Good morning. I'm Ryan Ghazaeri, Director of Capital Markets and Strategic Planning. Welcome to our Earnings Call for the Third Quarter of 2022. Please note, this call is being recorded and all lines have been placed on listen-only mode to prevent background noise. Before we begin this morning's call, I'd 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 a guarantee 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 page entitled forward-looking information for additional details. Presentation materials for today's call were posted on the Investor section of Visteon's website this morning. Please visit investors.visteon.com to download the material if you've not already done so. Joining us today are Sachin Lawande, President and Chief Executive Officer; and Jerome Rouquet, Senior Vice President and Chief Financial Officer. We have scheduled this call for one hour, and we'll open the lines for your questions after Sachin and Jerome's remarks. Please limit your questions to one question and one follow-up. Thank you for joining us. I will now turn over the call to Sachin.

Thank you, Ryan. Good morning, everyone. And thank you for joining our Third Quarter 2022 Earnings Call. Page 2 summarizes results for the third quarter. The Company performed very well despite the industry-wide challenges that have impacted vehicle production and inflated costs. Our third-quarter sales were $1,026 million, an increase of 63% year-over-year, making it the highest quarterly sales since I joined the company. Adjusted EBITDA was $95 million or 9.3% of sales, an increase of $53 million compared to the prior year due to the higher sales and strong commercial and operational discipline. Adjusted free cash flow for the third quarter was an inflow of $59 million, a strong EBITDA which was partially offset by an increase in working capital. The company delivered another quarter of strong sales growth compared to customer and global industry vehicle production—our 14th consecutive quarter of better-than-market performance. Our robust product launch cadence is a major driver of our sales growth, with all our core products growing at double-digit percentage levels in the third quarter. Year-to-date, we've launched 32 new products which will contribute to continued future sales growth. We won about $2 billion of new business in the third quarter bringing our year-to-date total to slightly over $5 billion, putting us on track to achieve our full-year target of $6 billion. We continue to build momentum in our display product line with the investments we've made over the past few years. Since the start of 2021, we've won $2.7 billion of displays business, mostly at the high-end of the automotive market. I will provide more details on our third-quarter performance as well as our near-term outlook on the subsequent pages before handing it over to Jerome to discuss the financials. Turning to Page 3. When excluding the favorable impact from recoveries and the unfavorable impact from foreign exchange, Visteon sales in Q3 grew 49% year-over-year with strong double-digit growth in all core product lines. This compares to vehicle production growth of about 24% over the same period. Our strong market out-performance was largely due to the ramp-up of recently launched products as well as favorable vehicle mix, both of which reflect the alignment of our core products with key industry trends in automotive. Clusters are the largest product line for the company, and our cluster sales growth was primarily driven by the rapid growth of digital clusters, which nearly doubled from last year. Digital clusters now make up about half of our total cluster shipments. Digital clusters did well globally and particularly in North America due to the ramp-up of recent launches with Ford and GM. Our infotainment business benefitted this quarter from a higher supply of critical chips as compared to Q3 of last year, in addition to new product launches. This was also the case with our display product line, which was impacted by a shortage of ICs in the second half of last year. Display panel supply has also recovered nicely this year, which has helped both our digital cluster and displays business. Ongoing SmartCore launches continue to drive strong growth in the Cockpit Domain Controller product line. SmartCore shipments were up 50% year-over-year, resulting in sales more than doubling year-over-year. Recently launched programs include the SmartCore system with Geely, one of the fastest-growing EV companies in China, and Mahindra and Tata in India. Our sales were up in all regions year-over-year, with Americas growing the most on account of the ramp-up of new products with Ford and GM that I mentioned earlier. The strong dollar did, however, create a currency headwind for us in the quarter of about 7% as compared to the prior year. Even with the strong demand from car makers, the company's performance in Q3 would not be possible without the proactive efforts undertaken by the entire Visteon team. We have launched over 20 redesigns of our products to work around semiconductor shortages, and more are in progress. The