Good morning. I'm Bill Robertson, Vice President of Finance for Visteon. Welcome to our Earnings Call for the First Quarter of 2018. 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 further details. Presentation materials for today's call were posted on the Investors section of Visteon's website this morning. Please visit www.visteon.com/earnings to download the material if you have not already done so. Our Form 10-Q was filed earlier this morning with the news release. Joining us today are Sachin Lawande, President and Chief Executive Officer; and Christian Garcia, Executive 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 and Christian's remarks. Please limit your questions to one question and one follow-up. Again, thank you for joining us. Now, I will turn it over to Sachin.

Thank you, Bill, and good morning, everyone. On Page 2, we summarize our highlights for the first quarter of 2018. We delivered a solid quarter with $814 million in sales and a 12.8% adjusted EBITDA margin. Both sales and adjusted EBITDA were up from prior year and recorded our 13th straight quarter of year-over-year adjusted EBITDA margin growth. The big story for Visteon this quarter has been our SmartCore business, where we have several significant achievements in the quarter. We launched the industry’s first cockpit domain controller based on SmartCore technology in the latest Mercedes-Benz A-Class model, which is now available in the market. And SmartCore technology won the prestigious Automotive News PACE Award for innovation. In addition, Geely the fastest growing automaker in China has selected SmartCore technology to drive all cockpit electronics functions in their new all electric vehicle platform, which will launch starting 2020. This is a sizable amount of new business as all Geely electric vehicles will be based on this new platform and where Visteon is the single supplier of all cockpit electronics. Moving to other highlights in the quarter, our performance in China was very strong with sales increasing 24% year-over-year. And we continued our strong performance with respect to new business wins by winning $1.6 billion of new business in the first quarter. Our order backlog now stands at over $20 billion, putting us in a good position to achieve our long-term sales targets for the business. Overall, it was a good start to 2018. Moving to Page 3. On a year-over-year basis, vehicle production in Visteon's primary markets were down by about 3% with global vehicle production decreasing by about 1%. Despite the vehicle production levels, we generated solid financial results across several metrics in the quarter. As noted earlier, we achieved…

Thank you, Sachin, and good morning everyone. On Page 10, we present our key financial results for the first quarter of 2018 versus the comparable period in 2017. Sales of $814 million in the first quarter increased slightly as favorable currency and that new business more than offset lower production volumes specifically in North America. Adjusted EBITDA was $104 million representing a 3% increase from first quarter 2017. Adjusted EBITDA margin was 12.8%, 30 basis points higher than prior year levels and largely reflects operating efficiencies across our organization and favorable currency. Since 2018, we've had 13 consecutive year-over-year quarterly improvements on this metric. Adjusted free cash flow was $48 million in the quarter, $79 million higher than last year due to strong receivable performance. I will provide more detail on the first quarter figures on the following pages. Turning to Page 11, we provide sales and adjusted EBITDA for the first quarter of 2018 versus last year. Sales for the quarter were $814 million about 1% higher than 2017 despite lower overall global volumes. Regionally the year-over-year changes were mixed sales increased in Asia were flat in Europe and declined in the Americas. In Asia, particularly in China new product launches drove an increase in sales despite China production volumes decreasing by roughly 3% year-over-year. As Sachin pointed out we continue to see our sales outpaced to underlying production volume in that market and expect that our China domestic revenues will grow by double-digits for the full-year of 2018. In the Americas sale decreased from prior year levels reflecting lower production volumes in North America which declined by approximately 3%. Additionally, some of our key customers had declined in the 5% to 6% range in the quarter of they’re adjusted their production to manage their inventory levels. These production…

[Operator Instructions] Your first question is from the line of David Leiker with Robert W. Baird.

Hi, good morning. This is Joe Vruwink for David.

Hey, Joe.

Clearly a lot of traction on SmartCore, so I wanted to start there, Sachin, I think at the beginning of the year, you mentioned $3.5 billion pipeline. Is that bigger today and then what sorts of win rate do you think is achievable of that pipeline?

