Slide 1: FY 2019 Third Quarter Earnings Call
FY 2019 Third Quarter Earnings Call August 6, 2019 Improving the experience of a world in motion FY 2019 Third Quarter Earnings Call / August 6, 2019
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 Del Grosso President and Chief Executive Officer Financial review Jeffrey Stafeil Executive Vice President and Chief Financial Officer Q&A FY 2019 Third Quarter Earnings Call / August 6, 2019 3 Adient –
Slide 4: Recent developments key takeaways
Recent Q2 2018developments key takeaways > Despite being down y-o-y, Adient’s Q3 financial results improved sequentially for the second consecutive quarter; benefits related to turnaround actions implemented earlier this year gained traction and more than offset significant industry weakness in the
Slide 5: New business wins
New business wins Ford Ranger Porsche Macan Buick Envision Kia Cadenza • EMEA Region • EMEA Region • Asia Region (China) • Asia Region • Asia Region • Replacement business • Replacement business • Replacement business • Replacement business VW A-SUV FAW VW Amarok • Asia Region (China) • Asia Region
Slide 6: Recent and upcoming launches
Recent and upcoming launches Focused efforts resulting in improved launch performance > On time staffing (at the right levels) and equipment buyoff to ensure flawless Daimler A class Sedan Renault Captur Jeep Gladiator launches Launched Q3 FY19 Launched Q3 FY19 Launched Q3 FY19 > Increased focus on
Slide 7: Operating turnaround gaining momentum and helping to offset macro headwinds
Operating turnaround gaining momentum and helping to offset macro headwinds Stabilizing and improving Achieving significant performance at reductions in premium freight underperforming plants and containment > Reduced headcount at critical JIT plant to align > Improved launch performance driving dow
Slide 8: Adient's turnaround plan is on track
Adient’s turnaround plan is on track… FY2019 FY2020 - FY2022 FY2023 and beyond Stabilization Improvement Optimization Renewed emphasis on Significant improvement in Expected margin gap closure to discipline in fundamentals free cash flow peers, additional FCF generation “Back-to-basics” approach Con
Slide 9: China market and other significant macro influences
China market and other significant macro influences China market > The China macro economy, especially consumer sentiment, remains weak Trade / tariffs > Passenger vehicle sales and production significantly impacted by FX the economy and industry specific China factors (e.g. pull ahead of GB6 emissi
Slide 10: Financial Review
FINANCIAL REVIEW FY 2019 Third Quarter FY 2019 Third Quarter Earnings Call / August 6, 2019 10 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 11: Factors impacting Adient's Q3 GAAP results
Factors impacting Adient’s Q3 GAAP results > Q3 GAAP results impacted by a variety of one-time, non-cash charges which included: ‒ Refinancing / tax related items (~$300M) • Deferred tax asset impairment: incremental interest expense and the corresponding repositioning of Adient’s intercompany debt
Slide 12: FY 2019 Q3 key financials
FY 2019 Q3 key financials As Reported As Adjusted 1 $ millions, except per share data FY19 Q3 FY18 Q3 FY19 Q3 FY18 Q3 B/(W) Revenue $ 4,219 $ 4,494 $ 4,219 $ 4,494 -6% EBIT $ 95 $ 89 $ 129 $ 205 -37% Margin 2.3% 2.0% 3.1% 4.6% EBITDA N/A N/A $ 205 $ 318 -36% Margin 4.9% 7.1% Memo: Equity Income 2 $
Slide 13: Revenue – consolidated & unconsolidated
Revenue – consolidated & unconsolidated Consolidated sales Unconsolidated Seating and SS&M $ in Millions $2,407 M $4,494 Year-over- $(150) year growth $(125) $4,219 $1,864 M - 23% Down 17% excluding FX Q3FY18 FX Volume/Pricing Q3FY19 FY18 Q3 FY19 Q3 Unconsolidated Interiors Regional Performance $2,3
Slide 14: Q3 FY19 Adjusted-EBITDA
Q3 FY19 Adjusted-EBITDA > Q3FY19 Adj. EBITDA of $205M, $ in millions down $113M y-o-y > Negative business performance, $318 lower volumes in Asia and EMEA and a decline in equity income were the primary factors behind the y-o-y decrease $(44) > Macro factors, such as the negative $(36) 7.1% $205 imp
Slide 15: Q3 FY19 Adjusted-EBITDA: Americas
Q3 FY19 Adjusted-EBITDA: Americas > Q3FY19 Americas Adj. EBITDA of $69M, down $30M y-o-y Business performance: > Primary drivers of the y-o-y decline $ in millions • $(17)M Operating performance • $(7)M Freight (outbound premium $3M better) included: • $2M Launch / Ops Waste / Tooling • $(4)M Pricin
Slide 16: Q3 FY19 Adjusted-EBITDA: EMEA
