Good morning. I'm Kris Doyle, Vice President of Investor Relations and FP&A. Welcome to our earnings call for the third quarter of 2025. Before we begin this morning's call, I'd like to remind you that today's presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and are subject to various risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed. Please refer to the page titled Forward-Looking Information in our earnings material for more detail. Presentation materials for today's call were posted this morning on the Investors section of Visteon's website. You can download them at investors.visteon.com if you haven't 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 scheduled the call for 1 hour, and we'll open the lines for questions after Sachin's and Jerome's prepared remarks. [Operator Instructions] Thank you again for joining us. Now I'll turn the call over to Sachin.

Thank you, Kris, and good morning, everyone. Thank you for joining our third quarter 2025 earnings call. Visteon delivered another quarter of strong operating and financial performance, demonstrating the strength of our business while continuing to execute on our long-term strategy. Sales for the third quarter were $917 million, coming in slightly below our expectations, primarily due to the impact of the unplanned production shutdown at JLR. Excluding this impact, sales were broadly in line with our forecast. We had good visibility into customer production schedules going into the quarter, and while there were some minor puts and takes across programs, they largely offset each other. Year-over-year, we continue to see strong momentum in our cockpit electronics business with solid growth in Europe and in the Americas. This was offset by lower sales in China and for BMS in the U.S. due to the anticipated headwinds from the challenging macro environment for global OEMs in China and for electric vehicles in the U.S. Adjusted EBITDA was $119 million, representing a margin of 13%, and adjusted free cash flow for the quarter was $110 million. We are maintaining our full year guidance, which Jerome will walk you through in more detail shortly. On the sales side, we're trending below the midpoint of guidance as a result of several temporary industry headwinds. Importantly, despite these headwinds, our adjusted EBITDA and free cash flow are forecasted to remain strong, supported by continued operating discipline, commercial execution and the impact of our cost reduction initiatives. From an operational viewpoint, the team delivered very well. We launched 28 new products, improved our profit margin through productivity measures and secured $1.8 billion in new business during the quarter. We continued to build momentum with our product portfolio, winning multiple large display programs and adding another high-performance…

Thank you, Sachin, and good morning, everyone. Consistent with recent quarters, we again delivered a strong operational and cost performance as well as a robust cash generation despite sales being slightly lower than originally expected. For the quarter, sales were $917 million, a 6% decline from the prior year. We continue to see strong growth in cockpit electronics across the Americas and Europe, along with higher engineering services revenue on a year-over-year basis. As expected, this was more than offset by lower battery management system sales in the Americas and reduced sales in China. However, what we did not expect was the negative impact of JLR unplanned shutdown for the entire month of September, which represented a little over a point of sales. Adjusted EBITDA for the quarter came in at $119 million underscoring our continued focus on operational execution and disciplined cost control. Adjusted EBITDA margin was 13%, benefited from our ongoing efforts in product costing and productivity. We did have net positive nonrecurring items this quarter, which contributed approximately 0.5 point to the margin. Adjusted free cash flow was $110 million, driven by a robust EBITDA performance as well as favorable timing of cash flows. During the quarter, we paid our first quarterly dividend, marking an important step in continuing to return capital to shareholders and reinforcing our commitment to a balanced capital allocation strategy. We closed the quarter with $459 million in net cash, giving us the flexibility to continue investing in the business, pursuing technology accretive acquisitions while delivering shareholder returns. Turning to Page 9. Sales for the quarter were $917 million, down $63 million year-over-year. Customer production volumes remained essentially flat, while growth versus market was negative 5% for the period. Growth over market came in below our expectations this quarter, driven by a combination…

[Operator Instructions] Your first question comes from the line of Luke Junk of Baird..

Sachin, maybe to start with the forward-looking question. You mentioned in the script, your expectation of returning to a cadence of growth in China. I'm just wondering, how should we think about that into '26, especially through the year and especially thinking about the materiality of the CDC wins into the back half of 2026.

Yes, Luke. So if you think about our business in China, right, it has, as we discussed, stabilized in Q3, and we expect that to continue into Q4, and there are launches in China in starting Q4, but also more into 2026. I think we have about 20 new model launches happening next year, but it is predominantly back half loaded, especially with those 2 high-performance compute SmartCore launches, which have also very high value. We expect to be able to outperform customer vehicle production in China next year. Now today, as we stand, I think S&P Global is forecasting customer production volume in China to be lower next year, but I believe it's still too early to call that. And I think there will be some changes. I'll no more be in China next month, and we'll have much better visibility into it. But overall, our expectations are that we would be returning to a growth over market performance back in China next year.

