Slide 1: FY 2018 Third Quarter Earnings Call
FY 2018 Third Quarter Earnings Call July 26, 2018 Improving the experience of a world in motion FY 2018 Third Quarter Earnings Call / July 26, 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 Fritz Henderson Interim Chief Executive Officer Financial review Jeffrey Stafeil Executive Vice President and Chief Financial Officer Q&A FY 2018 Third Quarter Earnings Call / July 26, 2018 / Public 3 Adient –
Slide 4: Q3 2018 key takeaways
Q3 Q2 2018 key takeaways > Fiscal Q3 results in line with FY18 guidance; Seat Structures & Mechanisms (SS&M) continues to demonstrate sequential improvement ‒ Q3 Adjusted-EBIT and Adjusted-EBITDA of $206M and $319M, respectively 1 ‒ Q3 Adjusted-EPS of $1.45 1 ‒ Q3 free cash flow of $252M 1; the laun
Slide 5: Near-term priorities
Near-term priorities > Accelerating better operational execution to drive meaningful improvements in profitability and free cash flow Acting with a sense of urgency no “interim mindset” > Eliminating waste from flawed program execution > Reviewing all facets of the business to identify cost reductio
Slide 6: Operations update: SS&M
Operations update: SS&M > We continue to work our turnaround plan with a focus on: ‒ Operational excellence • Continue to see improvement in next generation mechanisms production output • Expedition / Navigator production stable, significant production cost premiums eliminated • Premium freight cost
Slide 7: Operations update: Seating
Operations update: Seating > Complex launches in NA impacting performance ‒ New and legacy programs running concurrently ‒ Provided additional resources to support customer requirements ‒ Mitigating actions being executed: • Plant staffing level complete • Additional warehouse procured • Stabilizing
Slide 8: Summary
Summary > Q3 results impacted by operational headwinds; moving forward with urgency to accelerate the pace of operational improvements ‒ Actions taken to stabilize SS&M gaining traction; continued improvement expected in Q4 and FY19 ‒ Operational / launch challenges facing Seating (primarily NA) are
Slide 9: Financial Review
FINANCIAL REVIEW FY 2018 Third Quarter FY 2018 Third Quarter Earnings Call / July 26, 2018 / Public 9 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 10: FY 2018 Q3 key financials
FY 2018 Q3 key financials As Reported As Adjusted 1 $ millions, except per share data FY18 Q3 FY17 Q3 FY18 Q3 FY17 Q3 B/(W) Revenue $ 4,494 $ 4,007 $ 4,494 $ 4,007 12% EBIT $ 99 $ 293 $ 206 $ 333 -38% Margin 2.2% 7.3% 4.6% 8.3% EBITDA N/A N/A $ 319 $ 424 -25% Margin 7.1% 10.6% Memo: Equity Income 2
Slide 11: Revenue – consolidated & unconsolidated
Revenue – consolidated & unconsolidated Consolidated sales Unconsolidated Seating $ in Millions (incl. SS&M) $96 $141 $2,407 M $250 Year-over- $4,494 $2,163 M year growth $4,007 + 11% Up 8% excluding FX and JV consolidation Q3FY17 Acquisition FX Volume/Pricing Q3FY18 /JV Consolidation FY17 Q3 FY18 Q
Slide 12: Q3 FY18 Adjusted-EBITDA
Q3 FY18 Adjusted-EBITDA $ in millions > Despite the benefit of increased revenue, y-o-y Adjusted-EBITDA declined to $319M in fiscal Q3 $424 ‒ Operating results in Seating and $13 $0 SS&M weighed on Q3 results > Positive SG&A performance of $(69) $319 $32M, more than offset 10.6% $(49) approximately
Slide 13: Q3 FY18 Adjusted-EBITDA: Seating
Q3 FY18 Adjusted-EBITDA: Seating Memo: $ in millions • $12M FX > Q3 FY18 Seating Adjusted-EBITDA • $(12)M Net commodities of $344M, down $69M y-o-y $20 $4 $0 > Positive benefits recognized from the Futuris acquisition / China JV $27 consolidation of $27M and SG&A $413 performance of $20M Memo: $(4)M
Slide 14: Q3 FY18 Adjusted-EBITDA: SS&M
Q3 FY18 Adjusted-EBITDA: SS&M $ in millions > Segment results improved sequentially for the second $31 consecutive quarter > Q3 FY18 SS&M Adjusted-EBITDA 4.3% of $(18)M, down $49M y-o-y > Negative y-o-y operating performance primarily driven by: $(34) ‒ Operational inefficiencies, labor (2.3)% econo
Slide 15: Cash flow & debt
Cash flow & debt 1 Free Cash Flow (1) Debt (1) > Cash and cash equivalents of $378M at June 30, 2018 > Net leverage of 2.29x at June 30, 2018 (in $ millions) Q3 FY18 > Constructed and launched a €200M accounts receivable financing facility which provides a low-cost source of funds. Adjusted-EBITDA $
Slide 16: FY2018 outlook
FY2018 outlook Relative to June 2018 Relative to May 2018 Revenue ~ $17.5B Equity Income ~ $380M at current FX no change (included in Adj. EBITDA) previously $390M Adj. EBITDA ~ $1,250M Adj. EBIT ~ $810M no change Previously $1.0B $0 - $(100)M ~ $140M Free Cash Flow excluding impact of AR financing
Slide 17: Appendix and Financial Reconciliations
APPENDIX AND FINANCIAL RECONCILIATIONS FY 2018 Third Quarter FY 2018 Third Quarter Earnings Call / July 26, 2018 / Public 17 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 18: 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 19: 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 Actual (in $ millions) Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY1
Slide 20: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Net Income Adjusted Net Income Adjusted Diluted EPS Three Months Ended Three Months Ended June 30 June 30 (in $ millions) 2018 2017 2018 2017 Net income attributable to Adient $ 54 $ 201 Diluted earnings per share as reported $ 0.58 $ 2.14 Becoming Adient (1) 12 20
Slide 21: Non-GAAP reconciliations
Non-GAAP reconciliations Free Cash Flow Adjusted EBITDA to Free Cash Flow Three Months Ended June 30 Free Cash Flow (in $ millions) 2018 Three Months Ended June 30 Adjusted-EBITDA $ 319 (in $ millions) 2018 2017 (-) Interest paid (17) Operating cash flow $ 390 $ 157 (-) Taxes paid (56) Less: Capital
Slide 22: Non-GAAP reconciliations
Non-GAAP reconciliations Net Debt and Adjusted Equity Income Net Debt and Net Leverage Adjusted Equity Income Three Months Ended June 30 September 30 June 30 (in $ millions) 2018 2017 (in $ millions) 2018 2017 Cash $ 378 $ 709 Equity income as reported $ 87 $ 91 Total Debt 3,439 3,478 Purchase accou
Slide 23: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Income before Income Taxes Adjusted Income before Income Taxes Three Months Ended June 30 (in $ millions) 2018 2017 Income before Effective Income before Effective Tax impact Tax impact Income Taxes tax rate Income Taxes tax rate As reported $ 60 $ (13) -21.7% $ 262
Slide 24: 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 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 Q3 FY18 Jun '1
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 FY16 Actual FY17 Actual FY18 Actual Last Twelve Months Ended Actual 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 Q3 FY18 Jun '16 Sep '16 Dec '16 Mar '17 Jun '17 Sep '17 Dec