FY 2018 First Quarter Earnings Call Improving the experience of a world in motion January 29, 2018
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 the meaning of th e Private Securities Litigation Reform Act of 1995. In this document, statements regarding Adient’s future financial position, sales, costs, earnings, cash flows, other me asures of results of operations, capital expenditures or debt levels and plans, objectives, outlook, targets, guidance or goals are forward-looking statements. Words suc h as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “forecast,” “project” or “plan” or terms of similar meaning are also generally intended to identify forward-looking statements. Adient cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, som e of which are beyond Adient’s control, that could cause Adient’s actual results to differ materially from those expressed or implied by such forward -looking statements, including, among others, risks related to: the ability of Adient Aerospace to successfully implement its strategic initiatives or realize the expected benefits of the joint venture, the impact of tax reform legislation through the Tax Cuts and Jobs Act, the ability of Adient to meet debt service requirements, the ability and terms of financing, general economic and business conditions, the strength of the U.S. or other economies, automotive vehicle production levels, mix and schedules, energy and commodity prices, the availability of raw materials and component products, currency exchange rates, the ability of Adient to effectively integrate the Futuris business, and cancellation of or changes to commercial arrangements. A detailed discussion of risks related to Adient’s business is included in the section entitled “Risk Factors” in Adient’s Annual Report on Form 10 -K for the fiscal year ended September 30, 2017 filed with the SEC on November 22, 2017 (“FY17 Form 10 - K”) and quarterly reports on Form 10 -Q filed with the SEC, available at www.sec.gov. Potential investors and others should consider these factors in evaluating the forward-looking statements and should not place undue reliance on such statements. The forward-looking statements included in this document are made only as of the date of this document, unless otherwise specified, and, except as required by law, Adient assumes no obligation, and disclaims any obligation, to update such statements to reflect events or circumstances occurring after the date of this document. In addition, this document includes certain projections provided by Adient with respect to the anticipated future performance of Adient’s businesses. Such projections reflect various assumptions of Adient’s management concerning the future performance of Adient’s businesses, which may or may not prove to be correct. The actual results may vary from the anticipated results and such variations may be material. Adient does not undertake any obligation to update the projections to reflect events or circumstances or changes in expectations after the date of this document or to reflect the occurrence of subsequent events. No representations or warranties are made as to the accuracy or reasonableness of such assumptions or the projections based thereon. This document also contains non- GAAP financial information because Adient’s management believes it may assist investors in evalu ating Adient’s on -going operations. Adient believes these non-GAAP disclosures provide important supplemental information to management and investors regarding financial and business trends relating to Adient’s financial condition and results of operations. Investors should not consider these non -GAAP measures as alternatives to the related GAAP measures. A reconciliation of non-GAAP measures to their closest GAAP equivalent is included in the appendix. Reconciliations of non-GAAP measures related to FY2018 guidance have not been provided due to the unreasonable efforts it would take to provide such reconciliations. FY 2018 First Quarter Earnings Call / January 29, 2018 2 Adient – Improving the experience of a world in motion
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 Adient – Improving the experience of a world in motion
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 $3.1B and net leverage of 2.07x at December 31, 2017 1 > FY18 outlook revised to reflect challenges in SS&M and Q1 results > Signed a joint venture with Boeing to form Adient Aerospace (Adient has a majority ownership stake in the company at 50.01%) ‒ Strategic rationale: ‒ Forming Adient Aerospace is consistent with Adient’s five year marker to expand revenue beyond the automobile industry ‒ The total addressable market for commercial airline seating is ~ $4.5B today and is expected to grow to ~ $6.0B by 2026 ‒ Anticipated operating margins for Adient Aerospace are expected to exceed margins for ADNT’s automotive seating business long -term 1 – For Non-GAAP and adjusted results, see appendix for detail and reconciliation to U.S. GAAP FY 2018 First Quarter Earnings Call / January 29, 2018 4 Adient – Improving the experience of a world in motion
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 seating concept for urban, electrically powered and autonomous vehicles (Level 3 to 4) ‒ Unveiled lightweight solutions for seat structures > During Q1, established Adient (Tianjin) Automotive Components Sales Co., Ltd. -- Adient’s first aftermarket joint venture in China ‒ The JV will supply complete seat solutions to the Chinese retrofitting industry FY 2018 First Quarter Earnings Call / January 29, 2018 5 Adient – Improving the experience of a world in motion
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 increased changeovers and premium freight cost > Cost of customer interruption FY 2018 First Quarter Earnings Call / January 29, 2018 6 Adient – Improving the experience of a world in motion
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 − Investment reprioritization > Fundamental strategic review − Plant staffing model − Vertical integration (make vs. buy) − Discretionary spending − Commercial discipline − Commodity cost recovery mechanisms Profit enhancement plans are being developed and executed while fundamental changes within SS&M are being rolled out to drive cultural and business changes FY 2018 First Quarter Earnings Call / January 29, 2018 7 Adient – Improving the experience of a world in motion
Communication timeline Headwinds & Challenges in Q2 Earnings Investor Meetings 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 29th April 2018 Jan Headwinds & Challenges in SS&M “deep dive” Q1 Earnings SS&M Intensified with investors • Update FY18 • Isolating / identifying outlook problems • Implementing mitigating actions (incl. personnel changes / oversight) ADNT’s management team believes it is taking appropriate actions to help mitigate the near-term headwinds FY 2018 First Quarter Earnings Call / January 29, 2018 8 Adient – Improving the experience of a world in motion
FINANCIAL REVIEW FY 2018 First Quarter FY 2018 First Quarter Earnings Call / January 29, 2018 9 Adient – Improving the experience of a world in motion Adient – Improving the experience of a world in motion
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