Adient Plc · NYSE:ADNT
Adient — Q3 FY2021 Earnings Presentation
28 slides from Adient's earnings presentation, Aug 5, 2021
Slide 1: FY 2021 Third Quarter Earnings Call
FY 2021 Third Quarter Earnings Call August 5, 2021 Adient – PUBLIC 1
Slide 2: Important Information
Important Information Adient has made statements in this document that are forward-looking and, therefore, are subject to risks and uncertainties. All statements in this document other than statements of historical fact are statements that are, or could be, deemed “forward- looking statements” withi
Slide 3: Agenda
Agenda > Introduction Mark Oswald VP, Treasurer & Investor Relations > Business Update Doug Del Grosso President and CEO > Commodity Prices & Financial Review Jeff Stafeil Executive VP and CFO > Q&A Adient – PUBLIC Aug. 5, 2021 3
Slide 4: Adient's Q3 results demonstrate successful navigation of anticipated macro headwinds
Adient’s Q3 results demonstrate successful navigation of anticipated macro headwinds Turbulent production environment and increased commodity Proactive measures taken to lessen impact of production pressures continued into Q3 FY21 stoppages and utilize downtime at plants: As anticipated heading into
Slide 5: 2021 current operating environment – driving significant impact on near-term results
2021 current operating environment – driving significant impact on near-term results Underlying improved business performance and efficiencies continue, driven by Adient’s firmly rooted turnaround plan. Temporary macro factors continue to pressure near-term results. Positive Influences Est. FY21 Cau
Slide 6: Adient's longer-term goals and objectives remain on track
Adient’s longer-term goals and objectives remain on track Strategic transformation in China: Execution of the strategic transformation announced in March 2021, which includes among other agreements the termination of Adient’s Yanfeng Adient Seating Co., Ltd. (YFAS) joint venture in China, remains on
Slide 7: Strengthening our leading position
Strengthening our leading position Steady cadence of business wins (replacement, 1 new, conquest and alternative propulsion) 2 expected to strengthen Adient’s leading market position. YTD win rates (new business wins and incumbent wins) remain strong and in line with internal expectations 3 Recent p
Slide 8: In process and upcoming launches
In process and upcoming launches Adient is executing through a high cadence of product 1 launches (especially in North America). Launches continue 2 to trend well with positive feedback from customers. Strong focus on process discipline around launch readiness continues to bolster Adient’s successfu
Slide 9: Driving forward with focus – our approach to success
Driving forward with focus – our approach to success > We deliver win-win solutions to our customers Our guiding principles identify areas > We approach our work with a quality that will drive Adient forward while focusing on what is most important mindset, driving operational excellence These drive
Slide 10: Impact of Escalating Commodity Prices
Impact of Escalating Commodity Prices Adient – PUBLIC
Slide 11: Commodity inflation
Commodity inflation Adient‘s Recovery Mechanisms > Adient has different mechanisms in place to recover material cost changes with each of our customers. Generally, they differ in two key attributes: lag and % of contractual recovery > Lag: some customers have nearly immediate to one quarter lag whil
Slide 12: Material Economics Recovery Model
Material Economics Recovery Model H1 20 H2 20 H1 21 H2 21 H1 22 H2 22 Illustrative example of financial impact 350 Impact of commodity price movements - Illustrative purposes only. 300 Not reflective of past or > In general, Adient’s financial results are negatively impacted as prices future expecta
Slide 13: Financial Review
Financial Review FY 2021 Third Quarter Adient – PUBLIC
Slide 14: Q3 FY2021 Key Financials
Q3 FY2021 Key Financials As Reported As Adjusted 1 $ millions, except per share data Q3 FY21 Q3 FY20 Q3 FY21 Q3 FY20 B/(W) Memo: Q3 FY21 adj. EBITDA impacted by ~$53M Consolidated $ 3,242 $ 1,626 3,242 $ 1,626 NM premiums and temporary Revenue operating inefficiencies; Q3 FY20 significantly impacted
Slide 15: Q3 FY2021 Revenue: Consolidated and unconsolidated sales
Q3 FY2021 Revenue: Consolidated and unconsolidated sales Regional Performance Consolidated sales (consolidated sales y-o-y growth by region)1 $68 $3,242 $(16) Q3 Q3 IHS Production $1,564 Americas 142.8% 149.6% $1,626 EMEA 73.4% 91.8% Asia 39.0% -2.2% Note: China 15.8% -3.7% Note: Asia excl. China 54