team also did a great job in securing supply through constant discussions with chip suppliers, as well as finding and validating alternate chips from the open market to maximize shipments to customers. Turning to Page 4. New product launches are a key driver of Visteon's sales performance, and in Q3 we continued a strong launch cadence with the launch of five new programs. This brings our new program launches to 32 for the year-to-date with additional launches planned for the fourth quarter. About half of these new launches were for digital clusters, which will help continue the growth of this key product line for Visteon. Also, supporting the current industry trends, about a quarter of the new launches were for electric vehicles. Some of the key programs launched in Q3 are highlighted on this page. We launched a 12-inch digital cluster on the Nissan Serena minivan in Japan, our first in the region. The Serena is one of the most popular family vehicles in Japan. This product was launched in Korea and in Australia, with the U.S. to follow early next year. Multi-display systems are starting to crossover from luxury to mass market segments, and we expect this trend to gain momentum as we go forward. The two-wheeler segment is also seeing a similar trend of cockpit digitalization. In Q3, we launched a new digital cluster on Honda's all-new CB-F motorcycle platform. Honda is launching a series of motorcycles on this platform, and our 5-inch digital cluster will be offered as standard equipment on higher trim models of 500cc and above. This cluster offers the choice of four different drive modes that are user-selectable, as well as a fuel gauge, gear indicator and other bike-related data. The system works with helmet-mounted headsets and connects via Bluetooth with both Android and iOS phones. In addition to these new programs, we have several follow-on launches in Q3 of products that were previously launched in prior quarters, a couple of which are highlighted on this page. We launched our digital cluster on the Mercedes EQS Electric SUV following the launch on the electric sedan earlier in the year. In China, we launched our wireless BMS system on the Cadillac Lyriq, an all-electric crossover from GM, which follows the launch of this vehicle in the U.S. in the first quarter of this year. These follow-on launches are great examples of cross-platform products that go on multiple vehicle models, which are becoming a bigger part of our business, delivering a better return on our investment. Turning to Page 5. Q3 was another strong quarter for new business wins, with nearly $2 billion in wins, most of which were in emerging areas of automotive electronics. This brings our total wins year-to-date to about $5 billion with a good distribution across all our core products. We also see a good pipeline of new opportunities in the fourth quarter which should put us on track to achieve our target of $6 billion for the full year. Our wins in the third quarter were led by incremental business on the previously announced wireless battery management system win, along with large display and digital cluster wins. On the right side of the page, we highlight several key wins in the quarter. The first win highlighted is the incremental business for our previously announced win for the wireless battery management system. This win represents incremental business through an extension of both vehicle models and volume compared to the previous booking. In addition, this win introduces a new configuration of the OEM’s battery module and pack for greater power density. This change requires our BMS system to manage a greater number of cells in the battery pack, thereby increasing the content for the vehicle. This award also highlights the flexibility of our wireless BMS design to support such changes in battery pack configuration to meet the evolving needs of the OEMs. The second win highlighted is a combination of a 12-inch digital cluster and a separate 12-inch central information display for the North American OEM's electric vehicle line, with the first production starting in 2024. The third win highlighted is a multi-display module for the center information display and the passenger display with a luxury German OEM. This was our first multi-display win with this German luxury OEM and follows the earlier multi-display win in Q4 of last year with a different German luxury OEM. Multi-display systems with differentiating designs and features are emerging as a key part of the cockpit of next-generation luxury vehicles. This system offers a large center information display for infotainment content and a second passenger-side display with an advanced active privacy feature for viewing content without distracting the driver. Multi-display systems are relatively new to the industry but are quickly becoming key to cockpits of the future, starting with the luxury end of the market. I will discuss more about our multi-displays business on the next page. Turning to Page 6. The luxury car segment is expected to be the fastest-growing segment of automotive cockpit electronics. Currently, sales to