Thank you for being here. I would like to welcome everyone to Visteon's Third Quarter 2024 Results. Now, I will hand the call over to Ryan Wentling, Vice President of Investor Relations and Treasurer. Please proceed.

Good morning. I'm Ryan Wentling, Vice President of Investor Relations and Treasurer. Welcome to our earnings call for the third quarter 2024. 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 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 page entitled forward-looking information for additional details. Presentation materials for today's call were posted on the Investors section of Visteon's website this morning. Please visit investors.visteon.com to download the material if you have 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 the call for one hour and we'll open the lines for your questions after Sachin's and Jerome's remarks. Please limit your questions to one question and one follow-up. Thank you for joining us. Now I will turn the call over to Sachin.

Thank you, Ryan. And good morning, everyone. Thank you for joining our third quarter 2024 earnings call. Page 2 provides a summary of our third quarter performance. Visteon delivered strong results for the third quarter with sales outperforming customers' vehicle production and generating solid profitability and free cash flow. Sales were just under $1 billion, driven by strong demand for our digital cockpit and electrification products. These product lines drove mid-single digit growth over market, which was partially muted by lower sales in China, mainly due to the loss of market share of our global OEM customers in that region. Excluding China's negative impact, our growth over market would have been above 10%. I'm proud of our solid results, which continue to validate the strength of our product portfolio even in a challenging environment. Adjusted EBITDA was $119 million, driven by strong operational execution and our continued focus on controlling costs. Adjusted EBITDA margin was 12.1% for the quarter. Adjusted free cash flow was $73 million in the quarter and our year-to-date total is a record $135 million. The global Visteon team did a great job in launching our products in 30 vehicle models across the world in the third quarter, bringing the full-year total to 71 product launches. We also won $1.8 billion of new business in the quarter, mostly for digital cockpit products, taking our year-to-date total to $4.9 billion. We have a solid pipeline of new business opportunities for Q4 and we should be able to meet our target of greater than $6 billion in new business for the full year. Overall, our third quarter performance demonstrates the strength of our product portfolio and the continued focus on operational excellence and cost discipline by the entire Visteon team. Turning to Page 3. As I mentioned, demand for our digital cockpit products and electrification was strong, particularly in the Americas and in the rest of Asia outside of China, resulting in a growth over market of 6% in the third quarter. The trends of digitalization and the software-defined vehicle continue to be powerful drivers of growth for our digital cockpit products. Commercial vehicles and two wheelers are also beginning to contribute meaningfully, although they are still a small percentage of total company sales. Digital clusters did very well and grew double digits with the ramp-up of production of recently launched products on global vehicle platforms with Toyota and Nissan. Commercial vehicles and two wheelers also contributed to the growth of clusters with customers such as Volvo Trucks and Royal Enfield in India. Sales of large displays also grew double digits with the ramp-up of launches with Ford, Stellantis, and Nissan. SmartCore sales were lower year-over-year due to lower sales in China. However, SmartCore sales outside of China continued to do well and grow, driven by extensions on vehicle models with Mahindra in India. Turning to our electrification products, sales were strong in Q3, driven by the ramp-up of production of electric vehicles by GM and the start of BMS production for our second customer, Stellantis. We are optimistic that EV production volume with our BMS customers will grow with the launch of more price-competitive products like the electric Chevy Equinox, which has a starting price of under 35K, which is critical for greater EV adoption. From a regional perspective, we outperformed the market in the Americas and in the rest of Asia, excluding China. In North America, the launch of digital cockpit products and growth in BMS more than offset the impact of slowing EV sales, resulting in a strong market outperformance in the third quarter. In Europe, we slightly underperformed the market, mainly due to slowing EV sales in that region. The high number of new product launches in Q3 that we had in Europe should help offset this trend in the coming quarters. We outperformed customer vehicle production in the rest of Asia, excluding China, mainly driven by new product launches in India. From a year-over-year perspective, China was the biggest headwind as the ongoing loss of market share by our global customers and the lower sales of premium vehicles by Geely resulted in a 4 percentage point headwind to our overall growth over market for the quarter. In summary, we delivered solid growth over market in Q3, while navigating industry