Slide 1: FY 2018 Fourth Quarter Earnings Call
FY 2018 Fourth Quarter Earnings Call November 9, 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: Agenda
Agenda Introduction Mark Oswald Vice President, Global Investor Relations Business update Douglas DelGrosso President and Chief Executive Officer Financial review Jeffrey Stafeil Executive Vice President and Chief Financial Officer Q&A FY 2018 Fourth Quarter Earnings Call / Nov 9, 2018 3 Adient – Im
Slide 4: Douglas DelGrosso introduction
Douglas DelGrosso introduction Doug brings significant operational and turnaround experience to Adient Timeframe Select commentary • Appointed CEO; responsible for developing and Chassix 2016 - 2018 implementing a strategic plan to increase financial performance and improved customer relationships •
Slide 5: Recent developments key takeaways
Recent Q2 2018developments key takeaways > Revenue and free cash flow were delivered in-line with our commitments; operational challenges continue to weigh on earnings ‒ Q4 revenue of $4.1B, up $166M y-o-y ‒ Q4 Adjusted-EBITDA of $251M 1, down $139M y-o-y ‒ Q4 Adjusted-EPS of $1.30 1 ‒ Q4 free cash
Slide 6: CEO 100-day plan
CEO 100-day plan > Deep dive into fiscal 2019 profit plan > On-site follow-up reviews in Europe, Mexico and U.S. on top 5 underperforming plants (Asia visit Days 1 - 50 planned for late November) > Deep dive reviews on top 5 critical launches which occur in the next 90 days Listen, visit the operati
Slide 7: Financial review
FINANCIAL REVIEW FY 2018 Fourth Quarter FY 2018 Fourth Quarter Earnings Call / Nov 9, 2018 7 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 8: Factors impacting ADNT's Q4 GAAP results
Factors impacting ADNT’s Q4 GAAP results > Q4 GAAP net loss impacted by a variety of one-time, non-cash charges which included: ‒ Performance related – driven by on-going business performance issues that are expected to persist into the foreseeable future: Factors impacting Q4 GAAP net loss • SS&M a
Slide 9: FY 2018 Q4 key financials
FY 2018 Q4 key financials As Reported As Adjusted 1 $ millions, except per share data FY18 Q4 FY17 Q4 FY18 Q4 FY17 Q4 B/(W) Revenue $ 4,145 $ 3,979 $ 4,145 $ 3,979 4% EBIT $ (1,044) $ 389 $ 149 $ 296 -50% Margin * 9.8% 3.6% 7.4% EBITDA N/A N/A $ 251 $ 390 -36% Margin 6.1% 9.8% Memo: Equity Income (L
Slide 10: FY 2018 full year key financials
FY 2018 full year key financials As Reported As Adjusted 1 $ millions, except per share data FY18 FY17 FY18 FY17 B/(W) Revenue $ 17,439 $ 16,213 $ 17,439 $ 16,213 8% EBIT $ (977) $ 1,193 $ 770 $ 1,244 -38% Margin * 7.4% 4.4% 7.7% EBITDA N/A N/A $ 1,200 $ 1,605 -25% Margin 6.9% 9.9% Memo: Equity Inco
Slide 11: Revenue – consolidated & unconsolidated
Revenue – consolidated & unconsolidated Consolidated sales Unconsolidated Seating and SS&M $ in Millions $2,206 M $2,222 M Year-over- $158 $64 $4,145 year growth $3,979 $(56) + 1% Up 3% excluding FX Q4FY17 Acquisition Volume/Pricing FX Q4FY18 FY17 Q4 FY18 Q4 Unconsolidated Interiors Regional Perform
Slide 12: Q4 FY18 Adjusted-EBITDA
Q4 FY18 Adjusted-EBITDA $ in millions > Despite the benefit of increased • Lower SG&A expense • • $(48)M Freight / operational waste $(39)M Operating performance primarily launch related revenue, y-o-y Adjusted-EBITDA • • $(21)M Net material margin performance $(34)M FX / net commodities declined to
Slide 13: Q4 FY18 Adjusted-EBITDA: Seating
Q4 FY18 Adjusted-EBITDA: Seating > Q4 FY18 Seating Adjusted-EBITDA of $ in millions $301M, down $102M y-o-y Business performance: • $(36)M Freight / operational waste > The positive benefits associated with the • $(26)M Operating performance primarily launch related • $(52)M Pricing Futuris acquisit
