Bob Krakowiak - Vice President and Treasurer Tim Leuliette - Chief Executive Officer, President and Director Jeff Stafeil - Chief Financial Officer and Executive Vice President.

Colin Langan - UBS Brian Johnson - Barclays Matthew Stover - SIG Ryan Brinkman - JP Morgan Chris Van Horn - FBR Capital Markets.

Good morning, and welcome to Visteon's First Quarter 2015 Earnings Call. All lines have been placed on a listen only mode to prevent background noise. As a reminder, this conference is being recorded.

Before we begin this morning's conference call, I would like to remind you this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are not guarantees of future results and conditions but rather are subject to various factors, risks and uncertainties that could cause our actual results to differ materially from those expressed in these statements. Please refer to the slide entitled Forward-Looking Information for further information.

Presentation materials for today's call were posted on Visteon's Web site this morning. Please visit www.visteon.com/earnings to download the material if you have not already done so. I would now like to introduce your host for today's conference call, Mr. Bob Krakowiak, Visteon's Vice President, Treasurer and Investor Relations. Mr.

Krakowiak, you may begin..

Thank you, Brent. Good morning, everyone. Joining us today are Tim Leuliette, Visteon's President and Chief Executive Officer; and Jeff Stafeil, Executive Vice President and Chief Financial Officer. We appreciate your interest in our company, and thank you for joining us to review first quarter 2015 results.

We have scheduled the meeting for an hour, and we'll open the lines for your questions after Tim and Jeff's remarks. Please limit your questions to one question and one follow-up. As previously mentioned, presentation materials associated with today's call are posted on visteon.com within the Investors section.

Also note that our Form 10-Q was filed earlier this morning with the news release. Again, thank you for joining us. And now I will turn it over to Tim..

Thanks Bob, and good morning, everyone and welcome to our call. I'll really jump into the material on Page 2. This was a good quarter for the company.

We delivered strong results in the quarter on a consolidated basis looking first at the conventional and historical view of Visteon which includes HVCC which was still consolidated in our revenue $2 billion of revenue with 189 million of EBITDA, adjusted free cash flow of 139 million and earnings per share little over $2 a share.

On a net-debt basis obviously a strong balance sheet our healthy EBITDA to net-debt is 0.1. We just also announced that we completed our accelerated share buyback program that we initiated about a year-ago.

The majority of these shares have been returned already and have been included in our numbers but about another 10% of that was just recently completed, so that program is behind us at an average price of $96.72 a share.

If we look now separately what I would call the new Visteon the post HVCC's sale Visteon which includes electronics in the remaining corporate component that was also a very strong quarter. Sales of 781 million at an adjusted EBITDA of $84 million above our all-time records for any quarter.

And should we have been a standalone business that would have been $0.84 kind of earnings per share number.

The quarter was driven by a lot of aspects stronger revenues and we expected some good performance compared to store level, and SG&A performance we had some one-times not significant, but we also were facing some significant foreign exchange headwind which makes the performance all that much better.

As we looked at the performance and as we looked at exchange and we looked at the lot of aspects we have decided to update our guidance of the year. I will take this in different pieces here first of all looking at sales.

The exchange impact on sales goes straight forward, the euro is a lot weaker than we had anticipated as we put the budget it was $1.28 and the budget now 110 is our forecast for the year. So that’s rolling through.

We also hit our revenue stream and EBITDA to some degree as well and Jeff will take you through the detail, we will also be selling off our HVCC entity very shortly.

It does own some of electronic assets in India, it's going to take while for those to come back to us just given the transaction and time line in India so those are also been removed for the remainder of the year. So net-net our revenue guidance we’re going to reduce primarily for FX down the 3 billion.

On the other side we looked at our guidance and EBITDA and cash flow looked at the performance of the year tempered by the fact that this is early in the year.

And also remember that typically the first half of the year is about 53% of our revenue on average, so we can't take a first quarter and multiply it by four we have to look at the year in total.

But we still feel comfortable even with the exchange headwind to increase guidance on EBITDA through a 245 to 265 range, and 40 million to 80 million of adjusted free cash flow, again reflecting a good performance overall the company and again offsetting what was those FX headwinds.

Moving on to Page 3, this is a chart we show every time, just again aligning everyone to where our vehicles are built and where we build our products and where we sell our products we should say.

In the first quarter the 22.3 million vehicles build globally over half were in Asia, Asia will continue to grow as a percent, Europe 24%, North America 20 with the U.S. being about 14% of all vehicles produced in the world. If you look at Visteon both before and after the HVCC sale they are shown on the right.

Today because of the strong Asian presence of HVCC obviously we almost mimic the vehicle build ratios with almost half of our business in Asia. When we sell off HVCC we go to more of almost a third, third, third if you will balance globally.

However over the next few years and we share this with you at Deutsche conference the Auto Conference early in the year, is that Asia is growing much faster than the rest of this, we will continue to see Asia grow as part of our business, but Europe will remain a larger piece of our business in the vehicle build overall because of content and the progressive and aggressive nature of European vehicle producers to incorporate advanced electronics in their vehicle.

So we've a very well positioned platform and Asia will continue to grow, China in particular will grow considerably you will start to see that red component on the red piece of the pie growth but again we’re very globally balanced, we'll be very well globally balanced as we go forward.

