Adient Plc · NYSE:ADNT
Adient — J.P. Morgan 2016 Auto Conference
37 slides from Adient's conference presentation, Aug 9, 2016
Slide 1: Adient – J.P. Morgan 2016 Auto Conference
Adient J.P. Morgan 2016 Auto Conference August 9, 2016
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
Today’s Presenters Bruce McDonald Jeff Stafeil Chairman & Executive Vice President Chief Executive Officer & Chief Financial Officer 3
Slide 4: Bruce McDonald, Chairman & Chief Executive Officer, Adient
Bruce McDonald, Chairman & Chief Executive Officer, Adient 4
Slide 5: Overview
Overview > As announced on July 24, 2015, Johnson Controls will ADIENT spin off its automotive seating and interiors businesses into a standalone public company, named Adient plc Global Automotive Seating and Interiors Leader > Adient to be incorporated in Ireland > Expected first day of trading as
Slide 6: Adient's Key Investment Thesis
Adient’s Key Investment Thesis 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 automakers (190+ active
Slide 7: Key Changes Going Forward
Key Changes Going Forward Today Future > Part of a global multi-industry company > Focus on automotive seating ‒ Leaner cost structure / metals > Improving business performance integration & recovery > Expect 200 bps of margin > Capital allocated to support multi- improvement with double-digit EPS i
Slide 8: 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 estimate 230+ 25+ million 75,000 ~$17 billion locations globally seat systems a highly engaged Consolida
Slide 9: 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 10: Adient Competitive Strengths
Adient Competitive Strengths > Global market leadership in North America, Europe and China > Unique and longstanding position in China through JV structures with leading Chinese manufacturers (e.g. SAIC, Faway, etc.) > Diverse customer mix with longstanding relationships across all major, global OEM
Slide 11: Adient's Global Automotive Business
Adient’s Global Automotive Business Adient Automotive Seating Yanfeng Global Automotive Interiors > Complete Seat / Just-In-Time Manufacturing > Instrument Panels > Front & Rear Seat Structures > Floor Consoles > Track, Recliner, Manual Height Adjuster and Lock > Door Panels Mechanisms > Overhead Co
Slide 12: Broadest and Most Complete Line of Seating Products
Broadest and Most Complete Line of Seating Products Foam: Cushions & Backs, Complete Seat / JIT Metals & Mechanisms Trim: Cut & Sew and Fabric Head Restraints > Complete seat systems > Offers modular solutions, > World leader in > Market leader in ‒ Complex logistics and resulting in fewer parts man
Slide 13: Global Competitive Market Position
Global Competitive Market Position Total 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 2015–2019 CAGR 2.5% 2.5% 5.1% 4.7% $20.4B $14.7B $13.9B $10.8B region worldwide Other (<3%) 10% ‒ Leading automotive seating TS Tech
Slide 14: Well Diversified OEM Customer Mix
Well Diversified OEM Customer Mix Customer Mix 2015A Revenue by Geography 2015 Fiscal Sales European OEMs N. American OEMs 34% 29% $20.1 bn consolidated 27% Japanese & Chinese OEMs 5% Korean OEMs 5% Other Source: Company filings 14 *Includes YFAI sales only for the period from 02-Jul-2015 to 30-Sep-
Slide 15: Key Macro Growth Drivers
Key Macro Growth Drivers 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 SUV’s / MPV’s globally 94 million vehicles by 2020 > Increase in luxury /
Slide 16: FY2016E Sales Booking
FY2016E Sales Booking 6.73 $5.8 $2.5 $4.3B booked thru June 3.77 $3.77 3.55 $3.55 3.28 $3.29 Consolidated $0.81 $1.86 $1.31 100% Unconsolidated JVs Sales ($Billion) $3.3 $2.48 $2.24 $1.91 2013A 2014A 2015A 2016E Source: Management estimates 16
Slide 17: Jeffrey Stafeil, Executive Vice President & Chief Financial Officer, Adient
Jeffrey Stafeil, Executive Vice President & Chief Financial Officer, Adient 17
Slide 18: Adient – Seating in China
Adient – Seating in China > We have nearly 45 percent market share of the seating business in China, making us the industry leader Daqing Harbin Changchun Jilin Shenyang > By leveraging our market position, we will outpace the Beijing Qingdao market, further expanding our share and strengthening Bao
Slide 19: Market Trends Strengthening Our Leading Position
Market Trends Strengthening Our Leading Position > Shift to SUV / MPV segment ‒ New business wins with JV SUV programs (VW, GM, Nissan, Hyundai) will grow our share in segment ‒ Increased content on SUV / MPV vehicles vs. sedans / wagons > Geographic shifts from Tier 1 & 2 cities to inner cities ‒ W
Slide 20: Mutually Beneficial China JV Partnerships
