Slide 1: FY 2019 Second Quarter Earnings Call
FY 2019 Second Quarter Earnings Call May 7, 2019 Improving the experience of a world in motion FY 2019 Second Quarter Earnings Call / May 7, 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 Second Quarter Earnings Call / May 7, 2019 3 Adient – I
Slide 4: Recent Q2 developments key takeaways
Recent Q2 2018developments key takeaways > Despite being down y-o-y, the sequential improvement in Q2FY19 results compared with Q1FY19 demonstrates that the actions taken to improve ADNT’s operating and financial performance are taking hold ‒ Q2 revenue of $4.2B, down $368M y-o-y ‒ Q2 Adjusted-EBITD
Slide 5: 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 6: Benefits expected from new organizational direction
Benefits expected from new organizational direction > Drive accountability Organizational objectives > Speed up decision-making > Reduce complexity and redundant costs > Flatter organization Organizational impact > Fully integrated regional business covering entire portfolio > Condensed central func
Slide 7: Operations update
Operations update 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 improvement ➢ Turn around tro
Slide 8: 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 9: Financial Review
FINANCIAL REVIEW FY 2019 Second Quarter FY 2019 Second Quarter Earnings Call / May 7, 2019 9 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 10: Updated segment reporting
Updated segment reporting Prior Segment Structure New Segment Structure Seating segment Americas segment • Seating N. America • Seating N. America (incl Recaro NA) • Seating S. America • Seating S. America • Seating Europe • SS&M N. America • Seating Asia • Adient Aerospace • Fabrics • Corp. Allocat
Slide 11: FY 2019 Q2 key financials
FY 2019 Q2 key financials As Reported As Adjusted 1 $ millions, except per share data FY19 Q2 FY18 Q2 FY19 Q2 FY18 Q2 B/(W) Revenue $ 4,228 $ 4,596 $ 4,228 $ 4,596 -8% EBIT $ (22) $ (141) $ 117 $ 251 -53% Margin (0.5)% (3.1)% 2.8% 5.5% EBITDA N/A N/A $ 191 $ 362 -47% Margin 4.5% 7.9% Memo: Equity In
Slide 12: Revenue – consolidated & unconsolidated
Revenue – consolidated & unconsolidated Consolidated sales Unconsolidated Seating and SS&M $ in Millions $2,333 M $4,596 $(168) Year-over- $(200) year growth $4,228 - 18% $1,920 M Down 12% excluding FX Q2FY18 Volume/Pricing FX Q2FY19 FY18 Q2 FY19 Q2 Unconsolidated Interiors Regional Performance $2,2
Slide 13: Q2 FY19 Adjusted-EBITDA
Q2 FY19 Adjusted-EBITDA > Q2FY19 Adj. EBITDA of $191M, $ in millions down $171M y-o-y > Negative business performance, $362 unfavorable product mix within Americas and EMEA and a decline in equity income were the primary factors behind the y-o-y decrease $(71) > Macro factors, including the negative
Slide 14: Q2 FY19 Adjusted-EBITDA: Americas
Q2 FY19 Adjusted-EBITDA: Americas > Q2FY19 Americas Adj. EBITDA of $34M, down $64M y-o-y. $ in millions Business performance: > Among the primary drivers of the y-o-y • $(14)M Operating performance • $(11)M Freight decline included: • $3M Pricing $98 • $3M Material $6M Net material margin ‒ Unfavora
Slide 15: Q2 FY19 Adjusted-EBITDA: EMEA
Q2 FY19 Adjusted-EBITDA: EMEA > Q2FY19 EMEA Adj. EBITDA of $59M, Business performance: down $71M y-o-y. • $(34)M Operating performance • $(10)M Launch / Ops Waste / Tooling $ in millions • $4M Freight > Reduced engineering spend and • $1M Pricing • $5M Material $6M Net material margin efficiencies f
Slide 16: Q2 FY19 Adjusted-EBITDA: Asia
Q2 FY19 Adjusted-EBITDA: Asia > Q2FY19 Asia Adj. EBITDA of $123M, down $34M y-o-y $ in millions Business performance: • $(4)M Operating performance > A $23M decline in equity income due • $(4)M Warranty / Tooling / other to the significant reduction in China $2 • $(5)M Pricing $1M Net material margi
Slide 17: 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 18: 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 19: Fiscal 2019 outlook
Fiscal 2019 outlook Revenue ~ $16.5B – $16.7B Interest ~ $175M no change expense new Adj. EBITDA H2 > H1 ~$105M - $115M no change Cash tax new ~ $290M - $300M Equity income (incl. YFAI of $35M) CapEx ~ $550M – $575M new no change > Adj. EBITDA and margin expected to improve in the second half of FY1
Slide 20: Appendix and Financial Reconciliations
APPENDIX AND FINANCIAL RECONCILIATIONS FY 2019 Second Quarter FY 2019 Second Quarter Earnings Call / May 7, 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) 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 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 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 24: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Net Income Adjusted Net Income Adjusted Diluted EPS Three Months Ended Three Months Ended March 31 March 31 (in $ millions) 2019 2018 2019 2018 Net income attributable to Adient $ (149) $ (168) Diluted earnings per share as reported $ (1.59) $ (1.80) Becoming Adient
Slide 25: Non-GAAP reconciliations
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 26: Non-GAAP reconciliations
Non-GAAP reconciliations Net Debt and Adjusted Equity Income Net Debt and Net Leverage Adjusted Equity Income Three Months Ended March 31 September 30 March 31 (in $ millions) 2019 2018 (in $ millions) 2019 2018 Equity income as reported $ 62 $ 85 Cash $ 491 $ 687 Purchase accounting amortization (1
Slide 27: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Income before Income Taxes Adjusted Income before Income Taxes Three Months Ended March 31 (in $ millions) 2019 2018 Income (loss) Income (loss) before Income Tax impact Effective before Income Tax impact Effective Taxes tax rate Taxes tax rate As reported $ (62) $
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 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