Slide 1: FY 2020 Third Quarter Earnings Call
FY 2020 Third Quarter Earnings Call August 6, 2020 Improving the experience of a world in motion 1 Adient – 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, Treasurer & 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 2020 Third Quarter Earnings Call / August 6, 2020 3 Adi
Slide 4: Staying focused on our plan…
Staying focused on our plan… > Protecting our employees (and customers) as we restart and ramp up operations > Driving operational improvements – reductions in ops waste, premium freight, etc. > Exercising commercial discipline – winning profitable new business (return on capital > outgoing business
Slide 5: Key takeaways: managing through unprecedented times
while Q2 2018 managing key takeaways through unprecedented times ➢ Adient’s Q3 results were significantly impacted by COVID-19 (industry production was essentially zero across Europe and the Americas in April) ➢ Adient’s financial results improved sequentially by month as the quarter progressed as o
Slide 6: Operations and restart status
Operations and restart status Plants have reopened with a primary focus on team member safety, utilizing our Adient COVID-19 Return To Work Guide APAC EMEA Americas The APAC market and operations continue EMEA market is recovering, but at a slower Americas operations continue to ramp up to trend in
Slide 7: Focus on capital allocation driving profitable business awards
Focus on capital allocation (return on capital) driving profitable business awards ➢ Clear understanding of Adient’s profitability / return on capital by Key product wins over the platform and customers last 12 months ➢ Certain businesses / platforms have consistently failed to earn an Mustang - con
Slide 8: Critical upcoming launches underpinning Adient's turnaround plan
Critical upcoming launches Mustang Mach-E Nissan Rogue Citroen C41 Mercedes S-Class Launch performance is • Americas • Americas • EMEA • EMEA a key focus area • JIT, trim, foam • JIT • Seat structure and • JIT, trim, foam headrests underpinning Adient’s turnaround plan Flat work surface Ford F150 F-
Slide 9: Executing plans to create a stronger, more profitable business…
Executing plans to create a stronger, more profitable business… ➢ Adient continues to execute its turnaround plan and rightsize the business while navigating through these unprecedented times. ➢ Rightsizing actions necessary given: - Expectations for a smaller industry post COVID-19 Goal: to reduce
Slide 10: Examples of announced rightsizing actions…
Examples of announced rightsizing actions… Above plant > Identified and executing > In July, Adient’s EMEA region > Streamlined, delayered and continued decentralization of central began negotiations with the cost reductions of $75M - reporting functions (e.g. business development and legal reportin
Slide 11: Financial Review
FINANCIAL REVIEW FY 2020 Third Quarter FY 2020 Third Quarter Earnings Call / August 6, 2020 11 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 12: FY 2020 Q3 key financials
FY 2020 Q3 key financials As Reported As Adjusted 1 $ millions, except per share data Q3 FY20 Q3 FY19 Q3 FY20 Q3 FY19 B/(W) Revenue $ 1,626 $ 4,219 $ 1,626 $ 4,219 -61% EBIT $ (269) $ 95 $ (196) $ 129 NM Margin NM 2.3% NM 3.1% EBITDA N/A N/A $ (122) $ 205 NM Margin NM 4.9% Memo: Equity Income 2 $ 48
Slide 13: Revenue – consolidated & unconsolidated
Revenue – consolidated & unconsolidated $ in Millions Consolidated sales Regional Performance (consolidated sales y-o-y growth by region)1 $4,219 Quarterly IHS April May June Quarter Production Americas -99% -85% -25% -70% -71% Europe -93% -61% -20% -57% -64% $1,626 Asia -36% -45% -17% -33% -23% $(2
Slide 14: Q3 FY20 Adjusted-EBITDA
