Slide 1: FY 2018 First Quarter Earnings Call
FY 2018 First Quarter Earnings Call January 29, 2018 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 State of the business Bruce McDonald Chairman and Chief Executive Officer Financial review Jeffrey Stafeil Executive Vice President and Chief Financial Officer Q&A FY 2018 First Quarter Earnings Call / January 29, 2018 3 Adien
Slide 4: Recent developments
Recent developments > Adient’s Q1 results significantly impacted by the intensified headwinds affecting the Seat Structures & Mechanisms (SS&M) business ‒ Q1 Adjusted-EBIT of $163M (margin of 3.9%) 1 ‒ Q1 Adjusted-EPS of $1.06 1 ‒ Cash and cash equivalents of $390M at December 31, 2017 ‒ Net debt of
Slide 5: Recent developments
Recent developments > 2018 North American International Auto Show - NAIAS ‒ Hosted a group of investors and media and showcased Adient’s future mobility solutions that address trends driving change in mobility (e.g., autonomous vehicles, car-and ride-sharing) ‒ Presented Adient’s AI18 interior seati
Slide 6: Seat structures & mechanisms (SS&M) current state
Seat structures & mechanisms (SS&M) current state Headwinds intensified in Q1 > Commodity prices / availability > Launch inefficiencies − Launch complexity associated with global programs − Demand outpacing supply (resulting in outsourcing / additional tooling) > Steel supply constraints driving inc
Slide 7: Moving the business forward
Moving the business forward Profit enhancement plans Fundamental changes within SS&M > Implementing cost containment actions to > Personnel & oversight changes further improve cost structure & profitability: > Empowering employees − SG&A reductions − SS&M will be set-up as a stand alone operation −
Slide 8: Communication timeline
Communication timeline Headwinds & Challenges in Investor Meetings Q2 Earnings SS&M Developed • Initial communication of • Mid-term plan • Launch inefficiencies deepening challenge update • Commodity pricing & availability Mid Jan Late Summer / Fall Q4 FY17 Q1 FY18 February March Jan 29th April 2018
Slide 9: Financial review
FIN AN C IAL R E V IE W FY 2018 First Quarter FY 2018 First Quarter Earnings Call / January 29, 2018 9 Adient – Improving Improving the experience of a world in motion
Slide 10: FY 2018 Q1 key financials
FY 2018 Q1 key financials As Reported As Adjusted 1 $ millions, except per share data FY18 Q1 FY17 Q1 FY18 Q1 FY17 Q1 B/(W) Revenue $ 4,204 $ 4,026 $ 4,204 $ 4,026 4% EBIT $ 102 $ 227 $ 163 $ 283 -42% Margin 2.4% 5.6% 3.9% 7.0% EBITDA N/A N/A $ 267 $ 370 -28% Margin 6.4% 9.2% Memo: Equity Income 2 $
Slide 11: Revenue – consolidated & unconsolidated
Revenue – consolidated & unconsolidated Consolidated sales $ in Millions > Consolidated sales in Q1FY18 increased $178 million y-o-y $127 $235 ‒ Benefits of Futuris acquisition and China JV consolidation more than offset negative impact of lower volumes (primarily North America) $(184) $4,204 $4,026
Slide 12: Adjusted-EBITDA
Adjusted-EBITDA $ in Millions $6 $3 $26 > Q1FY18 adjusted-EBITDA of $267M, $51 down $103M y-o-y Increased spending to support new $370 business w ins > Primary drivers of y-o-y change: Seating $15M Interiors $(6)M JV Consolidation $(3)M ‒ Additional SG&A improvement (reflecting 9.2% $(94) lower corp
Slide 13: Margin progression thru Q1FY18
Margin progression thru Q1FY18 $300 Consolidated – targeted improvement 200 bps by the end of FY2020 unconsolidated Progress thru 12/31/17 (9) bps Adj. EBIT excluding equity income thru Equity incom e growth $250 12/31/17 has provided 47 bps of overall m argin Adj. EBIT and Adj. EBITDA Margin (exclu
Slide 14: Cash flow & debt