Hi, Joe. Yes that the pipeline for SmartCore has improved since the beginning of the year. We feel that with SmartCore, we’re really evolved from the technology development phase with the lead customer in this case Daimler, who have broader market development phase and this year it seems to be coinciding with the broader industry shift towards cockpit domain controllers. So the pipeline as we stand today as I mentioned earlier is about 20% of our total opportunity pipeline and it appears to be growing. And what's interesting is that this interest that we see in customers cuts across all regions as well as in a vehicle segments luxury all the way to mass market. So it's a very, very significant change since the last time we discussed and the shift is more pronounced. As you know, we are the leaders in this technology not only have we now launched the very first cockpit domain controller solution in the industry, but we're also working with multiple customers on multiple programs. So we have a very good depth of understanding and expertise in this solution and technology, which I'm confident, will translate into more wins with customers. So I'm very optimistic about this year in particular and as well going forward with respect to our opportunities with SmartCore.

And then stepping back a bit and thinking about your win rates, so you are running ahead of what you assume would be needed to reach the $4.7 billion revenue targets. What is contributing to that outperformance, so you’ve alluded to ECU consolidation is slower to start, but that seems to be picking up. Your penetration of Japanese auto makers and another win there this quarter that would seem to be an upside driver. Can you maybe just walk through some of the biggest variables that have allowed you to track ahead of your new business win targets?

Sure. As you may remember Joe, about two years ago we said that we are seeing a big sort of shift in terms of moving away from analog or hybrid clusters to all digital, which is part of the overall digitization of the cockpit that we see as one of the bigger trends in the industry. So that coupled with the ECU consolidation trend are the main drivers I would say that have contributed to our success. I should also point out the shift in infotainment, right. We mentioned that earlier as well where traditional infotainment systems which had embedded applications particularly navigation are giving way to display audio systems. And in display audio on account of trend in traditional audio products plus acquisition of AllGo systems which brought in our own capabilities of internal in-house capability I should say in CarPlay and Android Auto are really positioning us well in all the key trends that we see occur in cockpit electronics. So in short, it is clusters moving to digital from analog and hybrid, infotainment shifting towards display audio driven off of smartphones and then now in a bigger way sort of movement towards integrated consolidated cockpit domain controllers.

Okay. Great. Thank you.

Your next question is from the line of David Lim with Wells Fargo Securities.

Hi. Good morning, everyone. Quickly, who are you seeing from a bid standpoint when you guys are bidding for like SmartCore and Phoenix, I mean is it the usual suspects? And then can you give us an update on like the Phoenix win situation? And then I have a follow-up.

Sure. David, yes, I think that the competitors that we see are still the traditional set of automotive suppliers that we have always seen in infotainment and in instrument clusters. As we may have mentioned sometime in the past that status is not the same set of competitors. They are somewhat exclusive. We see a different set of competitors in infotainment opportunities versus clusters. As I've said this before, we had Visteon's want to be the one constant competitor that all of the other see and that's on account of the breadth of product portfolio that we have, the capabilities that we bring from instrument clusters to infotainment in ahead of displays telematics, and now integration of these into cockpit domain controllers. So that's the first answer to your question. When it comes to infotainment, we are continuing to see interest in standalone infotainment opportunities, display audio opportunities and here as you know we have our Phoenix product but we have also been investing in developing capabilities and Android based display audio systems. We believe that the market will not go strictly one way or the other. Some OEMs will go for Android based infotainment and others will want to stay away on account of several reasons which we don't need to go into detail here. But what we want to be as Visteon is to be agnostic to our OEM customer’s preferences. So we want to be able to offer both a state-of-the-art connected infotainment experience whether you go with that HTML5 in Phoenix all with Android and we're seeing a lot of opportunities in both those areas. The other thing I would say is that every SmartCore opportunity that we have also represents and infotainment opportunity. Because SmartCore integrated the bundle offering as you know it integrates instrument cluster, infotainment besides other features in the cockpit. So that's also another opportunity for us to grow our market share infotainment and with a really good offering and in Phoenix and now with our capabilities with Android it really puts us in a great position to grow our market share and I expect to be able to talk to you more about our infotainment business wins standalone as well as we go further in the rest of the year.