Moving on to Page 4, again looking back and remember this a bit here if you know about HVCC. HVCC has been a strong and viable element of Visteon since its inception and acquisition 20 years ago. Looking just over the past eight years, nine years you see that has 17% CAGR in revenue growth.

As we look forward here last year a $1.2 billion of the new business wins and net of loss and re-wins. So a strong order book and 7% CAGR is still a comfortable number looking forward as we look to 2018.

And it's not just as I say Korean company anymore as we looked around I said there is certain companies based and created a broken out into what I'll call a global footprint and global capability we can think of Hyundai and Samsung and LG, and many say HVCC as the same way.

So growing in Europe, growing in North America, growing in South America and I think for all of us here at Visteon I don't want to take this opportunity to say thank you to the leadership team of HVCC and all the members of management and all employees of HVCC for all they have done over the years and their splendid performance we've seen them have a quarter-after-quarter as they get ready to transition the new ownership.

A good business a solid business and attractive business going forward, and we’re sorry to see them go but we wish them well because we know that their future is going to be bright. Moving on to Page 5, let's discuss the sale here for a moment.

And we announced in December became a process of approvals and getting things lined up to get this sale completed. In March we announced that we've received on trust approvals to sell our 70% stake to Hahn & Hankook that included China, Czech Republic, India, Korea, Russia, Slovakia, Turkey and the U.S.

quite a platter of approvals that we needed globally.

And then on April 17th we received SEC approval for the proxy and of course distribute that quite quickly to the shareholders and we will have a special shareholders meeting here on May 18 here at Grace Lake to get approval for the transaction back and there is some remaining agreements between the parties associated with post sale support et cetera that we’re winding up as well, but once that approval is received from shareholders -- 15 days to close on the transaction.

I would say at this point that their enthusiasm and interest to getting this transaction done is the same as ours, we see this transaction proceeding in sometime in early June and you can see the time line below in the chart as at the various events, but we’re now within weeks of getting this transaction completed.

Moving on to Page 6, one of the questions that I -- Bob and Jeff, and I talk a little bit because this is one questions asked most probably many questions that have been asked us, is if we can do with proceeds.

And good news today is I am not going to tell anything new, exactly what we said before is that we will be returning about 2.5 billion to 2.75 billion of what will be approximately $3 billion receipt at close.

We fully expect the net proceeds once we clear up the tax issues in Korea to be approximately 3.2 to 3.3 meaning a billion meaning that we'll have around 5% or so I think less of a net tax exposure on the overall transaction.

The 3 billion will be immediate, the timing to get the remainder of the money are going through the process in Korea is hard to timeline. But could be years, probably will be some months before we receive that but we’re highly confident of receiving that amount as we go through the process in Korea.

So when we return 2.5 billion to 2.75 billion as we've said it will be a series of structured actions that will include buybacks special distributions and a large return of capital as a primary component.

I have said this before I will say it again we’re cognoscente of the tax implications of the transaction itself and we’re cognoscente of the tax implications of the shareholders and we will do our best to minimize that say the proper amount of tax will minimize that within the compliance and capability overall.

The element that determines the amount of the qualified dividend and the taxable element of this is a function as you know as we said before about the complex tax calculation regarding earnings and profit for a given year and then on a historical impact basis.

There is incentive and advantage on some of this to return to some of the cash in 2016 and reduce the tax exposure but for many other aspects of the return they need not wait and we will be as aggressive as we can in getting the tax proceed or getting -- excuse me the cash proceeds back to shareholders as quickly as possible.

We will be very definitive as we get close here get the close done, what we will do with the proceeds and will timeline that but again remember this we will we will get this as quickly as possible and we will try to do this in a matter of return the maximum amount of money back to the shareholders in the timeline that we said was within 12 months and that would be our target.

Some of that as I said will be done really quickly. And we will be more definitive as we get to the close. Moving on to page 7, let's review the quarter and talk about business update here for a moment.

The quarter for Electronics and the New Visteon was quite good, overall the margin was 10.8, Electronics by itself was 12.2, we know we've got further work to do I will talk about that but we’re seeing some good performance again despite the currency impact on EIBTDA basis for the quarter which was $10 million.

We continue to win significant new business and I think as we talk about all the various pieces here and all the elements today in this call one of the things I want to focus is the small but a very important piece of this page and that is the value proposition for this business was not just driven by performance core operating which we will do this team is dedicated and capable of doing that and it's also making sure that we’re properly positioned in one of the most attractive segments in the auto industry.

And while we do not quote numbers on a quarterly basis we only do it on an annual basis.

I will tell you that first quarter continued the momentum we saw last year although strong business win new business and re-win business and last year we won 1.3 billion of business and I think this year will be at that level or little bit more so there is tremendous customer momentum in the marketplace for this combination of JCI and Visteon and New Visteon electronics business.

Company that’s growing I am pleased with the where we are at today. Going on track for the synergies Visteon synergies to do there are still actions we need to take although we’re pleased with the first quarter there is clearly some more actions and we’re in process of taking place the improve margins even better as we move forward.

We announced to you $40 million to $70 million targeted synergies they tend to be harder to track as you get down the road as the organizations were solid et cetera, but you're starting to see these things flow through the numbers and that will continue to do so by the end of next year.

