Good morning. I’m Kris Doyle, Director of Investor Relations for Visteon. Welcome to our Earnings Call for the Fourth Quarter and Full Year 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 would like to remind you this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future results and conditions, but rather are subject to various factors, risks and uncertainties that could cause our actual results to differ materially from those expressed in these statements. Please refer to the page entitled Forward-Looking Information for further details. Presentation materials for today’s call were posted on the Investors section of Visteon’s new 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 Christian Garcia, Executive Vice President and Chief Financial Officer. We have scheduled the call for one hour, and we will 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, Chris, and good morning, everyone. I will start by providing an overview of our 2018 full year results on page two. On subsequent pages, I will discuss our key achievements in the year and provide our perspective on the outlook for vehicle production for 2019. Christian will then take you through our 2018 financial results in more detail. 2018 was a challenging year due to a weak market, especially in the second half, which reduced vehicle production volume at our customers. Besides the sharp drop in vehicle sales and production in China, our key customers in North America and Europe were impacted by the move away from sedans in the U.S. and the troubles with diesel and WLTP in Europe. Despite the challenging market environment, we delivered sales, profitability and free cash flow at the upper end of our latest guidance. Our technology leadership in the cockpit was reinforced with the launch of the first cockpit domain controller in the industry with Daimler in early 2018. We extended our technology portfolio with the introduction of an android based infotainment system and the scalable autonomous driving controller designed for level two in higher systems. The strength of our technology portfolio for the cockpit resulted in $6.9 billion of new business awards for the year, almost equal to prior year. Nearly three-fourth of these awards are for digital cluster and infotainment systems, which together with displays are becoming core products in our more streamlined product portfolio. We are continuing to diversify our customer base, and in 2018 I’m pleased to report that we added five new customers to our portfolio. China continues to be a bright spot for the company with sales outperforming the market by 10 percentage points. We launched 34 new products in China in 2018, which will…

Thank you, Sachin and good morning, everyone. On page 11, we present our key financial results for 2018 versus the comparable periods in 2017. Sales of approximately $2.98 billion for the full year 2018 decreased $162 million compared to last year due to lower customer production volumes, impact of pricing net of design changes, partially offset by net new launches and favorable impact of currency. Adjusted EBITDA was $330 million, representing a $40 million decrease from 2017 due to the impact of production volumes and product mix, partially offset by continued operating efficiencies across our organization and the impact of currency. Adjusted free cash flow was positive $107 million in 2018 and positive $72 million for the fourth quarter. Q4 cash flows benefited from favorable timing of trade working capital and higher engineering recoveries. I will provide more detail on the following pages. Turning to page 12, we provide sales and adjusted EBITDA for the full year 2018 versus 2017. Sales were negatively impacted by the challenging production environment with several key customers underperforming the global market average. However, for the full year of 2018, I am happy to share that our product launches exceeded program roll-offs. Besides the 34 product launches in China as Sachin mentioned, our 2018 new product launches include the industry's first cockpit domain controller with Daimler in select markets, which is scheduled to expand over the next several years. We also launched a new display offering with BMW rolling out in the North America market and an infotainment program with smartphone integration with Volkswagen, to name just a few. Offsetting revenues from new business, our roll-offs which come from two areas, programs that have naturally come to the end of their production schedule and specific actions made by certain OEMs. As an example, as we…

[Operator Instructions] Your first question comes from Anthony Deem of Longbow.

Hi, good morning.

Good morning.

So a question, do you see Visteon as a true outlier in the industry? When it comes to the human machine interface, your products are really interacting with the driver most. I know you're working with GAC launching level two system late next year and level four actively in China with some of your partners. But I'm wondering ultimately where does Visteon want to fit drive core in this market in terms of partial or full automation? And just wondering if you see your products are having an advantage in any particular level, because there just seems to be a growing emphasis in level two plus reduced on level four. And clearly there are some systems expertise or product differentiation here that this can be probably exploit. And ultimately help deliver greater results for the backlog maybe as soon as next year. So just kind of wondering if I can get some thoughts there?

