Slide 1: FY 2017 Third Quarter Earnings Call
FY 2017 Third Quarter Earnings Call July 27, 2017 Improving the experience of a world in motion
Slide 2: Forward Looking Statement
Forward Looking Statement 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” wi
Slide 3: Agenda
Agenda Introduction Mark Oswald Executive Director, Global Investor Relations Third quarter highlights Bruce McDonald Chairman and Chief Executive Officer Financial review Jeffrey Stafeil Executive Vice President and Chief Financial Officer Q&A FY 2017 Third Quarter Earnings Call / July 27, 2017 3 A
Slide 4: Highlights
Highlights > Solid Q3 results delivered earnings growth and margin expansion, building on ADNT’s positive momentum ‒ Adjusted-EBIT increased 3% to $336M (margin of 8.4%, up 90 bps) 1 ‒ Adjusted-EPS increased 4% to $2.52 1 ‒ Net debt of $2.7B and net leverage of 1.69x at June 30, 2017 1 > Full year o
Slide 5: Highlights
Highlights > Gross sales bookings continue at a robust pace; building on the positive momentum established in FY2016 ‒ FY17 gross sales bookings expected to outpace FY16 new business wins, which totaled $5.3B ‒ Awards year-to-date further strengthens Adient’s diversification (traditional manufacture
Slide 6: FY17 Q3 key product launches
FY17 Q3 key product launches Strengthening our leading position across customers, segments, and regions… VW Tiguan Chevrolet Traverse Honda CRV Audi A-8 Mexico United States Malaysia Romania Seat Ibiza and VW Polo Volvo XC-60 BMW 5 series Station Wagon Toyota Camry Spain Sweden Czech Republic United
Slide 7: Current operating environment
Current operating environment > Despite “softening” U.S. vehicle sales, the auto cycle remains favorable on an absolute level (H1’17 SAAR of ~17M units) ‒ OEM’s making near-term production adjustments in U.S. (primarily passenger cars) to align supply & demand > Strong growth continues in ADNT’s unc
Slide 8: Financial Review
FIN A N C IA L R EVIEW FY 2017 Third Quarter FY 2017 Third Quarter Earnings Call / July 27, 2017 8 Adient – Improving the experience of a world in motion
Slide 9: FY 2017 Q3 key financials
FY 2017 Q3 key financials As Reported As Adjusted 1 $ millions, except per share data FY17 Q3 FY16 Q3 FY17 Q3 FY16 Q3 B/(W) Reported revenue $ 4,017 $ 4,362 $ 4,017 $ 4,362 -8% EBIT $ 296 $ 145 $ 336 $ 326 +3% Margin 7.4% 3.3% 8.4% 7.5% EBITDA N/A N/A $ 427 $ 417 +2% Margin 10.6% 9.6% Memo: Equity I
Slide 10: Revenue – consolidated & unconsolidated
Revenue – consolidated & unconsolidated > Consolidated sales challenged in the near-term resulting $ in Millions Consolidated sales from capital constraints in prior years (pre-2016) $50 ‒ Volume and foreign exchange headwinds primary drivers of y-o-y $4,362 decrease > Strong growth continued in ADN
Slide 11: Adjusted-EBIT
Adjusted-EBIT > Despite lower sales, Adjusted-EBIT expanded to $336M, up 3% y-o-y ‒ Seating totaled $317M, up 6% y-o-y $11 $ in Millions $35 ‒ Interiors totaled $19M, down 27% y-o-y, driven primarily by growth investments (investment in IT $46 ($33) infrastructure, West-Coast office, branding initia
Slide 12: Margin progression solidly on-track
Margin progression solidly on-track Adjusted EBIT Margin (excluding equity income)1 SG&A – Adjusted1 • Target 200 bps in mid-term ADJ SG&A % of sales Targeting 150 bps reduction • ~ 75 bps achieved to date vs LTM Jun ’16 (~$256M) ADJ EBIT % of sales (excl. equity income) 5.2% 5.02% 5.0% 5.4% 4.76% 5
Slide 13: Cash flow & debt
Cash flow & debt 1 Free Cash Flow (1) Debt (1) FY17 Actual > Prepaid $200M of the $1.4B term loan using proceeds from new European Investment Bank loan, plus ~$20M cash (in $ millions) Q3 FY17 > EIB loan: 5-year, floating rate, EUR 165M; expected savings between 1-2% per year Adjusted EBITDA $ 427 >