Restructuring IT, the centralization integration actions which will continue to improve this business are on track, we had identified to you earlier the cash outflows approximately 110 million associated with this overtime of which about 17 million incurred in Q1 and that number is still the right number and is still on track.

I will expand upon that in a moment. And from a shareholder value perspective we continue to focus on return on capital. I should say here we still also focus on operations.

The operating acumen of the organization and leadership team here is focused on continue to improve those margins and we still have with balance sheet even with proceeds back and the ability to go and do the right size the value creation M&A opportunities as they present themselves.

So net, net positioning the business well for growth and we’re encouraged by the first quarter performance. Moving on to Page 8, talking about this restructuring, and again this was the focus on Electronics & Corporate only anything related with HVCC.

As we previously stated we expect about a 110 million in restructuring, professional fees integration cost IT transformation et cetera during 2015.

After that roughly is restructuring cash outflows the right sized SG&A and engineering consolidated debt we made some further announcements on that front yesterday we announced consolidation of Holland Engineering Organization should be consolidated mostly here in Grace Lake and some of the activities taken over Japan.

And 55 million in IT decentralization and associated costs with that. From a combined perspective and then expense perspective it's about 80 million this year's cash outflow is 110.

You can see on the table below that 17 million of that will occur in the first quarter and through remaining so just as you model and look at the cash flows here remember that those will be part of our story and they continue to be part of our story as we go forward.

While we're getting the returns on those investments as you would expect and as you see in the first quarter.

As we go on to Page 9, this is also I think an important story and I just mentioned it here, we've always mentioned that the key to connected part, key to the electronification of the automotive industry, this is the democratization of technology.

It's not enough to be in the high line vehicles not enough to be in the luxury vehicles where the per unit costs are high that the volumes low. What we're seeing here, and this is just sort of the launches we had in the first quarter.

Our vehicles in the B&C class, these are vehicles that are the first time new car buyer vehicles, these are vehicles that represent not the per unit content but have much higher volumes and these vehicles have to become part of electronification of the auto industry to make the connected car to work, you need the network, you need to be in these vehicles, and I'm very pleased with the awards that The Mazda 2, The Ford Figo, The Ford Fiesta, The Renault Twingo these are vehicles that are in that B&C category, and then you also got the F-150s and the Mercedes vans that are more commercial or one of these from our workload perspective.

We're seeing this apply across the board, this has positioned itself well to be in these segments globally and this is just a case of point as an example of some of the actions we had and we're benefited from our first quarter. And with that I'll turn it over to Jeff and he'll take you through the numbers in detail..

Great. Thanks, Tim. Good morning, everyone. I'll start my comment from Slide 11. Here we show our key financial results for the first quarter of 2015 compared to the first quarter of 2014. As we had explained on prior calls our financial results are impacted by a number of items that make year-over-year comparisons difficult.

The adjusted financial information presented on this slide exclude these items and represents how we manage the business internally. As non-GAAP financial measures, this adjusted financial information is reconciled to U.S. GAAP financials in the attached appendix on Pages 27 to 29.

Additionally, year-over-year comparisons were impacted by a number of transactions including the acquisition of Johnson Controls Electronics business in July 2014 and the acquisition of Cooper Standard's Thermal & Emissions division in August 2014.

These transactions resulted in significant year-over-year increases in sales, adjusted gross margin, adjusted SG&A and adjusted EBITDA. Lastly, as we explained in previous calls we have request by the majority of our interior businesses discontinued operations in our financial statements.

Our income statement has been adjusted to exclude interior specific income and expense and interior's net profit has been reflected on one line as discontinued operations. The financials on this slide exclude discontinued operations with the exception of the free cash flow and adjusted free cash flow numbers.

Adjusted EBITDA was 189 million in the quarter compared to 161 million for the same period last year. The 28 million year-over-year increase reflects the impact of JCI Electronics acquisition and improved electronics performance. Currency unfavorably impacted first quarter results by 24 million versus last year.

Adjusted EPS was $2.04 in the quarter compared to $0.65 in the first quarter of 2014. The year-over-year increase reflects higher adjusted EBITDA, lower taxes and lower shares outstanding. Tax expense was only one million for the quarter, which included a 33 million tax contingency accrual release related to the outcome of a favorable tax audit.

Adjusted free cash flow was 139 million in the quarter, 75 million higher than the same period last year. I'll cover these metrics more in the following pages. Turning to Slide 12, we provide first quarter 2015 sales and adjusted EBITDA for core Visteon and total Visteon.

Core Visteon which includes the combined results to the electronics product group and corporate cost is what we expect to be our ongoing operation post the HVCC operation, our transaction and after we address our legacy interiors and climate facilities. Sales for core Visteon were 781 million in the quarter, 342 million higher than last year.

Adjusted EBITDA for core Visteon was 84 million, 40 million or 91% higher than the same period last year.

As we have already discussed transactions make a year-over-year comparison difficult, especially the Johnson Controls Electronics acquisition which closed on July 1st, 2014, thus is included in our current 2015 results but was not in Q1 last year. I'll go in more detail on these year-over-year sales and EBITDA comparisons in the following slides.

Moving to Slide 13, on our electronics product group.