Absolutely. So the way we look at the more automated driving is that if you look at what has happened in the industry in 2018, there is a better realization of when level four plus -- by that I mean four and five solutions from a technology viewpoint might be ready for deployment. And that timeline has been pushed out on account of a better understanding of some of the technical challenges. At the same time, there has been more interest in the industry for what you can call as level two plus systems, which effectively bring the benefits of ADAS from not just at the lower speeds at which they are mostly effective today to even highway speeds. So our strategy has been to really focus our drive core solution on the highway level speeds, bringing the benefits of advanced safety to that application. Now that means that we would also be implement all of the lower speed suburban ADAS capabilities as well. Now the way we see this interact with the HMI is that there is a very close interaction that needs to happen between the more automated driving system and the HMI. The HMI of the past really had focused on enabling the driver to understand the vehicle health and the driving dynamics. But now as you bring more of this ADAS and more automated driving capabilities, that HMI has to extend itself and also bring in the outside perspective like what was happening outside of the vehicle. So we think with our HMI competence and now getting into this level two plus solutions, we are in a great position to offer a completely integrated experience to the drivers. So we're very positive, very optimistic about what we think would be our opportunities in this more automated driving business over and beyond our traditional HMI business.

Very good, thank you. And just my one follow up for Christian. I apologize if I missed this, but could you talk about any discrete tax items in the quarter effective fourth quarter?

I'm sorry, Anthony. Could you repeat that question?

Yes, any discrete tax items in the fourth quarter that you can call out?

Yes, we had obviously if you look at our EPR for the quarter it's about 4%. We had favorable audit outcomes particularly in Asia if you back that out it would have in the 20% to 25% as we've guided. And so in 2019, the way we're modeling the business is say an ETR, an effective tax rate in the mid-20s.

Very good. Thank you.

Your next question comes from Ryan Brinkman of J.P. Morgan.

Great. Thanks for taking my question. Can you remind us of your underlying revenue exposure to demand in China? As I think you saw before the highlight that a portion of your reported revenue in China is actually exported out of that market. And then your new launches allowed you to actually grow pretty nicely in China in 2018. What is the pace of launches look like in 2019 there? Or I guess said differently, how would you rate your ability to outgrow the China market in 2019 versus in 2018?

Right. So Ryan in terms of our exposure in China, there are really two things happening there. Our total China is about 24%, but that has two components to it, one is the domestic business that we serve the China market that's about 13% and the rest are products that we actually manufacture in China, but export it out of China.

Yes, with respect to Ryan your second part of the question. As we mentioned, we had a very good year in terms of new business wins in China. We had total wins of about $2 billion are significantly higher than the prior year. And these will -- some of these we’ll be launching in 2019. So we have a fairly healthy number of new product launches, I would say in the mid-20s in number in China for 2019. So we feel pretty good about how that should impact our revenue and market outperformance.

Okay, thanks. And then just last question, have you given any thought yet as to how Visteon might be impacted by section 232 tariffs, if they are extending from steel and aluminum to also include autos and auto parts? How helpful have the automakers been in helping you offset the impact of section 301? And how completely would you expect them to compensate the supply base for any sort of further inflation in your supply chain from any incremental tariffs?

Yes. When you look at 232 from what has been discussed so far. Clearly, we are still waiting for the details just like everyone else. But from what has been kind of talked about in the media. We believe that our exposure to the vehicles that are imported from Europe to be around about 10% of our production in Europe. So overall that amounts to between, I would say $50 million to $80 million of exposure to us on an annual basis. It's too early to say how this thing will play out and what that impact exactly might be and how the recovery discussions with the OEMs would progress. We'll keep you all informed as to how that goes in the subsequent quarters. Any additional tariffs are disruptive, we are hoping that it doesn't come through, but we'll see.

Okay, thanks.

Your next question comes from Joseph Spak of RBC Capital Markets.

Thanks for taking my question. Just maybe to follow up on tariffs. Just to be clear what is embedded in terms of 301 for China. Do you have that sort of going back to -- do you have that sort of holiday being extended or sort of going back to the higher rate?

Yes, so our forecast maybe assumes no further escalation nor a solution in terms of the trade disputes. So if it is the current state of the business, so to speak. And Joe, we are not really impacted that much by the tariffs on account of how and where we manufacture our products. We do not do any sort of cross shipments across the regions. So, so far, we are in a pretty okay shape, and if nothing changes there, we shouldn't be impacted by much.

