Slide 1: FY 2017 Fourth Quarter Earnings Call
FY 2017 Fourth Quarter Earnings Call November 2, 2017 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 Fourth quarter highlights Bruce McDonald Chairman and Chief Executive Officer Financial review Jeffrey Stafeil Executive Vice President and Chief Financial Officer Q&A FY 2017 Fourth Quarter Earnings Call / November 2, 2017 3
Slide 4: Q4 Highlights
Q4 Highlights > Adient’s Q4 results solidify a strong FY17 ‒ Q4 Adjusted-EBIT increased 3% to $296M (margin of 7.4%, up 10 bps) 1 ‒ Q4 Adjusted-EPS increased 9% to $2.34 1 ‒ Cash and cash equivalents of $709M at September 30, 2017 ‒ Net debt of $2.8B and net leverage of 1.73x at September 30, 2017 1
Slide 5: Q4 Highlights
Q4 Highlights > International Motor Show - Frankfurt ‒ Showcased pioneering solutions that address the challenges associated with the evolution of mobility (autonomous, ride sharing) ‒ AI18 innovation demonstrator focused on urban, electrically-powered and autonomously-driven vehicles; five usage sc
Slide 6: FY17 Q4 key product launches
FY17 Q4 key product launches Strengthening our leading position across customers, segments, and regions… Buick Enclave Nissan Pathfinder & Infiniti QX60 BMW X3 Porsche Cayenne United States United States Mexico Romania / Poland VW T-Roc Ford Ecosport Land Rover Discovery Sport Kia Sorento Portugal R
Slide 7: Adient three year seating backlog
Adient three year seating backlog 1 $2,976 ($ in millions) > The three-year global seating backlog increased ~22% y-o-y to just under $3.0B $1,240 > Adient’s consolidated $908 sales are expected to $828 benefit by more than $1.5B over the next three years (accounts for 51% of the total backlog) FY18
Slide 8: Opportunistically pursuing inorganic & adjacent market growth
Opportunistically pursuing inorganic & adjacent market growth We completed our first acquisition by purchasing Futuris Group Launched aircraft seating collaboration with Boeing to tap into $6.5B market opportunity within aircraft interiors Announced collaboration with Autoliv to address vehicle seat
Slide 9: Seat structures & mechanisms: turn-around plan
Seat structures & mechanisms: turn-around plan Key elements of Seat Structures and Mechanisms turn-around plan Status > Complete restructuring initiative: Pic ‒ Restructuring & closure of unprofitable locations progressing as planned; T3000 recliner & positive margin impact expected in FY19 / FY20 T
Slide 10: Seat structures & mechanisms: near-term headwinds
Seat structures & mechanisms: near-term headwinds > Significant launch challenges impacting seat structures and mechanisms: ‒ Late design changes, engineering / manufacturing issues, supply chain interruptions and labor challenges creating launch inefficiencies ‒ Launch headwinds expected to continu
Slide 11: Current operating environment
Current operating environment Near-term headwinds ˃ Metals launch activity Positive tailwinds ˃ Increased growth investments ˃ Increased seating content per ˃ Commodity prices vehicle ˃ Global vehicle production ˃ Growth in ADNT’s unconsolidated joint ventures ˃ Additional SG&A performance ˃ Integra
Slide 12: Financial Review
FIN A N C IA L R EVIEW FY 2017 Fourth Quarter FY 2017 Fourth Quarter Earnings Call / November 2, 2017 12 Adient – Improving the experience of a world in motion
Slide 13: FY 2017 Q4 key financials
FY 2017 Q4 key financials As Reported As Adjusted 1 $ millions, except per share data FY17 Q4 FY16 Q4 FY17 Q4 FY16 Q4 B/(W) Revenue $ 3,979 $ 3,932 $ 3,979 $ 3,932 1% EBIT $ 389 $ (32) $ 296 $ 286 +3% Margin 9.8% * 7.4% 7.3% EBITDA N/A N/A $ 390 $ 381 +2% Margin 9.8% 9.7% Memo: Equity Income 2 $ 248
Slide 14: FY 2017 full year key financials
FY 2017 full year key financials As Reported As Adjusted 1 $ millions, except per share data FY17 FY16 FY17 FY16 B/(W) Revenue $ 16,213 $ 16,790 $ 16,213 $ 16,790 -3% EBIT $ 1,193 $ 399 $ 1,244 $ 1,156 +8% Margin 7.4% 2.4% 7.7% 6.9% EBITDA N/A N/A $ 1,605 $ 1,511 +6% Margin 9.9% 9.0% Memo: Equity In
Slide 15: Revenue – consolidated & unconsolidated
Revenue – consolidated & unconsolidated > Consolidated sales in Q4FY17 increased $47 million y-o-y $ in Millions Consolidated sales ‒ Consolidation of China joint venture and foreign exchange positively $49 $64 impacted sales by $64 million and $49 million, respectively $3,932 $(66) $3,979 > Strong
Slide 16: Adjusted-EBIT
