VISTEON CORP (VC) FY 2025 MD&A

Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the results of operations, financial condition, and cash flows of the Company. MD&A is provided as a supplement to, and should be read in conjunction with, the Company’s consolidated financial statements and related notes appearing in Item 8 of this Annual Report on Form 10-K “Financial Statements and Supplementary Data”.

Executive Summary

Strategic Priorities

Visteon is a global automotive technology company serving the mobility industry, dedicated to creating more enjoyable, connected, and safe driving experiences. The Company's platforms leverage proven, scalable hardware and software solutions that enable the digital, electric, and autonomous evolution of its global automotive customers. The automotive mobility market is expected to grow faster than underlying vehicle production volumes as the vehicle shifts from analog to digital, incorporates increased connectivity through onboard computing, software and cloud-enabled features, and includes more advanced safety features.

The Company has laid out the following strategic priorities:

•Technology Innovation - The Company is an established global leader in cockpit electronics and is positioned to provide solutions as the industry transitions to the next generation automotive cockpit experience. The cockpit is becoming fully digital, connected, automated, and voice enabled. The Company's broad portfolio of digital cockpit and electrification electronics positions Visteon to support these macro trends in the automotive industry.

•Long-Term Growth - The Company has continued to win business at a rate that exceeds current sales levels by demonstrating product quality, technical and development capability, new product innovation, reliability, timeliness, product design, manufacturing capability, and flexibility, as well as overall customer service.

•Balanced Capital Allocation with a Strong Balance Sheet - The Company continues to maintain a strong balance sheet to withstand near-term industry volatility and support a balanced capital allocation framework. The Company is primarily focused on allocating capital to high-returning organic initiatives that increase internal capabilities, attractive inorganic growth opportunities, and returning capital to shareholders. In March 2023, the Company announced a $300 million share repurchase program maturing at the end of 2026. The Company has repurchased $226 million of Company common stock under this program. During the year ended December 31, 2025, the Company paid a total of $15 million of quarterly cash dividends. During the year ended December 31, 2025, Visteon paid a net cash outlay of $50 million on inorganic growth to acquire a user experience electronics engineering consulting and consumer research company.

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Financial Results

The pie charts below highlight the sales breakdown for Visteon for the year ended December 31, 2025.

*Regional sales are based on the geographic region where sale originates and not where customer is located (excludes inter-regional eliminations).

Global Automotive Market Conditions and Production Levels

Global light-vehicle production rose approximately 4% in 2025, based on January 2026 S&P Global data, while production volumes for the Company’s key customers decreased around 1%. In North America, retail demand remained resilient with U.S. seasonally adjusted retail sales above 16 million units in 2025, although electric-vehicle (“EV”) purchases softened in the fourth quarter following accelerated buying activity ahead of expiring tax credits. Industry production declined slightly, and production at the Company’s major customers declined at a slightly higher rate. In Europe, industry production decreased slightly compared to the prior year, while production at the Company’s top customers declined at a higher rate. Jaguar Land Rover (“JLR”) production was down significantly as operations were temporarily suspended during September and the company slowly ramped up production in the fourth quarter. In China, production increased by 10%, supported by continued share gains of domestic OEMs, and production at the Company’s key customers increased year over year but continued to lag the broader market due to ongoing shifts in OEM mix.

For the full year 2026, S&P Global expects global light-vehicle production to decrease slightly compared to 2025, and production volumes for the Company’s key customers are anticipated to decline by a low-single-digit percentage. Market conditions remain mixed across regions, with retail demand in the U.S. remaining stable, though sales of EVs are expected to decline due to the recent expiration of certain tax credits. Retail demand in Europe is forecasted to increase slightly, while retail demand in China is forecasted to decline marginally due to recent changes in government incentives. In 2026, memory chip market conditions may create cost pressures and have the potential to affect industry production volumes, as memory supplier capacity is increasingly allocated to support growth in data center infrastructure. The impact of tariffs on the automotive industry remains uncertain, with the potential to increase production costs and weigh on future vehicle volumes; however, the effects have been minimal to date.

The industry continues to face ongoing risks related to tariffs, vehicle affordability, economic uncertainty, geopolitical developments, production disruptions, and changes in customer market share. The potential impact on future periods’ financial statements, results of operations, and cash flows will depend on the evolution of tariff policies, plant production schedules, supply-chain conditions, and the pace of EV adoption.

Company Highlights

In 2025, Visteon continued to progress on its long-term growth strategy, making meaningful progress across product development, customer expansion, operational execution, and capital allocation, despite a challenging and uneven automotive environment.

Sales were $3,768 million, down 3% year over year, reflecting lower customer commodity price recoveries, continued market weakness in China and lower demand for its battery management system. Despite these headwinds, Visteon continued to outperform underlying customer production trends, supported by new product launches, strong performance in displays, and disciplined commercial execution. Net income attributable to Visteon was $201 million, reflecting a decline from the prior year due largely to a higher income tax provision driven primarily by changes in the Company's valuation allowance assessments, offset in part by lower restructuring costs and higher earnings from non‑consolidated affiliates. Adjusted EBITDA1 was $492 million reflecting continued operational discipline and effective cost management despite lower reported sales.

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Strategic execution in 2025 was highlighted by strong new business momentum including next-generation cockpit technologies. During the year, Visteon secured $7.4 billion of new business awards across its product portfolio, reflecting broad-based customer demand for digital cockpits and advanced displays. Notably, the Company secured two SmartCore™ high-performance computing (“HPC”) program awards, reinforcing customer confidence in the scalability of its cockpit domain controller architecture and its ability to support increased software content and advanced in-cabin functionality. The 2025 business wins of $7.4 billion included $3.6 billion of new display wins across 17 OEM customers. The Company also launched 18 new display products and expanded beyond its core markets, securing $1.1 billion of new business in two-wheeler and commercial vehicle applications.

Operationally, in 2025 Visteon delivered its fifth consecutive year of positive net income attributable to Visteon, by generating $201 million. While net income attributable to Visteon declined year‑over‑year driven primarily by changes in the Company's valuation allowance assessments, underlying profitability remained solid, supported by strong operational performance. Solid gross margin performance, disciplined cost actions, and continued commercial execution enabled the Company to maintain strong net income despite lower sales and industry volatility. The Company delivered its fifth consecutive year of Adjusted EBITDA1 margin expansion, reflecting strong cost performance and disciplined commercial management.

In parallel with these commercial and operational achievements, Visteon generated strong cash flow from operations during the year, reflecting the strength of its earnings profile, disciplined working capital management, and capital efficiency. The Company also maintained a balanced approach to capital allocation, returning approximately $70 million to shareholders through share repurchases and dividends while also completing a second engineering services acquisition to further strengthen its capabilities.

Taken together, these achievements demonstrate Visteon’s ability to execute across its strategic priorities, deliver measurable financial and operational results, and position the Company for sustained long-term growth.

1 Adjusted EBITDA is a Non-GAAP financial measure, as defined below.

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Results of Operations

Year ended December 31, 2025 Compared to Year ended December 31, 2024

The Company's consolidated results of operations for the years ended December 31, 2025 and 2024 were as follows:

[table omitted - see filing]