Slide 14: Q4 FY18 Adjusted-EBITDA: SS&M
Q4 FY18 Adjusted-EBITDA: SS&M $ in millions Business performance: • $(13)M Operating performance primarily launch related > Q4 FY18 SS&M Adjusted-EBITDA of • $(12)M Freight / operational waste • $(5)M Pricing $(34)M, down $38M y-o-y • $4M Material $(1)M Net material margin $7 > Benefits from a reduc
Slide 15: Cash flow & debt
Cash flow & debt 1 Free Cash Flow (1) Debt (1) > Cash and cash equivalents of $687M at September 30, 2018 (in $ millions) Q4 FY18 FY18 > Net leverage of 2.29x at September 30, 2018 Adjusted-EBITDA $ 251 $ 1,200 > Suspended the quarterly cash dividend to increase financial flexibility and increase fo
Slide 16: Other matters
Other matters > Amended the company’s main credit agreement, part of a focused effort to de-risk Adient’s capital structure ‒ The maximum total bank-adjusted net leverage covenant ratio increased to 4.5x from 3.5x ‒ Amending the credit agreement provides additional flexibility as the company execute
Slide 17: Looking forward
Looking forward > Continued execution of the CEO’s 100-day plan > Prioritize resources on most severe underperforming manufacturing sites and future launches, focus on SS&M and Seating Americas > Reviewing all facets of the business to identify further profit improvement and cash generation opportun
Slide 18: Appendix and financial reconciliations
APPENDIX AND FINANCIAL RECONCILIATIONS FY 2018 Fourth Quarter FY 2018 Fourth Quarter Earnings Call / Nov 9, 2018 18 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 19: 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 20: Non-GAAP reconciliations
Non-GAAP reconciliations EBIT, Adjusted EBIT, Adjusted EBITDA FY17 Actual FY18 Actual (in $ millions) Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Full FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Full FY18 Net income attributable to Adient $ 142 $ 190 $ 201 $ 344 $ 877 $ (216) $ (168) $ 54 $ (1,355) $ (1,685) Income at
Slide 21: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Net Income 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) 2018 2017 2018 2017 2018 2017 2018 2017 Net income attributable to A
Slide 22: Non-GAAP reconciliations
Non-GAAP reconciliations Free Cash Flow Free Cash Flow Adjusted EBITDA to Free Cash Flow Three Months Ended Twelve Months Ended Three Months Twelve Months September 30 September 30 Ended September 30 Ended September 30 (in $ millions) 2018 2017 2018 2017 (in $ millions) 2018 2018 Operating cash flow
Slide 23: Non-GAAP reconciliations
Non-GAAP reconciliations Net Debt and Adjusted Equity Income Net Debt and Net Leverage Adjusted Equity Income Three Months Ended Twelve Months Ended September 30 September 30 September 30 September 30 (in $ millions) 2018 2017 (in $ millions) 2018 2017 2018 2017 Cash $ 687 $ 709 Equity income as rep
Slide 24: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Income before Income Taxes Adjusted Income before Income Taxes Three Months Ended September 30 Twelve Months Ended September 30 (in $ millions) 2018 2017 2018 2017 Income before Effective Income before Effective Income before Effective Income before Effective Tax im
Slide 25: 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 26: Prior Period Results
Prior Period Results FY17 Actual FY18 Actual Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Full FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Full FY18 Sales ($Mils.) $ 4,026 $ 4,201 $ 4,007 $ 3,979 $ 16,213 $ 4,204 $ 4,596 $ 4,494 $ 4,145 $ 17,439 Adjusted EBIT 283 332 333 296 1,244 163 252 206 149 770 % of Sales 7.03% 7