Adjusted-EBIT > Adjusted-EBIT expanded to $296M, up 3% y-o-y ‒ Seating totaled $274M, up $12M y-o-y $ in Millions ‒ Interiors totaled $22M, down $2M y-o-y $5 > Primary drivers of Adjusted-EBIT improvement: $58 ‒ SG&A improvement reflecting lower corporate $296 expenses and the benefits of restructur
Slide 17: Mid-term Plan Progress to Date
Margin progression on track Adj. EBIT and Adj. EBITDA Margin (excluding equity income)1 - (50 – 150) bps Mid-term Plan +100 - 200 bps 7.7% 7.2% 7.47% 7.47% FY17-FY20 7.29% 6.7% 7.10% FY19-FY20 6.83% +200 bps 6.2% 6.44% +150 bps 5.7% 5.23% 5.24% 5.10% 5.2% 4.94% 4.72% FY17-FY18 4.7% 4.48% 4.2% SG&A B
Slide 18: Adient JV equity income and cash dividend summary
Adient JV equity income and cash dividend summary > Robust growth continues in equity Equity Cash % income and cash dividends Sources income dividends Conversion (as adjusted) 1 paid > In FY17, equity income (fx adjusted) increased 12% y-o-y outpacing 2015 $286M $193M 67.5% unconsolidated sales grow
Slide 19: Cash flow & debt
Cash flow & debt 1 Free Cash Flow (1) Debt (1) FY17 Actual > Cash and cash equivalents of $709M at September 30, 2017 (includes ~$350M net cash outlay related to Futuris acquisition) (in $ millions) Q4 FY17 > Net leverage of 1.73x at September 30, 2017, down 12% compared with September 30, 2016 Adju
Slide 20: Looking forward: FY2018 guidance
Looking forward: FY2018 guidance (excludes impact of aircraft seating business) 2018 Guidance 2018 Guidance vs. FY17 1 Revenue $17.0 - $17.2 billion +5% ADJ. EBIT $1.28 - $1.33 billion includes $435M equity income +5% equity income up 10% Creating value for ADJ. EBITDA $1.70 - $1.75 billion +7% ADNT
Slide 21: 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 pl
Slide 22: Appendix and Financial Reconciliations
A PPEN D IX A N D FIN A N C IA L R EC ON C ILIATION S FY 2017 Fourth Quarter FY 2017 Fourth Quarter Earnings Call / November 2, 2017 22 Adient – Improving the experience of a world in motion
Slide 23: Non-GAAP financial measurements
Non-GAAP financial measurements > Adjusted EBIT, Adjusted EBIT margin, Pro-forma adjusted EBIT, Pro-forma adjusted EBIT margin, Pro-forma adjusted EBITDA, Adjusted effective tax rate, Adjusted net income attributable to Adient, Pro-forma adjusted net income attributable to Adient, Adjusted earnings
Slide 24: Non-GAAP reconciliations
Non-GAAP reconciliations EBIT, Pro-forma Adjusted EBIT, Pro-forma Adjusted EBITDA FY16 Actual FY17 Actual Last Twelve Months Ended Actual Actual Actual Actual Actual Actual (in $ millions) Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Jun '16 Sep '16 Dec '16 Mar '17 Jun '17
Slide 25: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Net Income Adjusted Net Income Adjusted Diluted EPS Three Months Ended Twelve Months Ended Three Months Ended Twelve Months Ended September 30 September 30 September 30 September 30 (in $ millions) 2017 2016 2017 2016 2017 2016 2017 2016 Net income attributable to A
Slide 26: Non-GAAP reconciliations
Non-GAAP reconciliations Free Cash Flow Free Cash Flow Adjusted EBITDA to Free Cash Flow Three Months Ended Twelve Months Ended Three Months September 30 September 30 Ended September 30 (in $ millions) 2017 2016 2017 2016 (in $ millions) 2017 Operating cash flow $ 446 $ (1,478) $ 746 $ (1,034) Adjus
Slide 27: Non-GAAP reconciliations
Non-GAAP reconciliations Net Debt and Adjusted Equity Income Net Debt and Net Leverage Adjusted Equity Income Three Months Ended Twelve Months Ended September 30 September 30 September 30 September 30 (in $ millions) 2017 2016 (in $ millions) 2017 2016 2017 2016 2015 Equity income as reported $ 248
Slide 28: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Income before Income Taxes, Financing Charges, and Segment Adjusted EBIT Adjusted Income before Income Taxes Three Months Ended September 30 Twelve Months Ended September 30 (in $ millions) 2017 2016 2017 2016 Income before Effective Income before Effective Income b
Slide 29: Non-GAAP reconciliations
Non-GAAP reconciliations Reported to Adjusted SG&A FY16 Actual FY17 Actual Last Twelve Months Ended Actual Actual Actual Actual Actual Actual Actual (in $ millions) Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Jun '16 Sep '16 Dec '17 Mar '17 Jun '17 Sep '17 Selling, genera
Slide 30: Prior Period Results
Prior Period Results FY16 Actual FY17 Actual Last Twelve Months Ended Actual Actual Actual Actual Actual Actual Actual Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Jun '16 Sep '16 Dec '16 Mar '17 Jun '17 Sep '17 Sales ($Mils.) $ 4,150 $ 4,220 $ 4,290 $ 4,348 $ 3,932 $ 4,02