Visteon Corporation
Q3 2013 Earnings Call Transcript

Published: 7 Nov 2013

[Operator:]

Good morning, and welcome to Visteon's Third Quarter 2013 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. Before we begin this morning's conference 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 slide entitled Forward-Looking Information for further information. Presentation materials for today’s call were posted on Visteon's website this morning. Please visit www.visteon.com/earnings to download the material if you have not already done so. I would now like to introduce your host for today's conference call, Mr. Bob Krakowiak, Visteon's Vice President, Treasurer and Investor Relations. Mr. Krakowiak, you may begin.

[Robert R. Krakowiak:]

Thank you, Brent. Good morning, everyone. With us today are Tim Leuliette, Visteon's President and Chief Executive Officer; and Jeff Stafeil, Visteon's Executive Vice President and Chief Financial Officer. We appreciate your interest in our company and for taking the time to join us to review the third quarter of 2013. We have scheduled the meeting for an hour, and we'll open the lines for your questions after Tim and Jeff's remarks. As previously mentioned, a presentation deck associated with today's call is posted on visteon.com within the Investor section. Also note that our Form 10-Q was filed earlier this morning with the news release. Again, thank you for joining us, and now I will turn it over to Tim.

[Timothy D. Leuliette:]

Thank you, Bob, and good morning, everyone, and thank you for joining us. Let's move right on into the presentation materials on Page 2. We had a strong third quarter. I think for all of you who are familiar with the automotive industry, you realize that third quarter typically is affected by downtime for model changeover and holidays in many of our key markets. But overall, we had a good performance in the quarter with Climate sales up 10%, Electronics sales up 12%, including 19% increase year-over-year in cockpit electronics. So a strong revenue base which got us to $1.7 billion for the quarter. Adjusted EBITDA of $160 million versus $34 million in third quarter of '12. I would ask you to look at the, obviously, the PV of how the EBITDA performance was versus that the revenue increase was quite strong. Adjusted net income of $59 million versus -- and EPS of $1.17 on an adjusted basis. Again as I said, Climate, Electronics strong in the quarter. A net 10% increase in the Climate revenue, their EBITDA was up 21%. Electronics was up 60% of EBITDA. We ended up the quarter with approximately $1 billion of liquidity, including our undrawn ABL which, obviously, we don't touch with the cash we have on hand. But I think what it's important about that is we did proceed in the quarter with $125 million ASB or accelerated share buyback program. I think many of you wondered as we announced in August what our plans were to start addressing that $1 billion share buyback. And we began immediately with this ASB piece of $125 million, which we executed within days. We still have $875 million remaining on that repurchase authorization. Lest we not forget, a few days after our Q2 announcement, we did announce the Yanfeng transaction, which was a combination of selling Interiors and other assets and then acquiring a majority piece of our Electronics JV. That still remains on track. That transaction valued at $1.5 billion in total, $1.2 billion of proceeds to us. Approximately 90% of those at close and approximately 10% net tax position on those proceeds. That's still in place. Jeff will update you more in a few moments. As a result also, we are updating our 2013 guidance. It does not reflect the impact of the YFV transaction. As we've said, that transaction will close either late Q4, early Q1, and that'll impact some numbers, obviously, as it does occur. But independent of that transaction, we're raising our guidance for EBITDA, adjusted EBITDA, adjusted free cash flow and adjusted EPS and maintaining our sales, focusing our sales at the midpoint of our prior guidance. Adjusted EBITDA is being raised from $680 million to $700 million from the $660 million to $690 million. Adjusted free cash flow raised from $145 million to $185 million from the previous $135 million to $170 million, and adjusted EPS, $4.83 to $6.11, now it's $5 to $6.26. So again, we're comfortable with the remaining quarter of '13, and we see that as giving us good momentum as we go into the next year. Moving on to next page, Page 3. This is a slide we always show as to where vehicle production occurred during the quarter. Again, remembering that, primarily, Asia now is the primary, over half of the vehicle production on Earth. Of the 20 million units produced, they produced half; Europe, 23%; North America, 20%, U.S., 14% of that; South America, 6%. As you look at our particular businesses, I ask you to look at Climate, Electronics. In particular, you see the large Asian presence that we have. The Electronics number is reflective of the consolidation of the YFV position as it would be on a pro forma basis, but we're strong in Asia. North America and Europe follow. If you look at Interiors, you see Interiors is more of a European business. And so as we exit that business per our plans, you'll see that we continue to be focused more and more as an Asian business. Looking to the next page, Page 4. You've asked many times as to what is our footprint of manufacturing. This is, in essence, our factory production, or sales x factory of where we produce our goods around the world. Year-to-date through 2013, year-to-date, 23% of our business comes out of Korea, 13.7% out of China, and then it tails down a couple of points here. We have a very diversified production profile. You can see it's a very low cost production profile, strong Asian presence with 37% of our production in Korea and China. We're expanding our low cost footprint. I think you've seen recently our announcements of expansions in Indonesia. We're expanding in China. We also announced 2 facilities in Russia over the last about 45 days or so where our production will probably double over the next few years. So Russia is becoming also a growing market for us. Let me proceed now to the next page. And remember -- let's talk a bit about the transition of this company. Back in September 2012, as you see on Page 5, we were a collection of many businesses. As we go forward here, we announced, after the YFV transaction, basically a cleanup that got us down to basic Climate, Electronics, still with our Interiors business. Our Interiors business remains our plan to exit that. And as I said in the past, when there's something to announce, we will announce it. And then as we look forward to the future of Visteon, we see a very lean corporate center with 2 primary businesses