challenges, most notably in China. Our efforts to diversify our product and customer portfolio have paid off, with the company being much more resilient to market shifts and enabling us to continue to outperform our customer vehicle production. Turning to Page 4. New product launches continue to be a key driver of sales growth for Visteon. In the third quarter, we launched 30 new products, bringing our year-to-date total to 71. As you can see on the bottom right, our launches have been balanced across the regions this year, with roughly half of the launches in Europe and Americas and the remainder in Asia. Having 35% of launches in Asia, excluding China, validates our success in diversifying our customer base in this key region. Launches were balanced across the product portfolio with digital clusters representing nearly one-third of our launches, highlighting the continued penetration of digital clusters in mass-market vehicles. Now, I would like to highlight some of our key launches during the quarter. We launched infotainment and display systems for the Tata Punch, a best-selling compact SUV in the Indian market. We have been a long-term cluster supplier to Tata Motors and this is our first infotainment system launch with them, with potential to extend to additional vehicles. In North America, we launched a full digital cluster on the Ford Bronco Sport, replacing a competitor's hybrid cluster. We also launched our latest audio system in the vehicle as well. We had two SmartCore launches in Q3. We replaced a competitor's infotainment system with SmartCore on the latest Lynk & Co 01 plug-in hybrid vehicle model in Europe. We also launched SmartCore on the all-new Renault Grand Koleos hybrid vehicle with initial launch in Korea. Following launches are expected in Europe, the Middle East, and South America markets. One of our digital cluster launches was on the Nissan Qashqai, which is a popular SUV in Europe. This vehicle is offered with mild hybrid and range extender powertrain options, with our digital cluster being the default option on four of the five trim levels. Lastly, we launched our wireless battery management system with our second electrification customer, Stellantis, for the all-electric Wagoneer S. We expect further launches in the coming quarters as Stellantis rolls out electrified models in North America. Turning to Page 5. We delivered another strong quarter of new business wins, with $1.8 billion in the quarter, bringing our year-to-date total to $4.9 billion. Our quarterly win levels have increased sequentially for each of the major Japanese and premium European OEMs on additional vehicle models. These two car OEMs are relatively new additions to our customer portfolio and these wins strengthen our position as key suppliers to these carmakers. We also won digital cluster business with three large two-wheeler manufacturers in Asia, supporting our strategy of growing beyond the passenger car market. We did very well in winning display business in the third quarter, continuing our strong first-half performance. Our vertical integration strategy for displays makes us different and more competitive from most of the suppliers and that has translated into greater success in the market. Displays make almost half of our total new business wins year-to-date and we believe displays will become as large as digital clusters in our future sales. Our leadership and expertise in software for digital cockpit systems is well recognized in the industry. And in the third quarter, we won multiple new business awards for our SmartCore cockpit domain controller technology for vehicles launching in China, Europe, and India. On the right-hand side of the page, we highlight several wins from the third quarter. The first win is for a large curve display for multiple mass-market models with a European OEM. Large displays, greater than 12 inches, are making inroads into the mass market, much like the trend we are experiencing with digital clusters. The second win is for our SmartCore product and a multidisplay system for mid-cycle refresh of a popular SUV model for an Indian OEM. Indian OEMs represent a key catalyst of future growth as demand for our products continues to increase in the region. Another SmartCore win to highlight is for an electric vehicle for a domestic China OEM, our third domestic customer in that region. SmartCore provides an upgraded digital cockpit experience for consumers, which is highly valued by these OEMs as they look to move into the mid and upper segment of the intensely competitive market in China. Lastly, I would like to highlight our win for a digital cluster on a flagship two-wheeler model for an Indian OEM. This cluster offers Bluetooth and Wi-Fi-based wireless smartphone integration and turn-by-turn navigation on a 5-inch TFT display. These new features are only recently being introduced in the two-wheeler market and we expect to see rapid adoption of these new advanced features in that part of the industry. Overall, I'm very pleased with our new business win performance. We have been able to offset the headwinds of China market dynamics and the slowdown in electric vehicles and still win high levels of new business while diversifying our customer portfolio. Turning to Page 6. As we entered the final quarter of 2024, we expect to face similar industry dynamics in Q4 that we experienced