That’s very helpful. And my final question is when it comes to the Geely electric vehicle. Thus that platform also include hybrid by any chance? Thank you.

No. So the Geely platform it's an all digital cluster. It's a very high level of content in the cluster itself, but it's also embedded and connected infotainment as one would understand it, cloud services that are very important in China and integration of the head display. So it's one of the more I would say capable more advanced cockpit domain controller that we will be working on very excited about that win we've talked about Geely here on the call it's one of the fastest growing OEMs in China and I predict that on the account of this win as the rest of the market catches up the pit that will drive further interest in SmartCore in that region.

Your next question is from David Tamberrino with Goldman Sachs.

Hi, this is Tim O'Brien on for David. I just want to dig in more to your comments on the Geely SmartCore win. I guess how do you guys thinking about the eventual lifecycle of that products, especially with OEMs going through electric architectures redesign that more centralize compute and just had to that hit with a particular one.

Yes, absolutely Tim, so this win again to reiterate is for a new all electric vehicle platform at Geely it's called the PMA. This platform is the basis of Geely's electric vehicles. The first vehicle the launching 2020 and there are several vehicles planned for launch after that timeframe. As you may know China as the government has mandated that by 2025, 20% of all new vehicles sold must be new energy vehicles. In tractors what that amounts to is that they're likely going to battery electric vehicles. Now when you think about all electric vehicles extremely important that the platform besides being all electric from a power can be a point also reduce weight and power consumption. And that's exactly what a technology like SmartCore is targeted to achieve. As integration and a bundling architecture that brings instrument cluster infotainment head of displays and other technologies into a single chip and a single ECU it offers the best sort value in terms of being able to drive weight and power consumption down while delivering very advanced capabilities. So we believe that this solution will be the mainstream and the mainstay of all new platforms that are targeted for the electric vehicle markets are starting in China but we expect that to also be the case in other regions as they start to pick up on the lead that the China seems to currently have.

Thank you very much for the color. If I can just have one follow-up to – do you guys have an update on kind of customer interest you're seeing in DriveCore and how you thinking about monetizing the platform?

Absolutely, so first of all in a DriveCore is our autonomous driving technology platform that's designed for the Level 3 and Level 4 capable autonomous solutions and we talked about this – on the last call we have a lead customer for DriveCore in JAC or GAC in China. JAC is very similar to Geely. It's a very fast growing China domestic OEM. I believe last year, their growth rates in the 40% range. So we're very excited first of all to be partnering with an OEM that is very well established and fast growing. There are two components to our engagement with JAC. The first phase involves developing Level 3 technology for the China market. And the timeframe for that is mid next year, we should be in a position to go into field tests with the technology. Following that, we have plans to introduce that technology, that solution into vehicles from JAC. The first launch of which is planned in later half of 2020. And as – although these are still early days in the development of the technology, we're making good progress on account of the roughly two years of investment, we have made into the DriveCore solution and we expect by the end of this year to be more or less feature complete with respect to that first launch, which would be slated for 2020. So, so far I would say, we are on track and we'll provide you with more updates throughout the rest of the year as we made further progress.

Your next question is from the line of Steven Fox with Cross Research.

Thanks. Good morning. I was wondering if you could just expand a little bit, you mentioned on the Alibaba relationship. Can you talk about what capabilities you're bringing there and how maybe over time you take that experience and broaden it out across a market? And then I had a quick follow-up.