[Jeffrey M. Stafeil:]

Great. Thanks, Tim. I'll begin my comments on Slide 17 of the deck. And before I get to the third quarter results, I want to provide a quick update on the status of the Yanfeng transaction. Regarding our expectations for timing and proceeds of the transaction, nothing has changed. We are still on track to close the predominant portion of the transaction in late 2013 or early 2014 and expect net pretax cash proceeds will be approximately $1.2 billion, with approximately $1.1 billion of the proceeds received at or near close, and the remainder received in June 2014 and June 2015. The right side of the page shows the impact of the transaction on Visteon's financials and has not changed from the data we've shown you in the past. At the top of the page, we provide a summary of historical dividends we received from Yanfeng, excluding YFVE, the Electronics venture. On the bottom of the slide, we show the net impact on Visteon's reported adjusted EBITDA relating to the transaction. In summary, nothing's changed from what we talked to you about before on this transaction. Turning to Slide 18. On this slide, we present our key financial results for the third quarter of 2013 compared to the third quarter of 2012. As we have explained on prior calls, our financial results are impacted by a number of items that make year-over-year comparisons difficult. The adjusted financial information presented on this slide excludes these items and represents how we manage the business internally. As non-GAAP financial measures, this adjusted financial information is reconciled to U.S. GAAP financials in the attached appendix on Pages 33 through 35. We had another very good quarter as we meaningfully improved versus prior year on topline sales and our profitability metrics. We will cover the metrics more in the following pages, but let me cover the bottom 2 metrics on this slide related to cash flow now. The decrease in year-over-year cash flow was in line with our expectations and reflects 3 key items. The first relates to the delay of planned dividends from Yanfeng. These dividends would normally be paid during the third quarter, but were postponed to the fourth quarter as part of the announced Yanfeng transaction. The second item stems from timing impacts of scheduled supplier payments that benefited Q1 and Q2 but reversed in Q3. As we previously stated, we expected the benefits enjoyed in the first half of the year to reverse in the second half of the year simply due to how the calendar fell. Finally, our tax payments increased year-over-year. On a year-to-date basis, higher profitability increased tax payments by $7 million. However, the majority increase in taxes was related to several onetime items, including $12 million incurred in the first quarter related to the HVCC transaction buying our Climate business and $38 million related to tax disputes in Korea and Brazil. We anticipate that we will recover the money related to the tax disputes in the future. If we exclude these items, third quarter adjusted free cash flow would have improved consistent with our improvements in underlying earnings. It is important to note that these items are largely timing-related and that we are increasing our full year free cash flow and adjusted free cash flow guidance. I will discuss these metrics more in the following pages. Turning to Slide 19. Here, we compare 2013 third quarter sales and adjusted EBITDA to last year. Sales were $1.7 billion or $109 million better than the third quarter of 2012. The increase was driven by higher year-over-year sales in Climate and Electronics, which benefited from higher volumes in all regions, particularly, Asia and North America. Meanwhile, our adjusted EBITDA was $160 million, up $26 million versus the third quarter of 2012 and reflects higher adjusted EBITDA in Climate and Electronics and higher equity income from our nonconsolidated joint ventures, primarily Yanfeng. The Interiors base business, excluding nonconsolidated JVs, was down $9 million and primarily due to year-over-year engineering-related design recoveries. Moving to Slide 20. Here, we show our third quarter sales and adjusted EBITDA for our 3 product groups