Cash flow & debt 1 Free Cash Flow (1) Debt (1) > Cash and cash equivalents of $390M at December 31, 2017 (in $ millions) Q1 FY18 > Net leverage of 2.07x at September 30, 2017 Adjusted-EBITDA $ 267 (-) Interest Expense (33) (-) Taxes (43) Net Debt and Net Leverage (-) Restructuring (Cash) (41) (+/-)
Slide 15: Expected impact of U.S. tax legislation
Expected impact of U.S. tax legislation Positive influences Negative influences ˃ Rate reduction to 21% ˃ Full phase in expected in FY19 will be − Benefit of phase in of reduced rate in FY18 slightly detrimental without structural changes ˃ One time repatriation tax is immaterial, no cash outflow ˃
Slide 16: SS&M operating performance
SS&M operating performance $’s millions $25 SS&M Adjusted EBIT 15 (for illustrative purpose) 7 $- (6) $(25) (29) $(50) (46) $(75) $(100) $(125) (126) $(150) Actuals Forecast LTM June Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 FY17 FY17 FY17 FY17 FY18 FY18 FY18 FY18 Memo: Adjusted $26M $9M $10M $9M $9M $12M Equity
Slide 17: Revised FY2018 outlook
Revised FY2018 outlook Revenue $17.0B - $17.2B no change Effective Tax Rate 8-9% previously 11% Adj. EBIT $0.975B - $1.025B previously $1.28B - $1.33B Adj. Net Income $700 - $740M previously $940M - $980M Equity Income Seating $320M Interiors $80M $400M (included in Adj. EBIT) previously $435M Capit
Slide 18: Appendix and financial reconciliations
AP P E N D IX AN D FIN AN C IAL R E C ON C ILIAT ION S FY 2018 First Quarter FY 2018 First Quarter Earnings Call / January 29, 2018 18 Adient – Improving the experience of a world in motion
Slide 19: 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 20: Non-GAAP reconciliations
Non-GAAP reconciliations EBIT, Pro-forma Adjusted EBIT, Pro-forma Adjusted EBITDA FY16 Actual FY17 Actual FY18 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 Q1 FY18 Jun '16 Sep
Slide 21: 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) 2017 2016 2017 2016 Net income attributable to Adient $ (216) $ 142 Diluted earnings per share as reported $ (2.32) $ 1.51 Separation co
Slide 22: Non-GAAP reconciliations
Non-GAAP reconciliations Free Cash Flow Adjusted EBITDA to Free Cash Flow Three Months Free Cash Flow Ended December 31 Three Months Ended (in $ millions) 2017 December 31 (in $ millions) 2017 2016 Adjusted EBITDA $ 267 Operating cash flow $ (127) $ (13) (-) Interest Expense (33) Less: Capital expen
Slide 23: 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) 2017 2017 (in $ millions) 2017 2016 Cash $ 390 $ 709 Equity income as reported $ 96 $ 94 Total Debt 3,501 3,478 Purcha
Slide 24: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Income before Income Taxes, and Segment Adjusted EBIT Adjusted Income before Income Taxes Three Months Ended December 31 (in $ millions) 2017 2016 Income before Effective Income before Effective Tax impact Tax impact Income Taxes tax rate Income Taxes tax rate As re
Slide 25: 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 Actual Actual (in $ millions) Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Jun '16 Sep '16 Dec '16 Mar '17 Jun '17 S
Slide 26: Non-GAAP reconciliations
Non-GAAP reconciliations SS&M Operating Performance FY16 Actual FY17 Actual LTM Actual Actual Actual (in $ millions) Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Jun '16 Adjusted EBIT $ 230 $ 251 $ 296 $ 323 $ 286 $ 283 $ 332 $ 333 $ 296 $ 163 $ 1,100 Non-SS&M Adju
Slide 27: Prior Period Results
Prior Period Results FY16 Actual FY17 Actual FY18 Actual Last Twelve Months Ended Actual 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 Q1 FY18 Jun '16 Sep '16 Dec '16 Mar '17 Jun '17 Sep '17 Dec '17 Sales ($Mils.) $ 4,150 $ 4