Electronics sales for the first quarter of 2015 were 781 million and adjusted EBITDA was 95 million, sales increased versus 2014 by 342 million largely driven by the JCI Electronics acquisition and net new business win, these increases more than offset 27 million of unfavorable foreign exchange primarily related to weaker euro.

Adjusted EBITDA increased 38 million in the first quarter versus 2014, the increase is again primarily driven by the JCI Electronics acquisition in new business wins as well as the positive business equation.

Let me also point out that the increase in adjusted EBITDA would have been larger if not for the 10 million of adverse currency impact to year-over-year. The JCI Electronics integration continues to go well and as expected.

We saw significant improvement in electronics adjusted EBITDA versus the prior quarter, higher volume drove a portion of that improvement but we've also seen a reduction in fixed costs, as well as some of our synergy actions have materialized quicker than we expected.

Moving to Slide 14, we highlight electronics adjusted EBITDA and adjusted EBITDA margins for the last several quarters. As I said in the prior slide first quarter results were strong and reflected some of the synergies we've been pursuing. Generally speaking it was a good quarter and a nice start to our year.

With that said, I'd like to make it clear that the 95 million of Q1 adjusted EBITDA should not be thought of as a run rate number. Our operating results are seasonal, where by the first quarter and first half are materially stronger than later periods.

We expect a similar trend in 2015, explained by typical plant shutdowns during the third quarter and less workdays during the fourth quarter. Additionally, Q1 results benefited by approximately 4 million related to slightly higher than average engineering recoveries and a sale of some of our unused or non-core patents.

Second, we expect the weakening euro will continue to negatively impact our results for the remainder of the year. Our first quarter 2015 average euro rate was $1.16 for the remaining quarters of the year, we have a forecast based on a euro rate of $1.10. As a reminder every $0.01 strengthening of the U.S.

dollar versus the euro cost us approximately $3 million all else being -- everything has being equal. As Tim said earlier, we have increased our full year guidance for adjusted EBITDA but we do expect second half profits to be lower than the first half profits driven by the normal seasonality of the business.

Turning to Slide 15, we provide an overview of the key financials for our climate product group, which primarily reflects the HVCC business. Climate sales for the first quarter of 2015 were 1.3 billion down 28 million versus last year.

The year-over-year decrease for the quarter is more than explained by unfavorable currency, which reduced sales by 94 million year-over-year, impacting sales were both a weaker Korean won and a weaker euro versus the U.S. dollar.

This decrease was partially offset by 95 million related to higher volumes in Europe, new business wins of Hyundai, Kia and Ford and the impact of the Cooper Standard Thermal & Emissions acquisition.

Adjusted EBITDA was 109 million in the quarter compared to 117 million last year, excluding currency impacts adjusted EBITDA increased by 1 million as positive business equation more than offset slightly lower volumes.

It should be noted that volumes had a slightly negative impact on adjusted EBITDA despite a positive impact on sales as volumes were lower in Asia, our highest margin climate region.

Our climate product group has been impacted by unfavorable currency for multiple quarters now but it continues to successfully launch new business and approved its cost performance while working to mitigate against future foreign currency movements by localizing more supply around the globe. Overall the business continues to execute quite well.

Turning to Slide 16, we take a look at our cash flow and our capital structure for all of Visteon including our HVCC business and the remaining interior and climate operations.

Free cash flow was 118 million in the first quarter, should be noted that the impact of our discontinued interior operations of approximately a negative 8 million is included in this figure.

Adjusted free cash flow which also includes discontinued operations but exclude restructuring and transformation related payment was positive 139 million in the quarter. Our cash balance was 916 million as of March 31, 2015 and we closed the quarter on net a debt position of $41 million.

We have a strong balance sheet and leverage profile with debt to the last 12 months adjusted EBITDA of 1.4 times and net debt to EBITDA 0.1 times, excluding HVCC cash and debt we had 454 million in cash against 611 million in debt are well under one-times net leverage before considering the HVCC process.

Moving to Slide 17, we provide adjusted free cash flow by product group for the first time. As I discussed in the prior slide adjusted free cash flow was 139 million in the first quarter. Our HVCC climate business generated the majority of our cash flow contributing over a 130 of adjusted free cash flow from quarter.

Our core electronics and corporate business generated 6 million of adjusted free cash flow despite a 32 million seasonal trade working capital outflow.

Trade working capital which is impacted by plant shutdown has historically been negative in the first and third quarters for the electronics business, which generally recovers a little in Q2 and more substantial in Q4.

As we continue to realize electronics related synergies and right size our corporate structure to be in line with the smaller sales base, we expect adjusted free cash flow from our core operations to increase meaningfully. Moving to Slide 18, we provide an overview of Visteon's current reporting structure.

Our Q1 2015 results reflect three product groups and a corporate cost center. Post the sale of HVCC, our product group reporting will change which I will discuss in more detail on the next slide. On this slide the left half highlights of what we’re calling core Visteon or our ongoing operations.

This includes our Electronics Product Group and Corporate cost center. The right side of the slide provides an overview of our Climate and other product groups both businesses which we’re in the process of exiting. We expect to complete the exits of these businesses during 2015 or early 2016.

As Tim discussed we’re still on track to complete the sale of our 70% stake in HVCC in the coming weeks, we also believe that we will complete a series of transactions with HVCC over the coming six months to 12 months to move all of the Electronics operations under Visteon and all the climate businesses under HVCC.