Q3 FY20 Adjusted-EBITDA $ in millions $45 > Q3FY20 Adj.-EBITDA of $(122)M, down $90 $327M y-o-y. Primary drivers of the y-o-y performance included: $205 ‒ The impact of lower volumes & mix across Americas, EMEA, and Asia. In addition, FX and lower equity income (driven by the planned divestiture of
Slide 15: Cash flow & total liquidity
Cash flow & total liquidity Free Cash Flow (1) FY20 FY19 (in $ millions) Q3 FY20 YTD Q3 FY19 YTD Working capital impact on cash flow ➢ As expected, production restarts across Americas and Adjusted-EBITDA $ (122) $ 386 $ 205 $ 572 EMEA resulted in a temporary trade working capital (+/-) Net Equity in
Slide 16: Debt and capital structure
Debt and capital structure ($ in millions) 6/30/2020 Cash & Debt Profile Amount Net Debt Cash & Cash Equivalents $1,032 (1) ABL Revolver, incl. FILO due 2024 179 June 30 September 30 Term Loan B due 2024 792 (in $ millions) 2020 2019 9.00% Secured Notes due 2025 600 7.00% Secured Notes due 2026 800
Slide 17: Looking forward…
Looking forward… Memo: Q4FY20 Q4FY19 ➢ Building on the positive trend established by the end of Q3, Revenue ~ $3.3B – $3.5B $3.9B Adient expects vehicle production across the Americas and Europe to improve sequentially in the coming months Adj. EBITDA ~ $180M – $200M $201M * Q4FY20 production assump
Slide 18: Appendix and Financial Reconciliations
APPENDIX AND FINANCIAL RECONCILIATIONS FY 2020 Third Quarter FY 2020 Third Quarter Earnings Call / August 6, 2020 18 – Improving Adient Adient – Improving thethe experience of of experience a world in in a world motion motion
Slide 19: Q3 FY20 Adjusted-EBITDA: Americas
Q3 FY20 Adjusted-EBITDA: Americas Business performance: $ in millions • $1M Launch / Ops Waste / Tooling • $3M Freight > Q3FY20 Adj. EBITDA of $(83)M, down $152M • $37M Other performance (e.g. operations y-o-y. Primary drivers of the y-o-y decline improvement / other) included: ‒ A $233M decline att
Slide 20: Q3 FY20 Adjusted-EBITDA: EMEA
Q3 FY20 Adjusted-EBITDA: EMEA > Q3FY20 Adj. EBITDA of $(94)M, down $ in millions Business performance: • $12M Launch / Ops Waste / Tooling $147M y-o-y. Primary drivers of the y-o-y • $(1)M Freight • $12M Other performance (e.g. operations improvement / other) decline included: ‒ A $175M decline attr
Slide 21: Q3 FY20 Adjusted-EBITDA: Asia
Q3 FY20 Adjusted-EBITDA: Asia $ in millions > Q3FY20 Adj. EBITDA of $71M, down $39M y-o-y. Primary drivers of the y-o-y decline Q3 FY20 Adj.-EBITDA included: performance includes ~$(37)M impact from ‒ A $30M decline attributed to volume / COVID-1912.6%* mix $110 $1 ‒ To a lesser extent FX, SG&A, and
Slide 22: 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 23: Non-GAAP reconciliations - EBIT, Adjusted EBIT, Adjusted EBITDA
Non-GAAP reconciliations - EBIT, Adjusted EBIT, Adjusted EBITDA Three months ended June 30 2020 2019 (in $ millions) GAAP Adj. Adjusted GAAP Adj. Adjusted Net sales $ 1,626 $ - $ 1,626 $ 4,219 $ - $ 4,219 (1) Cost of sales 1,779 (1) 1,778 4,008 (6) 4,002 Gross profit (153) 1 (152) 211 6 217 (2) Sell
Slide 24: 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) 2020 2019 2020 2019 Net income (loss) attributable to Adient $ (325) $ (321) Net income (loss) attributable to Adient $ (3.46) $ (3.43) Restruct
Slide 25: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted Income before Income Taxes and Effective Tax Rate Adjusted Income before Income Taxes Three Months Ended June 30 (in $ millions) 2020 2019 Income (loss) Income (loss) before Income Tax impact Effective before Income Tax impact Effective Taxes tax rate Taxes tax rate
Slide 26: Segment Performance
Segment Performance Segment Performance (in $ millions) Q1 2019 Q1 2020 Corporate / Corporate / Americas EMEA Asia Consolidated Americas EMEA Asia Consolidated Recon Items Recon Items Net sales $ 1,935 $ 1,640 $ 650 $ (67) $ 4,158 $ 1,859 $ 1,564 $ 572 $ (59) $ 3,936 Adjusted EBITDA 43 2 154 (23) 17