luxury cars make a relatively small percentage of our total sales, mostly for digital clusters. The emergence of multi-display systems that incorporate two or more displays under a single glass cover lens with value-added features gives us another opportunity to grow our share in the luxury vehicle segment. Over the past few years, Visteon has emerged as a technology leader and a trusted partner to OEMs for large displays for the cockpit. More recently, our investment in the development of new display-related capabilities has resulted in us winning about $2.7 billion of new display business, with the majority of wins coming from multi-display systems. The trend of using multiple displays behind a single covered lens to offer pillar-to-pillar displays is just starting to gain momentum in the industry. Luxury car OEMs are looking to differentiate their cockpits from mass-market vehicles that are increasingly offering large center information displays in the cockpit. In addition to the large size of the display, luxury car OEMs are interested in new capabilities that can further differentiate their vehicles. This page shows some of the recent multi-display wins and the key new technologies incorporated in them. Ultra-thin bezels and narrow gaps between displays make the entire system feel like a single seamless large display. Curved displays make it easier for the driver to view the entire display area, while the active privacy feature for the passenger side display enables viewing of content by the passenger without causing distraction to the driver. All these new features are very challenging to implement, especially considering the strict automotive requirements of quality, safety, and product lifespan. Visteon was able to win these programs on account of the technology and manufacturing capabilities we have developed that address these challenges. Today we believe we are in the leading position in the industry, and we are focused on maintaining our lead and continuing to bring more innovations to cockpit displays. In summary, the emergence of multi-display systems in automotive cockpits, led by the luxury market, presents a new and growing opportunity for Visteon. I'm pleased that we have made quick inroads in one significant business with Japanese and German OEMs in the early days of this trend. As these displays become more affordable, I expect vehicles in the mass-market segment to also incorporate them. Turning to Page 7. We anticipate the industry environment in Q4 to be similar to Q3. Semiconductor shortages will remain the primary constraint for the industry, which will likely keep vehicle production close to the levels we saw in Q3. Demand from automakers for our products remains strong as OEMs respond to industry trends and consumer expectations. Visteon sales will be driven by the availability of semiconductors, both from suppliers as well as from the open market. Due to product redesigns that enable us to use alternate chips and our anticipation of modest improvement of supply from chip suppliers, we expect open market purchases in Q4 to be lower as compared to Q3. Nonetheless, semiconductor supply remains inherently unpredictable, with many critical chips having no buffer in the supply chain. Any quality or logistics issue can easily result in disruption to supply. This situation, combined with increased concerns in Europe of disruption to vehicle production due to energy supply, makes it more difficult than usual to forecast our sales in the quarter. We have therefore opted to maintain a wider than normal range for sales guidance that Jerome will discuss in more detail later. We expect many of these dynamics to continue into 2023, which will keep the situation fluid and challenging beyond Q4. As a result, and consistent with our practice, we'll be providing 2023 guidance on our Q4 earnings call in February. Our focus remains on things that are more in our control and mitigating the impact of these headwinds to the greatest extent possible. This includes ensuring smooth launches of new products in Q4 while ramping production to address the demand we are seeing from customers. Our ongoing product redesigns will give us more options for critical chips in the future. And of course, we will maintain the commercial and operational discipline that has served us well so far. We believe these actions will put us in a good position to deliver strong results in Q4 and set a solid base for 2023. Turning to Page 8. In summary, the company performed very well despite the ongoing semiconductor shortages. We delivered record sales with strong growth relative to customer vehicle production, accelerating the trend of recent quarters. The team continued to execute on our commercial and operational plans, which resulted in a solid adjusted EBITDA margin of 9.3%. We continue to build momentum in our foundation, with the launch of 32 new products and $5 billion in new business wins year-to-date, and our product portfolio is well-positioned to support the emerging needs of the industry. Now, I will turn the presentation over to Jerome to review the financial results.