Got it. And then for my follow-up, just circling back to Nexperia, Jerome, I appreciate your comments on the direct impacts. What about the indirect and just latest intel on what your customers are telling you what their production-related risk might be?

Yes. Luke, I'll take this and maybe just provide some more context. Jerome already discussed a bit in his prepared remarks, but I think this is a question that might be on everyone's mind. So let me just take this opportunity and give you more context. So Nexperia is NXP standard parts division, right? It used to be part of NXP. And, therefore, in automotive, was widely used given how NXP was prevalent in automotive, got sold to Chinese investors in 2017 and then eventually, this company, Fintech Semi, acquired it in 2019. And I would say about 60% of their business is in auto, and they make very, I would say, inconsequential, but very needed components, things like transistors, MOSFETs, diodes, right? And virtually, every single automotive electronics component has one or more of these parts in use. So that's the usage situation. Now what happened was on account of this issue between Nexperia, the Chinese owners and the Dutch government and the actions that were taken on September 30 by the Dutch government, that has kind of resulted into this escalation between the governments now it's become a little more of a diplomatic role. The short of it is from October 4 onwards, supply from Nexperia China essentially stopped. And that's going into all of these automotive components that I mentioned. Now as Jerome mentioned, they've taken this -- or applied for an export permit, but I think this will require more of a government level intervention and resolution, which could happen any moment. I know that -- and this is also, I think, public information that the Commerce ministers of both sides are in talks to try to find a solution. So we're hopeful that this is imminent and gets resolved. Now specifically about the impact of…

Your next question comes from the line of Itay Michaeli with TD Cowen.

Just curious if you can comment on just how some of the shifts in revenue and some maybe slipping into 2026, others maybe being more kind of onetime in nature is maybe influencing your thinking on the 5% CAGR target through 2027 as well, how we should think about BMS directionally into 2026.

Yes. Let me take this first, And then I'll invite Jerome to add anything that I might have missed. But when we think about 2026, although it is too early to really be specific, let me share some of the puts and takes as we see right now. First of all, S&P Global is forecasting vehicle production at our customers to be down next year, 3% to 4%, mainly in North America and China, but I do expect that to be revised as many of our customers that have been impacted by all of these things that we have discussed on the call will likely try to recover that cost production next year. So we will have to, again, wait and watch how this develops, but my expectation is that it won't be as negative as S&P Global has the outlook today. Now when it comes to the 2 main headwinds we have faced this year, namely China and BMS, they will play out differently as we go forward. So first, China, as we discussed also in our prepared remarks, we'll start to come back to growth, based on the launches that we discussed, including the high-performance compute launches. And this growth will continue going forward into 2027, as we have additional launches coming in on top of the ones that I just mentioned. Now with BMS, we will have to still wait and see how this develops, but at least in 2026, our expectation is that given the headwinds that EVs faced, especially in the U.S., I expect our BMS revenue to continue to see some decline next year. and then maybe stabilize from that point. And we will have, at that point, also better comps as we go into 2027, and we expect that to be on the…

No, that's super helpful. As a quick follow-up, congrats on the new business booking momentum this year. Is $7 billion sustainable, Sachin, next year and beyond? Or maybe there's some onetime [ ones ] in there this year?

No. So let me first explain how -- what's the reason behind it so that there's a better appreciation for what we are seeing and how and why we think that higher levels would be sustained. So the main driver of our wins, even last year, and certainly this year, has been our success with displays, and the investments that we've been making since 2018 have continued to put us in a very strong position when it comes to more complex, larger displays for automotive. Now this has helped us win new business, especially in U.S. and Europe, at a time when coating activity has been lower than normal, especially for electronics. And the reason for that is that the OEMs in these regions have been adjusting or have been forced to adjust their new vehicle launch plans in response to the sudden in their outlook of EVs. Now in Asia, the OEMs there don't have this situation. And therefore, we are seeing opportunity for our full suite of products, including the cockpit electronics products. And therefore, we are winning SmartCore and SmartCore HPC are currently in Asia. Now I expect these OEMs in Europe and U.S. to resume sourcing activity for the electronics are very soon as well, because otherwise, they will be noncompetitive, especially against the Chinese counterparts. So -- and that's what's reflected in our wins this year. If you look at Q3 year-to-date, about 40% of the wins were Europe or 25% in the Americas and then Asia made 33%. And on top of that, and this is really what is the reason why I think this is going to be sustainable, our initiatives with commercial vehicles and 2-wheelers have also contributed to a higher new business win growth. In fact, this year, I think we have more than doubled our new business wins in absolute dollar value over last year. And prior to that, it was a very small portion of our overall business. So all of these, I think, are sustainable. And as we have demonstrated this year in an environment that is pretty challenging, we seem to be able to win more than our fair share of the opportunities out there, it just speaks to the strength of our product portfolio and our cost competitiveness.