Finally we believe we will complete the exit of our interior legacy facility in Europe by the end of 2015 using cash approximately equal to the net pension liability transferred with the operations. Moving Slide 19, we provide an overview of Visteon's reporting structure post sale of HVCC.

We have color quoted the slides show three contemplated transactions to complete our transition into focused electronics company. First in green, we show the transactions necessary with HVCC to move the remaining climate business underneath HVCC and to move the electronics business that is currently in the HVCC structure underneath of Visteon.

We expect to buy the Indian electronics facility form HVCC by early 2016. Most likely these transactions will result in a net cash transfer form Visteon's HVCC as the purchase price of the Indian Electronics facility is expected to be higher than the price for the remaining non-HVCC climate businesses.

The sales and adjusted EBITDA for full year 2015 of the Indian Electronics businesses are projected to be approximately 75 million and 7 million respectively while the sales of the climate business to be sold to HVCC are projected to be approximately 100 million and the adjusted EBITDA between 0 million and 5 million.

Given the uncertainty regarding the timing of the Indian Electronics purchase we've excluded second half 2015 results for this facility and the updated guidance figures which I will present in the following pages.

This change contributed approximately a 40 million reduction in sales and 4 million reduction in adjusted EBITDA and is already reflected in our updated guidance. Second in light blue on this page we show our planned exit of the remaining interiors business in Europe.

As mentioned in the past this operation is approximately breakeven cash flow and we expect to pay cash approximately equal to the pension liability or the net pension liability that we will transfer with the transaction. Finally in orange, we show the two remaining portions of our Interior sale an affiliate of Cerberus that have not yet completed.

These transactions are planned to close in Q3 of this year.

The last bucket on this slide relates to our discontinued operations in addition to the majority of our Interiors business which included in discontinued operations today, historical HVCC financial results will also be reclassified as discontinued operations after the closing of the HVCC sale.

Turning to Slide 20 we highlight the key changes to our updated guidance. The guidance metrics are for the Electronics Product Group in the corporate cost center only. We have excluded all financial results related to our Climate Product Group and our legacy facilities.

We’re updating our guidance to capture several significant impacts including first currency; we've updated our financial projections for the latest exchange rate. The rates exchange more significantly was the euro to dollar.

Our previous guidance was established for the euro-dollar exchange rate of $1.28 our latest projection use rate of $1.10 for the last nine months of the year. Changes in currency rates had an unfavorable impact on both our sales guidance and our adjusted EBITDA guidance.

The impact on sales is to reduce full year sales by approximately 170 million while the impact on adjusted EBITDA to reduce profits by approximately 30 million.

Second, as I said earlier we have assumed that the HVCC electronics facility in India will be sold as part of the HVCC transaction and any subsequent repurchase will not take place until at least year-end. The impact on electronics sales and adjusted EBITDA as a reduction of approximately 40 million and 4 million respectively.

And finally we have updated our guidance for operating performance improvements which more than offset the impact of the unfavorable currency and HVCC electronics facility. Moving to Slide 21, we have included this slide to better illustrate our expectations for the euro to U.S. dollar exchange rate for the rest of 2015.

At the top of the slide you can see the average euro to U.S. dollar exchange rate in the first quarter was $1.16 while our effective rate with hedges was $1.21. We have used a rate of the $1.10 for our projections for the rest of the year.

This decrease in the roll off of hedges consistent with our hedging policy results in a decrease in our effective rate from $1.21 in Q1 to $1.16 in the second quarter and down to a $1.11 by year-end. The annual impact of currency movements in our full updated adjusted-EBITDA guidance versus our prior guidance is approximately 30 million unfavorable.

Moving to Slide 22, we provide updated guidance for 2015. We have three material updates to discuss. First we have decreased sales to account for the shift in foreign exchange and the HVCC Indian Electronics Business.

Next we have increased our guidance for adjusted EBITDA, while the change in our exchange assumptions has had an approximate 30 million negative impact, our performance is expected to more than offset this impact and our synergy plan has materialized quicker than previously expected.

Finally we have increased adjusted free cash flow consistent with our earnings expectation. Moving to Slide 23, we provide a reconciliation from our 2015 prior guidance for sales and adjusted EBITDA to our updated 2015 guidance. Our updated 2015 sales guidance is 3.0 billion or roughly 300 million lower than our prior guidance.

The variance reflects the removal of HVCC electronics sales for the second half of the year unfavorable currency of 170 million and the removal of the other product group sales of 100 million from our guidance. Despite the decrease in sales versus prior guidance we've increased our midpoint adjusted EBITDA guidance by 15 million to 255 million.

The increase reflects a 50 million improvement related to business performance and cost reduction actions, which more than offsets 30 of unfavorable currency impact and 5 million related to removal of HVCC Indian Electronics Business in the second half of the year. Now let me turn the presentation back to Bob for Q&A..

Thank you, Tim and Jeff. Brent, please open the line for questions..

[Operator Instructions]. Your first question comes from the line of Colin Langan with UBS. Please go ahead with your question..

Tim, can you just give an update, you announced that you went down your [comprehensive] share.

What is the status of [absorption] and what is your outlook in terms of follow on you are going to stay with the company at this point?.

