Slide 1: FY 2019 First Quarter Earnings Call
FY 2019 First Quarter Earnings Call February 7, 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: 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 First Quarter Earnings Call / Feb 7, 2019 3 Adient – Im
Slide 4: Recent developments key takeaways
Recent Q2 2018developments key takeaways > Internal and external challenges faced in FY18 continued into Q1FY19; actions taken to improve ADNT’s financial performance should become visible as we progress through FY19 ‒ Q1 revenue of $4.2B, down $46M y-o-y ‒ Q1 Adjusted-EBITDA of $176M 1, down $90M y
Slide 5: Margin potential and CEO observations from first days
Margin potential and CEO observations from first 100 days Benchmarking our performance CEO observations of 100-day assessment 12% > Leading customer position • Diversified revenue with #1 market share in largest Closest peer 8.5 – 9% 2 markets (NA & China) • #1 or 2 position in most other markets 8%
Slide 6: Key actions - transitioning from CEO 100-day plan
Key actions - transitioning from CEO 100-day plan Fix and prevent Focus on core Commercial Strengthen operational / launch Downsize SS&M “back-to-basics” discipline balance sheet problems > Re-establish business > Problem plant focus > Economics / surcharge / > Anticipated new credit > Focus on tier
Slide 7: Operations update
Operations update Seating > Q1FY19 results in-line with internal expectations • Volume and complexity of launches in North America weighing on results > Operational and commercial actions expected to drive improved results in H2FY19 • Back-to basics mindset • Redirected resources to focus on problem
Slide 8: Financial Review
FINANCIAL REVIEW FY 2019 First Quarter FY 2019 First Quarter Earnings Call / Feb 7, 2019 8 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 9: FY 2019 Q1 key financials
FY 2019 Q1 key financials As Reported As Adjusted 1 $ millions, except per share data FY19 Q1 FY18 Q1 FY19 Q1 FY18 Q1 B/(W) Revenue $ 4,158 $ 4,204 $ 4,158 $ 4,204 -1% EBIT $ 54 $ 101 $ 105 $ 162 -35% Margin 1.3% 2.4% 2.5% 3.9% EBITDA N/A N/A $ 176 $ 266 -34% Margin 4.2% 6.3% Memo: Equity Income 2 $
Slide 10: Revenue – consolidated & unconsolidated
Revenue – consolidated & unconsolidated Consolidated sales Unconsolidated Seating and SS&M $ in Millions $2,469 M $48 Year-over- $4,204 year growth $(94) $4,158 - 11% $2,201 M Down 7% excluding FX Q1FY18 Volume/Pricing FX Q1FY19 FY18 Q1 FY19 Q1 Unconsolidated Interiors Regional Performance $2,194 M
Slide 11: Q1 FY19 Adjusted-EBITDA
Q1 FY19 Adjusted-EBITDA > Q1FY19 Adj. EBITDA of $176M, down $90M y-o-y $ in millions > Negative business performance within Seating (primarily launch $7 $10 related), temporary SG&A benefits $266 recognized last year that did not repeat and a decline in equity income were the primary factors behind
Slide 12: Q1 FY19 Adjusted-EBITDA: Seating
Q1 FY19 Adjusted-EBITDA: Seating > Q1FY19 Seating Adj. EBITDA of $261M, Business performance: $ in millions down $93M y-o-y • $(38)M Operating performance • $(22)M Launch / Ops Waste / Tooling • $(12)M Freight > Negative business performance was the • $(14)M Pricing • $16M Material $2M Net material
Slide 13: Q1 FY19 Adjusted-EBITDA: SS&M
Q1 FY19 Adjusted-EBITDA: SS&M > Q1FY19 SS&M Adj. EBITDA of $ in millions $(72)M, up $10M y-o-y > Improved business performance (primarily lower launch related headwinds) was the primary driver of the y-o-y increase ‒ Reduced freight and operational waste (i.e. scrap and cost of poor quality) (11.4)%
Slide 14: Cash flow & debt
Cash flow & debt 1 Free Cash Flow (1) Debt (1) (in $ millions) Q1 FY19 > Cash and cash equivalents of $406M at December 31, 2018 > Amended ADNT’s credit facility to move to a Net Secured Adjusted-EBITDA $ 176 Leverage financial covenant (-) Interest paid (13) > Evaluating options to refinance ADNT’s
Slide 15: Fiscal 2019 outlook
Fiscal 2019 outlook > Expected y-o-y decline in revenue primarily driven by FX (~$500M), softer market conditions in China and a reduction in complete seat business in Europe Key financial metrics FY19 > First half FY19 expected to be trough Adj. EBITDA; expect to see improvement in second half resu
Slide 16: Appendix and Financial Reconciliations
APPENDIX AND FINANCIAL RECONCILIATIONS FY 2019 First Quarter FY 2019 First Quarter Earnings Call / Feb 7, 2019 16 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 17: 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 18: Non-GAAP reconciliations - EBIT, Adjusted EBIT, Adjusted EBITDA
Non-GAAP reconciliations - EBIT, Adjusted EBIT, Adjusted EBITDA 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 Dec ' 18 Net income attributable to Adient $ (1,546) $ 877 $ (216) $ (
Slide 19: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Net Income Adjusted Net Income Adjusted Diluted EPS Three Months Ended Three Months Ended December 31 December 31 (in $ millions) 2018 2017 2018 2017 Net income attributable to Adient $ (17) $ (216) Diluted earnings per share as reported $ (0.18) $ (2.32) Becoming A
Slide 20: Non-GAAP reconciliations
Non-GAAP reconciliations Free Cash Flow Free Cash Flow Adjusted EBITDA to Free Cash Flow Three Months Ended Three Months December 31 Ended December 31 (in $ millions) 2018 2017 (in $ millions) 2018 Operating cash flow $ (128) $ (127) Adjusted-EBITDA $ 176 Less: Capital expenditures (144) (143) (-) I
Slide 21: Non-GAAP reconciliations
Non-GAAP reconciliations Net Debt and Adjusted Equity Income Net Debt and Net Leverage Adjusted Equity Income Three Months Ended December 31 September 30 December 31 (in $ millions) 2018 2018 (in $ millions) 2018 2017 Cash $ 406 $ 687 Equity income as reported $ 83 $ 96 Purchase accounting amortizat
Slide 22: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Income before Income Taxes Adjusted Income before Income Taxes Three Months Ended December 31 (in $ millions) 2018 2017 Income before Effective Income before Effective Tax impact Tax impact Income Taxes tax rate Income Taxes tax rate As reported $ 21 $ 10 47.6% $ 69
Slide 23: Segment Performance
Segment Performance (in $ millions) Segment Performance Q1 2018 Q1 2019 Corporate / Corporate / Seating SS&M Interiors Recon Items Consolidated Seating SS&M Interiors Recon Items Consolidated Net sales $ 3,796 $ 718 $ - $ (310) $ 4,204 $ 3,739 $ 727 $ - $ (308) $ 4,158 Adjusted EBITDA 354 (82) 25 (3
Slide 24: 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 Sales ($Mils.) $ 16,790 $ 16,213 $ 4,204 $ 4,596 $ 4,494 $ 4,145 $ 17,439 $ 4,158 Adjusted EBIT 1,150 1,240 162 251 205 148 766 105 % of Sales 6.85% 7.65% 3.85%