Your next question comes from the line of Dan Levy, Barclays.

Jerome, I wanted to start with a question on the margins. And maybe you could just talk about the one-timers. And when we just add up everything for the year, how much is it -- what's the right jumping off point when we're going to start to do our bridges into '26? And then the other thing that I think that's relevant here is we know there's been a number of EV programs that have been delayed, canceled, and there's going to be some OEM recovery payments to suppliers. Maybe what is the magnitude of potential recoveries down the road?

Yes. Thanks for your question. The margins, I would say, have been very strong throughout the year. We've pretty much always exceeded our -- or let's say, the consensus or our guidance from a margin percentage standpoint, Q3 was no different. We were at 13%, even when you normalize this, we were at 12.5%, so slightly above what we had indicated in previous quarters. I think the strength of the margin is coming from all the initiatives that we've been working on for the last few quarters. And it is largely around product costing. We spent a lot of time making sure that our products are competitive in the market from a cost standpoint that includes 1 theme that we've talked a lot about, which is vertical integration. We've also spent a lot of time on productivity in manufacturing, but as well in engineering, especially with AI, which has recently helped us as well to be pretty efficient on the engineering side. So if you step back and look at our margin, we'll be able to finish the year with margins that are slightly over the midpoint of our guidance. And in fact, we'll be close to $0.5 billion in EBITDA for the full year, that includes about $30 million of one-timers. We've had about 25 in the first half of the year and 5, so it was lower, 5 in this quarter. These recoveries are generally related to, as you mentioned, lower program volumes that we've seen or various recoveries on, for example, inventories that we had in excess because of, again, a volume being lowered -- program being lower term volume. So that is kind of the main reason. So I would definitely back that out as we would go into 2026. Now equally, there's always some level of recoveries from -- in that nature as we go into any year.

Yes. Maybe I can help also provide more context because our exposure and to EVs is very different than many of our peers because we are essentially, for now at least, really focused on electronics. And the CapEx and other requirements for EMS is significantly different as compared to, say, a traction inverter or something that is very specific to NAV. So in the grand scheme of things, our investments and, therefore, recovery are much smaller as compared to what you might hear from some of our other competitors or peers.

Great. As a follow-up, I wanted to ask about your Toyota exposure. And I know this is a question that's come up in past calls, and I think the number is something like 10% of revenue potentially in '27 or '28, whatever that maybe?

'28.

Yes. Maybe you could just talk about the launch cadence ahead and the line of sight and the confidence that this will ultimately start to become a dominant piece of the revenue that could offset maybe any continued mix headwinds, which may linger?

Yes. No, I'll take that one. So you're absolutely right. We've been obviously very successful with Toyota in terms of business wins recently. And we have a pretty gradual set of launches as we go into '27, and it's going to increase, obviously, numbers as well in dollar terms. So for '25, we'll launch 2 programs overall; in '26, 5; and then in '27, 7 programs. So that shows you a little bit the acceleration that we have as we go into '27. And that's the reason why we've been talking about 10% of our sales going into '28. So it's a fairly significant ramp based on what we've won recently. I think the good news as well with Toyota is that we keep on getting very good engagement with this customer, and there are still opportunities. So obviously, that would go beyond '28 and further, but it's been a very successful story for us.

I think we need to maybe just give you more context on the opportunities even beyond this. And having said that, with these launches, 2028, we expect as we said earlier, about 10% of revenue, but these are essentially 2 product lines that we currently are engaged on, right? It's the cluster and displays. And we have opportunities even within those 2 product lines to get on other vehicles. This is still less than 50% of their vehicle platforms and models. So there's still plenty of opportunity for growth. On top of that, we are engaged with them on discussions regarding electronics, right? And given my prior comments about how we see the industry rapidly evolving to use of more and more advanced software-driven features, and AI becoming a very dominant theme or a trend, I think we are very well positioned to support this customer, this OEM in their ambitions with respect to addressing some of the gaps that they have in their portfolio. So for us, this represents much more than just the immediate the 2028 sort of horizon opportunity that we have discussed. So we will continue to explore more opportunities as we go forward.

