Slide 1: FY 2020 Second Quarter Earnings Call
FY 2020 Second Quarter Earnings Call May 5, 2020 Improving the experience of a world in motion 1 Adient – Improving the experience of a world in motion
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” within
Slide 3: Agenda
Agenda Introduction Mark Oswald Vice President, Global Investor Relations Business update Douglas Del Grosso President and Chief Executive Officer Financial review Jeffrey Stafeil Executive Vice President and Chief Financial Officer Q&A FY 2020 Second Quarter Earnings Call / May 5, 2020 3 Adient – I
Slide 4: Recent Q2 developments key takeaways
Recent Q2 2018developments key takeaways > Supported by the acceleration of self-help initiatives, Adient’s second quarter earnings improved y-o-y despite a 17% drop in sales and an approximate $100M Adjusted- EBITDA impact from COVID-19 ‒ Q2 revenue of $3.5B, down $717M or 17% y-o-y ‒ Q2 Adjusted-E
Slide 5: Adient's response to COVID-19
DF Adient’s response to COVID-19 FY 2020 Second Quarter Earnings Call / May 5, 2020 5
Slide 6: Current environment: impact of COVID-19 on Adient
Current environment: impact of COVID-19 on Adient > Adient was on pace to beat its 2020 targets before COVID-19 > First and foremost, the > COVID-19 has caused a great deal of uncertainty for the global auto industry (supply and demand) Adient team is working > China operations have restarted after
Slide 7: With COVID-19 effectively managed within China, business gradually restarting since March
With COVID-19 effectively managed within China, business gradually restarting since March After emerging from national lock-down since late Feb, China business activities gradually recovering by end of March • 99% manufacturing re-opened • Almost all supermarket, retail, entertainment (excl. close-d
Slide 8: China operations provides a proven playbook for Americas and EMEA
China operations provides a proven playbook for Americas and EMEA Improved cost base by focusing on cost reductions when China market was experiencing volume drop in FY19 Select actions taken (in process) to reduce cost base: > Flexed headcount across JVs in China (reduced total workforce by 15% by
Slide 9: Immediate cash conservation actions
Immediate cash conservation actions Above plant and JVs Cumulative actions initiated in > Salaried compensation actions 2020 to reduce labor costs, > Filling open positions put on hold reduce variable overhead, and > Canceled all travel, external training, discretionary spending reduce other SG&A ha
Slide 10: Identifying and executing additional actions to protect Adient's long-term health
Identifying and executing additional actions to protect Adient’s long-term health In addition to executing actions within Adient’s direct control, opportunities offered by various governments across Asia, Europe and the U.S. to help reduce costs and preserve cash are also being executed, including,
Slide 11: Adient operations are prepared to restart
Adient operations are prepared to restart > Employee health and safety is Adient’s top priority In China, JV team interviewed by media for high quality re- > Operational leadership team established to benchmark and standardize best practices opening process – restart of Adient’s China operations pro
Slide 12: Support for the auto industry…stimulating demand
Support for the auto industry…stimulating demand Governments and central banks are implementing numerous stimulus measures around the world to fight the economic disruption of COVID-19 Government actions: > Municipal governments across China announced plans to support the auto market (cash rebates,
Slide 13: Resizing the organization to compensate for expected lower industry sales
Resizing the organization to compensate for expected lower industry sales > Although most industry observers expect governments to implement actions designed to spur consumer demand, Adient expects returning to pre-crisis sales and production levels is not likely to occur for several quarters (possi
Slide 14: Financial Review
FINANCIAL REVIEW FY 2020 Second Quarter FY 2020 Second Quarter Earnings Call / May 5, 2020 14 Adient Adient– Improving – Improving thethe experience of of experience a world in in a world motion motion
Slide 15: FY 2020 Q2 key financials
FY 2020 Q2 key financials As Reported As Adjusted 1 $ millions, except per share data Q2 FY20 Q2 FY19 Q2 FY20 Q2 FY19 B/(W) Revenue $ 3,511 $ 4,228 $ 3,511 $ 4,228 -17% EBIT $ 66 $ (22) $ 142 $ 117 21% Margin 1.9% (0.5)% 4.0% 2.8% EBITDA N/A N/A $ 211 $ 191 10% Margin 6.0% 4.5% Memo: Equity Income 2
Slide 16: Revenue – consolidated & unconsolidated
Revenue – consolidated & unconsolidated $ in Millions Consolidated sales Regional Performance (consolidated sales y-o-y growth by region)1 $4,228 $(634) Americas (14)% $(83) Europe (14)% $3,511 APAC (25)% Includes ~$530M impact from Covid-19 1 – Growth rates at constant foreign exchange Memo: Adient