Okay. And then just sticking in China, so Ford is obviously a key customer for you there and the -- has obviously been a difficult situation over the past year and probably in sort of the first half of this year. Well, how are you seeing that sort of play out I guess in the back half? Do you anticipate some sort of recovery to that customer? Or are you sort of straight lining the headwinds that you've experienced recently?

Right, right, and so Ford, as you pointed out was a much larger customer for us in China, in 2018, on account of the reduction that they experienced in their volumes, I would say that they are no longer probably even in the top five. So thinking about 2019 and how that might impact us, we are not necessarily assuming any recovery on their business in China, we're essentially flat lining what happened in 2018 into 2019. So if there is any recovery, that would be a good upside, but we're not counting on it.

Okay, that's helpful. Last one, I apologize if I missed this, but how are you thinking about R&D spend in 2019, verses 2018? And then, even if you could sort of maybe break that down a little bit further, like what is really sort of engineering for programs that are launching versus actual sort of true, I guess research. Because I think like if I go back to sort of CES, you talked about some initiatives in voice and ASIC. And I was wondering if some of those dollar -- spending dollars start to kick in, in 2019?

Yes, so Joe, the first thing I would say is that our engineering costs tend to be a bit lumpy based on the timing of the recoveries. And so from a quarter-over-quarter comparison viewpoint, those tend to shift around a bit. The second point is that our engineering has gone up largely on account of the higher number of customer programs that we are executing. So if you look at when we ended 2017, we had roughly about 160 customer programs in active development. We ended 2018 with that number approximating I think 200. So significant increase, and this is good because that drives our future revenue. That's the predominant portion of our engineering expense. R&D, pure R&D stuff that we talked about at CES for example, I would say is about approximately a point in terms of total revenues, it's not a significant contributor. The third thing I would mention is that, as we are undertaking a higher number of customer programs, we’re also continuously balancing our global footprint of engineering to be more efficient. And these things do take some time in terms of being able to execute and see the impact to our financials. So the actions that we have taken in 2018 and are also taking in early 2019 will have that impact appear in the second half of 2019.

So, Joe, if I can add to that, as we pointed out in the auto conferences, North America auto conferences, that our engineering spend is going to go up on a year-on-year basis, but only 5% to 6%, including all of the things that Sachin has mentioned. However, in Q1, it's probably going to be the double digit kind of growth rate against on a year-on-year basis.

Okay, thanks for all the color.

Your next question comes from Colin Langan of UBS.

Great, thanks for taking my question. It looks like your guidance is for China down or some other spires are indicating that maybe they're seeing closer to down 8 or 10. Could you give us any like sensitivity if it is coming in down double digit how we should think about that a downside risk?

Yes Colin and again I think what that reflects is really all the uncertainty that we are seeing in China, so you see this forecasts are a little bit all over the place. So our assumptions for China are a double digit decline in the first quarter, especially as the comps are challenging. First quarter last year was a significantly higher quarter. Our expectation is that from the first quarter onwards largely on account of more favorable comps the declines reduces in Q2 and then effectively flat for the second half. If you look at that structure that amounts to a decline of somewhere around say 3% to 5% in that range. Now we will have to see what transpires, this has been our expectation. But the thing I would like to mention is that our performance in China is less dependent on the underlying production volume, it is more dependent on our new product launches. So we still continue to expect a better than market performance by a double digit margin in 2019 as well.

Got it. I mean, should we think if the market comes in modest then obviously if you have a big backlog it won't matter like a 20% decremental is that typical for weakening underlying market or is that too high?

And just wanted to make sure that you are asking for China in specific or just total?

China specific.

China. So it should be in the 20% to 25% range that much like what we've experienced last year for the total company.

Okay. And in looking at slide five you have $2.3 billion in audio infotainment backlog. Is there any color on what's the net breakout? How much is sort of traditional audio, how much is advanced display in particular, how much is the Phoenix part of the business?

Right, right. So it’s virtually all of it is display audio, there's not much of audio in that if any. So the real reason why we did very well and you see the jump from the prior year is on account of the success that we've seen with android based display audio infotainment. We won several programs both standalone infotainment and also infotainment that is integrated on our smart core platform. So it's been a good year for us and I think the combination of this Linux and HTML5 in our Phoenix platform as well as this android based infotainment really gives us that breadth of offering and display audio continues to be a big sort of pool on for infotainment right now that we're seeing.