in the third quarter. We expect demand for our digital cockpit products to drive strong market outperformance in all regions except in China and finish the year on a solid 6% market outgrowth. In the Americas, our sales are benefiting from the ramp-up of recent new product launches in electrification and digital clusters and we expect double-digit market outperformance in the fourth quarter. Product launches in the third quarter with multiple OEMs in Europe are expected to ramp up in production in Q4 and more than offset lower vehicle production. We anticipate our sales to also grow double-digit over market in Europe. We are forecasting a solid mid-single digit market outperformance in the Rest of Asia, excluding China, given our recent momentum in that region. In China, we are estimating a sequentially flat performance considering the headwinds in that region and underperformed vehicle production. We are in the process of expanding our business with domestic China OEMs to offset the trend, but it will take some more time to turn the tide in that region. For the full year, we expect our sales to grow 6% over market. This is a solid performance, given the industry headwinds that we have had to face throughout the year. Moving to Page 7. I want to take a step back to both reflect on what we have accomplished and look forward to what I view as a bright future for Visteon. Visteon has a proven track record of delivering in challenging times. In recent years, we overcame numerous industry headwinds, including the COVID pandemic, semiconductor shortages and cost inflation as well as headwinds in China and electric vehicles. But through it all, we have delivered exceptional results across every key financial metric. To be direct, our team has delivered regardless of the challenge. To put our performance in context, I'd like to compare our current results to what we delivered in 2019, the last year before the COVID crisis. I think it's helpful for the comparison that both 2019 and 2024 had roughly the same global light vehicle production. While the market was flat over this five-year period, Visteon was not. We grew sales by over 30%, adding $1 billion of sales. We did this by strengthening our market leadership in digital cockpit with digital clusters, displays, and infotainment products and expanding our product portfolio in electrification. While growing sales by $1 billion, we doubled adjusted EBITDA and expanded margin by 430 basis points. Equally as important, we efficiently converted that EBITDA to cash. Our adjusted free cash flow tripled, driven by EBITDA growth and a focus on cost control in all aspects of the business. As I mentioned earlier, all key financial metrics improved substantially over this five-year period. Looking to the future, we have a strategy that will drive our next phase of growth through four key pillars. First, our best-in-class software capabilities serve as the foundation for our partnerships with OEMs. Cars are increasingly defined by software, and we believe the automotive industry is starting on a new super cycle of innovation and software content growth with the emergence of new technologies such as artificial intelligence at the edge, which is the car in this case. Diversification of our customer base has been a key priority of mine since joining Visteon nearly a decade ago. In recent quarters, we have made substantial progress on this initiative, diversifying our customer base in Asia, and there is significant runway yet to go. OEMs in Japan, India, and Korea represent more than a third of global light vehicle production but only a small share of Visteon's revenue. Diversifying our China business with more domestic OEMs is also a key priority for us going forward. Diversifying into adjacent end markets such as two-wheelers and commercial vehicles is another pillar of our growth strategy. While these markets only represent low single digits of our sales today, there is significant upside as the digitalization trend strengthens in these markets and demand for digital cockpit products increases further. Lastly, we have identified a growing need for OEMs to have a strong partner for advanced design and R&D services in addition to our existing tier 1 supplier status. These advanced capabilities and services also strengthen our product portfolio by bringing key insights gained from early engagement with car OEMs across several critical technology domains such as connectivity, cybersecurity, and functional safety. Overall, we are optimistic about the future for Visteon, and I look forward to updating you more about our mid-term views in our February earnings call. Turning to Page 8. In summary, the company performed very well in the first nine months of 2024. Our technology portfolio is aligned with key industry trends, including digitalization, the connected car, and electrification, megatrends that will drive future growth for years to come. We continue to deliver market outperformance compared to our customers' vehicle production with 6% growth over market expected for the full year. The team continued to execute on our commercial and operational plans, which resulted in a strong adjusted EBITDA margin of 12.2%. We continue to build our foundation for the future by launching 71 new products and winning $4.9 billion in new business. Now, I will turn the presentation over to Jerome.

