Adient Plc · NYSE:ADNT
Adient — Q4 FY2020 Earnings Presentation
33 slides from Adient's earnings presentation, Nov 30, 2020
Slide 1: FY 2020 Fourth Quarter Earnings Call
7 ADIENT 7 FY 2020 Nov. 30, 2020 Fourth Quarter Earnings Call
Slide 2: Important Information
4 ~ Important Information ADIENT 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 statem
Slide 3: Introduction and Agenda
> SS \ Introduction Mark Oswald y VP, Treasurer & Investor Relatior Agenda Business update t Douglas Del Gro President and Nov. 30, 2020 FY 2020 Fourth Quarter Earnings Call
Slide 4: Non-GAAP and adjusted results note
1 – For Non-GAAP and adjusted results, see appendix for detail and reconciliation to U.S. GAAP Adient - INTERNAL
Slide 5: We delivered on our commitments in FY20
4 5 . di ~ We delivered on our commitments in FY20... _ADIENT We are focused and resilient, executing plans to position Adient for long-term success. Successfully executed plans within While managing through an Driving long-term our control. unplanned obstacle shareholder value by: Advanced the impr
Slide 6: Significant opportunity to build on our progress in FY21
With significant opportunity to build on our progress in FY21 Launch management Nov. 30, 2020 Key enablers of earnings growth in FY21 FY2020 - FY2022: Improvement phase Significant earnings and cash flow growth expected Specific focus areas underpin expected improvement in FY21 Operational Cost impr
Slide 7: Significant progress made throughout FY20; launch management a focus
Significant progress made throughout FY20; launch management will remain a focus area to ensure best-in-class performance Adient - INTERNAL
Slide 8: Cost & Technology Optimization
Cost & Technology Optimization Leveraging the available knowledge to create opportunities and value for our customers to improve their market performance and increase Adient’s overall value-add Adient - INTERNAL
Slide 9: SS&M progress update
SS&M progress update SS&M operations made steady progress in FY20 and are on track to become free cash flow neutral exiting FY21. Adient reduced free cash flow burn by ~50% in FY20 vs. FY19. Enablers of SS&M continued progress: Targeted business selection (profitable / RoCE) Improving cost competiti
Slide 10: Ford Future EV
1 2 3 4 1 5 6 2 3 4 7 5 Ford Future 6 EV 7 Adient - INTERNAL
Slide 11: Launch volume and complexity FY21 vs. FY20
2 1 1 3 2 3 4 5 Launch volume and complexity 4 FY21 vs.FY20 Volume Complexity 5 Americas EMEA China Asia (excl. China) Adient - INTERNAL
Slide 12: Positive influences / Headwinds
Positive influences Headwinds Adient - INTERNAL
Slide 13: Adient - INTERNAL
Adient - INTERNAL
Slide 14: Q4 FY20 as reported and as adjusted
As Reported As Adjusted 1 $ millions, except per share data Q4 FY20 Q4 FY19 Q4 FY20 Q4 FY19 B/(W) Consolidated $ 3,597 $ 3,921 $ 3,597 $ 3,921 -8% Revenue EBIT $ 50 $ 102 $ 199 $ 138 44% Margin 1.4% 2.6% 5.5% 3.5% EBITDA N/A N/A $ 287 $ 215 33% Margin 8.0% 5.5% Memo: Equity Income Memo: Equity Incom
Slide 15: FY20 as reported and as adjusted
As Reported As Adjusted 1 $ millions, except per share data FY20 FY19 FY20 FY19 B/(W) Consolidated Revenue $ 12,670 $ 16,526 $ 12,670 $ 16,526 -23% EBIT $ (195) $ 229 $ 363 $ 489 -26% Margin NM 1.4% 2.9% 3.0% EBITDA N/A N/A $ 673 $ 787 -14% Margin 5.3% 4.8% Memo: Equity Income excluding Interiors up
Slide 16: Q4 sales by region versus production
Q4 adj. for Q4 portfolio changes Americas -5% -5% EMEA -10% -9% $(339) Asia -17% -15% Note: China 20% 20% Note: Asia excl. China -28% -26% > Adient sales impacted by lower y-o-y global production volumes, Adient specific launches and recent portfolio adjustments consolidated ‒ Americas impacted by t
Slide 17: Q4 FY20 Adjusted EBITDA bridge
$23 $14 $4 $87 $(56) $287 > Q4FY20 Adj.-EBITDA of $287M, up $72M $215 y-o-y. Primary drivers of the y-o-y performance included: ‒ Improved business performance (labor & overhead, freight, lower launch and ops Q4FY19 Improved SG&A Equity FX / other Vol $- / Mix Q4FY20 Business Income waste) Performan
Slide 18: Adjusted EBITDA to free cash flow
FY20 FY19 (in $ millions) Q4 FY20 YTD Q4 FY19 YTD Adjusted-EBITDA $ 287 $ 673 $ 215 $ 787 (+/-) Net Equity in Earnings (61) 12 (53) (68) (-) Restructuring (23) (93) (19) (132) (+/-) Net Customer Tooling 4 18 30 73 (+/-) Trade Working Capital (Net AR/AP + Inventory) 204 (180) (89) (176) (+/-) Accrued
Slide 19: Net Debt and cash & debt profile
Net Debt ($ in millions) 9/30/2020 Cash & Debt Profile Amount September 30 September 30 Cash & Cash Equivalents $1,692 (in $ millions) 2020 2019 (1) ABL Revolver, incl. FILO due 2024 0 Term Loan B due 2024 790 Cash $ 1,692 $ 924 9.00% Secured Notes due 2025 600 Total Debt 4,307 3,738 7.00% Secured N
Slide 20: Adient - INTERNAL
20 Adient - INTERNAL
Slide 21: Key assumptions
Key assumptions (units in FY20 FY21 IHS ADNT sales y-o-y ∆ millions) Actual FCST fcst. N. America 13.0 15.9 22% 18% Europe 16.4 18.9 15% 22% China 19.0 20.2 7% 9%* Note: PC only Memo: 72.3 82.4 14% 17% Global * Including unconsolidated sales forecast Euro €.89/ $ € .85/ $ 4% Chinese RMB ¥7.01/ $ ¥6.