Thank you, Sachin. And good morning, everyone. Visteon's third-quarter financial results reflect another quarter of strong performance. Our teams continue to do a remarkable job on both the commercial and operational side of the business. Q3 sales were $1,026 million, representing another record quarter for Visteon. Our strong sales performance continues to be driven by ongoing high-quality product launches from recent quarters. While customer demand remains elevated, we're still navigating through the semiconductor shortages, focusing on improving supply through constant interactions with customers and suppliers, as well as through engineering redesigns and open market purchases. Adjusted EBITDA was $95 million, representing a margin of 9.3% for the quarter. Adjusted EBITDA benefitted from higher sales volumes as well as ongoing commercial and cost discipline. Incremental costs from semiconductor shortages and supply chain constraints remained elevated this quarter. We continue to actively mitigate inflation in our negotiations with customers, which remain on track. Customer recoveries from open market purchases were approximately $19 million in the quarter, diluting margins by approximately 90 basis points. Adjusted free cash flow for the quarter was an inflow of $59 million, driven primarily by higher EBITDA and our ongoing activities to optimize capital expenditures. Inventory levels increased due to continued supply chain disruptions. We ended the quarter with a total cash of $365 million and $349 million of debt, resulting in a net cash position of $16 million. Turning to Page 11. Third quarter sales of $1,026 million represents our highest level of sales since 2015, and an increase of $395 million compared to last year. This year-over-year increase is primarily driven by higher customer production volumes, strong growth of the market due to recent product launches and favorable pricing, partially offset by unfavorable exchange rates. Excluding the year-over-year impact from pricing—which was positive $125 million—sales would have been approximately $900 million, providing a proxy for sales levels excluding the unusual pricing dynamics this year. Q3 was the 14th consecutive quarter of market outperformance, driven by our recent launch cadence and the robust customer demand for our digital cockpit products. Pricing increased sales by approximately 20% compared to the prior year, driven mostly by customer cost recoveries. For the quarter, approximately $90 million of customer recoveries related to open market purchases of semiconductors are included in pricing. Adjusted EBITDA was $95 million, presenting an increase of $53 million compared to the prior year, and margin expansion up 260 basis points to 9.3%. Adjusted EBITDA increased primarily due to higher sales. Our continued commercial discipline allowed us to minimize the impact to adjusted EBITDA this quarter from high semiconductor and material costs, which is an improvement from the prior year. However, EBITDA margins remain diluted by the elevated open market purchase costs and the associated recoveries by approximately 90 basis points. Compared to the prior year, net engineering and adjusted SG&A were modestly higher. Finally, foreign exchange was also a headwind year-over-year as a result of the strength of the dollar. Excluding customer recoveries and associated costs from open market purchases of $90 million, EBITDA margins would have been closer to 10.1%, reflecting a more normalized run rate for when the semiconductor constraints begin to abate. Turning to Page 12. We ended the quarter with a total cash position of $365 million and debt of $349 million, resulting in a net cash position of $16 million. We continue to have one of the strongest balance sheets in the industry, with more cash than debt. As we discussed on our last call, we refinanced our credit agreement in July and now have a $350 million term loan with a current interest rate of 3.3% and an undrawn $400 million credit facility, both maturing in 2027. Adjusted free cash flow was an inflow of $59 million in the quarter, reducing the year-to-date net outflow to $40 million through the first three quarters. Adjusted free cash flow in the quarter benefitted from higher EBITDA and continued focus on optimizing capital expenditures. Inventory levels increased in the quarter as supply chain shortages continued, where the timing mismatch between customer collections and supply payments remains. We anticipate inventory levels will decline in Q4 compared to the current levels, but to a lesser extent than we initially forecasted, resulting in a higher outflow of working capital than previously anticipated for the full year. Turning to Page 13. As a result of our strong performance throughout the first nine months of the year, we are increasing our full-year guidance for sales and adjusted EBITDA. We are lowering adjusted free cash flow to reflect the higher working capital outflow that I mentioned in the prior slides. We're increasing full-year sales to a range of approximately $3.6 billion to $3.7 billion to reflect higher full-year growth of the market and customer recoveries, as our open market purchases of semiconductors remain elevated. Compared to Q3, we anticipate that customer production volumes and Visteon's underlying sales will essentially be flat sequentially. However, at the midpoint of the guidance, we're currently factoring a reduction of open market purchases of semiconductors and associated recoveries. As Sachin mentioned, our range accounts for the uncertainty in production volumes in Q4, particularly in Europe, but it also reflects the difficulty in forecasting the level and pricing of open market purchases that may be required to support our customers in Q4. We are raising our full-year adjusted EBITDA to a range of $325 million to $345 million. Adjusted EBITDA would benefit from higher underlying sales, while the increase in customer recoveries—which is largely offsetting material cost increases—will have a minimal impact on adjusted EBITDA. We do anticipate Q4 net engineering will be modestly higher compared to Q3, which is in line with our full-year expectations for net engineering expense. We now anticipate adjusted free cash flow will be between $30 million and $70 million for the full year. In Q4, we anticipate adjusted free cash flow will be approximately $70 million to $110 million, reflecting a strong EBITDA, ongoing capital expenditure discipline, and an inflow from working capital. In summary, our updated guidance reflects a strong first nine months of the year, while our range acknowledges that the environment in Q4 still remains very dynamic. Turning to Page 14. Visteon remains a compelling long-term investment opportunity. We have positioned the company well for topline growth, margin expansion, and free cash flow generation, and our strong balance sheet continues to provide significant flexibility.

