Slide 1: FY 2018 Second Quarter Earnings Call
FY 2018 Second Quarter Earnings Call May 3, 2018 Improving the experience of a world in motion FY 2018 Second Quarter Earnings Call / May 3, 2018 / Public
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 Bruce McDonald Chairman and Chief Executive Officer Financial review Jeffrey Stafeil Executive Vice President and Chief Financial Officer Closing remarks Bruce McDonald Chairman and Chief Executive Officer Q&A
Slide 4: Q2 2018 key takeaways
Q2 2018 key takeaways > Despite improved results in Seat Structures & Mechanisms (SS&M) compared with Q1, continued headwinds within the business weighed on ADNT’s Q2 results ‒ Q2 Adjusted-EBIT and Adjusted-EBITDA of $252M and $363M, respectively 1 ‒ Q2 Adjusted-EPS of $1.85 1 ‒ Cash and cash equiva
Slide 5: Reassessing our mid-term margin targets
Reassessing our mid-term margin targets 2020 mid-term plan Update > Given the approximate $300M earnings setback between June 2016 LTM and FY2018 outlook, a full review was performed to reassess the 200 bps margin improvement target > Outside of SS&M, results are tracking to plan > Although we expec
Slide 6: Seat structures & mechanisms update
Seat structures & mechanisms update > Objectives of the comprehensive strategic assessment of the SS&M business: ‒ 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 opp
Slide 7: Stabilizing the business
Stabilizing the business > Actions taken to stabilize the business have gained traction and include: ‒ Strengthened the leadership team & implemented new reporting structure ‒ Reinforced launch teams ‒ Completed comprehensive review of targeted business / put in place clear boundaries for business a
Slide 8: Moving the business forward
Moving the business forward > Improving the business beyond 2020 requires major change (both near-term and long-term actions) and will be a multi-year journey > Key tenets under review: ‒ Pivot to more selective participation, emphasizing profitability and strategic fit (likely resulting in a smalle
Slide 9: SS&M expected to drive near and longer-term value
SS&M expected to drive near and longer-term value Near-term Intermediate-term > Ability to return the business to the pre-spin > Change in business composition level of profitability (by 2020) − Smaller; less tier 2 business − Significant improvement vs. FY18 outlook − Focused on margins & returns −
Slide 10: Financial Review
FINANCIAL REVIEW FY 2018 Second Quarter FY 2018 Second Quarter Earnings Call / May 3, 2018 / Public 10 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 11: FY 2018 Q2 key financials
FY 2018 Q2 key financials As Reported As Adjusted 1 $ millions, except per share data FY18 Q2 FY17 Q2 FY18 Q2 FY17 Q2 B/(W) Revenue $ 4,596 $ 4,201 $ 4,596 $ 4,201 9% EBIT $ (134) $ 284 $ 252 $ 332 -24% Margin (2.9)% 6.8% 5.5% 7.9% EBITDA N/A N/A $ 363 $ 421 -14% Margin 7.9% 10.0% Memo: Equity Incom
Slide 12: Revenue – consolidated & unconsolidated
Revenue – consolidated & unconsolidated Consolidated sales Unconsolidated Seating $ in Millions $285 (incl. SS&M) $234 $(124) $2,333 M Year-over- $4,596 $2,092 M year growth $4,201 + 12% Up 8% excluding FX and JV consolidation Q2FY17 Acquisition FX Volume/Pricing Q2FY18 /JV Consolidation FY18 Q2 FY1
Slide 13: Q2 FY18 Adjusted-EBITDA
Q2 FY18 Adjusted-EBITDA $ in millions $13 > Realignment of reportable $13 $421 segments in Q2 (Seating, SS&M, Interiors) $363 > Despite SG&A efficiencies of $(74) $(10) ~$43M and the benefit of 10.0% 7.9% acquisitions / JV consolidations of ~$29M, y-o-y performance declined by $58M > Y-o-y deteriora
Slide 14: Q2 FY18 Adjusted-EBITDA: Seating
Q2 FY18 Adjusted-EBITDA: Seating $ in millions $22 $6 > Q2 FY18 Seating Adjusted-EBITDA of $411M, up $13M y-o-y $26 $29 $(36) > Positive benefits associated with acquisitions / JV consolidation of $(20) $411 $398 $29M, FX $26M and improved $(14) SG&A of $22M > Partially offset by: 10.4% 9.9% ‒ Incre
Slide 15: Q2 FY18 Adjusted-EBITDA: SS&M
Q2 FY18 Adjusted-EBITDA: SS&M $ in millions $11 > Q2 FY18 SS&M Adjusted-EBITDA $40 of $(34)M, down $74M y-o-y > Primary drivers of y-o-y decline: 5.3% Includes: - Net customer pricing ‒ Operating performance (e.g. ops - Eng. / Growth Investment inefficiencies, labor economics, customer chargebacks,