Q3 FY19 Adjusted-EBITDA: EMEA $ in millions Business performance: > Q3FY19 EMEA Adj. EBITDA of $53M, • $(15)M Operating performance down $44M y-o-y • $(12)M Launch / Ops Waste / Tooling • $6M Freight (outbound premium $8M better) • $(9)M Pricing > Primary drivers of the y-o-y decline • $7M Material
Slide 17: Q3 FY19 Adjusted-EBITDA: Asia
Q3 FY19 Adjusted-EBITDA: Asia $ in millions > Q3FY19 Asia Adj. EBITDA of $110M, down $36M y-o-y Business performance: $8 • $(3)M Launch / Ops Waste / Tooling $146 • $(2)M Operating performance > Lower volume $(18)M and equity • $(1)M Freight • $2M Pricing income $(18)M resulting from a • $0M Materia
Slide 18: Cash flow & debt
Cash flow & debt 1 Free Cash Flow (1) Debt (1) > Cash and cash equivalents of $1,025M at June 30, 2019 FY19 FY18 > Cash dividends received from China JV’s totaled approximately (in $ millions) Q3 FY19 YTD Q3 FY18 YTD $165M in Q3 Adjusted-EBITDA $ 205 $ 572 $ 318 $ 946 > The company will continue to
Slide 19: Fiscal 2019 outlook
Fiscal 2019 outlook Revenue ~ $16.5B – $16.7B Interest ~ $175M no change expense no change Adj. EBITDA H2 > H1 ~$105M - $115M no change Cash tax no change ~ $265M Equity income (incl. YFAI of $40M) CapEx ~ $500M – $525M Revised from $290M to $300M Revised from $550M to $575M > Driven by positive con
Slide 20: Appendix and Financial Reconciliations
APPENDIX AND FINANCIAL RECONCILIATIONS FY 2019 Third Quarter FY 2019 Third Quarter Earnings Call / August 6, 2019 20 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 21: 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 22: Non-GAAP reconciliations - EBIT, Adjusted EBIT, Adjusted EBITDA
Non-GAAP reconciliations - EBIT, Adjusted EBIT, Adjusted EBITDA (see footnotes on slide 23) FY18 Actual FY19 Actual Last Twelve Months Ended Actual (in $ millions) Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Full FY18 Q1 FY19 Q2 FY19 Q3 FY19 Dec '18 Mar '19 June '19 Net income attributable to Adient $ (216) $ (
Slide 23: Non-GAAP reconciliations - EBIT, Adjusted EBIT, Adjusted EBITDA
Non-GAAP reconciliations - EBIT, Adjusted EBIT, Adjusted EBITDA 1. The income tax provision for the three months ended June 30, 2019 includes a tax charge of $254 million to record valuation allowances on the net deferred tax assets in Luxembourg and UK and a tax charge of $48 million to recognize t
Slide 24: 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) 2019 2018 2019 2018 Net income attributable to Adient $ (321) $ 54 Diluted earnings per share as reported $ (3.43) $ 0.58 Becoming Adient (1) -
Slide 25: Non-GAAP reconciliations
Non-GAAP reconciliations Free Cash Flow Free Cash Flow FY19 FY18 Three Months Ended (in $ millions) Q3 FY19 YTD Q3 FY18 YTD June 30 (in $ millions) 2019 2018 Adjusted-EBITDA $ 205 $ 572 $ 318 $ 946 (+/-) Net Equity in Earnings 103 (16) 105 (19) Operating cash flow $ 266 $ 390 (-) Restructuring (23)
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 June 30 September 30 June 30 (in $ millions) 2019 2018 (in $ millions) 2019 2018 Equity income as reported $ 64 $ 87 Cash $ 1,025 $ 687 Purchase accounting amortization (1
Slide 27: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted net financing charges and adjusted Income before Income Taxes Financing Charges Adjusted Income before Income Taxes Three Months Ended June 30 Three Months Ended June 30 (in $ millions) 2019 2018 (in $ millions) 2019 2018 Income (loss) Income (loss) before Income Ta
Slide 28: Segment Performance
Segment Performance (in $ millions) Segment Performance Q1 2018 Q1 2019 Corporate / Corporate / Americas EMEA Asia Consolidated Americas EMEA Asia Consolidated Recon Items Recon Items Net sales $ 1,786 $ 1,853 $ 648 $ (83) $ 4,204 $ 1,935 $ 1,640 $ 650 $ (67) $ 4,158 Adjusted EBITDA 35 82 176 (27) 2
Slide 29: Supplementary - Seat Structures & Mechanisms (SS&M) progression
Supplementary - Seat Structures & Mechanisms (SS&M) progression Memo: Seat Structures & Mechanisms Q1 2018 Q2 2018 Q3 2018 Q4 2018 FY 2018 Net sales $ 718 $ 797 $ 783 $ 705 $ 3,003 Adjusted EBITDA (82) (34) (18) (34) (168) Adjusted EBITDA margin -11.4% -4.3% -2.3% -4.8% -5.6% Adjusted Equity Income
Slide 30: Prior Period Results
Prior Period Results FY18 Actual FY19 Actual Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Full FY18 Q1 FY19 Q2 FY19 Q3 FY19 Sales ($Mils.) $ 4,204 $ 4,596 $ 4,494 $ 4,145 $ 17,439 $ 4,158 $ 4,228 $ 4,219 Adjusted EBIT 162 251 205 148 766 105 117 129 % of Sales 3.85% 5.46% 4.56% 3.57% 4.39% 2.53% 2.77% 3.06% Q1-2