Your first question comes from Shreyas Patil with Wolfe Research.

Hi, thanks a lot. Thanks for taking my question. I wanted to start with the SmartCore side. I didn’t see it mentioned in the new business wins in the quarter. But I'm curious how you’re working with OEMs when it comes to embedded software. You've talked about a high degree of Visteon code in these product wins—10 million lines of code across three operating systems—so it's quite complex. But we know the automakers are looking to get more involved in the cockpit. As we look further out, we are seeing similarly trends in integrating the cockpit domain into another domain as well. So, I'm curious about that and whether this is an area where Visteon might want to get involved as well.

Thank you, Shreyas, and that's a great question. As we've been saying for a couple of years, this trend towards cockpit domain controllers is definitely starting to hit its stride. We're seeing more and more OEMs get interested in these indicated products. Now the issue is that these products, as I've mentioned, are fairly complex; they have multiple operating systems and are using some of the latest, more advanced silicon chips from our technology providers. These chips, and the silicon and the software used in many of the applications across the different OEMs, are very similar. Visteon has developed a platform we call SmartCore that provides an abstraction of the underlying capabilities of these devices, allowing applications to be built on top of it. Some of the applications are very common—like CarPlay, Android Auto, navigation, multimedia, etc.—but some would be very specific to each OEM. Our value proposition is that we can provide OEMs wanting to build their own systems with a better starting point than if they were to try to do that all on their own. The pace of change they are focusing on—whether in silicon or in the underlying software—still matters. We have multiple OEMs and multiple programs that we’ve been developing, and we have this asset of more than 10 million lines of code that they will need to rewrite if they want to build this themselves. You also asked about multi-domain controllers. Today, what we’re seeing in the industry is still primarily cockpit domain controllers. However, as higher-performance silicon becomes more available, we can envision more functionality from other domains, whether from the body side or safety, being integrated into these multi-domain controllers. We want to be a player in that emerging business area, and we’ve been investing in developing our software along with the cockpit solutions. We are among the few in the industry to have digital clusters and infotainment software, and now we are integrating them with multi-domain functionalities. This transition may not happen within the next 12 to 18 months, but as we mentioned with the silicon improvements we expect, this is where the industry is headed.

Okay, great. That's really helpful. Jerome, I appreciate that you provided an updated guidance, thank you. But as we think about the prior guidance for 2023—the $4 billion in revenue and 12% EBITDA margin—and obviously, volume expectations have weakened since then. Can you talk about some of the levers you can pull next year that may still support that kind of expansion, even if market volumes decline? Are there additional cost actions you could take to still get you towards that target at least on an EBITDA level?

Sure, good morning, Shreyas. As you said, we will give more detail regarding guidance not in this call but today I would say that the way we see 2023 developing still remains largely supply-based. That's what we're watching. The semiconductor challenges we see this year will continue into next year, especially in the first half. We anticipate demand for growth in the market has been strong in Q4; it's been so since the beginning of the year. We expect mid-teens growth of the market going into next year, though we will refine that as we get closer. We'll have to watch currency as we move into next year as well; that’s been a headwind for us this year. As for pricing, we still expect elevated stock buy levels in Q3, but we anticipate a reduction moving into next year as supply improves, which will positively impact our EBITDA margin. There are many moving pieces at this point, and we'll continue to assess these various factors as we move into Q4 earnings.

Your next question comes from the line of Mark Delaney with Goldman Sachs.

Yes, good morning, thank you very much for taking the questions. I hope to get a better context on how demand trends might be evolving, understanding that it has been quite strong. Can you give some qualitative insights into what Visteon is seeing in terms of macroeconomic trends impacting order levels and how that’s being impacted by your programs and opportunities?

Sure. I'll take that first, and Jerome can jump in if he'd like. The main thing I’d like to reiterate is we are still supply-limited. Demand is extremely strong, and we have been seeing that for the last three quarters, continuing into the next quarter as well. The orders from our customers are very strong and robust. Therefore, I believe we will work through the rest of the year and possibly into next year with supply constraints as the more limiting factor, rather than demand. As for product line speculation, these are products that car makers need to meet competitive and consumer expectations. Digital clusters as a trend will continue for the next few years, driven largely by the success of commodities like ADAS and largely displace of others—a very strong trend continuing. The last four quarters leading into Q3 saw over 50 launches, and if we keep that path, we will have lots of demand for the product, which I do not expect to dissipate. Yes, we are all monitoring the macro environment and seeing how it develops. We are specifically watching Europe, which was extremely strong in Q3, and we expect it to perform strongly in Q4. However, we are cautious regarding energy needs and other considerations impacting demand. For now, we haven’t seen any softness in demand as our OEMs will continue to place their orders.