As we said, Colin that I'll be staying on until we find a successor, we're in that process but nothing new to report. I won't leave until we find somebody that we're all comfortable with. And you'll be the second to know, we'll get that process done and then announce.

But in the meantime, we're -- as you can tell focused specifically on the business and the running of the business globally in the HVCC we've done..

And then on the buyback of transaction.

Can you give any color in terms of how you're thinking about between buyback and special dividends and in particular on the special dividend, would you do the taxable dividend before the return of capital of that or has to wait next year but how should we think about the priorities there, what would come out on itself..

First of all, I'm not going to give you any more color on the breakdown but to sit back and say, if there are elements that are taxable now as oppose to taxable later months will given done now, given behind us, so I think we're in condensate of at least some of that process.

But again you're within a couple of weeks, so I'll give you some much more extended detail when we're ready to go to level process. No more color just few weeks..

And any color, what's going on with the taxes, it seems like this quarter was quite good but it looks like your full year tax guidance was up -- anything unusual you have on income tax front?.

Yes, I mentioned there in my comments and quickly Colin but we had a reversal of 33 million of tax expense in the quarter relating to anyways, we'll see accruals for uncertain audits.

We had favorable completions to those audits and we're able to reverse that accruals, so the tax expenses are normally low with $1 million on number I think in the quarter..

But -- it looks like your full year guidance actually went higher, is that wrong?.

I mean we do have some more EBITDA, but I think lot of that benefit we had won't make itself into corporate and electronics it will probably be attached to our discontinued operations Colin. In other words part of the climate business for HVCC that will move to discontinued operation..

Your next question comes from the line of Brian Johnson with Barclays. Please go ahead with your question..

I want to focus more strategically on just the electronics business not get into the capital allocation and merger and all that fund stuff. But just kind a think about this business that people are evaluating where they want to own to the next several years.

So few questions, can you give us a sense of how are your CPV is developing particularly as I look through the words on Page 9.

Are we seeing the movement either in the production or in the orders or even in if not that in the pipeline towards, we can figure more dashes with in driver information systems with the higher CPV?.

Good and I'm glad to talk about some of the size proceeds, appreciate your question. The content that we're seeing and I mentioned earlier that the momentum of new and re-win business in 2014 is continuing in the 2015 and it's very rare if the replacement product is in a lower price, there is additional content usually throughout the applications.

But you are also seeing new stuff, we mentioned in the past SmartCore, SmartCore is a much higher vehicle content product than historical more than just a reconfigurable cluster. So we’re seeing added content.

So I think in the case in point there is on a $3 billion business base with 1.3 billion win of which 800 million was new business, you are seeing us grow faster than vehicle build and that’s driven by either share or content and quite honestly it's both overtime. As you get into the 2018 2019 perspective you see that there is a lot driven by content.

I think one of the metrics and we talk about it internally is being more exclusive on content per vehicle and live with those trends and now that we’re just a single focused product which is electronics we can probably do that in more easily and we'll talk about being more public about that type of information. But it's all headed in that direction.

We’re not wining business based on customer pricing, this is all technology driven game, and that technology game implies that there is more content as you move up.

And even on these vehicles here and I'll give you some point there is -- we had a vehicle application between first let's say generation 1 and then about the generation 2 in the next platform is that the cost of our components went up $50 per vehicle.

The plastic basals and surrounded to support that went down by $50 because for the consumer he did not see difference in the cost base of the OEM they didn't see there were some cost base but our component our portion of that went up considerably and we’re seeing as we look throughout many applications that type of story..

And do you need a vehicle re-launch to do that or can it be a vehicle mid-cycle refresh where the driver information could be brought into the modern era?.

Good question.

I think from most of our customers they focus on new platform launches is being a place where they want to go do this and again no matter how fast and how aggressive we would like to be in moving to a connected car software world because I said the first that we need in the connected car is a connection and that takes 4G LTE and we’re really only 4G LTE in the U.S.

for the most part. So some of the vehicle global platforms that we’re seeing are evolutionary in many instances but the content continues to increase.

There are vehicles and we’re involved right now as one of the customers who is doing a mid-cycle update on that, but that’s more rare, it's typically done in vehicle platforms where there is major launches and if you look at our vehicle awards typically where the bulk of our business comes from is when there is a new vehicle platform..

So that’s the revenue side, on the margin side your implied guidance seems to be about 10% for this year.

I guess two questions around that, your long-term implied outlook is also about 10% for 2018, does this imply that potentially there could be upside to that and how does that -- is that being driven at all between where the margins were at the JCI, your legacy Visteon your legacy JCI and then this new business we've been talking about..

Couple of points. I think mentioned back in the January conference that we saw the 40% increase in EBITDA between over the next three years four years to 2018 as being probably sub-standard and that was potential further updating event. And it was driven by respect from SG&A situation.

I think we focused the last discussion we had Jeff went through an SG&A conversation and we will continue to focus on SG&A as a potential to improve the overall margins to the company, because we know we’re still little heavy there.

The other issue too is that no matter how focused we’re and how much we've discussed the JCI acquisition this is only the third quarter that we've reported since we've gotten the keys. And as we learned about the company we see further areas of opportunity obviously we saw some strength in the first quarter because of some optimism.