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

Thanks for the comments on the various product opportunities and your thoughts on the market environment. I'm hoping you can help better contextualize what that all means for consolidated growth in the coming years as you consider share gains with certain Asia ex-OEMs, Axia ex-China OEMs. You were working through the backlog, given the booking strength you're seeing, executing on some of these AI opportunities, but then also some of these headwinds like in BMS and customer mix. And as you put that all together, how is the company tracking relative to the $4.15 billion revenue target you previously discussed for 2027?

Yes. Again, I think we will not necessarily specifically comment on '27. We will do that beginning of next year, primarily because we need to get a better handle on the underlying volume assumptions, as we discussed there's a lot of moving parts there. But having said that, we are making really good progress with all the initiatives that I have mentioned on this call and previously as well, starting with Toyota. As Jerome just mentioned, we have these launches. We really have to execute these launches well, which I have no reason to doubt that we would be doing anything otherwise. But the other 1 that I would like to highlight that also really contributes to our growth in 2027 is the launch in '26 with Honda. This is the 2-wheeler opportunity that we have previously mentioned fairly significant. And then on commercial vehicles, we have there's opportunities that are with TRATON, which is the commercial vehicle group constitutes MAN, Scandia and the sub in the U.S. as well as Volvo trucks, which are launching in 2027. So we have, in '27, the situation where China starts to grow. We have this BMS headwind kind of just lapped at that point. So the comparison should be good. And then all these new launches that are kicking in. So we would expect to be in a good position, but we -- I do want to just caveat investing this volume expectations, we need to get a much better handle on, and that's what we will be focused on between now and end of the year.

Helpful context. And my second question was on BMS and thanks for all the commentary and discussion you already provided there. I did want to understand profit implications for Visteon in that product area over the next couple of years. And given what you articulated around volumes in relation to what customers are now planning for their EVs, how is Visteon operating that business? And is this something that can remain profitable even if BMS sales are at low levels in '26, and maybe in '27 as well?

Yes, I'll take that, Mark. BMS still represents about 5% of our sales. So it's still a significant contribution in terms of product line. Margins are similar to other product lines. So there's not a major difference. Obviously, the more volume we have, the better. But it's not going to be, let's say, a mix impact that we'll see as we go forward.

Your next question comes from the line of Joe Spak of UBS.

I just -- maybe just to quickly follow up off the last point because it was headed down a similar path. So that suggests BMS is like, again, you said, I think, 5%, so call it roughly $200 million. So just in terms -- so investors could get properly calibrated, like do we think like it's a couple of point headwind and is where sort of things bottom out for '26? And I know it's sort of highly fluid, but like what's your sort of preliminary thinking there? And then related to the -- another topic which came up, which is receiving payments for volume, should we expect that you receive some payments for these BMS shortfalls as well? Or have those already started?

Yes. So I think maybe answer the second question first. So for the BMS shortfall, we do anticipate recoveries that, that would be either part of the product piece price or as lump sum as we go forward. Some of that has been reflected in the price already, by the way. So we will continue to monitor the volume and adjust and go back as necessary. And so in terms of the volume itself, we're still looking at the latest information that's coming in from GM, and you have also seen what they have publicly stated. So we believe that it's probably somewhere between 10% to 15% or maybe even up to 20% down sequentially. So we'll have to see whether it recovers in the second half, but in the first half, we do expect to see a drop. And then it will depend on how the underlying demand really holds, right? Because we will be in an environment where for the first time, there are no incentives to drive the behavior. I mean, at the same time, we all know that OEMs will continue to offer their own, but to what extent is yet to be seen. So our expectation in what we would tend to model would be somewhere around 20% to be a little conservative.

20% down in '26 versus '25.

Correct, correct.

Okay. And then, Sachin, the second question, a little bit bigger picture, but I recently saw you posted about, I think, what you called the intelligence era versus sort of the software era. And I'm just curious to get your thoughts about how your customers are thinking about AI, maybe by region and how Visteon is positioning themselves for that to benefit? And what type of time frame are we really talking about here? Because some of your customers have to put it bluntly, history been fairly slow to adopt some of these technology changes.