That's helpful. Can you help us quantify the global LVP levels needed for Visteon to reach $4 billion in revenue next year? While we understand you’re not guiding at this point, some previous comments suggested around 89 million LVP units were necessary for that revenue level. With $1 billion in this past quarter at LVP levels of between 83 million to 84 million, can you give us a range for LVP in 2023 required to equate to the $4 billion revenue?

Certainly. The revenue from this quarter, while it's over $1 billion at the top line, when you look at pass-throughs, it's just a shade under $900 million as organic revenue. So, at these levels of production, we feel comfortable that we could achieve or even slightly exceed our targets if supply improves. We believe that we will not need the previously estimated 89 million units to hit our targets. It’s more crucial that critical semiconductors holding us back must improve in production next year to achieve the $4 billion revenue. As we assess our portfolio, not every semiconductor is equally impacted, but a few select parts, which we refer to as ‘golden screws,’ have been pivotal. We just need a slight uplift in production from these or minor improvements in supply, alongside the redesigns already accomplished. I would say at just under $900 million revenue, a 10% to 15% improvement overall will put us in a good position, and we believe that will come with lower vehicle production than previously expected.

Your next question comes from the line of James Picariello with BNP Paribas Exane Research.

Can you confirm what is the baked-in assumption for your past two revenue based on the strong recovery of about $130 million in the third quarter? What level are you expecting here for the fourth quarter?

For our Q4 assumption, we expect sales levels to be similar to Q3. The key difference in our Q4 assumption is that we expect spot purchases to be lower by approximately $40 million to $50 million, which contributes to the overall perspective.

That's helpful. How dynamic is the situation in terms of chip supply? How quickly do you realize you might be short, requiring you to go to the open market? Is this a day-to-day or week-to-week kind of situation?

Yes, that's a great question. To answer your question directly, yes, it is very dynamic—often week by week or even day by day. The key issue is that the constraints are not across all semiconductors; it’s focused on a smaller set that is very constrained. This can stem from logistics issues which impact our supply chain. In Q3, for instance, sales were better than we anticipated because supply improved more than we expected at the beginning of the quarter. We anticipate potential enhancements in Q4 especially with softening demand in other industries. These dynamics create a challenging environment, which is why our range for guidance is wider than usual.

I would add as well that the forecasting is extremely challenging for the reasons Sachin mentioned. We start by needing to identify which parts are shorter. We then have to look at broker availability, and prices from brokers fluctuate easily week by week. Lastly, there's the OEM's willingness to pay for these elevated prices. Many parameters vary daily, which makes forecasting a difficult task.

Understood. For your second wireless BMS customer, are you supplying them with a digital cluster or any other products besides the wireless panels?

We are supplying displays and digital clusters across their portfolio of vehicles. Most of our cluster customers are integrated with our systems, so we have very few OEMs that are not part of our portfolio.

Your next question comes from the line of Luke Junk with Baird.

Good morning. Thanks for taking the questions. I want to ask about supply chain but from a different angle, Sachin. You’ve been discussing demand over $1 billion from your customers. How much can you close the gap through redesigns from an estimated $900 million this quarter? Also, how has redesign activity evolved throughout 2022?

Good question, Luke. I can't quantify the exact revenue attributable to the redesign, but without them, we would have been significantly lower. We can control a lot of that, but the shifting constraints make it challenging. Discussions around the numbers we launched have increased, and we have a multitude in progress for product introductions. It’s important that during redesigns, we maintain original designs, giving broader access to chips rather than just switching from one to another. I believe that if we execute our planned redesigns by the second half of next year, we should have more control over supply.

For the incremental wireless BMS award, can you clarify the scope compared to your initial work with that customer, whether across platforms or in dollar terms?

Certainly! We have three customers we've mentioned regarding our BMS solution. One is in production, while the others will enter production around 2024. When we first began developing BMS systems, the industry transitioned to higher voltage battery packs for fast charging. Our wireless BMS was designed to support this; the recent event reflects that. The scope of this particular win has expanded; we initially had about seven or eight vehicles and that has since doubled in the latest announcement; volumes have considerably increased. Moreover, the changing high voltage requirements mean higher battery content. We've previously discussed content ranges of around $350 to $500, with higher voltage requirements typically exceeding this range. Overall, it remains somewhere between $350 to $500 depending on the OEM and vehicle mix, which could push the average to the upper end.