Thank you, Sachin. And good morning, everyone. Visteon delivered solid results in the third quarter. We successfully navigated another quarter of challenging market conditions and delivered strong operational performance, both on the commercial and on the cost side. Our growth over the market was in the mid-single digits and in line with our expectations. We delivered an adjusted EBITDA margin slightly above 12% and generated strong cash flow. We also strengthened our future growth profile with 30 new product launches this quarter and $1.8 billion of new business wins. The end market and customer diversification initiatives that we have highlighted in recent quarters have continued to gain traction with $600 million of new business wins with Rest of Asia OEMs and further successes with commercial vehicle OEMs and two-wheeler customers. Overall, I am very pleased with this performance and continue to be confident in our prospects for long-term growth and margin expansion. Turning now to our third quarter financial results in more detail. Q3 sales were slightly below $1 billion. Compared to last year, sales benefited from our market outperformance of 6%, driven by new product launches and strong performance of our digital cockpit and electrification product lines. This was offset by lower customer volumes and lower recoveries from our customers. In terms of performance by geography, Americas had the strongest market outperformance, rest of Asia was positive, Europe declined slightly, and China underperformed by double digits. Consistent with past quarters, customer recoveries declined year-over-year as a result of improved semiconductor supply but were stable sequentially. Adjusted EBITDA was $119 million for the quarter or 12.1%. Our strong EBITDA performance this quarter is the result of our robust sales level and excellent operational performance, including strong cost controls and increased efficiencies. We believe our normalized EBITDA margin continues to run at approximately 12%. Adjusted free cash flow was $73 million in the quarter as a result of our solid adjusted EBITDA and improved working capital performance. Lastly, in the third quarter, we completed a bolt-on acquisition for $48 million net of cash acquired. As I have mentioned in recent quarters, we are prioritizing bolt-on M&As in our capital allocation framework as we believe there are meaningful opportunities to enhance our capabilities and grow our business. Our strong balance sheet with net cash of over $200 million provides us with significant flexibility to pursue our capital allocation priorities. Our team continues to operate well with a strong focus on operational performance, commercial excellence, and cost discipline. We proactively adjust our cost structure to reflect the business changes. And in that regard, we recognized approximately $28 million of restructuring costs outside of adjusted EBITDA in the third quarter aimed at improving our efficiency and further rationalizing our footprint. This is in line with our focus on continuous improvement and maintaining our best-in-class footprint. Overall, I am proud of our solid third quarter performance. Turning to Page 11. Sales were $980 million for the quarter, representing a slight decrease compared to the prior year. Our market outperformance of 6% was offset by 6% lower customer production, lower recoveries, normal price downs from customers, and a 1% headwind from FX. Our growth over market was driven by recent product launches combined with strong demand for our digital cockpit products and the ramp-up of our electrification products. Our next-gen products continue to grow with digital clusters, displays, and electrification all showing year-over-year increases. Adjusted EBITDA was $119 million in the third quarter, representing a 12.1% margin. Our strong performance this quarter represented a decrease from the prior year, which had approximately 100 basis points of non-recurring commercial items. Excluding those commercial items in the prior year, our adjusted EBITDA margin would have increased year-over-year in the third quarter of 2024. Exchange negatively impacted year-over-year adjusted EBITDA by approximately $10 million, driven mostly by the euro and the Brazilian real. Net engineering cost as a percentage of revenue was 4.8%, below our expected full year average in the mid-5% range due to the timing of project spend, higher recoveries, and lower spending in China in response to the challenges in the region. SG&A as a percentage of revenue was 4.5%, in line with our expected full-year target. Turning to Page 12. Our balance sheet remains among the strongest in the industry. We ended the quarter with $553 million in cash and a net cash position of $229 million. Our balance sheet supports our growth and provides flexibility for our capital allocation priorities. Turning to cash flow, we generated $73 million of adjusted free cash flow in the third quarter, bringing our year-to-date total to a record $135 million. This is a $42 million improvement compared to the first nine months of last year, primarily due to $40 million higher adjusted EBITDA year-over-year. Trade working capital was an outflow for the first nine months as we built additional working capital to support our future growth. Cash taxes were modestly lower than prior year as 2023 was impacted by the timing of some tax payments. Interest was a positive in the quarter with a net inflow as interest cost from our term loan were more than offset by interest income on our invested cash. CapEx was $96 million in the first nine months. We expect this to increase in the fourth quarter due to timing. We remain on track for $145 million for the full year. We're investing in projects to deliver on our future growth and margin expansion, including vertical integration. With our consistent cash flow generation and solid balance sheet, we're able to execute on our capital allocation priorities. As noted on the right side of the slide, our first priority continues to be investing in organic growth. Our annual CapEx spend of approximately 3.5% of sales supports projects that are critical to our sustainable profitable growth. Our second priority is bolt-on acquisitions, like the one we completed this quarter. We are targeting companies that not only enhance our capabilities or product offering but are also quickly accretive to our bottom line. Although these bolt-on acquisitions are likely to be individually small, we believe that in aggregate, they can be a meaningful growth and profit driver in the medium term. Our acquisition this quarter met this criteria and we will continue to be very selective and disciplined in executing on future M&A. Lastly, we intend to continue to return cash to shareholders through share repurchases. Since implementing our $300 million share repurchase program in March 2023, we have repurchased $126 million of shares. We're committed to a balanced capital allocation between these three priorities. Turning to Page 13. Based on our year-to-date performance and our outlook for the fourth quarter, we are updating our 2024 full-year guidance. For sales, we are tightening our guidance range to $3.85 billion to $3.9 billion. While still within our previous guidance, we brought down the top end of the range as a result of the ongoing challenges in the industry, notably in China and the slower adoption of electric vehicles. We still expect to deliver a solid full year of growth over market of 6%. For adjusted EBITDA, we are raising our guidance range to $465 million to $480 million, reflecting our strong year-to-date commercial and operational performance. We have been able to flex our net engineering and SG&A costs, which we expect to remain within our initial forecast of approximately 10% of sales. On a margin basis, the 12.2% midpoint is slightly higher than our prior guidance as a result of our strong year-to-date performance. For adjusted free cash flow, we're increasing our guidance to $165 million to $185 million. Our full-year range considers our assumption of the current adjusted EBITDA range, a use of working capital, and CapEx spending of $145 million. Our adjusted EBITDA conversion ratio remains within our targeted range of 35% to 40%. Turning to Page 14. Visteon remains a compelling long-term investment opportunity. We expect to benefit from higher demand for more digital content in the cockpit regardless of powertrain and the growth of electric and hybrid vehicles. Visteon is uniquely positioned for multiyear top-line growth, margin expansion, and free cash flow generation while our strong balance sheet provides us with significant flexibility. We appreciate your support and look forward to talking with you again in February when we will provide our 2025 and future guidance. Thank you for your time today. I would like now to open the call for your questions.

