Slide 1: Adient Investor Meeting August 2017
Adient Investor Meeting August 2017 Improving the experience of a world in motion
Slide 2: Forward looking statement
Forward looking statement 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” wi
Slide 3: Today's presenters and meeting agenda
Today’s presenters and meeting agenda Bruce McDonald Jeffrey Stafeil Chairman & CEO, Adient EVP & CFO, Adient > Company / business > Financial overview overview Investor Meeting: August 2017 3 Adient – Improving the experience of a world in motion
Slide 4: 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 5: Broadest and most complete range of Seating & Interior Products
Broadest and most complete range of Seating & Interior Products Adient Automotive Seating Yanfeng Global Automotive Interiors > Complete Seat / Just-In-Time > Instrument Panels Manufacturing > Floor Consoles > Front & Rear Seat Structures > Door Panels > Track, Recliner, Manual Height Adjuster > Ove
Slide 6: Global market leader with diversified geographic exposure
Global market leader with diversified geographic exposure Global market share Revenue by geography Adient Americas Lear Europe / Africa 33% 34% 29% Faurecia Toyota 7% Asia / Pacific Boshoku 30% Other China Magna Early investment in emerging markets allowed Adient to take advantage of the globalizati
Slide 7: Our customer portfolio closely mirrors our customers' global market share
Our customer portfolio is the envy of the industry and closely mirrors our customer’s global market share Others JLR 4% Ford BMW 3% 4% 13% Key Takeaways Volvo 4% > Industry leading diversification Renault, Peugeot & Citroen GM > By customer -- largest customer 9% 5% accounts for 13% of total consoli
Slide 8: Global industry trends ask for new design solutions in seating
Global industry trends ask for new design solutions in seating Global Industry trends Implications on seating • Safety • Changes in vehicle architecture & • Electrification power managment • Light-weight • Slim & lightweight • Low block height • Connectivity • Smart, individualized heating & cooling
Slide 9: Focused on advancing Adient's investment thesis
Focused on advancing Adient’s investment thesis… Earnings growth: > On track towards goal of 200 bps improvement in the mid-term > SG&A leading the charge, contribution from metals expected in FY19 and FY20 Cash generation: > De-risking the balance sheet (prepayment of debt) > Supporting Adient’s pr
Slide 10: Earnings growth bridge
Earnings growth bridge 4 > 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% the mid-term +2.0% 1 ‒ Immediate near-term impact from cor
Slide 11: Cash generation
Cash generation > Earnings growth and margin expansion driving strong cash generation > Balanced approach to cash usage / capital allocation: - De-risking the balance sheet with prepayment of debt; Adient’s net leverage ratio at June 30, 2017 at 1.69X, down about 13% compared to 1.95X at September 3
Slide 12: For many years Automotive was the growth engine for Johnson Controls
As a reminder…for many years Automotive was the growth engine for Johnson Controls Revenue YFAI Hammerstein, 33 Interiors Keiper, Recaro JV 30 ˃ JCI multi-industrial strategy constrained investment in automotive Michel Thierry 27 JCIM JV 24 Sagem 21 Ikeda Becker Bussan 18 Sale of Yanfeng Electronics
Slide 13: Adient's growth engine is beginning to accelerate
Market position $’s Billions Seating backlog Backlog growth continues to accelerate -- further $2.4 strengthening our market position $2.1 > Gross sales bookings in FY17 expected to exceed FY16 total of $5.3B > New business wins coming from a diverse group of customers (Traditional, West Coast, Luxu
Slide 14: Opportunities in new markets
Opportunities in new markets Growing outside traditional auto markets West Coast New Commercial Players Vehicle Seating Railway Seating Aircraft Seating Investor Meeting: August 2017 14 Adient – Improving the experience of a world in motion
Slide 15: Meeting agenda
Meeting agenda ˃ Company & business overview ˃ Financial overview ˃ Q&A Investor Meeting: August 2017 15 Adient – Improving the experience of a world in motion
Slide 16: FY 2017 Q3 key financials
