Adient Plc · NYSE:ADNT
Adient — Investor Presentation (November 2016)
36 slides from Adient's investor presentation, Nov 15, 2016
Slide 1: Adient Investor Meeting November 2016
Adient (“ADNT”) Investor Meeting November 2016
Slide 2: Forward looking statements
Forward looking statements 2 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”
Slide 3: Meeting agenda
Meeting agenda 3 > Introduction to Adient & business overview > China / JV overview > Financial overview > Q&A > Appendix
Slide 4: Numerous reasons Adient is a solid investment
Numerous reasons Adient is a solid investment 4 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 automaker
Slide 5: For many years Automotive was the growth engine of Johnson Controls
For many years Automotive was the growth engine of Johnson Controls 5 0 3 6 9 12 15 18 21 24 27 30 33 Prince Becker Ikeda Bussan Sagem Michel Thierry YFAI Interiors JV Revenue ($billion) 100% Unconsolidated JVs Revenue Hoover Universal JCIM JV Hammerstein, Keiper, Recaro Naue Group & Lahnwerk Yanfen
Slide 6: Adient today
Adient today 6 FY 2016 ~$17 billion Consolidated revenue ~$8 billion Unconsolidated seating revenue ~$8 billion Unconsolidated interiors revenue 230+ locations globally 25+ million seat systems a year 75,000 highly engaged employees The largest global automotive seating supplier, supporting all majo
Slide 7: Introducing Adient: key changes going forward
Introducing Adient Key changes going forward 7 Past Today > Part of a global multi-industry company > Improving business performance > Capital allocated to support multi-industry transformation > Focus on automotive seating ‒ Leaner cost structure > Expect 200 bps of margin improvement with double-d
Slide 8: Adient's vision and mission bring focus to our success
Adient’s vision and mission bring focus to our success 8 Vision Mission Improving the Experience of a World in Motion We will be the world-class automotive seating supplier through leadership in cost, quality, launch execution, and customer satisfaction. We will leverage our capabilities to drive gr
Slide 9: Broadest and most complete range of Seating & Interior Products
Broadest and most complete range of Seating & Interior Products 9 Yanfeng Global Automotive InteriorsSeatingAdient Automotive Seating > Instrument Panels > Floor Consoles > Door Panels > Overhead Consoles > Decorative Trim > Complete Seat / Just-In-Time Manufacturing > Front & Rear Seat Structures >
Slide 10: Global market leader with diversified geographic exposure
Global market leader with diversified geographic exposure 10 34% Lear Magna Adient Other Faurecia Toyota Boshoku Adient share Includes non-consolidated revenue Revenue based on FY2015 (consolidated and non-consolidated) Source: IHS Automotive and management estimates Global market share 29% 6% 30% 3
Slide 11: Global competitive market position
Global competitive market position 11 Source: IHS Automotive with management adjustments. Adjustments are based on management’s knowledge of customer schedule details and participation in the global automotive seating market, and include identification of the seating provider for certain vehicle mod
Slide 12: Our customer portfolio is the envy of the industry
Our customer portfolio is the envy of the industry and closely mirrors our customer’s global market share 12 Based on FY16 Consolidated Sales Key Takeaways > Industry leading diversification > By customer -- largest customer accounts for 13% of total consolidated sales > By platform -- largest platf
Slide 13: Seating – growth market
> Increase in passenger-focused technologies: ‒ Occupant sensing ‒ Seat heating / cooling ‒ Massage features ‒ Passenger health and wellness ‒ Advanced seat adjustability > Connected car / autonomous driving provide large potential for content growth ‒ Adient offers complete interior solution to pot
Slide 14: The industry is shifting
The industry is shifting Trends & key questions 2020 and beyond Traditional manufacturers ... Industry trends > Autonomous driving > Electrification > Internet of things > Connectivity > Urbanization > Alternative propulsion > Slim & lightweight > Smart materials > Individualization > New shapes > S
Slide 15: Opportunities in new markets
Opportunities in new markets Growing outside traditional auto markets 15 West Coast New Players Railway Seating Commercial Vehicle Seating Aircraft Seating
Slide 16: Meeting agenda
Meeting agenda 16 > Introduction to Adient & business overview > China / JV overview > Financial overview > Q&A > Appendix
Slide 17: Adient – Winning in China
Adient – Winning in China 17 0 2 4 6 8 10 2000 2005 2010 2015 2020E U n c o n s o l i d a t e d S a l e s @ 1 0 0 % ( $ B ) Adient Seating China > We have nearly 45 percent market share of the seating business in China, making us the industry leader > By leveraging our market position, we expect to
Slide 18: Joint venture structure
Joint venture structure 18 Tailored Strategy for Each JV Equity Share Strategic Plan Joint Venture Chinese Group Partner OEM partnered with Chinese Auto Group Adient Partner > Components for China & Asia Pacific > Regional growth > Low cost engineering and innovation YFJC SAIC 49.99% 50.01% Sub-part
Slide 19: Adient China's current seating market share in each big auto group