[Robert R. Krakowiak:]

Thank you, Tim and Jeff. Brent, please open the phone lines for questions.

[Operator:]

[Operator Instructions] Your first question comes from the line of Colin Langan with UBS.

[Colin Langan:]

You mentioned already that in Q4, there's some tough comps. Can you just remind us of what are the major items? I believe there's some pretty large commercial recoveries last year that won't reoccur. Any color around what are the year-over-year headwinds?

[Timothy D. Leuliette:]

Jeff, you want to...

[Jeffrey M. Stafeil:]

Yes. The -- in the fourth quarter of last year, you'll see that the number of our margins were spiked. And when we were on the conference call talking about our fourth quarter performance last year, Colin, you had remembered, we talked about a large amount of commercial agreements and we also had, I'd say, just a number of true-up items across the year that we had pledged that we were going to focus, really, throughout the year in 2013. And I think we've done that. We've -- so the amounts are fairly significant as a portion to the Electronics business but, again, we see the margin improvements we made this year continuing in just without that spike in the fourth quarter that we had last year.

[Colin Langan:]

Okay. And I noticed in Climate, your sales are up around 19% in the first half and they moderated a little bit this quarter. Is anything, from an end market perspective, that caused it to come down to 10% or is this just sort of normal year-over-year winds from last year?

[Timothy D. Leuliette:]

The -- you saw in the first half -- I think, we saw a better delta in China, in particular, year-over-year than we were seeing in the Q3. Q4 still growth, still good, up versus prior year but not at the same rate. I think there's just some difference in deltas between markets. There's no falloff in anything there. It's just the comparisons year-over-year of market strengths in selected markets.

[Colin Langan:]

And then China is where the [indiscernible].

[Jeffrey M. Stafeil:]

Yes, I think if you look at the Hyundai-Kia volumes in China, you'd see a huge growth in the first half of 2013 versus the first half of 2012. But they had already -- they had a nice growth in the back half of 2012. So the year-over-year comparisons are a little lighter.

[Colin Langan:]

And on the accelerated share repurchase program, did you say that was completed or is that still ongoing?

[Jeffrey M. Stafeil:]

We -- the way that works is we -- the $125 million, it's fully out of our treasury and fully out of our balance sheet. The process of those shares being delivered to us and the purchasing process from the agent executing that for us is not quite done. It'll be done in the fourth quarter.

[Colin Langan:]

Okay. I wasn't sure [indiscernible] That.

[Jeffrey M. Stafeil:]

But the cash is fully out of our balance sheet.

[Colin Langan:]

Okay. And any -- what is you're -- sort of can you just give us your latest view of M&A, particularly within Electronics? I mean, what kind of targets would you be looking for? And how do you think of the opportunities that are available out there today?