Slide 16: Q3 FY21 Adjusted-EBITDA
Q3 FY21 Adjusted-EBITDA Q3 FY21 Adj.-EBITDA of $118M, up $240M y-o-y (Q3 FY20 significantly $5 impacted by COVID related customer production shutdowns). $(57) $(24) $ in millions $(24) $(13) $353 $118 The y-o-y increase was primarily driven by volume and mix of ~$353M and to a much lesser extent, FX
Slide 17: Cash flow and total liquidity
Cash flow and total liquidity Free Cash Flow (1) FY21 FY20 (in $ millions) Q3 FY21 YTD Q3 FY20 YTD Cash and liquidity position Adjusted-EBITDA $ 118 $ 799 $ (122) $ 386 Total liquidity of ~$1.85B at June 30, 2021, (+/-) Net Equity in Earnings 244 $ 106 184 74 comprised of cash on hand of ~$1.0B and
Slide 18: Debt and capital structure
Debt and capital structure ($ in millions) 6/30/2021 Net Debt Cash & Debt Profile Amount Cash & Cash Equivalents $1,000 Cash balance June 30 September 30 excludes (in $ millions) 2021 2020 ABL Revolver, incl. FILO due 2024 (1) - ~$270M held as Term Loan B due 2024 1,000 “Other assets” to Cash $ 1,00
Slide 19: FY21 Outlook – key financial metrics
FY21 Outlook – key financial metrics Outlook FY21 Consolidated sales ~ $14.3B - $14.5B > FY21 guidance updated to reflect Adient’s YTD results thru June 30, completed prior: ~$14.6-$15.0 portfolio transactions, executed debt paydown and current market conditions > Consolidated sales – Significantly
Slide 20: Appendix and financial reconciliations
Appendix and financial reconciliations FY 2021 Third Quarter Adient – PUBLIC
Slide 21: Q3 FY21 Adjusted-EBITDA: Americas
Q3 FY21 Adjusted-EBITDA: Americas Business performance (significantly impacted by temporary operating inefficiencies): $ in millions • $(11)M Freight • $(6)M Net Material Margin (excl Econ) Q3 FY21 Adj.-EBITDA of $23M, up $106M y-o-y. • $(19)M Other performance (i.e. operations improvement, commerci
Slide 22: Q3 FY21 Adjusted-EBITDA: EMEA
Q3 FY21 Adjusted-EBITDA: EMEA Business performance (significantly impacted by temporary operating inefficiencies): $ in millions • $(7)M Other performance (i.e. operations improvement, commercial settlements, other) Q3 FY21 Adj.-EBITDA of $22M, up $116M y-o-y. • $(7)M Net Material Margin Perf (excl
Slide 23: Q3 FY21 Adjusted-EBITDA: Asia
Q3 FY21 Adjusted-EBITDA: Asia Q3 FY21 Adj.-EBITDA of $92M, up $21M y-o- Business performance: y. Key drivers of the y-o-y improvement • $8M Net Material Margin (excl Econ) included: • $2M Launch / Ops Waste / Tooling • $(2)M Other performance > Improved volume and mix of about $39M and improved busi
Slide 24: Non-GAAP financial measurements
Non-GAAP financial measurements Adjusted EBIT, Adjusted EBIT margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income attributable to Adient, Adjusted effective tax rate, Adjusted earnings per share, Adjusted equity income, Adjusted interest expense, Free cash flow and Net debt as well a
Slide 25: Non-GAAP Reconciliations - EBIT, Adj.-EBIT, Adj.-EBITDA, and Adj.-Equity Income
Non-GAAP Reconciliations - EBIT, Adj.-EBIT, Adj.-EBITDA, and Adj.-Equity Income Three months ended Jun 30 2021 2020 (in $ millions) GAAP Adj. Adjusted GAAP Adj. Adjusted Net sales $ 3,242 $ - $ 3,242 $ 1,626 $ - $ 1,626 Cost of sales (1) 3,092 28 3,120 1,779 (1) 1,778 Gross profit 150 (28) 122 (153)
Slide 26: Non-GAAP Reconciliations - Adjusted Net Income and Adjusted EPS
Non-GAAP Reconciliations - Adjusted Net Income and Adjusted EPS Adjusted Net Income Adjusted Diluted EPS Three Months Ended Three Months Ended June 30 June 30 (in $ millions) 2021 2020 2021 2020 Net income (loss) attributable to Adient $ (71) $ (325) Diluted earnings (loss) per share as reported $ (
Slide 27: Non-GAAP Reconciliations - Adjusted Income before Income Taxes and Effective Tax Rate
Non-GAAP Reconciliations - Adjusted Income before Income Taxes and Effective Tax Rate Adjusted Income before Income Taxes Three Months Ended June 30 (in $ millions) 2021 2020 Income (loss) Income (loss) before Income Tax impact Effective before Income Tax impact Effective Taxes tax rate Taxes tax ra
Slide 28: Segment Performance
Segment Performance (in $ millions) Q1 2020 Q1 2021 Corporate / Corporate / Americas EMEA Asia Consolidated Americas EMEA Asia Consolidated Recon Items Recon Items Net sales $ 1,859 $ 1,564 $ 572 $ (59) $ 3,936 $ 1,737 $ 1,604 $ 554 $ (47) $ 3,848 Adjusted EBITDA 94 49 177 (23) 297 132 114 151 (19)