So where would Phoenix fit in within that bar -- within that bucket? Or is that in another…

Within the same bucket. So what we're seeing is some OEMs are asking for a non-android based solution. Okay. And that's where the Phoenix HTML5 is being offered. And then there are others that are more comfortable with android and so we have now the ability to offer both options.

Okay. But the majority are coming in with android?

That's correct.

Okay, got it. All right, thanks for taking my questions.

[Operator Instructions] Your next question comes from Emanuel Rosner of Deutsche Bank.

Good morning everybody.

Good morning.

So my apologies. I joined the call late. So I apologize if this has been asked before. I'm curious about how you're thinking about the cadence for revenue and margins in 2019. And more specifically, if you're expecting any sort of major differences between the back half and the first half. So on the revenue side specifically, obviously you have a lot of new business launches next year. Curious if that will also benefit revenue growth in the back half of this year. And then on the margin side, whether there's any higher exit rate towards the end of the year that would position you well for margin expansion next year?

Right, Emanuel, let me start and maybe Sachin would have additional comments. But there are really two drivers for the improved sales picture in the second half. One is the improved volumes on a year-on-year basis. As we provided that are prepared remarks, we estimate that the production volume for our key customers will be down about 3% for the year. However, as we pointed out, there is a marked difference between the two halves. We estimate that the production volumes will decline in the mid-single digits in the first half, while the second half production volumes will probably register a slight growth. Again, that's a mirror image of what we saw in 2018. The second component of the improved sales picture is the cadence of our product launches. We have the lowest number of launches in the first quarter, and then a steady number for the rest of the year. As such, the contribution from this new products would become more substantive as the year progresses. On the EBITDA side, so again the EBITDA would actually move the same way as our sales picture. Because of, again, the booth volumes as well as a product launches. In addition, the improved recoveries from engineering. So we always have the recoveries being much more weighted towards the second half of the year.

And the only thing I would add Christian is that some of the efficiency actions that we’re taking will also see more impact in the second half.

That's great bridge to I guess my follow up. So when you sort of look at your bridge between in 2017 and 2018 it is actually impressive the amount of efficiencies that were sort of unlocked, because obviously your volume mix was a negative contributor and yet on the EBITDA bridge, it's obviously positive net of efficiencies. So how should we think about that as we move into this year? What kind of contribution can you expect? How much room is there still for, efficiencies or is the margin story from here on just really moves to revenue growth and the operational leverage that comes with it?

Right, operational leverage is clearly a huge component of our business model. And so, in 2019, when you think about where -- how the sales will be impacted, as we pointed out in our prepared remarks, pricing will be down about 3%, as we talked about. We think the customer volumes will be essentially down about 3% as we said, currency would also be a little bit of a headwind, not too much. And so the net new business wins will be a huge driver for the rest of the sales picture. And as such, when you do the flow through of that, really it's going to be quite steady and the big difference as we pointed out in the North America auto show that we have an increase amount of engineering of 5% to 6%. And that's how we bridge the guidance for 2019.

Perfect, that's very helpful. And then just very finally, and again, apologies if that has been asked. But any update in terms of customer interest or activity on DriveCore?

Yes. There has been quite a bit of engagement that we've had on DriveCore. But the way, we are looking at this part of the market is that we are focused right now on developing DriveCore to offer this highway pilot capabilities. This level two plus capabilities that we are working on together with our lead customer. We expect to be in a position to have most of the technology implemented by the end of this 2019 calendar year. And we are seeing more interest in these types of level two solutions, as I mentioned earlier. And so this is something that we are very optimistic about, but in reality, I believe most of the opportunities will start to appear more in 2020 timeframe as we are able to demonstrate this functionality that we are currently developing.

Thank you very much.

This concludes our earnings call for the fourth quarter and full year 2018. Thank you everyone for participating in today's call and your ongoing interest in Visteon. If you have any follow-up questions, please contact me directly. Thank you.

This concludes Visteon's fourth quarter and full year 2018 earnings call. You may now disconnect.