Our first question comes from Luke Junk with Baird. Your line is open.

Hi, good morning. Thanks for taking the questions. To start-off, hoping to just expand on cluster growth specifically, Sachin. Just hoping to unpack it from both a product launch and sunset standpoint as well as just geographic mix impacts that might be reflected right now, just the growth here pretty flat in a growth over market basis. What are some of the conditions that you would see that are needed to get that cluster business back to an overall growth posture despite continued digital growth right now?

Good morning, Luke. Yes, the trend of digitalization remains a significant driver for the growth of our product line. In Q4, our digital clusters led product sales, with double-digit growth excluding China. This performance highlights that while it may appear stagnant overall, it's primarily due to conditions in China. This year, we have launched several new cluster programs, with about 30% of our 71 new launches being digital clusters, and the same percentage applies to our new business wins. Looking ahead, we anticipate that CDCs and displays will replace traditional digital clusters and infotainment in the premium and luxury segments. However, we expect to see continued growth in digital clusters and standalone infotainment in the mass-market segment, positioning us well to capitalize on both trends. Notably, despite price pressures on OEMs in various regions, including China, this shift is encouraging higher sales of our mass-market products. We recently launched a digital cluster with Toyota and expect robust growth with that customer moving forward. Overall, I am very satisfied with our position in digital clusters, which remains a strong product line. Additionally, as we've observed with our display performance, that segment is beginning to evolve, and I wouldn't be surprised if it grows to match the significance of digital clusters in the next few years.

Okay. Thanks for that, Sachin. And then maybe a second question, my follow-up would be for Jerome, just on the net R&D or net engineering, second quarter in a row that that's run a little better than expected. Can you just pull apart the two pieces here in terms of project timing, what that might mean to 2025, seems like maybe some spend is deferred and can flow back in and then recoveries just tracking higher. Can you continue to drive a little bit higher than expected outcome on the recovery side? And then you had mentioned also in your prepared remarks some rationalization of R&D in China. So, hoping you could just expand on that and the sort of balance of multi is coming under pressure in China, yet the need to still drive launches with local OEMs there in terms of engineering investment? Thank you.

Yes, thanks a lot, Luke. Good morning. So maybe let me step back a little bit on engineering. We've been running a fairly cost-effective engineering organization in the last few years and maybe three points around that. The first one is that our platform approach has been very successful. We also have most of our engineers located in best-cost countries, and that has been helping our model tremendously. And then finally, we've been working very diligently on efficiencies within our engineering teams, ensuring that they produce quality software on time in a cost-effective manner. So as it relates to Q3, and the two pieces are obviously the gross engineering piece as well as the recoveries. If you step back and look at what we've achieved on the gross engineering side, our costs have been fairly flat for the last few quarters. Therefore, it's been in line with what we've been able to achieve in the first half of the year. Recovery really is what has helped us this quarter, and we had an improvement in recoveries versus the prior quarter, but as well versus prior year. And we've been running a little bit ahead this year in terms of the recovery. So timing is hard to predict on recoveries and we think that will still be overall in terms of net engineering within our target of, let's say, mid-single-digit percentage of total sales. As we go into next year, we'll keep on looking at efficiencies and we'll keep on as well investing in very critical areas that will allow us to grow on a go-forward basis, like connectivity, AI, as well as other areas. As it relates to China, we have now flexed a little bit our engineering cost, especially in Q2 and Q3, to adjust for what is going on in the region. So it is indeed a slight reduction over there just to adjust for the reality of the market.

Maybe just the China piece, if you could, just a follow-up on the local OEMs, just investment in engineering specifically with that cohort?

Yes, we are still active in China and intend to remain relevant in the market. There is a significant amount of technology in China and a strong emphasis on cost management due to the ongoing price competition. We continue to invest in that region and are successfully acquiring new business, but we will be selective about the customers we choose to work with.

Indeed. In fact, this topic of China may be of interest to everybody given how significant of an impact it has been. So let me elaborate on that a little bit. So if you go back maybe last year or the year before, China represented about 15% to 16% of our sales. Now that has come down to about 11% to 12% this year and that's largely due to the loss of market share of our global OEM customers that are selling into China. Now our - if you look at our revenue profile in China, about two-thirds of our revenue in China comes from global OEMs, and one-third from domestic OEMs. But we are really well represented in that market. Of the top 15 OEMs that have more than 70% of the market in China, nine are Visteon customers today. And of those nine, it's about three are domestic OEMs. At the same time, it's a very competitive market. So there has been a lot of price-based sort of war that is being fought by OEMs. And at the same time, the OEMs have to keep their cockpits competitive. So we continue to see opportunities, but we have been very prudent in terms of where and how we want to engage because we want to make sure that we have a profitable business there. So our strategy has been to grow more with domestic OEMs and also to grow share of the wallet with the OEMs that we are currently present in China. Now European and American OEMs have done a little worse than, let's say, the Japanese. And of course, the domestic OEMs have taken a lot of market share. So we have a strategy of working with the ones that we think are going to do well, but it's going to take a little bit of time for us to recover from what has happened this year and we expect in a couple of years to see growth return to that part of our business.