Slide 14: Looking forward: FY2017 guidance
Looking forward: FY2017 guidance 2017 Guidance Monitoring near-term production adjustments; full year revenue Revenue $16.15 - $16.25 billion tracking towards low end of range ADJ. EBIT $1.24 - $1.26 billion Depreciation & ~$375 million Amortization Interest expense now expected to be about $135 mil
Slide 15: Adient's Key Investment Thesis
Adient’s Key Investment Thesis MARKET POSITION ˃ Broadest and most complete range of seating products ˃ Unparalleled customer diversity– market leadership in North America, Europe and China (unique and longstanding position in China through JV structure); support all major automakers (190+ active pl
Slide 16: Appendix and Financial Reconciliations
A PPEN D IX A N D FIN A N C IA L R E C ON C IL IAT ION S FY 2017 Third Quarter FY 2017 Third Quarter Earnings Call / July 27, 2017 16 Adient – Improving the experience of a world in motion
Slide 17: Non-GAAP financial measurements
Non-GAAP financial measurements > Adjusted EBIT, Adjusted EBIT margin, Pro-forma adjusted EBIT, Pro-forma adjusted EBIT margin, Pro-forma adjusted EBITDA, Adjusted effective tax rate, Adjusted net income attributable to Adient, Pro-forma adjusted net income attributable to Adient, Adjusted earnings
Slide 18: Non-GAAP reconciliations
Non-GAAP reconciliations EBIT, Pro-forma Adjusted EBIT, Pro-forma Adjusted EBITDA FY16 Actual FY17 Actual Last Twelve Months Ended Actual Actual Actual Actual Actual (in $ millions) Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Jun '16 Sep '16 Dec '16 Mar '17 Jun '17 Net income att
Slide 19: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Net Income Adjusted Net Income Adjusted Diluted EPS Three Months Ended Three Months Ended June 30 June 30 (in $ millions) 2017 2016 2017 2016 Net income attributable to Adient $ 204 $ (14) Diluted earnings per share as reported $ 2.17 $ (0.15) Separation costs (1) -
Slide 20: Non-GAAP reconciliations
Non-GAAP reconciliations Free Cash Flow Three Months Ended Adjusted EBITDA to Free Cash Flow June 30 Three Months (in $ millions) 2017 2016 Ended June 30 (in $ millions) 2017 Operating cash flow $ 157 $ 150 Adjusted EBITDA $ 427 Less: Capital expenditures (115) (126) Less: Interest Expense (31) Cash
Slide 21: Non-GAAP reconciliations
Non-GAAP reconciliations Net Debt and Adjusted Equity Income Net Debt and Net Leverage Adjusted Equity Income Three Months Ended June 30 September 30 June 30 (in $ millions) 2017 2016 (in $ millions) 2017 2016 (1) Cash $ 669 $ 550 Equity income as reported $ 94 $ 89 (2) Total Debt 3,399 3,521 Purcha
Slide 22: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Income before Income Taxes, Financing Charges, and Segment Adjusted EBIT Adjusted Income before Income Taxes Three Months Ended June 30 (in $ millions) 2017 2016 Income before Income Taxes Tax impact Effective tax rate Income before Income Taxes Tax impact Effective
Slide 23: Non-GAAP reconciliations
Non-GAAP reconciliations Reported to Adjusted SG&A for prior periods (LTM Jun 16 – LTM Jun 17) FY16 Actual FY17 Actual Last Twelve Months Ended Actual Actual Actual Actual Actual Actual (in $ millions) Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Jun '16 Sep '16 Dec '16 Mar '17 Ju
Slide 24: Prior Period Results
Prior Period Results FY16 Actual FY17 Actual Last Twelve Months Ended Actual Actual Actual Actual Actual Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Jun '16 Sep '16 Dec '16 Mar '17 Jun '17 Sales ($Mils.) $ 4,162 $ 4,233 $ 4,298 $ 4,362 $ 3,944 $ 4,038 $ 4,212 $ 4,017 $ 17,055 $ 1