Adient Plc · NYSE:ADNT
Adient — Deutsche Bank Global Auto Industry Conference 2017
40 slides from Adient's conference presentation, January 2017
Slide 1: Deutsche Bank Global Auto Industry Conference
Deutsche Bank Global Auto Industry Conference January 2017
Slide 2: Forward looking statements
Forward looking statements 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” w
Slide 3: Today's presenters and meeting agenda
Today’s presenters and meeting agenda Bruce McDonald Jeffrey Stafeil Chairman & CEO, Adient EVP & CFO, Adient > Company / business > China / JV overview overview > Financial overview 3
Slide 4: Numerous reasons Adient is a solid investment
Numerous reasons Adient is a solid investment 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: Adient today
Adient today The largest global automotive seating supplier, supporting all major automakers in the differentiation of their vehicles through superior quality, technology and performance. FY 2016 230+ 25+ 75,000 ~$17 billion locations globally million seat highly engaged Consolidated revenue systems
Slide 6: Adient's vision and mission bring focus to our success
Adient’s vision and mission bring focus to our success Vision Improving the Experience of a World in Motion Mission 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 grow
Slide 7: Broadest and most complete range of Seating & Interior Products
Broadest and most complete range of Seating & Interior Products Seating Seating Adient Automotive Yanfeng Global Automotive Interiors > Complete Seat / Just-In-Time > Instrument Panels Manufacturing > Floor Consoles > Front & Rear Seat Structures > Door Panels > Track, Recliner, Manual Height Adjust
Slide 8: Global market leader with diversified geographic exposure
Global market leader with diversified geographic exposure Global market share Revenue by geography Adient Lear Americas Europe / Africa 34% Faurecia 34% 29% Toyota Boshoku 7% Asia / Pacific Magna 30% Other China Early investment in emerging markets allowed Adient to take advantage of the globalizati
Slide 9: Global competitive market position
Global competitive market position Total Automotive Seating Market Size 2015: $59.8 Billion > Adient is the leading player 2012–2014 CAGR 1.5% 1.5% 11.3% 1.0% globally and in every major region 2015–2019 CAGR 2.5% 2.5% 5.1% 4.7% $14.7B $13.9B $10.8B worldwide $20.4B ‒ Leading automotive seating mark
Slide 10: 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 Others JLR 4% Ford BMW 3% 13% 4% Volvo 4% Key Takeaways Other Renault, Peugeot & Citroen 4% GM > Industry leading diversification 9% 5% N. American > By customer -- largest Mercedes European OEM
Slide 11: Seating – growth market
Seating – growth market 1 Industry Growth1 2 Mix > Global light vehicle production remains robust > Mix of Foam/Trim/JIT sourcing and component sourcing and is expected to reach production levels of > Continued shift towards SUVs / MPVs globally 101 million vehicles by 2020 > Increase in luxury / co
Slide 12: Adient portfolio enhanced with YFAI joint venture
Adient portfolio enhanced with YFAI joint venture > The market leader in interiors > Well diversified customer base > Solid and improving financial performance Global Interior Market Share1 Key Metrics 2 YTD 20163 mid-term (2020) Revenue $6.2B $10+B EBITDA $371M EBITDA Margin 6.0% +100-120 bps ROIC
Slide 13: Serving the global Interiors market…
Serving the global Interiors market… 13
Slide 14: Significant growth opportunity within YFAI resulting from megatrend impact on interiors
Significant growth opportunity within YFAI resulting from megatrend impact on interiors 14
Slide 15: Adient is well positioned to capitalize on a shifting industry
Adient is well positioned to capitalize on a shifting industry Traditional manufacturers ... ... and the new players Industry trends > Autonomous driving > Electrification > Internet of things > Connectivity > Urbanization > Alternative propulsion > Slim & lightweight > Smart materials > Individuali
Slide 16: Opportunities in new markets
Opportunities in new markets Growing outside traditional auto markets West Coast Commercial New Players Vehicle Seating Railway Aircraft Seating Seating 16
Slide 17: 2017 – 2019 seating backlog
2017 – 2019 seating backlog ($ in millions) Key Takeaways • The three-year global seating backlog increased 17% y-o-y to $2.4B $2,437 • Prior constraints on capital impacting consolidated business in near-term; $1,256 strong sales bookings in $1,000 2016 will positively influence results in 2019 $18
Slide 18: 2017 – 2019 YFAI backlog
2017 – 2019 YFAI backlog Key Takeaways • Solid order book, with strong revenue visibility ($ in millions) • Growth driven by shift to megatrends • Shared mobility • Connectivity • Safety $2,279 • Electrification $1,405 • Well diversified customer mix including VW/SVW, BMW, $678 GM/SGM, and Chrysler
Slide 19: Meeting agenda
Meeting agenda > Introduction to Adient & business overview > China / JV overview > Financial overview > Q&A > Appendix 19
Slide 20: Adient – Winning in China
Adient – Winning in 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 outpace the market, further expanding our share and strengthening our leadership > Seating in China (incl. joint ventur
Slide 21: Joint venture structure
Joint venture structure 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 & SAIC Asia Pacific Sub-partners > Regional growth YFJC 49.99% 50.01% > Low cost engineering and Chang’An