But at this point in time we would like to look at the quarters and year we will have to see if there is any upside potential there but again remember as Jeff said there always is a typical softness in the last half of the year which works its way through margin, so you'll see some stronger margins in the first half of the year and you'll see some lower margins in the second half of the year.

We ultimately know that we’re going to be at double-digit margin business here and I think that will flow out and will update the market as opportunities present themselves and as we get more comfortable with the business.

There is two things for a successful acquisition, one is buying at the right price and the second is executing the game plan to integrate it. We are in the middle of that second process. Now I think we've bought the business right, we’re in the business of executing our integration plan.

I am pleased with the process and the progress, we’re confident and we have some good performance in the first quarter let's just see how the year progresses..

And just final kind of more short-term question. What would happened to your electronics margins if the euro strengthens a tiny bit by the end of the year, does that become a tailwind or vice versa if it continues to be another headwind..

Definitely. We're only partially hedged and you can see on the one slide, we've provided there, Brian its highlighted some of our foreign exchange and it would be tailwind if we move that, on Page 21 I guess..

We have a 1.10 assumption in for the year..

And every one penny of strengthening is about $3 million or actually it goes in both directions before considerations of any hedges on an annual basis..

Your next question comes from the line of Matthew Stover with SIG. Please go ahead with your question..

I have two questions, one mechanical. If I look at the FX through the electronics business, you called out 27 million impact and assume that's for the full business.

If I just to apply half of that to the historic YFV the stand business would that but that the appropriate?.

To the historic YFV businesses?.

YFV and Visteon business, are even non JCI Electronics piece..

Yes, probably that's about right. European -- it's all really driven by Europe sales and the Visteon business and the JCI business we're roughly about equal..

So if I look at that it's probably about 10% organic growth in the quarter for that business..

The quarter, the exchange masked some descent improvements in sales because of what happened this year..

Second question is this on the increase in the 50 million in EBITDA I recognize that portion of that is a result of what happened in the first quarter.

But what are some of the other things that we should think about are driving the back half for the years, is this just programs are loading quicker than you expect or is that mostly the SG&A improvements are coming in a little quicker than you expected?.

The few things, I'd say, not as much to do with SG&A. I think our engineering efforts have performed well both on the direct cost as well as general recoveries from our customers. Second thing I'd highlight with be the four-wall we called the four-wall margin or operating margin in the plants.

The plants has performed well so that assumption of getting and finding synergies on things like material and taking best practices from the operating factors to and applying at we've seen good results there as well.

So, I think we have more opportunities we move forward but some of the things have moved a little quicker than we had originally put in our plans..

Matt, just replying on that, as you know we did a sort of forced integration here quite quickly once we get the keys. And as we went through that the best practice issue is we try to implement quite quickly, and we're finding some areas that we're greater than our expectations as far as opportunities you're trying to see those flow through.

And that's the kind of thing that it's penny here and penny there add up..

Your next question comes from the line of Ryan Brinkman with JP Morgan. Please go ahead with your question..

Just regarding the better quarter that the better electronics EBITDA in the quarter, one reason that's excited on -- in the Slide 14, you talked about the synergies with JCI. And I imagine that is coming from the full year increase to.

So I'm just curious, if that's related to more to a sooner than expected realization of the same total amount of expected synergies over time or could it instead pertains an increase in the total expected synergies over time, therefore providing a reason to think differently about long-term targets..

Ryan I think that's -- as obviously we're continuing to work these businesses. As Tim mentioned, we've only been under common ownership for three quarters. And we're continuing to drive the team and -- I'd say there is a lot of opportunity in this business.

At the end of the day that opportunity, the sales piece and the excitement we really have is over the future sales portfolio. But I'd say we're operating well, I think we have ability to that operate a bit better.

I think it's a little too early a little too premature to give you an indication of whether or not we can upsize the synergies but we're continuing to look for every avenue we can in the business and are encouraged by what we've seen so far..

I think none of us are satisfied with the performance of the business where it is. So, we'll focus -- and can focus on continued improvements but again three quarters is all we had business which I've said, so we're learning as we go..

And then just one quick one I guess on tax impact of that capital return. Firstly do you have any greater clarity from the IRS in terms of how much of any dividend payment 2016 would be considered qualified tax above versus tax return? And then at the time of 4Q call, I think there was like a $500 million range in there.

So secondly if you don't have that clarity, do you expect get it at early June. And then thirdly, if the amount is determined -- that's determined to be qualified tracks at the low end say 500 million or the high end 1 billion.

How that factor into your thinking of by that versus dividend?.

The first piece of your question would be if we tighten the range. The concept is still there that -- to the degree we would pay a large dividend, it would be better from a pure tax standpoint to pay the majority of that dividend in 2016, because of what we explained in the last call the dividend would be characterized.

The range that we put forward, we’re continuing to work to tighten that but it's not so much of the discussion with the IRS this is as looking through all the opportunities we have on tax planning.

There is a lot contemplated transactions that I brought you through in my words, some of those transactions will perhaps bring about additional tax attributes that factor into that analysis so I think not so much because there is IRS clarity or other things but as we move forward with the business on some of these transactions it might unlock opportunities for us to maybe have a better tax picture.

