Adient (“ADNT”) Investor Meeting
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Adient (“ADNT”) Investor Meeting November 2016 Forward looking statements 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 the Private Securities Litigation Reform Act of 1995. In this document, statements regarding Adient’s future financial position, sales, costs, earnings, cash flows, other measures of results of operations, capital expenditures or debt levels and plans, objectives, outlook, targets, guidance or goals are forward-looking statements. Words such 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, some 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 expected tax treatment of the spin-off, the impact of the spin-off on the businesses of Adient, the ability of Adient to meet debt service requirements, the risk that disruptions from the spin-off will harm Adient’s business, competitive responses to the spin-off, general economic and business conditions that affect Adient following the spin-off, 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, 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 Registration Statement on Form 10 filed with the U.S. Securities and Exchange Commission on April 27, 2016, which the SEC declared effective on September 29, 2016, and 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 evaluating 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 are included in the appendix. Reconciliations of non-GAAP measures related to FY2017 guidance have not been provided due to the unreasonable efforts it would take to provide such reconciliations. 2 Meeting agenda > Introduction to Adient & business overview > China / JV overview > Financial overview >Q&A > Appendix 3 Numerous reasons Adient is a solid investment 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 platforms) Earnings Growth > Lean and improving cost structure (targeting restructuring actions in process) > Upward trend in profitability expected to continue; ~200 bps margin improvement expected over the mid-term Cash Generation > Proven record of generating substantial cash flow > Cash generation will enable Adient to transition from a levered company to an investment grade company while enhancing shareholder value through a competitive dividend > Cash generation will support Adient’s profitable growth strategy (organic & inorganic) 4 For many years Automotive was the growth engine of Johnson Controls Revenue YFAI Hammerstein, Interiors 33 Keiper, Recaro JV 30 ˃ Recent JCI multi-industrial strategy constrained investment in automotive Michel Thierry 27 JCIM JV 24 Sagem 21 Ikeda Becker Bussan 18 Sale of Yanfeng Electronics 15 JV 12 Prince Roth 9 Naue Group & Freres Lahnwerk 6 Hoover 3 Universal 0 Revenue ($billion) 100% Unconsolidated JVs 5 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 a year employees ~$8 billion Unconsolidated seating revenue ~$8 billion Unconsolidated interiors revenue 6 Introducing Adient Key changes going forward Past Today > Part of a global multi-industry company > Focus on automotive seating ‒ Leaner cost structure > Improving business performance > Expect 200 bps of margin improvement with double-digit EPS growth over the mid-term > Capital allocated to support multi-industry transformation > Strong cash flow provides flexibility and ability to de-lever > Targeted capital allocation strategy > Smart reinvestment ‒ Growth capex, capital return and opportunistic M&A Focus on Increasing Value for Shareholders and Customers 7 Adient’s vision and mission bring focus to our success Vision Improving the Experience of a World in Motion Mission We will be the world-class automotive seating supplier through leadership in cost, quality, launch execution, and customer satisfaction. We will leverage our capabilities to drive growth, both within and beyond the automotive industry. 8 Broadest and most complete range of Seating & Interior Products Adient AutomotiveSeating 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 > Overhead Consoles and Lock Mechanisms > Decorative Trim > Foam Cushions & Backs > Head Restraints & Armrests > Trim Covers & Fabrics > RECARO High Performance Seating > Commercial Vehicle Seating 9 Global market leader with diversified geographic exposure Global market share Revenue by geography Adient Lear Europe / Africa Americas 34% Faurecia 35% 29% Toyota Boshoku 6% Asia / Pacific Magna 30% Other China Early investment in emerging markets allowed Adient to take advantage of the globalization of the automotive industry Adient share Includes non-consolidated revenue Revenue based on FY2015 (consolidated and non-consolidated) Source: IHS Automotive and management estimates 10 Global competitive market position Total Market Size 2015: $59.8 Billion > Adient is the leading player 2012–2014 CAGR 1.5% 1.5% 11.3% 1.0% globally and in every major region 2015–2019 CAGR 2.5% 2.5% 5.1% 4.7% worldwide $20.4B $14.7B $13.9B $10.8B ‒ Leading automotive seating market share in North America and Europe ‒ Leadership position in China, the world’s largest and one of the fastest growing automotive markets > Through our JVs, we plan to invest >$1bn in the Asia region ‒ Primarily to drive continued growth in China Segment Americas Europe China SE Asia, Japan, Korea Source: IHS Automotive with management adjustments. Adjustments are based on management’s knowledge of customer schedule details and participation in the global automotive seating market, and include identification of the seating provider for certain vehicle models unidentified by IHS Automotive, among others. 11 Our customer portfolio is the envy of the industry and closely mirrors our customer’s global market share Others JLR 4% Ford BMW 3% 13% 4% Volvo 4% Key Takeaways Other 4% Renault, Peugeot GM > Industry leading diversification & Citroen 9% 5% N. American > By customer -- largest European OEM's customer accounts for 13% of Mercedes OEM's 34% 7% 33% total consolidated sales FCA > By platform -- largest platform 12% Asian accounts for ~5% of total OEM's VW 29% consolidated sales 10% > Ability to leverage products Toyota Honda 9% across customers and regions 6% Hyundai/Kia Nissan > Scale provides leverage to 6% 8% optimize cost structure Based on FY16 Consolidated Sales 12 Seating – growth market 1 Industry Growth1 2 Mix > Global light vehicle production remains robust > Mix