Slide 22: Adient China's current seating market share in each big auto group
Adient China’s current seating market share in each big auto group % Adient’s JIT market share in each auto group, based on 2016 production volume (PV) Where competitors have alliance with the auto group PV seating market share per each big auto group 4.57M units 3.39M units 2.87M units 2.00M units
Slide 23: Market trends strengthening our leading position
Market trends strengthening our leading position > Increasing growth to non-Tier 1 cities > Premium segment remains robust ‒ Well-positioned to grow through our JV structure ‒ Strong and growing position with Daimler, BMW, with all OEMs Audi, and Volvo ‒ Foreign OEMs adding competitive products in n
Slide 24: Meeting agenda
Meeting agenda > Introduction to Adient & business overview > China / JV overview > Financial overview > Q&A > Appendix 24
Slide 25: Adient financial overview
Adient financial overview > Financial profile ‒ Consolidated top-line “flat to down slightly” near-term Key Metrics Expected Range > Consolidated seating ‒ ~200 bps margin improvement expected in mid-term Net Leverage1 2.0x ‒ Lower SG&A ‒ Improved performance in metals business Cash on Balance Sheet
Slide 26: Profitability on an upward trajectory
Profitability on an upward trajectory Years Ended September 30, 2015 and 2016 Net Revenues(1) ($ in billions) $16.7 $16.8 > Consolidated revenue of $16.8B increased 1% vs. FY15 excluding the impact of the Interiors deconsolidation and foreign exchange. Adj. for deconsolidation of > Unconsolidated
Slide 27: Drivers of future earnings growth
Drivers of future earnings growth > Positive volume trends and backlog > Well positioned to capture growth in China through equity income from market leading JV Increased Profitability > Improved operational efficiencies driven by: ‒ Implementation of world-class operating system ‒ G&A reduction ‒ M
Slide 28: Earnings growth bridge
Earnings growth bridge 4 Key Takeaways > 200 bps margin improvement identified Cumulative Savings (% of Sales) > Key drivers: 3 (0.5-1.5%) ‒ Leaner cost structure +1-2% ‒ Metals integration & recovery opportunity 2 (0.5%) > Improvement expected over +2.0% +2.0% the mid-term 1 ‒ Immediate near-term i
Slide 29: Dissecting Adient's 2017E earnings
Dissecting Adient’s 2017E earnings ($ in millions) Base Business 2017E Consolidated Business EBITDA (Including Equity Income) $ 1,600 (-) 2017E Equity Income (380) Valued at Industry 2017E Base Business EBITDA $ 1,220 EV / EBITDA Multiple Reconciliations of non-GAAP measures related to FY2017 guidan
Slide 30: Adient cash flow profile
Adient cash flow profile > Strong initial free cash flow 1 ‒ Advantageous tax rate (Irish domicile) ‒ Minimal working capital needs ‒ Smart reinvestment / capital expenditures (maintenance & growth) > Growing opportunity ‒ Margin / earnings growth ‒ Increasing equity income and cash dividends ‒ Lowe
Slide 31: FCF Growth
FCF Growth Key Takeaways > FY17 expected results include: ‒ A heightened level of cash outflows (~$280M) related to restructuring Cumulative FCF ($ in Millions) initiatives ‒ Anticipated one-time expenses (~$100M) (0.5-1.5%) associated with “Becoming Adient” +1-2% ‒ Elevated CapEx of ~$75M related t
Slide 32: Adient JV equity income and cash dividend summary
Adient JV equity income and cash dividend summary Sources Equity Income Cash Dividends % Conversion Paid “Cash rich / low debt” 1 balance sheets 2012A $211 $143 67.8% maximum disbursement of 1 earnings after 2013A $302 $148 49.0% reinvestment Adjusted for Dividends paid in 2014A $284 $176 62.0% YF
Slide 33: Looking forward: FY2017 guidance
Looking forward: FY2017 guidance status Revenue $16.8 to $17.0 billion Adj. EBIT $1.15 to $1.2 billion (Incl. ~$380 million of E.I.) Depreciation & Amortization $400 million Interest Expense $145 million Effective ~16-18% on consolidated ops; China income (~ 40% of net income) is shown net of Tax Ra
Slide 34: Questions
ADIENT Questions 34
Slide 35: Meeting agenda
Meeting agenda > Introduction to Adient & business overview > China / JV overview > Financial overview > Appendix 35
Slide 36: Appendix and Financial Reconciliations
Appendix and Financial Reconciliations 36
Slide 37: Adient debt and maturity profile
Adient debt and maturity profile Capitalization Detail No Near Term Maturities ($ in millions) $ Amount Coupon ($ in millions) $ 1,600 Pro Forma Cash¹ $ 550 $ 1,500 Revolving Credit Facility ($1.5bn) due 2021 - $ 1,200 $1,119 New Term Loan A due 2021 1,500 LIBOR +175 $ 900 2 Senior Unsecured Notes (
Slide 38: Non-GAAP financial measurements
Non-GAAP financial measurements > 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 calcul
Slide 39: Non-GAAP reconciliations
Non-GAAP reconciliations Segment EBIT, Pro-forma Adjusted EBIT, Pro-forma adjusted EBITDA (in $ millions) Q1-2016 Q2-2016 Q3-2016 Q4-2016 FY16 FY15 Income before income taxes $207 $82 $143 ($42) $390 $959 Net financing charges 2 4 2 14 22 12 Restructuring and impairment costs1 -- 169 75 88 332 182 P
Slide 40: Non-GAAP reconciliations
Non-GAAP reconciliations Total leverage and net leverage ratios (in $ millions) Sept 30, 2016 Pro forma Cash 1 $ 550 Total gross debt 2 3,564 Net debt $ 3,014 FY16 Pro Forma Adjusted EBITDA 3 $ 1,524 Total Leverage: 2.3 x Net Leverage: 2.0 x 1 – Pro forma cash based on preliminary funding of Adient’
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