Right, so with respect to Alibaba, as you may know China has a very connected cloud ecosystem, where Alibaba, Baidu and Tencent offer multiple features or applications to the cloud, which are highly used by consumers across their various activities and lifestyles. So infotainment in China has really started to integrate these capabilities. This specific opportunity that we discussed the win, it’s for a Japanese OEM that had an existing infotainment system and embedded infotainment system that did not have this capability. We in China through our joint venture partners have very good relations with all three Baidu, Alibaba and Tencent and this particular case, we are working with Alibaba to bring that cloud content into the car in that existing infotainment system from a competitor. This as a couple of advantages, we are able to recognize revenue earlier than would normally be the case. This is a current system. The vehicle is already launched in the market and there is a lot of competitive pressure on the OEM to be able to offer such services to their consumers. It also means that we can through integration of this capabilities into our infotainment systems as well as on top of SmartCore offer a more integrated further cost reduce solution to this OEM and others and that puts us in a very good position from a comparatively point in the China market. The Geely solution that we talked about earlier will also integrate a similar cloud services solution that will bring all three Baidu, Alibaba and Tencent through a single log-on ID and have access to all of that content in the vehicle. So this gives you a sense of where we are headed with cloud connectivity inside the vehicle in China. We expect that this will also be the case in other regions in the world as Alibaba, Baidu and Tencent start to grow and offer the services outside of China. We expect to be able to carry our solution together with them in those regions.

Great. That's really helpful. And then just really quickly, any color you can provide on how the sort of inventory correction in some of your key customers plays out relative to second quarter sales? Is it going to be a challenge for sales to be up versus Q1? Any description on that in terms of the back inning waiting for a year now?

This is Christian. So let me give you a little bit of color around the inventory levels that you’ve seen. So if you look at the data, you would see that they supply for the entire industry went down by a four days on a year-on-year basis to 68 days. However, if you look at the OEMs, there's a mix change depending on the vehicle manufacture. There have been certain OEMs to drop by 7 days another that actually drop – they supplied as much as 26 days. So we think this could have been a factor in why production volumes were down in North America in the first quarter. So if you look at the production volumes in the first quarter of minus 3% for North America, IHS is projecting a 2% increase over last year for the rest of the year, which would be supportive in painting a better picture compared to the first quarter for us.

Great. Thank you so much.

Your next question is from the line of Joseph Spak with RBC Capital Markets.

Hi. This is Joe on for Joe Spak. Can you remind us of your Ford passenger car exposure as a percent of sales? And you know, how does that recent announcement that they just made affect your backlog? And maybe even more importantly on long-term targets.

Yes. Sure. So Ford cars North America today represent about 3% of our revenue. And as we look at our mix of customers and the growth that we're experiencing in our sales which is mostly outside of North America, this will be even lesser by 2020 timeframe. And the other point I would like to mention here is that we are also well represented and the trucks and SUVs and also in the cars that will continue with Ford. And as the content on trucks and SUVs tend to be higher in value than in cars, the mix shift towards trucks and SUVs will actually be beneficial to Visteon. So in short, as we see this play out over the next couple of years, I don't expect much of an impact if anything this might even be a positive in terms of the mix shift and the higher value content in trucks and SUVs, so we think that we should be in a position to mitigate whatever impact might be the case from the announcements.

Okay. That's a good insight. And then moving more towards the margin, if you talk a little bit about what drove cost performance in light of some later sales? And I guess specifically if you talk a little bit about autonomous spend in the quarter and how we should think about cadence throughout the year?

Right. So let me go and talk about the cost performance. We are very happy that we were able to do positive business equation which is all the cost savings that we've gotten for all across our organization in excess of pricing. The opportunities that we continue to see is actually also in the material savings, so if you think about this that we're now fully leveraging the new business wins that we're getting to extract savings from our supply base by using better tools and methodologies, and we think that will continue going forward. Now the other question that you had could you repeat that.

Yes, sure. Can you talk a little about your autonomous R&D spend?

Okay. All right. Our autonomous spend on a year-on-year basis actually doubled, but you have to remember we started this investment very early in 2017, so it's coming from a small base. And we still believe at this point in time given the projections that looking at for the rest of the year that we will hit the $14 million, $15 million that we said we will be spending for this year.

Okay. Great. Thank you.

Your next question is from Colin Langan with UBS Securities.

It is [indiscernible] on for Colin. Just wanted to dig into that decision to software Android-based infotainment. Is that something that you didn’t response to customer requests kind of any color you give there?

