Visteon Q3: $77M Warranty Charge Crushes EBITDA, Guidance Cut Despite Sales Raise
VC is trading near its 52-week low of $83.49 (1.6% above the low).
Summary
Visteon's Q3 net income of $5 million came with $77 million of exceptional warranty charges that dragged adjusted EBITDA to $46 million from $119 million a year earlier. Sales guidance was raised to $3.80-$3.85 billion, but EBITDA and free cash flow guidance were cut.
Key Events · Earnings and Guidance · VC
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Q3 Sales Rise 6% to $970 Million
Net sales of $970 million versus $917 million a year ago, with 10% growth-over-market despite customer vehicle production falling 5%.
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$77M Warranty Charge Sinks Profitability
Gross margin fell to $47 million from $131 million and adjusted EBITDA to $46 million from $119 million, both reflecting $77 million of exceptional warranty charges.
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Guidance Mixed: Sales Up, EBITDA and Cash Cut
Full-year 2026 sales guidance raised to $3.80-$3.85 billion, while adjusted EBITDA was lowered to $370-$410 million and adjusted free cash flow to $90-$130 million.
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Cash Flow Already Negative Through Nine Months
Nine-month operating cash flow of $81 million less $103 million of capital expenditures left adjusted free cash flow at an outflow of $4 million against a $90-$130 million full-year target.
Analysis · VC · Manufacturing
The headline profit of $5 million hides the real story: $77 million of exceptional warranty charges gutted gross margin to $47 million from $131 million a year ago, and adjusted EBITDA fell to $46 million from $119 million. Management raised full-year sales guidance to $3.80-$3.85 billion but cut adjusted EBITDA to $370-$410 million and adjusted free cash flow to $90-$130 million — a mix that says volumes are holding up while costs and quality issues are eating the profit. Nine-month adjusted free cash flow is already an outflow of $4 million against a $90-$130 million full-year target, meaning the fourth quarter has to carry the entire year. The balance sheet is the cushion: $466 million of cash against $330 million of debt, $136 million net cash, after completing the $200 million accelerated share repurchase and paying a $9 million dividend.
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At the time of this filing, VC was trading at $84.80 on NASDAQ in the Manufacturing sector, with a market capitalization of approximately $2.3B. The 52-week trading range was $83.49 to $126.95. This filing was assessed with negative market sentiment and an importance score of 7 out of 10.