Slide 17: Q2 FY20 Adjusted-EBITDA
Q2 FY20 Adjusted-EBITDA > Q2FY20 Adj.-EBITDA of $211M, up $20M y-o-y. Primary drivers of the y-o-y Q2 FY20 Adj.-EBITDA performance includes performance included: $ in millions ~$(100)M impact from ‒ Improved business performance (launch, ops $3 COVID-19 $72 waste, freight, material margin) across al
Slide 18: Cash flow
Cash flow Free Cash Flow (1) Working capital impact on cash flow FY20 FY19 (in $ millions) Q2 FY20 YTD Q2 FY19 YTD ➢ As previously highlighted, trade working Adjusted-EBITDA $ 211 $ 508 $ 191 $ 367 capital highly sensitive to quarter end (+/-) Net Equity in Earnings (3) (110) (37) (119) days of the
Slide 19: Executing actions to increase Adient's financial flexibility
Executing actions to increase Adient’s financial flexibility > Proactively bolstered Adient’s cash position with the partial draw down of the company’s asset based revolving credit facility ➢ Important to remember, available liquidity associated > Total liquidity of approximately $1.8B at March 31,
Slide 20: Debt and capital structure
Debt and capital structure ($ in millions) 3/31/2020 Pro-forma Cash & Debt Profile Amount Trans. Adj. Amount Net Debt Cash & Cash Equivalents $1,640 $ 591 $2,231 (1) ABL Revolver, incl. FILO due 2024 825 825 March 31 September 30 Term Loan B due 2024 794 794 (in $ millions) 2020 2019 New Secured Not
Slide 21: Key takeaways and outlook
Key takeaways and outlook… > Historical operational challenges are being addressed and the business is performing ahead of plan > COVID-19 impact is being addressed, and the playbook used in China in February and March is being applied globally - All operations in China are up and running; Americas
Slide 22: Appendix and Financial Reconciliations
APPENDIX AND FINANCIAL RECONCILIATIONS FY 2020 Second Quarter FY 2020 Second Quarter Earnings Call / May 5, 2020 22 Adient Adient– Improving – Improving thethe experience of of experience a world in in a world motion motion
Slide 23: Q2 FY20 Adjusted-EBITDA: Americas
Q2 FY20 Adjusted-EBITDA: Americas > Q2FY20 Adj. EBITDA of $106M, up $72M $ in millions y-o-y. Primary drivers of the y-o-y performance Q2 FY20 Adj.-EBITDA performance includes included: Business performance: • $14M Commercial $21M Net material margin ~$(23)M impact from • $7M Material ‒ Business per
Slide 24: Q2 FY20 Adjusted-EBITDA: EMEA
Q2 FY20 Adjusted-EBITDA: EMEA > Q2FY20 Adj. EBITDA of $62M, up $3M Business performance: • $12M Commercial $ in millions $30M Net material margin y-o-y. Primary drivers of the y-o-y • $18M Material • $11M Launch / Ops Waste / Tooling performance included: • $5M Freight • $(4)M Other performance (inc
Slide 25: Q2 FY20 Adjusted-EBITDA: Asia
Q2 FY20 Adjusted-EBITDA: Asia Business performance: • $15M Commercial $16M Net material margin • $1M Material • $4M Launch / Ops Waste / Tooling • $2M Other performance (net of merit increases) > Q2FY20 Adj. EBITDA of $63M, down $60M • $(2)M Freight y-o-y. $ in millions > A significant reduction in
Slide 26: 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 free cash flow, Net debt and Net leverage as well as
Slide 27: Non-GAAP reconciliations - EBIT, Adjusted EBIT, Adjusted EBITDA
Non-GAAP reconciliations - EBIT, Adjusted EBIT, Adjusted EBITDA Three months ended March 31 2020 2019 (in $ millions) GAAP Adj. Adjusted GAAP Adj. Adjusted Net sales $ 3,511 $ - $ 3,511 $ 4,228 $ - $ 4,228 (1) Cost of sales 3,274 (3) 3,271 4,031 (14) 4,017 Gross profit 237 3 240 197 14 211 (2) Selli
Slide 28: Non-GAAP reconciliations - EBIT, Adjusted EBIT, Adjusted EBITDA (prior periods)
Non-GAAP reconciliations - EBIT, Adjusted EBIT, Adjusted EBITDA Three months ended December 31 (prior periods) (in $ millions) GAAP 2019 Adj. Adjusted 2018 GAAP Adj. Adjusted Adj. Adjusted GAAP 1 2018 Adj. Adjusted Net sales $ 3,936 $ - $ 3,936 $ 4,158 $ - $ 4,158 Cost of sales (1) 3,673 (2) 3,671 3
Slide 29: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Net Income Adjusted Net Income Adjusted Diluted EPS Three Months Ended Three Months Ended March 31 March 31 (in $ millions) 2020 2019 2020 2019 Net income (loss) attributable to Adient $ (19) $ (149) Net income (loss) attributable to Adient $ (0.20) $ (1.59) Restruc
Slide 30: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Income before Income Taxes and Effective Tax Rate Adjusted Income before Income Taxes Three Months Ended March 31 (in $ millions) 2020 2019 Income (loss) Income (loss) before Income Tax impact Effective before Income Tax impact Effective Taxes tax rate Taxes tax rat
Slide 31: Segment Performance
Segment Performance (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