Yes, so as you may be a very Android release O, Google released several features that made Android a solution that could be integrated into infotainment and it had the features and the capabilities that OEM's are typically requesting such as the flexibility to redefine the user interface make that that very specific to the OEM and certain deeper features within the technology that is required for an infotainment system versus the smartphones. So that that was the trigger that generated interest in the industry. The main benefit of using something like Android would be the ability to access apps that are already developed. The variability of engineering talent and resources that are already familiar with the technology which are all very important considerations. So we did start to see interest from OEMs to go towards Android. And again we were anticipating this we have been having discussions for several quarters now with our customers and one of the things that one of the reasons why we acquired all go was besides their expertise in CarPlay and Android Auto. They were also Google's partner as one of three in the word that they work with that validates Android implementations. So this was a reason why we acquired them that brought in a lot of depth in Android capabilities that were important for us. Since then we have continued to build our Android based solution at CS earlier this year in Las Vegas. We demonstrated our SmartCore solution that indicated Android and that that was one of the triggers also for our customers the OEM customers to want to talk to us about bringing Android based infotainment for the future needs are in some cases integrated the SmartCore.

Okay. Great. Thanks so how does that affect the Phoenix strategy then are you going to try and implement similar competing features to make it more appealing to OEMs?

Yes, yes, so good question. So Phoenix is based on the HTML5 and as I mentioned earlier not all OEMs have indicated interest in going towards Android and there are good reasons for them to do so. There are certain are contractual requirements that we put it that way between Google and the OEM's that not all OEMs are willing to accept. So we need to have a ability to support the needs of these customers for Android in some cases and without Android because we don't want to miss out on those opportunities. So we have Phoenix for those that will not be willing to go towards an Android to solution and we have our Android based system for those that will not care so much about those restrictions and will still want a Android base infotainment. That puts us in a great position because we're not here to pick winners and we will be here to serve the needs of the market and with this two solutions in our stable. It really makes us total agonistic to it and put us in a good position to address all customers.

Great. Thank you.

Your next question is from Brian Johnson with Barclays.

Yes, hi, good morning. This is Steven Hempel on for Brian. Just one follow-up on the question around Ford pass car exposure in North America. That it is a little bit – 3%, which is good, but in terms of kind of the follow on business that the Ford is talking about replacing that capacity with – as Visteon secured the replacement business or similar business on those new trucks yet or you still on the bidding face?

Yes, the short answer Steven is, yes. We have won the replacement business. So we are on the crossover that was mentioned. We are also on the electric vehicle that was mentioned in the press release. So the short answer is, yes. We continue to work very closely with Ford as part of their supplier base here and we expect to continue to do well with them.

Good. Okay, it’s good to hear. And then just in terms of kind of global architectures, as Ford mentioned in the callyesterday that they’re kind of talking about developing global architectures, but then basically customers – vehicles for regions based on specific kind of consumer demand? Imagine just given the SmartCore architecture in the Phoenix software kind of layer. It seems like that would be a right opportunity for OEMs kind of customized based on regional specific demand. Does that really apply here and I guess how do we kind of think about that for now the broader market as well?

Yes, so we're seeing SmartCore decisions tend to become very core to the architecture of the vehicle and the customization comes on top of that in terms of different HMIs display sizes et cetera. So it is very complementary, SmartCore based electrical architecture for the cockpit compliments underlying vehicle network evolution that they have in mind as they move forward, especially for electric because due to the reasons that I mentioned earlier. So we think that SmartCore works very well with the global architecture in the move. As we discussed earlier, the Daimler engagement that we have is for a global cross vehicle solution. So we’re effectively developing one solution that cuts across multiple vehicle models, across multiple regions. As you can imagine, the user interfaces were this different vehicles are different both in terms of the vehicle model lineup as well as the regional requirements that are different. So that's a great illustration of how this technology is able to support the global platform evolution of the industry as a whole. And this is something that we think from our point [indiscernible] it really allows us to leverage our fixed costs better. Our value of wins on an average has gone up. The value of this new launches that we have, they have gone up very well as well in the last two to three years, and we expect that to continue. This is extremely important for us as we go down the path here of increasing our margins and this is right in line with what we were expecting.