Slide 22: FY21 revenue outlook bridge
$200-$250 ~$150 ~$14.6B - $15.0B $1,900-$2,200 ~$(150) ~$(150) • - Tesla • RECARO $ in millions • - Nissan Altima • Fabrics • + Ford Mustang Mach E $12,670 • + Mercedes B-Class EV • + Audi Q4 e-tron FY20 Volume / Mix FX Backlog Customer Divestitures FY21 Actual (roll on / roll off) pricing Outlook A
Slide 23: FY21 adjusted EBITDA influences
Positive influences Expected headwinds Expected headwinds Material economics (primarily • Includes adj. equity income of • Includes adj. chemicals and steel) $250M equity income of Expected positive influences Launch costs • Consolidated adj. $265M (including Volume & mix Roll-off / portfolio adjust
Slide 24: FY21 forecast vs FY20 actual
FY21 Fcst FY20 Actual FY21 B/(W) FY20 1 ~ $14.6B – $15.0B $12.7B ~$2.1B ~ $1,000 – $1,100M $673M ~$380M ~3 ~ ~ $250M $248M ~ flat ~ ~ $235M $223M ~ $(10)M ~ ~ ~ $85M $98M ~ $13M ~ ~ $320 - $340M $326M ~ flat ~$160M - $260M excl. special items impacting FY21 (e.g. elevated ~ $0M - $100M $(80)M ~ $130
Slide 25: Appendix and financial reconciliations
7 ADIENT 7 Appendix and ee fi nancial reconciliations
Slide 26: Q4 FY20 Adjusted EBITDA: Americas
~Q4 FY20 Adjusted-EBITDA: Americas _ADIENT Q4FY20 Adj. EBITDA of $111M, up $47M y-o-y. Primary drivers of the y-o-y performance included: \ A $34M improvement in SG&A, primarily driven by a reduction in net engineering, increased efficiencies, the deconsolidation of Adient Aerospace and divestiture
Slide 27: Adient - INTERNAL
• • • $5 $17 $39 $84 $(24) $47 Adient - INTERNAL
Slide 28: Adient - INTERNAL
$14 $3 $126 $(21) $113 $(8) $(1) • • * Excluding equity income. Including equity income, margins of 22.6% and 24.6% for Q4 FY19 and Q4 FY20, respectively Adient - INTERNAL
Slide 29: Non-GAAP financial measurements
5 : 4 ~ Non-GAAP financial measurements _ADIENT 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, Free cash flow, Net debt and Net leverage as wel
Slide 30: GAAP to adjusted results reconciliation
Three months ended September 30 Twelve months ended September 30 2020 2019 2020 2019 (in $ millions) GAAP Adj. Adjusted GAAP Adj. Adjusted GAAP Adj. Adjusted GAAP Adj. Adjusted Net sales $ 3,597 $ - $ 3,597 $ 3,921 $ - $ 3,921 $ 12,670 $ - $ 12,670 $ 16,526 $ - $ 16,526 Cost of sales (1) 3,352 (4) 3
Slide 31: Adjusted net income and diluted EPS
Adjusted Net Income Adjusted Diluted EPS Three Months Ended Twelve Months Ended Three Months Ended Twelve Months Ended September 30 September 30 September 30 September 30 (in $ millions) 2020 2019 2020 2019 2020 2019 2020 2019 Net income (loss) attributable to Adient $ (36) $ (4) $ (547) $ (491) Net
Slide 32: Financing charges and adjusted income before taxes
Financing Charges Three Months Ended Twelve Months Ended September 30 September 30 (in $ millions) 2020 2019 2020 2019 Net financing charges as reported $ 64 $ 47 $ 220 $ 182 Write off of deferred financing charges upon debt renewal - - - (13) Gain on partial extinguishment of long-term debt 3 - 3 -
Slide 33: Quarterly segment data
(in $ millions) Q1 2019 Q1 2020 Corporate / Corporate / Americas EMEA Asia Consolidated Americas EMEA Asia Consolidated Recon Items Recon Items Net sales $ 1,935 $ 1,640 $ 650 $ (67) $ 4,158 $ 1,859 $ 1,564 $ 572 $ (59) $ 3,936 Adjusted EBITDA 43 2 154 (23) 176 94 49 177 (23) 297 Adjusted EBITDA mar