[Timothy D. Leuliette:]

Well, I think, we've said in the past, we don't comment on M&A activities other than to say that if there are accretive opportunities that bring technology or market presence to us in either of our core businesses, that we would be actively evaluating those opportunities. And I think I'll leave it at that.

[Operator:]

Your next question comes from the line of Ryan Brinkman with JP Morgan.

[Ryan J. Brinkman:]

So on Page 18, Jeff walked us through some of the items which might have impacted comparability year-over-year. I didn't hear you discuss work stoppages in Korea, which have sometimes been mentioned on these calls and sometimes not, but I think that there were some during the quarter. So curious if you were impacted at all by that.

[Jeffrey M. Stafeil:]

Yes, Ryan. There was a brief strike in Korea. I would say that it's somewhat comparable to the brief strike they did in the previous year. So we didn't really call it out in our variances. But yes, there was a bit of a few days where they were out of work over there at one point.

[Timothy D. Leuliette:]

We typically -- and we saw the same thing last year, as they lose 5, 6, 7 days perhaps, and then we pick up and recover that production in the Q4. And we see that occurring again this year.

[Ryan J. Brinkman:]

Okay, got it. Can you talk about the scale of your Electronics business currently and if you think that the business could gain from getting some greater scale? I know what you do in Electronics has really nothing to do at all with what Lear does in the electrical space. But in that company, we've just noted that the margins just really took off once they started gaining some scale closer to that of their major competitors.

[Timothy D. Leuliette:]

Yes. Well, I think the -- again, and I think I heard the whole question, the Electronics business at this point is going through commitments in new platforms, whether they're platforms on the cluster side or platforms on the infotainment side. And yes, you do get leverage when you expand the volumes and you do get revenue leverage on the investment in those platforms. What we typically see right now, if you look at where we see margin improvement, margin enhancement capability, as you know, we will be consolidating in the YFV component once we close the transaction in China, that'll give us that opportunity to consolidate that piece and more leverage those assets in China. We see some -- still some factory floor operating opportunities there. We will probably, over the short term, continue to see RD&E expenditures of about 12% gross and 9% net. There may be some improvement over time, 0.5 points here or there. But in absence of significant volume increases, that's the model. The margin improvement opportunities there, absent significant volume improvements, are still factory floor. And those are being worked. Does that answer your question?

[Ryan J. Brinkman:]

No, I think that does help. Then just the last real aimed [ph] Question. Just on the customer recoveries, your increased -- your stronger EBITDA guidance state implies, obviously, a sequential increase in 3Q to 4Q and you talked in your opening remarks -- well, first, you [indiscernible], you're talking about how 3Q is typically softer, so I'm just curious what you penciled in from a customer recoveries perspective in 4Q? Because last year, and we should clearly not model what happened last year. It was amazing. But last year was better than you expected going in the quarter. So is there a potential to -- how will customer recoveries track differently as you have those conversations with automakers? Could there be potential upside to your numbers?

[Timothy D. Leuliette:]

Okay, let me -- I'll start this and I'll throw it to Jeff. I think the key part of last year, as we said, was as we went through the accounts here and, again, as the management teams came on board, we reviewed where we stood with key customers. And there were some monies owed to us, not only through activities for '12, but also for activities in '11, that had yet to be paid. So the first thing we did is we went back and looked at trying to get current. Typically, there's a variety of different types of reimbursements here, from engineering, particularly. And those activities, some of them have different milestones. Sometimes our agreements cover our performance or operating targets and in all cases, it's now going back and vetting paperwork. And so we did recover activities in '11 that were due to us in December. But more importantly, there were milestones throughout the year of '12 that had yet to be recovered that we now -- and we made the commitment, I think, as we went into this year saying, "Look, we will try to do these now on a more of a quarter-by-quarter basis and not let these things bow wave in the Q4." And so the combination of recoveries from '11 and the combinations of events that should have occurred earlier in '12 added up to a bit of a bulge in Q4 of '12. And I don't think we have gone in and quantified the size of that bulge. But just to sit back and say that if you want to go back and look where we stand today, as we've given you guidance for the year and we've gone through 3 quarters, so you get a sense of where we believe our fourth quarter's going to be, and we're comfortable with that guidance.