And you are starting to see this really kind of become more distinct when you look at China and then the rest. So the way we see, and we are already very deeply engaged with the Chinese is that AI is coming in, in 2 ways, right? So end-to-end ADAS are AI-driven. Today, most of the ADAS uses AI, but it's not end-to-end AI. So that's one big change. The second is AI as a smart assistant for the cockpit. That's the one that we are initially more focused on, and the two wins that we have talked about, one with Zeekr, the other is now with Cherry are for this SmartCore HPC that will bring this AI-based smart assistant for the cockpit. And if you may remember, we talked about our cognitoAI. It was also featured in our CES earlier this year, is the first framework, software framework of its kind that enables you to run AI -- Gen AI models in the car, not in the cloud. And you see many references today to having whether it is Gemini, Google, Gemini AI or something else, but these are essentially cloud applications that limit how extensive that AI-driven functionality can be offered. But in China, we see that already happening. In fact, the 2 launches that I mentioned earlier, next year will feature these AI models, probably from DeepSeek initially. And then on the -- with respect to the rest of the regions, we are seeing a lot of interest in Europe, as you can imagine. But for Europe, the difference that we're seeing is sort of redoing the whole cockpit system to be able to be built on top of AI, they're thinking of AI as an accelerator. So imagine an ECU that you bring in with minimal changes to existing cockpit domain controllers, that would enable them to offer some level of AI-enabled features. So it's not as expensive as what the Chinese would be able to offer, but it is still better than nothing. And that is seen as a stepping stone towards a full-blown AI-driven cockpit. So we are really focused on both those opportunities. One minor thing that is still very relevant that I would like to highlight, it's interesting to note that when you look at the entire cockpit and what the programs in China are doing, they tend to use Qualcomm silicon. But for the AI box as an accelerator that tends to be more NVIDIA. And so we are in the process of really developing solutions for both those architectures, which is kind of unique. I do not expect much activity in that regard from all competitors, especially outside of China, and that should position us well to take advantage of this emerging trend.

Your last question comes from the line of Colin Langan of Wells Fargo.

Just to follow up, trying to get all the puts and takes on the -- some of the commentary going forward. I mean if I think about you mentioned sort of battery management will be a drag into next year. It sounds like that could be about 1 point. I assume that there's good news from the reversal of maybe some of the volumes from JLR and the aluminum disruption, any way to frame maybe the 2-wheeler and commercial market help, and I guess the biggest factor as we look year-over-year, you commented that China will turn positive. Is that going to be the biggest sort of help to improving growth over market as that reverses? And any way to frame what kind of drag that was to this year's growth?

Yes. So the 2 big tailwinds we face next year; one is China, obviously; the other launches, by the way, in the rest of the markets, primarily commercial vehicles and 2-wheelers. So these are kind of net new programs that we will be introducing. So in terms of the growth of our market, we expect China to be positive, and we expect rest of the market to also be positive as a result.

And in terms of headwinds this year that will reverse into next year, largely because of JLR and nonetheless, we've assumed so far in this year, a revised outlook $30 million to $40 million of impact. So you would expect that to be a positive as we go into next year.

And how bad has the China drag been on this year's growth though?

We generally are estimating that it's about a 5 percentage point impact. So again, it highlights the fact that excluding China and I would say as well, excluding BMS, our cockpit business has been pretty strong in -- mostly in Europe and the Americas.

Got it. That's very helpful. And then as we think about margins into 2026, you did note that the $30 million of recoveries is high. What is the normal level that we should be thinking about? Is that -- is half of that normal? And then what other drivers outside of the higher volume? Or is it really margin expansion is going to be volume driven, or are there any other cost cutting that we should be thinking about into next year?

Yes. So in terms of the -- your first question, I would say half of that is probably a normal run rate. And it's generally balanced with potentially negative one-timers as well that we may have. But I would say 50% is probably a good ballpark number. In terms of margin drivers, so we've constantly improved margins as we move forward, even with volumes that were slightly down year-over-year. So we'll continue to do so. I think some of my previous comments in terms of why we've achieved good margins in '25 will still be valid as we go into '26. So volume is definitely going to help, but it's our cost. It's our constant focus on productivity, being engineering, manufacturing as well as product costing. And we will start to see pretty significant positive as well as we go into '26, but as well '27 from vertical integration as we are accelerating these initiatives.

Thanks for participating in today's call. I'd like to quickly point your attention to Slide 24, in which we highlight several Investor Relations activities for the fourth quarter. If you are interested in learning more, please contact our Investor Relations team. Thank you.

This concludes Visteon's Third Quarter 2025 Results Earnings Call. You may now disconnect.