Slide 1: Adient Investor Meeting
Adient Investor Meeting May 2018 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: Today's presenters and meeting agenda
Today’s presenters and meeting agenda Bruce McDonald Chairman & CEO, Adient > Adient’s value creation opportunity Byron Foster EVP Seat Structures & Mechanisms (SS&M), Adient > SS&M update – moving the business forward Investor meeting: May 2018 3 Adient – Improving the experience of a world in moti
Slide 4: Adient today
Adient today Adient is the largest global automotive seating supplier, #1 supporting all major automakers in the differentiation of their vehicles through superior quality, technology and performance FY 2017 Global market Revenue by share* geography* ~$16.2B We supply one Consolidated revenue Americ
Slide 5: Adient's value creation journey
Adient’s value creation journey Pre-2016 2016 2017 2018 2019 2020 2021 Business unit of Johnson Controls, plc ADNT Successfully executed spin-off “Day 1” trading NYSE 10/31/16 FY17 Strong execution in first fiscal year as independent company Reignited Adient’s growth engine FY18 Operational issues h
Slide 6: Adient's compelling investment opportunity
Adient’s compelling investment opportunity Adient is a critical supplier in automotive seating supplying approximately one out of every three automotive seats worldwide Today’s valuation impacted by: Future valuation driven by: > Significant operational challenges > Demonstrating significant operati
Slide 7: Adient's near and long-term value drivers
Adient’s near and long-term value drivers TODAY FY18 & beyond Cash generation & > A critical supplier in capital allocation automotive seating Incremental benefits (supplying one out of > Improved FCF every three automotive from growth tailwinds generation (runoff of seats worldwide) elevated restru
Slide 8: Meeting agenda
Meeting agenda >Adient’s value creation opportunity >SS&M update – moving the business forward Investor meeting: May 2018 8 Adient – Improving the experience of a world in motion
Slide 9: Byron Foster: 20 years with Adient / Johnson Controls
Byron Foster: 20 years with Adient / Johnson Controls Adient’s Executive Vice President, leading the company’s Seat Structures & Mechanisms business and its turnaround initiative > Prior to this position, responsible for Adient’s global seating business in the Americas, Europe and Asia Pacific, lead
Slide 10: Recap from FY18 Q2 earnings call
Recap from FY18 Q2 earnings call > Launched comprehensive strategic assessment of SS&M with three objectives: − Stabilize the business and drive rapid near-term improvements − Revisit strategic importance of SS&M and align on long-term vision for the segment − Identify potential restructuring opport
Slide 11: How did we get here?
How did we get here? 1. Launched a completely new mechanisms portfolio (once every 20-30 years event) – which required new process technology Aggressive go-to-market 2. 2-3x typical launch load in 2017-2018 (largest strategy coupled with launch load in company history) – with many very macroeconomic
Slide 12: We continue to believe that SS&M is a key part of Adient's portfolio
We continue to believe that SS&M is a key part of Adient's portfolio Capability for new Access to OEMs who Better enterprise mobility and system Support for profitable source complete seat performance sourcing trends China business Adient has valuable Better performance is SS&M critical capability M
Slide 13: However, our view on the business has shifted
However, our view on the business has shifted SS&M today SS&M future plans • Aim to have top performing and engineered • Focus innovation efforts on designs that are low cost Products product in all categories or have high profitability upside • Set strict thresholds for platform profitability Platf
Slide 14: Our plans to get there
Our plans to get there Selective Next Gen Commercial Supply chain Programs & participation Operations advantage excellence engineering and cost fit for purpose (AMS, lean, & (focus, (network, (complexity Industry 4.0) approach, & buying & mgmt., risk negotiation planning, mgmt. & discipline tools) a
Slide 15: Our transformation efforts are addressing each strategic pillar
Our transformation efforts are addressing each strategic pillar Selective Next Gen Commercial Supply chain Programs & participation operations advantage excellence engineering Alagon Steel demand 1 TBL prioritization 5 14 Recliner pricing 17 22 ECR Recovery stabilization management Low tonnage Rocke