That's all great color. Thanks for jumping in there, Sachin. I'll leave it there.

Thank you, Luke.

Our next question comes from the line of Joe Spak with UBS. Your line is open.

Thank you. Good morning, everyone. Sachin, maybe you could just sort of provide a little bit of color on what you're seeing out there from your customers because it looks like you're implying your customer production is down maybe mid-single digits in the fourth quarter. We just had another supplier report some pretty dire volume for the fourth quarter, like minus 9%, including significant deterioration in Europe in the fourth quarter. So just want to better understand what you're seeing.

Yes, absolutely. Thanks, Joe. And the first thing I would say is at this point, our outlook for the fourth quarter is really relying more on the direct orders that we have from our customers. And as you can imagine, given all of the announcements that have been made, we have been very diligent in terms of checking for the integrity of those orders and we feel pretty good about where we stand. So, having said that, we do see softness in Europe. There's no question about it. But our performance in Europe is driven more by new product launches. And if we were not to have those, I believe we would have seen a similar drop in our outlook for production as perhaps some others might have been referring to. So, as you know, we had a high number of launches even in Q3, and many of them were actually in Europe. And that's benefiting us. From a production perspective, if I look at the various regions for Q4, we see pretty much, I would say, a reduction in all regions except our customers in Americas. And so, Americas seems to be doing relatively well, is holding up pretty well. All of the regions are a bit, I would say, on the negative side, including Europe. And our performance is totally driven by new product launches. So we see a market outgrowth in all regions except China. In China, we see more of a flattish performance relative to Q3, even though there is a seasonal uplift in production anticipated for Q4, we would probably be, I think, prudent in not assuming any benefit from that. There might be some tailwind, but we're not assuming it in our outlook for now. Hope that gives you some color.

Yes, that's helpful. For my second question, I would like to understand the conversations you're having with your customers and how these could influence future sourcing. A recent Qualcomm auto product release has showcased significant performance improvements allowing for AI capabilities. However, with this product likely not reaching vehicles until 2026 or possibly 2027, it appears that hardware development is accelerating rapidly. I suspect that in a year, we could see another major performance leap. When you discuss this with your customers, how do they perceive this situation? How does it affect your sourcing, especially since technology is evolving so quickly and you want to avoid being stuck with outdated technology?

That's a great question. AI will drive growth in content, especially in the cockpit, but it comes with significant costs. Upgrading to the latest silicon capable of supporting AI models is a considerable investment that may not be feasible for all market segments. We are observing a divide where the premium luxury segment will need to offer advanced features, including AI in the cockpit, ADAS, and enhanced camera-based processing. This is primarily because the costs of these advanced silicon solutions are increasing significantly, potentially doubling or tripling prices. As a result, there will be a greater demand for competitive and feature-rich solutions, particularly in the lower market segments, which presents a significant opportunity for us. We have established platforms that we can offer to OEMs, not just for passenger cars but also for commercial vehicles, which share similar features and content. The two-wheeler market, while also significant, often has higher volumes and faster time to market. Overall, we are seeing a technological segmentation that aligns with long-established vehicle classifications. Our goal is to provide tailored solutions for each segment, including two-wheelers and commercial vehicles. We are focused on a vertical integration strategy to lower costs and make systems more affordable, especially in software and displays, while less so in silicon. This approach helps to differentiate Visteon.

Thank you.

Thank you.

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

Hi, yes. Good morning and thanks very much for taking my questions. First, I was hoping to better understand the key puts and takes behind the updated EBITDA outlook for this year and what's allowing a slight increase to the EBITDA guidance even on slightly lower revenue? And perhaps more importantly, as you're seeing some of the progress the company is making within margins, is there anything episodic helping that's more temporary in nature? Or is this perhaps a sign of progress toward the medium-term target of 13.5%?