Slide 16: Cash flow & debt
Cash flow & debt 1 Free Cash Flow (1) Debt (1) > Cash and cash equivalents of $353M at March 31, 2018 (in $ millions) Q2 FY18 > Net leverage of 2.30x at March 31, 2018 Adjusted-EBITDA $ 363 Net Debt and Net Leverage (-) Interest paid (58) (-) Taxes paid (45) March 31 September 30 (-) Restructuring (
Slide 17: Macro influences
Macro influences > Global automotive demand remains strong; positive mix of SUVs / CUVs continues Industry Demand > U.S. tax reform expected to spur consumer spending > Various country exemptions for steel & aluminum tariffs viewed as a positive development Steel & aluminum tariffs in U.S. > Despite
Slide 18: FY2018 outlook
FY2018 outlook Revenue $17.0B - $17.2B Effective Tax Rate 8-9% Adj. EBITDA $1.40B - $1.45B Adj. Net Income $700 - $740M Equity Income Seating $320M $400M Interiors $80M (included in Adj. EBITDA) Capital $575M - $600M Expenditures Adj. EBIT $0.975B - $1.025B Free Cash Flow ~ $225M Interest Expense ~
Slide 19: Closing Remarks
CLOSING REMARKS FY 2018 Second Quarter FY 2018 Second Quarter Earnings Call / May 3, 2018 / Public 19 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 20: 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: Key tenets (building blocks) ‒ Ability to recapture lost SS&M profits since spin for future value creation ‒ Opportunity to change the comp
Slide 21: Appendix and Financial Reconciliations
APPENDIX AND FINANCIAL RECONCILIATIONS FY 2018 Second Quarter FY 2018 Second Quarter Earnings Call / May 3, 2018 / Public 21 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 22: 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 23: Non-GAAP reconciliations
Non-GAAP reconciliations EBIT, Pro-forma Adjusted EBIT, Pro-forma Adjusted EBITDA FY16 Actual FY17 Actual FY18 Actual Last Twelve Months Ended Actual Actual Actual Actual Actual Actual Actual Actual (in $ millions) Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY
Slide 24: 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) 2018 2017 2018 2017 Net income attributable to Adient $ (168) $ 190 Diluted earnings per share as reported $ (1.80) $ 2.02 (1) (1) Becoming Ad
Slide 25: Non-GAAP reconciliations
Non-GAAP reconciliations Free Cash Flow Adjusted EBITDA to Free Cash Flow Three Months Free Cash Flow Ended March 31 Three Months Ended (in $ millions) 2018 March 31 (in $ millions) 2018 2017 Adjusted-EBITDA $ 363 Operating cash flow $ (23) $ 156 (-) Interest paid (58) Less: Capital expenditures (12
Slide 26: Non-GAAP reconciliations
Non-GAAP reconciliations Net Debt and Adjusted Equity Income Net Debt and Net Leverage Adjusted Equity Income Three Months Ended March 31 September 30 March 31 (in $ millions) 2018 2017 (in $ millions) 2018 2017 Cash $ 353 $ 709 Equity income as reported $ 85 $ 89 Total Debt 3,678 3,478 Purchase acc
Slide 27: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Income before Income Taxes Adjusted Income before Income Taxes Three Months Ended March 31 (in $ millions) 2018 2017 Income before Effective Income before Effective Tax impact Tax impact Income Taxes tax rate Income Taxes tax rate As reported $ (171) $ (28) 16.4% $
Slide 28: Non-GAAP reconciliations
Non-GAAP reconciliations Reported to Adjusted SG&A FY16 Actual FY17 Actual FY18 Actual Last Twelve Months Ended Actual Actual Actual Actual Actual Actual Actual Actual Actual (in $ millions) Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Jun '16 Sep '16 Dec '
Slide 29: Non-GAAP reconciliations
Non-GAAP reconciliations Segment Performance (in $ millions) Adjusted EBITDA by Segment Q1 2017 Q1 2018 Corporate/ Corporate/ Seating SS&M Interiors Eliminations Consolidated Seating SS&M Interiors Eliminations Consolidated Net sales $ 3,692 $ 671 N/A $ (337) $ 4,026 $ 3,796 $ 718 N/A $ (310) $ 4,20
Slide 30: Prior Period Results
Prior Period Results FY16 Actual FY17 Actual FY18 Actual Last Twelve Months Ended Actual Actual Actual Actual Actual Actual Actual Actual Actual Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Jun '16 Sep '16 Dec '16 Mar '17 Jun '17 Sep '17 Dec '17 Mar '18 Sal