Slide 16: Focus on the right opportunities
Focus on the right opportunities: We have put in place clear boundaries for new business acquisitions Selective participation Program launch constraints Capital Expenditure Reducing CapEx over next few Revenue Targets years 6 year average program lifecycle Selective with reduced annual targets per y
Slide 17: Fix the plants: Focusing on most unprofitable plants
Fix the plants: Focusing on most unprofitable plants to drive rapid cost takeout North American plants European plants Operations on track Continuous improvement focus Intervention underway Closures announced Investor meeting: May 2018 17 Adient – Improving the experience of a world in motion
Slide 18: Fix the plants: Interventions have already shown success
Fix the plants: Interventions have already shown success at key plants 1 Athens 2 Mor 3 Ramos Implemented new change Improved material Launched set of initiatives to over standard work provisioning at laser welding increase press up time reduction in increase in increase in ~25% average C/O time ~5%
Slide 19: Manage the launches: Reviewed all near-term program launches
Manage the launches: Reviewed all near-term program launches against expanded evaluation criteria to identify high focus programs Reviewed 113 near-term ...against expanded set of ...identified 26 focus program launches... 12 assessment criteria... programs 1 Days late Programs preparing Existing 11
Slide 20: Discipline across multiple elements, process of management system
Discipline across multiple elements, process of management system required to enable operational improvements Five key elements of management system to optimize • Definition of accountabilities for each role and decision 1 Decision rights • Optimizes ownership of processes by individuals • Collation
Slide 21: Comprehensive set of KPIs to track our progress
We have a comprehensive set of KPIs to track our progress and react quickly if certain measures vary from plan 1 Global SS&M scorecard 2 Transformation scorecard Key business metrics reported monthly, measured Transformation progress reporting, from initiative against targets and visualized with mon
Slide 22: We've enhanced the operating model and infused it with a high-talent team
We've enhanced the operating model and infused it with a high-talent team Strengthens the leadership team by driving end-to-end New reporting accountability and allows us to bring in the best talent, both structure from inside Adient as well as outside We've infused the business with the best talent
Slide 23: SS&M strategy is a significant change, requiring a multi-year journey
SS&M strategy is a significant change, requiring a multi-year journey 1 Selective participation focused on profitability and strategic fit Typical program lifespan of 5-7 years – will take time to cycle out unprofitable programs 2 Simplification of the plant network & supply chain to attack fixed co
Slide 24: Summary
Summary > Adient intends to take a variety of near and longer-term actions that, when executed, are expected to drive significant value for ADNT. These include: − Ability to recapture lost SS&M profitability since spin − Opportunity to change the composition of the SS&M business over time: − Smaller
Slide 25: Appendix and Additional Information
APPENDIX AND ADDITIONAL INFORMATION Investor Meeting: May 2018 25 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 26: Non-GAAP financial measurements
Non-GAAP financial measurements > Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted SG&A, as well as other measures presented on an adjusted basis 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 identic
Slide 27: Segment performance
Segment performance (in $ millions) Segment Performance Q1 2017 Q1 2018 Corporate / Corporate / Seating SS&M Interiors Recon Items Consolidated Seating SS&M Interiors Recon Items Consolidated Net sales $ 3,692 $ 671 $ - $ (337) $ 4,026 $ 3,796 $ 718 $ - $ (310) $ 4,204 Adjusted EBITDA 364 7 30 (31)
Slide 28: SG&A performance
SG&A performance Adjusted Adjusted (in $ millions) SG&A YoY Q2 (in $ millions) SG&A YoY Q1 Reported Q2 FY 17 Selling, general and administrative costs $ 178 Reported Q1 FY 17 Selling, general and administrative costs $ 217 (1) (1) Separation costs - Separation costs (10) (1) (1) Becoming Adient (10)