Adient Plc · NYSE:ADNT
Adient — Investor Presentation (May 2019)
34 slides from Adient's investor presentation, May 2019
Slide 1: May Investor Meetings
May Investor Meetings May 2019 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: Executive summary
Executive summary Leading competitive position in a strong and vital market > Adient maintains one of the largest market shares (~33%) in a concentrated segment with few global competitors > Well diversified customer mix - no customer is greater than 12% of total consolidated sales > High barriers t
Slide 4: Adient today
Adient today Adient is the global market share leader in automotive seating, estimated to be supplying approximately one out of every three automotive seats worldwide** NYSE: ADNT FY18 Revenue Global market Revenue by share (2018 market $60B) geography* ~$17.4B ~$9.4B We supply one Americas Europe /
Slide 5: We are located right where our customers need us most
We are located right where our customers need us most Global locations 214 manufacturing facilities Europe 32 countries North America 91 Asia* 56 50 Global employees Africa 84,000 South America 12 5 * Does not include China joint ventures 5 5 Adient – Improving the experience of a world in motion
Slide 6: Strong customer diversification
Strong customer diversification FY 2019 May Investor Meetings 6 Adient – Improving the experience of a world in motion
Slide 7: Seating joint venture partnerships in China
Our Seating Joint Venture partnerships in China enable us to enjoy a clear leadership position in China We generated We have We have $9.2B 21 seating joint ventures* ~80 manufacturing sales revenue in FY2018 locations with We employ 4 45% global tech centers 33,000 combined share of the passenger ve
Slide 8: China's unconsolidated financial strength
China’s unconsolidated financial strength 1 FY2014 – FY2018 CNY in billions Industry Adient Results Sales Net Cash 3 60.2 9.0 > Top-line growth > Well capitalized Units, Millions 43.6 in excess of balance sheets China Light Vehicle industry growth across the Production 2 3.3 various joint ventures 2
Slide 9: Well positioned innovation and product portfolio
Well positioned innovation and product portfolio Global Industry trends Implications for seating • Safety • Changes in vehicle architecture & • Electrification power managment • Light-weight • Slim & lightweight • Low block height • Connectivity • Smart, individualized heating & cooling • Urbanizati
Slide 10: Business update
Business update FY 2019 May Investor Meetings 10 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 11: Priorities to successfully drive performance
Priorities to successfully drive performance Focused priorities expected Main root causes impacting Americas, EMEA and Asia to drive future success ➢ Increased focus on operational execution and Business profitability: commercial discipline > Launch challenges distracting business from continuous im
Slide 12: New team / organizational structure to drive turnaround
New team / organizational structure to drive turnaround CEO Doug Del Grosso Three Fully Integrated Regions Americas EMEA Asia Finance Jerome Dorlack Michel Berthelin James Huang Jeff Stafeil Driving responsibility into Seating Seating Seating Legal SS&M SS&M SS&M Cathy Ebacher the regions; Engineeri
Slide 13: Focus on commercial excellence
Focus on commercial excellence Early successes: Increased commercial focus through product lifecycle > CEO-level direct customer interactions to align product Initiate face-to-face dialogue with economics with the high quality of seating solutions being customers in strained relationships delivered
Slide 14: Launch activity remains heightened, lessons learned contributing to success in FY19
While launch activity remains heightened, lessons learned are contributing to success in FY19 2019 Launch Outlook Seating Americas and SS&M launches by fiscal year 93 89 Seating Americas (28 launches in FY19) 70 > On track to achieve 76% successful launch target in FY19 62 49 > Maintaining rate of s
Slide 15: Disciplined Approach Toward Underperforming Plants
Disciplined Approach Toward Underperforming Plants Plant Launch Monitor Process Progression on Underperforming Plants (FYE17 – FY19 YTD) Weekly – Targeted Business List • New business opportunities • Current business changes (lifetime ext., volume 20% y-o-y increase, and etc.) improvement • Global l
Slide 16: Driving to a stable, leaner and focused SS&M business
Driving to a stable, leaner and focused SS&M business Significantly reduced ongoing capital expenditure needs with a more focused, vertically integrated global footprint FY 2019 May Investor Meetings 16 Adient – Improving the experience of a world in motion
Slide 17: SS&M program lifecycle and expected progression