Mutually Beneficial China JV Partnerships One Partner Brings: Other Partner Brings: > Technology > Market access > Products > Local knowledge > System, process, global exposure > Local connection Past China JV Relationship New China JV relationship > JCI: Provided technology and products as well > A
Slide 21: China JV Growth Strategy
China JV Growth Strategy > Exposure to Chinese OEMs is being advanced as their influence in the global market increases > Initiatives are being developed in China and other Asia Pacific regions to improve the business’ position with Japanese OEMs Growth > Expanding the current Complete Seat and comp
Slide 22: 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 JCI Partner > Components for China & SAIC Asia Pacific > Regional growth YFJC Sub-partners 49.99% 50.01% > Low cost engineering and Chang’An Don
Slide 23: Financial Overview
Financial Overview 23
Slide 24: Adient Financial Overview
Adient Financial Overview > Financial profile ‒ ~$18bn LTM consolidated net sales (includes $1.1bn Key Metrics Expected Range interior revenue) 1 > Consolidated seating Net Leverage2 ~2.0x ‒ ~200 bps margin improvement expected in mid-term ‒ Lower SG&A Cash on Balance Sheet ~$700mm ‒ Improved perfor
Slide 25: Historical Financial Performance
Historical Financial Performance Consolidated Revenue & YoY % Growth Adj. EBITDA3 & % Margin $22,041 $1,451 $1,406 $19,986 $20,470 $20,071 $18,776 $1,112 $1,014 $1,067 13.0% 6.4% 7.7% 6.6% 7.0% 2.4% 5.4% 5.6% 5.2% (8.9)% FY11A FY12A FY13A FY14A FY15A FY11A FY12A FY13A FY14A FY15A Decline in 2015 Sal
Slide 26: FY 2016 Performance Update
FY 2016 Performance Update Q3 FY16 9 Months FY16 Net Revenues Net Revenues ($ in billions) ($ in billions) > Excluding the impact of the Interiors deconsolidation and $15.9 Unadjusted foreign exchange, sales expected to be down 1% vs. Q3 FY15 $12.9 $5.4 (19%) ‒ Expiring programs in North America o
Slide 27: Adient Cash Flow Profile
Adient Cash Flow Profile > Strong initial free cash flow 1 ‒ Low tax rate (Irish domicile ~10-12%) ‒ Minimal working capital needs ‒ Smart reinvestment / capital expenditures (maintenance & growth) > Growing opportunity ‒ Margin / earnings growth ‒ Increasing equity income and cash dividends ‒ Lower
Slide 28: Adient JV Equity Income and Cash Dividend Summary
Adient JV Equity Income and Cash Dividend Summary Cash Dividends YFJC represents ~57% Sources Equity Income % Conversion of Adient Seating JV Paid equity income and ~52% of total 2011A $201 $156 77.6% equity income 1 2012A $211 $143 67.8 “Cash rich / low debt” balance sheets 1 maximum 2013A $302 $
Slide 29: Financial Policy Planning
Financial Policy Planning > Initial leverage > Dividend / share repo spend ‒ Net leverage 1 of ~2x at spin (expected to ‒ Balanced capital allocation plan aims to support consistent decline materially) return of capital to shareholders while maintaining flexibility ‒ $1.5bn of 5-year pre-payable ban
Slide 30: Framework for Valuing Adient
Framework for Valuing Adient P/E Multiple Methodology Blended Multiple Methodology Base Business EBITDA Multiple EBITDA Overview Adient EPS P/E Multiple JV Equity P/E Multiple Income Provides full value for JV Equity Income (key contributor Common method currently used by Wall Street research to
Slide 31: Adient's Key Investment Thesis
Adient’s Key Investment Thesis 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 automakers (190+ active
Slide 32: Q&A
Q&A 32
Slide 33: Appendix and Financial Reconciliations
Appendix and Financial Reconciliations 33
Slide 34: Non-GAAP Financial Measurements
Non-GAAP Financial Measurements > SINC, EBITDA, Adjusted EBITDA, Pro Forma Adjusted EBITDA, Free Cash Flow, EBITDA Less Capex, Net Debt and Net Leverage are not recognized terms under GAAP and do not purport to be alternatives to the most comparable GAAP amounts. Further, since all companies do not
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations Segment income, EBITDA, Adjusted EBITDA, Pro-forma adjusted EBITDA Twelve months As of the six months ended Mar. 31, As of the fiscal year ended Sep. 30, ended Mar. 31, (in $ millions) 2016 2015 2016 2015 2014 2013 2012 2011 Net Income (loss) attributable to Adient ($642) $3
Slide 36: Non-GAAP Reconciliations
Non-GAAP Reconciliations EBITDA, Adjusted EBITDA, Pro-forma adjusted EBITDA Three Months Ended June 30, Nine Months Ended June 30, 2016 2015 2016 2015 (preliminary) (preliminary) (in millions) High end Low end High end Low end Income before income taxes $ 153 $ 143 $ 322 $ 442 $ 432 $ 778 Net financ
Slide 37: Non-GAAP Reconciliations
Non-GAAP Reconciliations Total Leverage and Net Leverage Ratios (in $ millions) March 31, 2016 Cash $ 708 Total debt 3,671 Net debt $ 2,963 LTM pro forma adusted EBITDA $ 1,507 Total Leverage: 2.4 x Net Leverage: 2.0 x Source: Capitalization table, Amendment #2 Form 10 and JCI Form 8-K filed July 29