Adient China’s current seating market share in each big auto group 19 Source : IHS 201606 Forecast, traditional passenger vehicle ( 2016 total market size:20.4million) Market share information: JCI internal information *GHRC =Beijing Guanghua Rongchang % Adient’s JIT market share in each auto group,
Slide 20: Market trends strengthening our leading position
> Increasing growth to non-Tier 1 cities ‒ Well positioned to grow through our JV structure with all OEMs ‒ Foreign OEMs adding competitive products in non- Tier 1 & 2 cities ‒ Local manufacturers recognize Adient’s value proposition 20 > Premium segment remains robust ‒ Strong and growing position
Slide 21: Meeting agenda
Meeting agenda 21 > Introduction to Adient & business overview > China / JV overview > Financial overview > Q&A > Appendix
Slide 22: Adient financial overview
Dividends Capital Expenditures Tax Rate Cash on Balance Sheet 2 Net Leverage1 Key Metrics 22 . > Financial profile ‒ ~$17bn consolidated net sales > Consolidated seating ‒ ~200 bps margin improvement expected in mid-term ‒ Lower SG&A ‒ Improved performance in metals business ‒ Wind down of remaining
Slide 23: FY16 financial results
23 > Consolidated revenue of $16.8M increased 1% vs. FY15 excluding the impact of the Interiors deconsolidation and foreign exchange. > Unconsolidated revenue of approximately $16B in FY16. Sales in China (primarily unconsolidated) increased 46% to $11.9 billion (up 16% excluding the impact of the
Slide 24: Drivers of future earnings growth
> Positive volume trends and backlog > Well positioned to capture growth in China through equity income from market leading JV > Improved operational efficiencies driven by: ‒ Implementation of world-class operating system ‒ G&A reduction ‒ Metals and Mechanisms improvement ‒ Increased use of low-co
Slide 25: Earnings growth bridge
Earnings growth bridge 0 1 2 3 4 SG&A Benchmark Savings SG&A China Support Metals Growth Inv. / Other Targeted Improvement C u m u l a t i v e S a v i n g s ( % o f S a l e s ) Key Takeaways > 200 bps margin improvement identified > Key drivers: ‒ Leaner cost structure ‒ Metals integration & recover
Slide 26: Adient cash flow profile
26 > Strong initial free cash flow 1 ‒ Low tax rate (Irish domicile ~10-12%) ‒ Minimal working capital needs ‒ Smart reinvestment / capital expenditures (maintenance & growth) > Growing opportunity ‒ Margin / earnings growth ‒ Increasing equity income and cash dividends ‒ Lower cash restructuring ov
Slide 27: FCF growth
FCF Growth Key Takeaways > FY17 expected results include: ‒ A heightened level of cash outflows (~$280M) related to restructuring initiatives ‒ Anticipated one-time expenses (~$100M) associated with “Becoming Adient” ‒ Elevated CapEx of ~$75M related to IT and facility capital associated with stand
Slide 28: Adient JV equity income and cash dividend summary
28 Note: Yanfeng Automotive Interiors (YFAI) JV formed on July 2, 2015, and did not generate a cash dividend to Adient in FY2015 or FY2016. 1. Includes $106 million and $3 million of non-cash gains related to fair value adjustments of Adient’s existing cash equity investments in FY2013 and FY2012, r
Slide 29: Looking forward: FY2017 guidance
Looking forward: FY2017 guidance 29 Revenue $16.8 to $17.0 billion Adj. EBIT (Incl. ~$380 million of E.I.) $1.15 to $1.2 billion Depreciation & Amortization $400 million Interest Expense $145 million Effective Tax Rate 10 to 12% Adj. Net Income $850 to $900 million Capital Expenditures $545 to $575
Slide 30: Adient's key investment thesis
Adient’s key investment thesis 30 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
Slide 31: Meeting agenda
Meeting agenda 31 > Introduction to Adient & business overview > China / JV overview > Financial overview > Appendix
Slide 32: Appendix and Financial Reconciliations
Appendix and Financial Reconciliations 32
Slide 33: Adient debt and maturity profile
Adient debt and maturity profile 33 Capitalization Detail No Near Term Maturities Term Loan A EUR Notes USD Notes $ 1,500 $1,119 $ 900 $ 0 $ 400 $ 800 $ 1,200 $ 1,600 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 ($ in millions) Source: Management estimates 1 - USD/EUR exchange rate at time of i
Slide 34: Non-GAAP measures definitions
34 > Segment EBIT, Pro-forma Adjusted EBIT, Pro-forma Adjusted EBITDA, Free Cash Flow, Net Debt and Net Leverage are not recognized terms under GAAP and do not purport to be alternatives to the most comparable GAAP amounts. Since all companies do not use identical calculations, our definition and pr
Slide 35: Pro forma adjusted EBITDA reconciliation notes
35 1. Reflects qualified restructuring charges for costs that are directly attributable to restructuring activities and meet the definition of restructuring under ASC 420. 2. Reflects net mark to market adjustments on pension and postretirement plans. 3. Reflects expenses associated with the separat
Slide 36: Non-GAAP reconciliations: total and net leverage ratios
Non-GAAP reconciliations Total leverage and net leverage ratios 36 Source: Pro forma cash based on preliminary opening cash balance of Adient; Gross debt derived from management accounts as of September 30,2016; pg 35 for FY16 pro forma adjusted EBITDA (in $ millions) Sept 30, 2016 Pro forma Cash 55