Adient Plc · NYSE:ADNT
Adient — Investor Presentation (November 2016)
36 slides from Adient's investor presentation, November 2016
Slide 1: Adient Investor Meeting November 2016
Adient (“ADNT”) Investor Meeting November 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: Meeting agenda
Meeting agenda > Introduction to Adient & business overview > China / JV overview > Financial overview > Q&A > Appendix 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: For many years Automotive was the growth engine of Johnson Controls
For many years Automotive was the growth engine of Johnson Controls Revenue YFAI Hammerstein, 33 Interiors Keiper, Recaro JV 30 ˃ Recent JCI multi-industrial strategy constrained investment in automotive Michel Thierry 27 JCIM JV 24 Sagem 21 Ikeda Becker Bussan 18 Sale of Yanfeng Electronics 15 JV 1
Slide 6: 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 7: Introducing Adient
Introducing Adient Key changes going forward Past Today > Part of a global multi-industry company > Focus on automotive seating ‒ Leaner cost structure > Improving business performance > Expect 200 bps of margin improvement with double-digit EPS growth over the mid-term > Capital allocated to suppor
Slide 8: Adient's vision and mission
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 9: 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 10: Global market leader with diversified geographic exposure
Global market leader with diversified geographic exposure Global market share Revenue by geography Adient Lear Europe / Africa Americas 34% Faurecia 35% 29% Toyota Boshoku 6% Asia / Pacific Magna 30% Other China Early investment in emerging markets allowed Adient to take advantage of the globalizati
Slide 11: 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 region 2015–2019 CAGR 2.5% 2.5% 5.1% 4.7% $20.4B $14.7B $13.9B $10.8B worldwide ‒ Leading automotive seating market share in North A
Slide 12: 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 13: 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 SUV’s / MPV’s globally 101 million vehicles by 2020 > Increase in luxury /
Slide 14: The industry is shifting
The industry is shifting Trends & key questions 2020 and beyond Traditional manufacturers ... ... and the new players Industry trends > Autonomous driving > Electrification > Internet of things > Connectivity > Urbanization > Alternative propulsion > Slim & lightweight > Smart materials > Individual
Slide 15: Opportunities in new markets
Opportunities in new markets Growing outside traditional auto markets West Coast Commercial New Players Vehicle Seating Railway Aircraft Seating Seating 15
Slide 16: Meeting agenda
Meeting agenda > Introduction to Adient & business overview > China / JV overview > Financial overview > Q&A > Appendix 16
Slide 17: 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 18: 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 19: 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 20: 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 21: Meeting agenda
Meeting agenda > Introduction to Adient & business overview > China / JV overview > Financial overview > Q&A > Appendix 21
Slide 22: Adient financial overview
Adient financial overview > Financial profile ‒ ~$17bn consolidated net sales Key Metrics Expected Range > Consolidated seating Net Leverage1 2.0x ‒ ~200 bps margin improvement expected in mid-term ‒ Lower SG&A ‒ Improved performance in metals business Cash on Balance Sheet 2 $550mm ‒ Wind down of r
Slide 23: Profitability on an upward trajectory
Profitability on an upward trajectory Years Ended September 30, 2015 and 2016 Net Revenues(1) ($ in billions) $16.7 $16.8 > Consolidated revenue of $16.8M increased 1% vs. FY15 excluding the impact of the Interiors deconsolidation and foreign exchange. Adj. for deconsolidation of > Unconsolidated
Slide 24: 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 25: 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 26: 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 27: 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 28: 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 29: Looking forward: FY2017 guidance
Looking forward: FY2017 guidance 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 Tax Rate 10 to 12% Adj. Net Income $850 to $900 million Capital $545 to $575 million (include
Slide 30: Adient's key investment thesis
Adient’s key investment thesis Market Position > Broadest and most complete range of seating products > Unparalleled customer diversity– market leadership in North America, Europe and China (unique and longstanding position in China through JV structure); support all major automakers (190+ active
Slide 31: Meeting agenda
Meeting agenda > Introduction to Adient & business overview > China / JV overview > Financial overview > Appendix 31
Slide 32: Appendix and Financial Reconciliations
Appendix and Financial Reconciliations 32
Slide 33: Adient debt and maturity profile
Adient debt and maturity profile Capitalization Detail No Near Term Maturities ($ in millions) $ Amount Coupon ($ in millions) $ 1,600 Pro Forma Cash $ 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 Senior Unsecured Notes (EUR
Slide 34: 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 35: 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 36: Non-GAAP reconciliations: leverage ratios
Non-GAAP reconciliations Total leverage and net leverage ratios (in $ millions) Sept 30, 2016 Pro forma Cash $ 550 Total debt 3,564 Net debt $ 3,014 FY16 Pro Forma Adjusted EBITDA $ 1,524 Total Leverage: 2.3 x Net Leverage: 2.0 x Source: Pro forma cash based on preliminary opening cash balance of Ad