[Jeffrey M. Stafeil:]

Yes. I guess maybe a couple of other words, Ryan. If you go back, and I don't have the numbers sitting in front of me, but I believe our fourth quarter was something like $203 million of adjusted EBITDA in 2012. When we sat on our February call, we mentioned that there were some recoveries from 2011, and there was a lot of things in 2012 that had been sort of finally done in the fourth quarter, which we emphasized as being reflective or adding to maybe unnaturally to that quarter. As we look here, I'd say the margins and the stability of our margins have been better in 2013 relative to 2012 versus the first 3 quarters. As we look at Q4, I think we look at the core operating strength to be improved for especially the Climate and the Electronics business. But probably the relative piece of what you can look at from our year-to-date performance through Q3 versus the updated guidance we just gave you, that relative difference is going to be less than the $203 million we did last year, but still should reflect stronger operating performance sans those onetime items. And I'd model it consistent with the guidance we provided you.

[Ryan J. Brinkman:]

That's really helpful. Just a housekeeping item then on the ASR, are you able -- or would you expect to be making open market purchases the same time as the bankers is wrapping that up...

[Jeffrey M. Stafeil:]

I mean, I think it's a good question, Ryan. I'd say from our -- as a general response to that, we said we would put out $1 billion share buyback right after we announced the YFV deal. We said the relative size of that buyback relative to our market cap was so significant that we gave ourselves a fairly long time. And we said we'd do a number of different vehicles, and open market purchases could be one, accelerated stock buyback, potentially tender offers, to be one. The challenge on the open market buyback in particular, but on any buyback that we engage in, we do need to have a clear day from a public information standpoint. So I'd say with the element of limiting factor of if it being a clear day, we certainly could go out and buy. But the mere fact we were out doing an ASB probably would have prevented us at that point.

[Operator:]

Your next question comes from the line of Brian Johnson with Barclays.

[Steven Hempel:]

This is Steven Hempel, on for Brian Johnson. Just had follow-up questions on the Electronics business. And obviously, according to our estimates, the market is implying a little value to Electronics roughly around 1x FY to EBITDA post the YFV consolidation. I'm just wondering, moving forward here, you're making some efforts with the YFV consolidation along with increasing your stake in the Russian JV, Electronics JV. I understand your continuing to explore opportunities to optimize the size and scale of that business, but should we really think about that business as being grown organically or potentially through M&A? Or are you guys thinking about potentially, I mean, still divesting the businesses, is that still an option? Or will electronics become core moving forward? And a follow-up on that, which areas would you focus on? I understand cockpit electronics, definitely core right now, divesting some powertrain business. But competitors out there with the divestiture's remaining Electronics business, and any interest in that at all? So...

[Timothy D. Leuliette:]