Your next question comes from the line of Emmanuel Rosner with Deutsche Bank.

Thank you very much. To follow up on wireless BMS, I think your partner for initial wins was advanced devices. They’ve recently announced another wireless BMS—can you comment on that?

I wouldn’t venture to comment on that specific announcement, but in general terms, silicon choices are made ahead of selecting Tier 1 suppliers. We have been working closely with this partner for a long time. These partnerships involve various OEMs together, and I want to keep it at that for now. Since the start of the year, changes to high voltage setups have led to delays in discussions as we adjust the designs for these new requirements. However, I expect we will conclude these discussions soon, with awards being talked about in the near future.

Regarding your free cash flow guidance, could you review the drivers behind working capital timing and how this may align back with your normalized free cash flow profile in early 2025?

Yes, of course Emmanuel. We've revised our cash flow guidance for the full year to be at a midpoint level of $50 million. As you may remember in Q2, we indicated a low-end guidance approaching $85 million. Most of the change relates to working capital items. Two points are noteworthy: first is increased inventory in Q3; we expect a modest reduction in Q4. The second relates to the timing of customer collections—some deals were quite late in the quarter, leading to collections slipping into the next quarter. We are improving this cadence with customers, while there remains some timing differences. We expect progress in Q4, but results won’t be as strong as we originally anticipated, which led to lowered guidance. We also maintain a broader range of $30 to $70 million due to sensitivity.

In 2023, should we expect further improvements in free cash flow? Could you outline how the dynamics of working capital will play out for a more normalized profile next year?

We will provide more guidance later, but we expect to generate adjusted free cash flow in ‘23. We’ll keep an eye on working capital dynamics. I expect that inventory collection will normalize, but we’ll need to be mindful that increased safety levels slightly raised inventory. Our anticipated higher volumes next year should naturally influence our inventory levels, which we predict will settle below 30 days—ideally, slightly below a month.

Given the context for potential revenue growth in 2023, can you give comparable insight into margins? What factors could help you reach your margin targets for next year, as opposed to headwinds?

No significant changes from our past statements here. Volume is critical for us to achieve our targets. We’ve seen strong volume growth this quarter compared to a year ago, which is significant. Positive factors include expectations of reversing inefficiencies around freight in the upcoming year. On the flip side, we will continue to monitor inflation and related pricing, with spot buy levels expected to decline with improved supply. This generally supports margin percentages and the overall outlook.

Your next question comes from the line of David Kelley with Jefferies.

Can you elaborate on your exposure to Europe? Could you provide insight into product demand and how you see the mix evolving? How does customer scheduling visibility factor into your year-end outlook?

Europe performed strongly in Q3. Demand was when Q3 tends to be typically softer in production, but this quarter, we did not experience any weakening of demand. I expect that to persist into Q4, as we haven't noticed any changes in product placements from our customers. The mix is similar to others—closely related to clusters, displays, and cockpit domain control systems. Despite the challenges facing Europe, we aren't seeing adverse trends impacting our orders.

I have a follow-up question regarding your new business wins. 45% of your business wins so far in 2022 are for EVs. Can you discuss the content per vehicle opportunity for EV wins versus ICE wins and any color on this multiplier would be greatly appreciated?

To clarify, that 45% indicates that—of the recent wins, 45% contain some EV content. EVs often present us with a positive outlook because they typically entail more displays and electronics and software content. What we’ve been seeing is an increase in display opportunities for EVs, alongside BMS and Cockpit Domain Controllers as well. Average sales prices are notably on the rise due to the newly introduced multi-display systems and higher-end smart port systems. Looking ahead, as we continue to secure our share of the market within these emerging areas, we anticipate further growth driven by these dynamics.

Thanks, David. Thanks, everyone. This does conclude our earnings call for the third quarter of 2022. Thank you, everyone, for participating in today’s call and for your ongoing interest in Visteon. If you have any follow-up questions, please contact me, Kris Doyle, directly. Thank you.

This concludes Visteon third quarter 2022 results earnings call. You may now disconnect.