Yes, thanks. I would say, generally, we've been running pretty well ahead of targets on the margin side. And we saw that in Q2, and we saw that again in Q3. And that's really the fundamental reason as to why we are increasing our full-year guidance on the margin dollar, but as well margin percentage standpoint. Despite a slight reduction in volume for the full year, we're able essentially to have better engineering cost. We are pretty much keeping our engineering percentage as is for the full year. And obviously, with lower sales, that implies lower dollars. And we've been running well. In terms of efficiencies, operational performance has been good and that's another reason as to why we're able as well to improve our margins. So 12.2% is the number we are putting out there for the full year. It's essentially very much in line with what we've achieved in H1, and that's a very good run rate as we go into next year. So apart from the commercial items that I indicated impacted our financials in Q2 and it was not a very large number, it was 50 basis points of margin at the time. I don't see any major item that is temporary as we go into next year. Obviously, next year, we'll have a lot of puts and takes and we'll talk about that in February.

Yes, thank you for that. My other question was around BMS and one of your key BMS customers spoke recently about a future plan to shift some of their cell manufacturing away from pouch toward prismatic cells. Hoping to better understand if there's any implications of that for Visteon and your BMS business there. Thanks.

No, great question. And, Mark, what I would say is Visteon is one of the few suppliers, if not maybe the only supplier of BMS that actually has a BMS design that is agnostic to the form factor or to the chemistry of the battery cell. Now this is something that needs to be understood carefully because most BMS systems are designed to work with a specific cell chemistry and we took a platform approach. This is part of what we do here for all of the product lines, and that platform approach meant that we had to design our BMS to be able to work with different form factors, different chemistries of the cell, and, therefore, it requires no change on our part to support this transition or, eventually, for example, they were to go with, say, solid-state batteries, it would still allow them to go through that transition without needing a change with the BMS. So that's a unique and key differentiator that we offer to our customers.

Thank you.

Thank you.

Our next question comes from the line of Colin Langan with Wells Fargo. Your line is open.

Hi, everyone. I'm stepping in for Colin. My first question is about the restructuring. You have been one of the most effective suppliers in restructuring over the past decade. Can you provide more details about the actions you've taken and possibly the savings you anticipate?

Yes, good morning. I appreciate the question. Looking at our operations, we have a solid presence but are always seeking ways to improve. With the rapid technological advancements, we need to realign our resources to better serve our businesses. The restructuring plan we implemented in September is designed to address this. It serves not only as a cost-saving measure but also as a means to rebalance our resources. For instance, we previously mentioned some restructuring in China, and now we are redirecting some funds to other regions, such as the rest of Asia, where we aim to expand our two-wheeler offerings and cater to specific customers in Japan. Therefore, it's equally about managing costs and rebalancing our resources.

Great. Thank you. And my second question, you guys called out some potential strength in Q4 in North America. My question is the D3 of their inventory is rather elevated. Do you guys have any downside risk to D3 production in Q4 factored into your guidance?

Yes, we have good visibility for the remainder of the quarter. I would say everything is largely accounted for, unless something significantly unexpected occurs in the next few weeks, which we do not anticipate. So the short answer is yes, it is accounted for.

Great. And then just maybe one last one. On the share repurchases, I think you've done $20 million year-to-date versus $76 million last year at this point. Do you expect to see a rather dramatic pickup in Q4?

We have generated a strong cash flow this year and have focused on share repurchases over the last 18 months. This quarter, we are concentrating on M&A. Our goal is to maintain a balanced approach to capital allocation. From our $12 million share repurchase authorization last year, we have purchased $126 million in shares so far. We have additional capacity, and we are committed to continuing share repurchases moving forward.

Great. Thank you for taking my questions.

Thank you.

Our next question comes from the line of James Picariello with BNP Paribas. Your line is open.

Hi, everyone. Can you provide some insight into what Visteon is observing in the competitive landscape for SmartCore? It appears that an increasing number of Tier 2 and 3 suppliers are competing for the cockpit domain controller as OEMs streamline their vehicle architecture. How critical is it for Visteon to secure this hardware related to the domain controller, and could you clarify the relationship between SmartCore and your digital instrument clusters business? Is there a situation where both could be competing against each other? Thank you.

Yes, that's a good question. I want to reiterate my earlier comments about how we view market segmentation in relation to technology. We often perceive these as zero-sum scenarios, but in reality, technology tends to start at the higher end of the market and gradually move down to the mass market. The current landscape is quite varied. Domain controllers are particularly beneficial at the mid to upper market levels because they provide greater processing power, enabling more software-defined features within the vehicle, especially in the cockpit. As previously mentioned, AI is beginning to influence this area, leading to additional segmentation within cockpit domain controllers, distinguishing between AI-capable systems and standard cockpit controllers, which still offer significantly higher computing power than separate digital clusters and infotainment systems. Considering this three-tier approach, we are observing growth across all segments of this product. It is certainly not a zero-sum game. Moreover, the technological complexity is growing rapidly. While we may refer to it as simply hardware capabilities, it draws a substantial amount of software at every level. If your platform doesn't already encompass a complete range of capabilities, integrating various third-party technologies can become extremely challenging. That's why, despite the considerable investments OEMs have made to bring these capabilities in-house, success has been limited due to the absence of a robust platform. I won't discuss specific emerging competitors, but I will say that we don't see many new entrants to the market; the competition remains largely the same. Given this situation, executing as a singular supplier is becoming more complex. We anticipate increased collaboration among tier 1 suppliers, OEMs, and technology partners, particularly those focused on software solutions, which will be critical for higher-end market segments. For the mid-tier and lower segments, we expect more of the status quo to prevail.