FY 2017 Q3 key financials As Reported As Adjusted 1 $ millions, except per share data FY17 Q3 FY16 Q3 FY17 Q3 FY16 Q3 B/(W) Reported revenue $ 4,017 $ 4,362 $ 4,017 $ 4,362 -8% EBIT $ 296 $ 145 $ 336 $ 326 +3% Margin 7.4% 3.3% 8.4% 7.5% EBITDA N/A N/A $ 427 $ 417 +2% Margin 10.6% 9.6% Memo: Equity I
Slide 17: Margin progression solidly on-track
Margin progression solidly on-track Adjusted EBIT Margin (excluding equity income)1 SG&A – Adjusted1 • Target 200 bps in mid-term ADJ SG&A % of sales Targeting 150 bps reduction • ~ 75 bps achieved to date vs LTM Jun ’16 (~$256M) ADJ EBIT % of sales (excl. equity income) 5.2% 5.02% 5.0% 5.4% 4.76% 5
Slide 18: Drivers of future earnings growth
Drivers of future earnings growth > Accelerating backlog growth Increased Profitability > Well positioned to capture growth in China through equity income from market leading JV > Improved operational efficiencies driven by: ‒ Implementation of world-class operating system ‒ G&A reduction ‒ Metals a
Slide 19: Managing through near-term production adjustments
Managing through near-term production adjustments > Adient’s strong diversification reduces downside exposure against near-term production adjustments > Numerous levers available to drive efficiencies and remove costs: ‒ Advanced and standardized operating systems in place ‒ Operational flexibility
Slide 20: Managing through near-term production adjustments
Managing through near-term production adjustments Current state Drivers mitigating Future state FY17 production adjustments vs. FY17 Sales: Plateauing environment “Potential” impact to a U.S. downturn > Global platforms coming on-stream > Increasing exposure to “West Coast” Self-help expected to dri
Slide 21: Value drivers for Adient stock
Value drivers for Adient stock VALUE DRIVERS ~55% ˃ Margin improvement of 200 bps vs. LTM June 2016 results net earnings ˃ Strong order book in 2016, expected to drive top line growth in 2019 and beyond ˃ Proven ability to generate substantial cash flow Consolidated ˃ Largest market share with most
Slide 22: Unconsolidated results = higher quality earnings
Unconsolidated results = higher quality earnings UNCONSOLIDATED RESULTS = HIGHER QUALITY EARNINGS ADNT’s equity income ˃ ~25% of Adient’s EBITDA generated through equity income ~25% – Shown as EBITDA for accounting purposes, should be treated as net EBITDA income for valuation purposes (already refl
Slide 23: Framework for valuing Adient
Framework for valuing Adient Primary - P/E Multiple Methodology Secondary - Blended Multiple Methodology Base Business EBITDA Multiple EBITDA Overview Adient EPS P/E Multiple JV Equity P/E Multiple Income Provides full value for JV equity income (key contributor Common method currently used by W
Slide 24: Meeting agenda
Meeting agenda ˃ Introduction to Adient & business overview ˃ Financial overview ˃ Q&A Investor Meeting: August 2017 24 Adient – Improving the experience of a world in motion
Slide 25: Appendix
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Slide 26: China / JV Overview
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Slide 27: 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 28: 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 YFAS 49.99% 50.01% > Low cost engineering and Chang’An
Slide 29: 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 big auto group, based on 2016 production volume (PV) Where competitors have alliance with the auto group PV seating market share per each major auto group 4816K 3495K 3057K 2037K 1999K 1734K 100% 7
Slide 30: Leading position with western OEMs with opportunities with Asian and Local OEMs
Leading position with western OEMs with opportunities with Asian and Local OEMs Seating* market share among each OEM Group European OEM 70% LEAR FSA Sitech Adient Share at In-House N.A. OEM 77% LEAR FSA Global OEM 6.5% 23.5% C OEM Japanese OEM 31% Toyota Boshoku TS-Tech Tachi –S FSA JV Others 56% KR
Slide 31: Unparalleled customer diversity and relationships in China
Unparalleled customer diversity and relationships in China Customer Mix by Volume Asian OEMs (w/o China) 19% European OEMs 40% Chinese OEMs 19% North American OEMs 22% Investor Meeting: August 2017 31 Adient – Improving the experience of a world in motion