Got it, okay. That’s helpful. And then just one quick follow-up if I could, maybe for Christian, in terms of the NOLs that was a fairly sizable kind of benefit to the cash tax rate historically. I guess just could you just remind us suppose the U.S. tax reform how we should be thinking about those NOL balances?

Yes, so the NOL balances, obviously as you know we had $1.8 billion. We’ve got reduced $1.5 billion for the tax rates, but evaluation and adjustment that we had also had reduced. So there is no impact and that impact to the balance sheet, so we still have $1.5 billion of NOIs and we could use up to $120 million every year for that.

Your next question is from Anthony Deem with Longbow Research.

Hi, good morning, gentlemen.

Good morning.

Good morning.

On the ECU consolidation, trend circling back to it, I’m curious on your capabilities versus some of the emerging competition and what I am wondering is, is that the bundling of greater components that might be setting Visteon apart and, is there a component capacity limit on maybe what smart work in integrate meaning, can you integrate more than three components [indiscernible] displays, cluster, telematics, HVAC and more or as the capacity more limited based on today’s generation of the product?

Right, so let me try to address this in two parts. So first what’s that Visteon apart from the competition said of today? As I may have mentioned in the past, we see competitors that have capabilities in specific areas of cockpit electronics. For example, we see a different set typically with instrument clusters from infotainment to hard and so on. So as SmartCore of cockpit domain controller tends to be a bundling solution that bundles all these various capabilities. One needs to have a really good, but that of product portfolio in the cockpit. So that narrows the set of competitors down first quite a bit. Now in terms of what is the limiting factor here in terms of how many more features we can bundle with SmartCore that's that question is a good one, but it fairly related to the underlying capabilities of the silicon and software. And this is an evolving picture. So when we started out with this approach say four years ago, the silicon capabilities that are available to us could integrate a couple of these features or systems, instrument cluster and infotainment as an example. So what were the limiting things then it was the graphics capability to be able to drive to displays simultaneously off of a single chip at the required level of performance. Now as we look at what's available to us today and in the 2019, 2020 timeframe that silicon capability has gone up by approximately 10 times. So that opens up a lot more capabilities. So now we're integrating ahead of displays which you can imagine is yet another display that needs to be driven on top of the cluster and infotainment. And as we look forward here, we anticipate more safety related capabilities, ADAS capabilities more within the cabin that would continue to be – getting integrated. I mentioned on the call that Euro NCAP has mandated for 2022 for Five Star safety rating the need for gravel monitoring. Now that is an incremental cost to the OEMs that will not be passed easily down to the consumer. We see that as an opportunity to integrate into SmartCore offered this capability without necessarily adding a whole lot of new cost. So that's the kind of evolution that we expect to see SmartCore continue that over the next couple of years. And I'm sure there will be more opportunities as we go forward.

Very good. That's helpful. I’m sorry if I missed this earlier. How much was the currency benefit on EBITDA margins?

It’s in our deck. It’s $9 million.

Thank you very much. And then the year has started off very solid in terms of EBITDA margins despite a challenging environment this quarter. And I’m just sort of wondering, what risk do you see for the remainder of the year and maybe some of the conservatism in your forecast related to some of the regional performance highlights you mentioned where the Americas maybe weaker than expected, and is there any regional differences in margins that you can highlight? Thank you.

Right. So first of all there is seasonality in the business. Q1 and Q4 are highest both on the revenue side as well as EBITDA margins, and when you look at it there are a sweep pointed out, the regional mix changes. So Asia and Europe are doing quite well are going to be growing over and above the production volume growth for those regions. We see headwinds in North Americas. And how it all plays out? We will provide you with updates every quarter. End of Q&A

Okay. Thank you, Sachin, and thank you, Christian, and thank you to all for joining us today. I will be available for phone calls later this afternoon and tomorrow, so please feel free to reach out. And with that, this concludes the Visteon’s first quarter earnings call.

Thank you for your participation. You may now disconnect.