Yes, that's very helpful. I appreciate it. I would like to follow up and apologize if I missed this, but can you provide any details on the German acquisition you made for about $50 million, which is half of the intended target of $100 million for the bolt-on pipeline? What are the benefits of that business? Additionally, in light of not pursuing the other $50 million for M&A, should we expect buybacks or returns? Thank you.

Yes. Let me address that first and then I'll also invite Jerome to talk about the buybacks in more detail. We see that the last five years have focused on digitalization and connected cars, while we believe the next five years will be driven by software-defined and AI-defined vehicles. Our strategy is to lead through technology and provide the essential capabilities to build these platforms. Without those capabilities, catching up is not feasible, and this trend is accelerating rather than stabilizing or slowing down. We continuously evaluate whether to make or buy various technologies, and we primarily develop a lot in-house. For instance, we recently launched our vision-based technology for integrating multiple cameras. We are among the few capable of doing this even at the market's entry price point. This was achieved internally. At the same time, we explore opportunities to acquire specific capabilities to enhance our technology offerings, such as the recent purchase of a small German technology company specializing in connectivity and e-mobility technology. They are currently collaborating with German OEMs on their technology development needs and possess significant expertise in that field. This acquisition strengthens our capabilities and addresses potential gaps we may have. Additionally, it allows us to engage in service collaborations with OEMs as they navigate their future plans beyond the current definitions for next-generation cockpits. We are defining what we refer to as outsourced R&D services, which we see as a promising area for growth opportunities for Visteon.

Maybe, Sachin, just to comment on the share repurchases versus M&A, we want to keep it very balanced overall and we'll continue to look at acquisitions. But in the short term with the cash that we've generated, we should be able to do both, continue to look at acquisitions while doing some share repurchases.

Our next question comes from the line of Edison Yu with Deutsche Bank. Your line is open. We'll move on to the next caller. Next question comes from Shreyas Patil with Wolfe Research. Your line is open.

Hi, thank you for taking my question. I wanted to follow up on your comments regarding displays. You mentioned that in the next couple of years, you expect this segment to grow to a size comparable to your clusters business, which would represent significant growth. How would you describe your current market position in displays, and could you provide insight into the margin profile in this business? Is it roughly in line with the corporate average, around 14% to 15% gross margin?

Yes, I would answer that first. Absolutely. I think the margins there look very good. I view our displays differently from some other products because they have lower software content but include many other value additions that drive margins. What we're experiencing is that the value of the displays we provide, particularly for the premium and high-end market, is significantly higher than the average selling price of a digital cluster. This is what's going to contribute to a rapid growth in our displays revenue. It partially depends on our customers' success with launching and producing electric vehicles. As I've mentioned before, we believe that beginning in '26 and '27, the increasing state and federal emissions mandates in the U.S. and Europe will drive more sales of those vehicles, which will, in turn, increase demand for our content. We have a significant number of new product launches related to displays, the value is higher, and we are optimistic about the growth prospects in that area.

Okay, great. And then wanted to just touch a little bit on the topic that came up earlier around the competitive landscape, broadly maybe focusing on China. In particular, we do see several cockpit electronics players in that market. In areas like displays, clusters, cockpit domain controllers, they seem to be pricing their products quite competitively while still generating decent gross margins and growing volume. I'm curious what you're seeing from a competitive landscape in China. And do you see risks or are you seeing any expansion of those players into markets outside of China?

Yes. Let's first discuss what is happening in China. We have been disciplined in how we approach the opportunities there. The rapid pace of technology adoption means that OEMs often replace electronics faster than is beneficial for business returns. While margins may appear favorable on paper, the frequent changes are not enhancing profitability for most suppliers. Many of them are struggling to be profitable enough. Additionally, we believe our cost structure is competitive with anyone in the market. We have not found ourselves at a disadvantage regarding costs, although pricing is a separate issue. Regarding suppliers expanding outside of China, we will naturally see some as the Chinese OEMs begin exporting more. Currently, 20% of vehicles produced in China are exported. We already have a strong presence, which is actually one of our selling points to Chinese domestic OEMs as a partner for their business outside of China. We do not anticipate any significant changes in our competitive positioning with current competitors outside of China. Ultimately, we need to rely on our own competitive strengths, which we feel confident about.

This concludes our earnings call for the third quarter of 2024. Thank you for participating. You may now disconnect.