Slide 32: SUV trends are beneficial to Adient's growth
SUV trends are beneficial to Adient’s growth China SUV Development Trend % share based on production volume Seating content per vehicle: ~$1000-$1,100 Share of SUV of total market (Left) Gobal OEM's share in SUV (Right) ~$500-$600 ~$550-$650 60.0% 60.0% 45% 47% 44% 40% 40.0% 33% Average SUV SUV Loca
Slide 33: Premium market will continue to outpace the volume market in China
Premium market will continue to outpace the volume market in China China PV Production YoY Growth ( Average market vs. Premium) Segment share 2016 vs. 2021e PV Avg.YoY Growth % Premium YoY Growth % 28.2% 28.1% 29,6 29,3 26,7 65.0% 62.3% 6.8% 9.6% 21,1 18,6 19,0 ˃ Premium segment will 17,6 13,9 2016
Slide 34: Market trends strengthening our leading position
Market trends strengthening our leading position Shift to SUV / MPV Premium segment China technology Ability to offset “price segment remains robust roadmap 2025 downs” > New business wins with > Strong and growing > Lightweight materials > Scale advantage both domestic and global position with Daim
Slide 35: Importance of Chinese market will continue to increase
Importance of Chinese market will continue to increase Evolution of the Global Platforms Chinese OEM Technology roadmap 2025: Leading Market New OEMs Of Electrification World’s biggest electric vehicle market with aggressive growth plans Investor Meeting: August 2017 35 Adient – Improving the experi
Slide 36: China's unconsolidated financial strength
China’s unconsolidated financial strength 1 FY2012 – FY2016 Industry CNY in billions Adient Results Sales Net Cash 3 48.9 > Top-line growth > Well capitalized Units, Millions 5.8 in excess of balance sheets China Light Vehicle 29.1 industry growth across the Production 2 expected to various joint co
Slide 37: Dissecting Adient's 2017E earnings
Dissecting Adient’s 2017E earnings ($ in millions) Base Business 2017E Consolidated Business EBITDA (Including Equity Income) $1,625 (-) 2017E Equity Income (400) 2017E Base Business EBITDA $1,225 Valued at Industry EV / EBITDA Multiple China Joint Ventures Valued at Industry 2017E Equity Income $40
Slide 38: Framework for valuing Adient
Framework for valuing Adient Primary - P/E Multiple Methodology Secondary - Blended Multiple Methodology Base Business EBITDA Multiple EBITDA Overview Adient EPS P/E Multiple JV Equity P/E Multiple Income Provides full value for JV equity income (key contributor Common method currently used by W
Slide 39: Financial Reconciliations
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Slide 40: 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 41: 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 (in $ millions) Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Jun '16 Sep '16 Dec '16 Mar '17 Jun '17 Net income att
Slide 42: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Net Income Adjusted Net Income Adjusted Diluted EPS Three Months Ended Three Months Ended June 30 June 30 (in $ millions) 2017 2016 2017 2016 Net income attributable to Adient $ 204 $ (14) Diluted earnings per share as reported $ 2.17 $ (0.15) Separation costs (1) -
Slide 43: Non-GAAP reconciliations
Non-GAAP reconciliations Net Debt and Adjusted Equity Income Net Debt and Net Leverage Adjusted Equity Income Three Months Ended June 30 September 30 June 30 (in $ millions) 2017 2016 (in $ millions) 2017 2016 (1) Cash $ 669 $ 550 Equity income as reported $ 94 $ 89 (2) Total Debt 3,399 3,521 Purcha
Slide 44: 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 June 30 (in $ millions) 2017 2016 Income before Income Taxes Tax impact Effective tax rate Income before Income Taxes Tax impact Effective
Slide 45: Non-GAAP reconciliations
Non-GAAP reconciliations Reported to Adjusted SG&A for prior periods (LTM Jun 16 – LTM Jun 17) 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 Jun '16 Sep '16 Dec '16 Mar '17 Ju
Slide 46: Prior Period Results
Prior Period Results FY16 Actual FY17 Actual Last Twelve Months Ended Actual Actual Actual Actual Actual Q4 FY15 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Jun '16 Sep '16 Dec '16 Mar '17 Jun '17 Sales ($Mils.) $ 4,162 $ 4,233 $ 4,298 $ 4,362 $ 3,944 $ 4,038 $ 4,212 $ 4,017 $ 17,055 $ 1