Okay, let me just summarize up by saying Electronics for us is very core. We've made that statement, I think, very clearly. And we're committed to this business for a number of reasons. One, we have significant organic growth. We have a significant intellectual property portfolio. We've got a strong customer support for continued growth, and we like our low cost footprint. So as we look at the business, the first thing we assess is a, are we making money at it? And two, is it something that has a long-term opportunity set for us? The answer is, clearly, it does. As we then look at M&A opportunities in this space, as I've said, we have a balance sheet and we have the capability to go and do the kinds of things that makes sense. I think that we will -- since it is a core business, we'll always keep an eye out for those things that make either technical or market sense for us -- technology or market sense for us to expand. But this is not a business for sale at all. This is a business that we're going to grow. And we are as puzzled as you as why a business with that kind of growth, with that kind of margin and that kind of CapEx, I mean it's a real value driver, is valued as it is. But we think -- I go back to where we were 18 months ago when we said, "Look, we're going to spend the first year or so here, the new management team, addressing some of the cleanup issues." We still have one left to do of significance -- of partial significance, anyway, the Interiors side. But now we are migrating to focus in on these 2 strong core businesses, both of which have a portfolio capability and leverage capability that is above industry growth patterns. And we have a very strong position in Electronics that we will do everything we can do to lever. And so we're quite, quite bullish on that business. And I'm sure you will see -- and if you can join us or anyone that can join us at the Consumer Electronics Show, we'll see how that's expanding. We have a very unique position here. In the HMeye world, you can do all you want to do on the electronic front, but it still has to come back and do that interface with the driver, interface with the passenger, interface with the consumer in an automotive context. And it's -- OEM after OEM are coming to us for that experience. So this was something that we see as quite a robust opportunity for us. I know that it's not the size of Climate, but you can see just with the 12% growth this quarter and the 19% growth in cockpit electronics year-over-year, this is an engine of growth. And yes, we think it should be valued higher than it is, and that's part of our message.

[Steven Hempel:]

Great. And just one quick follow-up then on that. On an organic basis and moving forward with the Electronics business, post the YFVE consolidation, how should we think about the margin profile of that business? We've seen a lot of new products here in some of the slides, interesting products. One of the products was the one with a German premium OEM, that's definitely a positive. Just wondering where -- when should we start thinking about the benefit rolling into them, from the backlog, if at all? And how we should think about margins moving forward? Also if you could just update us on the capacity utilization in Electronics, specifically North America.

[Timothy D. Leuliette:]

Yes. We have stated -- a good couple of questions. We have stated that we are targeting 100 to 150 basis points of gross margin improvement in that business over the next 3 years, and we still see that as a possible, clearly, and a necessary and probable act, because we still believe that we are not operating on the factory floor as we should. And so we still see some margin improvement there going forward. And we will see that into '14. From a standpoint of capacity issues, we do not have a capacity site, a manufacturing site in the United States. We do have in Mexico. We do utilize our primary electronics footprint globally, which is China, Mexico, Brazil and Portugal with some new facilities. You saw we announced one in Thailand. We announced the expansion in Russia as being adjuncts to what is our core manufacturing footprint. We do export from those sites on a global basis. From the standpoint of overall capacity, we are -- we have the capacity to expand in some areas, but I think the important element of electronics, which comes back to the value equation, is that you see that we spend around 2.25%, 2.5% of CapEx -- of sales on CapEx in that business. It's not a capital-intensive business, it's a software-intensive business. Our engineering focus -- and we are software-driven and our assembly capability is not a capital-intensive business because we -- again, we buy displays and screens. We buy things, we do the assembly, we do the work, we input our software. So we can expand that business without significant capital requirements. That's just the nature of our business model, and it's worked quite well.

[Operator:]

Your next question comes from the line of Matt Stover with Guggenheim.

[Matthew T. Stover:]

Just a quick follow-up on that, Tim. If we think about sort of the outlook for growth in the Electronics business, how would you encourage us to think about a growth rate over the next several years in that business? Obviously, post integration of the YFV asset.

[Timothy D. Leuliette:]

Well, we've stated that we have a 12% CAGR model in the forecast, so that we update our -- every January, our, if you will, our 3-year guidance and outlook for that business. But we have shown this year of being at 12% CAGR over the next 3 years. We think we're comfortable with that. I would say that in this business in particular, and I think this is kind of a unique segment in the auto industry, and that is this will grow as fast as we can commercialize next-generation technology. The kind of thing you'll see in the cluster, the kind you'll see that we're launching in Europe, I think will change dramatically how people look at the information flow to the driver. I think when you see the infotainment packages that are utilizing open-source designs, that's going to significantly lower the cost and, as I say, democratize the capability of taking this technology to a broader array of consumers. And the key to this is as soon as we can get it done, as soon as we can launch these products, as soon as they're ready for production, there's demand. And I -- we meet with a number of OEMs, and we're probing that element. The consumer Electronics industry moves at a much faster pace than the auto industry and launches. But the key is we've got to launch it with automotive reliability and quality and robustness, and that's that balance that we look at. So this is a business that's going to grow considerably higher than vehicle build for the rest of this decade and then the next. This is going to be the one of the major dynamic and exciting areas in the automobile.