SS&M program lifecycle and expected progression Illustrative program lifecycle T-1 P.O. P.O. ~ 2 year development SOP ~ 6 year production run • Commercial • Engineering Launch activity • Product stabilization (milk time) • Engineering • Tooling (90 day period) • Continuous improvement opportunity •
Slide 18: Expected progression
Expected progression Fiscal 2019 (stabilization) Fiscal 2020 - 2022 (improvement) > Continue operational execution > Focused “back-to-basics” priorities are the building blocks to achieve peer margins while significantly improving cash • Improve utilization generation (with a focus on deleveraging)
Slide 19: Uncertain macro influences
Uncertain macro influences China / Asia Pacific Trade / Tariffs ➢ The passenger vehicle market in China remains ➢ Trade tensions between the United States and China challenged with no immediate signs of stabilization remain heightened with both sides recently announcing an escalation in duties / tar
Slide 20: Financial update
Financial update FY 2019 May Investor Meetings 20 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 21: FY 2019 second quarter financial highlights
FY 2019 second quarter financial highlights Sales Adjusted EBITDA1 Free cash flow > Sales significantly impacted by FX ($200M) and lower volume / $362M $60M mix ($168M), primarily in Europe $4,596M and Asia $4,228M $191M FY18 Q2 FY19 Q2 > Negative business performance, unfavorable mix in Americas an
Slide 22: Cash flow & debt
Cash flow & debt 1 Free Cash Flow (1) Debt (1) > Cash and cash equivalents of $491M at March 31, 2019 FY19 FY18 > Post Q2, increased the strength and flexibility of the capital (in $ millions) Q2 FY19 YTD Q2 FY18 YTD structure through a successful debt refinancing: Adjusted-EBITDA $ 191 $ 367 $ 362
Slide 23: Capital structure summary
Capital structure summary > Increased the strength and flexibility of ADNT’s capital structure with a successful debt refinancing - $800M TLB, $800M secured notes, $1.25B asset-based revolver - Eliminates restrictive maintenance covenants - Provides strong liquidity (pro forma ~ $2.1B) - Extends deb
Slide 24: Significant opportunity going forward
Significant opportunity going forward Downsize SS&M Close margin gap to peers ADNT 2018 free cash flow (FCF) a ~$0 ADNT 2018 Adj. EBITDA b $1.2B ADNT 2018 Adj. EBITDA margin c ~4.7% SS&M performance: 2018 Adjusted EBITDA $(168)M Gap to peer ~400bps or $700M 2018 SS&M CapEx $(255)M Approximate SS&M F
Slide 25: Reasons to invest in ADNT
Reasons to invest in ADNT Leveraging our Increased Focused on the leading position shareholder core business in China value Critical supplier in the Unique and longstanding automotive seating business, position in China through our with a leading market position joint venture structure New managemen
Slide 26: Appendix and financial reconciliations
APPENDIX AND FINANCIAL RECONCILIATIONS FY 2019 Second Quarter FY 2019 May Investor Meetings 26 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 27: 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 28: Non-GAAP reconciliations - EBIT, Adjusted EBIT, Adjusted EBITDA
Non-GAAP reconciliations - EBIT, Adjusted EBIT, Adjusted EBITDA (see footnotes on slide 23) FY16 Actual FY17 Actual FY18 Actual FY19 Actual Last Twelve Months Ended Actual (in $ millions) Full FY16 Full FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Full FY18 Q1 FY19 Q2 FY19 Dec '18 Mar '19 Net income attribu
Slide 29: Non-GAAP reconciliations - EBIT, Adjusted EBIT, Adjusted EBITDA
Non-GAAP reconciliations - EBIT, Adjusted EBIT, Adjusted EBITDA 1. The income tax provision for the three and twelve months ended September 30, 2018 includes a non-cash tax charge of $439 million to establish valuation allowances against net deferred tax assets in certain jurisdictions because of th
Slide 30: Non-GAAP reconciliations - Free Cash Flow
Non-GAAP reconciliations Free Cash Flow Free Cash Flow FY19 FY18 Three Months Ended (in $ millions) Q2 FY19 YTD Q2 FY18 YTD March 31 (in $ millions) 2019 2018 Adjusted-EBITDA $ 191 $ 367 $ 362 $ 628 Operating cash flow $ 168 $ (23) (+/-) Net Equity in Earnings (37) (119) (21) (124) Less: Capital exp
Slide 31: Non-GAAP reconciliations - Net Debt
Non-GAAP reconciliations Net Debt Net Debt and Net Leverage March 31 September 30 (in $ millions) 2019 2018 Cash $ 491 $ 687 Total Debt 3,383 3,430 Net Debt $ 2,892 $ 2,743 Adjusted-EBITDA (last twelve months) $ 935 $ 1,196 Net Leverage 3.09x 2.29x FY 2019 May Investor Meetings 31
Slide 32: 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 33: 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 34: Prior Period Results
Prior Period Results FY16 Actual FY17 Actual FY18 Actual FY19 Actual Full FY16 Full FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Full FY18 Q1 FY19 Q2 FY19 Sales ($Mils.) $ 16,790 $ 16,213 $ 4,204 $ 4,596 $ 4,494 $ 4,145 $ 17,439 $ 4,158 $ 4,228 Adjusted EBIT 1,150 1,240 162 251 205 148 766 105 117 % of Sale