So I think those ranges are probably still the correct ranges to use and the reason that they are wide is not for necessarily a lack of sharpening our pencil but the lack of pure clarity of exactly how all those transactions will manifest themselves and what tax attributes will fall out of them that we might be able to use to mitigate some of the proceeds and provide a better tax answer for the shareholders..

And then just lastly wondering if your -- infotainment competitors Harman recently closed on some technology company acquisitions in the area of the updating acquisitions upward development et cetera to enhance it and put in offerings.

Curious in how you think about acquisitions going forward, I ask in part because the JCI acquisition was highly accretive of Harman's acquisitions really not some up near-term. So I think probably reflective over the fact by development stage technology company, you're expected to pay large premium.

So just before all of your acquisitions would be accretive in year one without synergy, maybe you're at a different point in the company stage, are you considering technology tuck-ins and would you be willing to modify that earlier self imposed condition of immediate accretion.

And do you need those additional technologies to compete or do you think you have everything that you need in-house currently?.

Overtime, there will be opportunities to grow the business vis-à-vis external growth and M&A. There are areas in the software side and we’re obviously are interested in as you have seen over the last year or so we will do partnerships relationships with times take out some assets I think we will continue to do that.

Overall we believe the balance sheet allows us to go do the kinds of things, this company still needs to go do, if there is something significantly larger that makes sense it’s beyond the balance sheet that we have today money is always available that makes sense.

The issue of being accretive in the first year and would hold on that I'm not going to say yes I'm not going to say no but I will say this any acquisitions are done by this company by me by my successor anyone else I think you seen a discipline here by the Board and by the leadership team here to make sure there is a value creation story here.

And the value creation story is permanent and as those opportunities present themselves we will look at it -- I think that with the growth we have internally today we have got a lot of internal momentum, it's technology driven, there is areas where we need support of help we can relate to that through the partnerships as I said and relationships but there is a tremendous amount of momentum here in the short-term which I think and given the fact that we’re still integrating JCI we will be hesitant to go do something large just in the very nature of digesting what we have..

Your next question comes from the line of Chris Van Horn with FBR Capital Markets. Please go ahead with your question..

Just had a quick question on the -- you said that the pipeline and it gives the existing new business wins you guys are highlighting. Could you just give me sense of we think about it is a similar split of just looking at the new business or the pipeline coming up, is there some more split in terms of customers regions.

And then if you could give us some additional color of when you're seeing new business wins is it core products or is it products kind of introduced or developed in the past one year to two years?.

Chris good question. First of all I would say over the next few years the majority of the growth is Asian based and that just was what was in the pipeline and that was what was awarded.

So there will be a skewing of business awards sometime about '16, '17 that are more Asian based, and as I said earlier in my comments we will see that piece of the pie go to more Asian.

And that’s not for any other reason that just that’s the way the platforms are being awarded what happens as you get into '18 and '19 you will see more global platforms that may have been a decision made in Europe let's say but that they are build around the world.

Typically and as again I commented earlier you will see major changes in content typically associated with platforms and there are some new major platforms in the 2018 2019 range that are significant step ups in content. And that’s just the nature of their cycle.

So those products that are going to be launched in 2018 were first shown to the customer in 2014. And to be shown to the customer in 2014 they had to spend some sort of just gestation time earning time inside our own businesses.

So they are much more advanced in and stuff is in production today, but again I think we need to go to the lead times that the industry has.

We could be in a position to invent and launch product within 12 months but our customers are not ready for that, our customers still goes through a vehicle development cycle, a launch cycle and the testing cycle that puts us into depending on the customer somewhere between 28 months to as much as 42 months cycle, and that’s just the nature of our industry.

There are exceptions for that rule but they are not big enough to move the number considerably.

So we’re trying to compress the development time, we’re seeing obviously great interest in compressing development time but in the end the development time of our products is not driven by the gestation and improve our time at electronics per se it's driven by the development of the vehicle and the [output] of the vehicle which is a much more complex and longer development cycle than we quite honestly need ourselves..

And just looking at the customers it seems like there is a lot -- think of you guys had leveraged to Ford et cetera but it seems like there is a lot of more new customers on this slide, is that how you guys see it and is that how you see in the pipeline as well from a customer standpoint?.

I mean Ford remains a large customer but you are seeing a lot of Renault business and Chinese business and other business, so while we expect Ford to remain and I think we showed this chart in the past that was in the January conference.

We expect to see Ford remain a major customer of ours but it will decrease as a percentage just because of the bulk in the new wins that are occurring, a lot of that is Asian a lot of that is Europe that’s going to be -- if you will the traditional Ford share but we were winning businesses across the Board. Japan, China, Germany everywhere.

I would like to thank everyone for their participation in today's call. If you have any additional questions please feel free to contact me at your convenience. And I'd like to turn it back over to Tim for some final comments..

I want to thank you all for your support and your investments for those that are already into the Visteon share. We have had a good quarter.

I think the most important part here is to get beyond the good quarter of financial performance or good strategic nature of the business; we have over the last few years repositioned Visteon to be a major player focused player on the electronics world. The customer reaction has been strong, and the integration of JCI is working well.

The HVCC transaction should be closed within a few weeks and we will enter new chapter for this company with high growth and a very strong balance sheet. So we appreciate your support through the years. And we look forward to a prosperous future..

Thank you. This concludes today's conference call. You may now disconnect..