[Matthew T. Stover:]

Actually, I had a follow-on to that. I -- within the context of the commentary here, there had been a reference to the sale of the Interiors. I noticed that there was no sense of timing on that. And I'm wondering if you could kind of update us on that? And I know the original timing had been set towards the end of the year. Has that been pushed out or changed?

[Timothy D. Leuliette:]

As I think we have said, we don't comment specifically on timing. I'll just give you 2 inputs. One, it took us 8 months to negotiate a YFV transaction, and we weren't public about that until it was done. To not -- for us, not to be making comments or saying anything publicly about it, that's not to infer that we're not doing something on this moving it forward. We will -- we do not have a gun to our head as we've said, but it is something that we are comfortable with that we will deal with in a timely manner. So I'm going to give you no greater insight than that.

[Operator:]

Your final question comes from the line of Kirk Ludtke with CRT Capital Group.

[Kirk Ludtke:]

Just a couple of follow-ups, one on electronics and one on restructuring. I just -- my sense has been that whatever you do on Electronics M&A-wise is opportunistic rather than need-based, and I just want to confirm that. And if it is need-based, maybe I've got some follow-ups on that.

[Timothy D. Leuliette:]

No. I think you're spot on. There's no technology we have to have to execute our game plan. If there's ways that we can get economies of scale, if there's ways that open customers up to us, if there's some opportunities as you said, we'll pursue it, but it's not a have to. I'd like greater scale in that segment. I think we've made that clear, but it's not something where we've got to go do that. I think you're seeing with the growth, 19% year-over-year in cockpit electronics, it's good business model. When you can grow at that rate with these kind of EBITDA margins, with a business that has 2.5% CapEx as a percent of sales, you can create a lot of value.

[Kirk Ludtke:]

Great. I appreciate that. And then on restructuring, I guess you've got $59 million of the $100 million left to spend. Is that all in 2014? And then secondly, if and when you're able to exit some Interior plants, will that be incremental to the $59 million?

[Jeffrey M. Stafeil:]

So to your first question, the $59 million at this point, we do expect to spend in 2014. As it relates to a question of would there be additional cash outflows as it relates to an Interiors business, I think that's too speculative right now to address. And we'll come to you as things become more definitive on Interiors.

[Operator:]

We've now reached the allotted time for Q&A. I'd like to turn the call back over to Mr. Krakowiak.

[Robert R. Krakowiak:]

Thank you, Brent. I'd like to thank everyone for their participation in today's call. If you have any additional questions, please feel free to contact me at your convenience. Now I'd like to turn it over to Tim for his final comments.

[Timothy D. Leuliette:]

Thank you, Bob. I think, as we've said before and we'll say it now again, we're very comfortable with the path we're on. We've now transitioned from, what I call, the paint up, clean up and fix up era of this business, now focusing on the 2 core businesses of Climate and Electronics. They have indigenous growth opportunities. We see margin improvement. We see good customer reaction. We still have issues on Interiors and what have you to deal with that we are dealing with, and we'll deal with on a timely basis as we move this company forward. Visteon, at this point, we see as an engine of value creation, an engine of growth with a very good Asian and global footprint. So we appreciate your support. We look forward to a good Q4 and a good 2014. And we'll talk to you again in 90 days with the performance of the last quarter. So thank you, all.

[Jeffrey M. Stafeil:]

Thank you.

[Robert R. Krakowiak:]

Thank you.

[Operator:]

Thank you. This concludes today's conference call. You may now disconnect.