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| 8-K - 8-K - Adient plc | q22017earningsreleaseform8k.htm |
RECENT HIGHLIGHTS
ADIENT • FISCAL SECOND QUARTER 2017 EARNINGS • 1
Adient delivers strong Q2
results; increases full year
earnings expectations
> GAAP net income and EPS diluted increased to
$192M and $2.04, respectively; adjusted-EPS diluted
up 16.3% to $2.50
> Adjusted-EBIT expanded to $334M (margin of 7.9%)
> Cash and cash equivalents of $729M at March 31,
2017
> Gross debt and net debt totaled $3,352M and
$2,623M, respectively, at March 31, 2017
> Guidance raised: FY2017 adjusted-EBIT now
expected at $1.24-$1.26B, up from $1.15 – $1.20B
“Adient delivered strong second
quarter results, building on the
positive momentum established
earlier in the year. In addition to
growing earnings and expanding
margins, Adient’s recently
announced dividend will further
enhance shareholder returns.”
R. Bruce McDonald,
Chairman and Chief Executive Officer
FY 2017 Q2 RESULTS OVERVIEW
REVENUE
$4,212M
ADJ. EBIT
$334M
+12.1%
AS REPORTED
AS ADJUSTED
vs. Q2 16
ADJ. EBIT MARGIN
7.9%
+100 bps
EBIT
$286M
NET INCOME
attributable to Adient
$192M
ADJ. NET INCOME
attributable to Adient
$235M
+16.3%
$2.04
EPS DILUTED
ADJ. EPS DILUTED
$2.50
+16.3%
Announced the company is
collaborating with Boeing to
explore innovative comfort,
efficiency, and functional
improvements to commercial
aircraft seating and interiors.
Prepaid $100 million of the
$1.5 billion Term Loan during
the quarter; net leverage at
1.64x at March 31, 2017.
Declared the company’s first
quarterly dividend of $0.275
per ordinary share; $250
million share repurchase
program approved.
Unconsolidated seating
revenue increased 18% to
$2.1B (at constant currency).
FY 2017 SECOND QUARTER EARNINGS
Adjusted results include certain pro forma adjustments for FY16. For complete details and to see reconciliation of non-GAAP measures to their most directly
comparable GAAP measures refer to the appendix.
April 28, 2017
Exhibit 99.1
CONTACTS
DAVID ROZNOWSKI
+1 734 254 3255
David.J.Roznowski@adient.com
MARK OSWALD
+1 734 254 3372
Mark.A.Oswald@adient.com
MEDIA INVESTORS
Adient is the global leader in automotive seating. With 75,000 employees operating in 230
manufacturing/assembly plants in 33 countries worldwide, we produce and deliver automotive seating
for all vehicle classes and all major OEMs. From complete seating systems to individual components,
our expertise spans every step of the automotive seat-making process. Our integrated, in-house skills
allow us to take our products from research and design all the way to engineering and manufacturing –
and into more than 50 million cars every year.
ADIENT • FISCAL SECOND QUARTER 2017 EARNINGS • 2
SALES
CONSOLIDATED
UNCONSOL.
SEATING
UNCONSOL.
INTERIORS
ADJ. EQUITY
INCOME a
INTEREST
EXPENSE a
ADJ. EFFECTIVE
TAX RATE a
Q2 17 $4,212M $2,092M $2,087M $96M $33M 14.0%
Q2 16 $4,298M $1,852M $2,084M $82M $36M 14.0%
Down ~1%
adjusting for foreign
exchange; passenger
car production
adjustments in NA
also contributed to
the decline
Up ~18%
adjusting for
foreign exchange
Up ~3%
adjusting for
foreign exchange
Strong growth
continued; up ~22%
adjusting for foreign
exchange
Slightly better
vs. expectations
due to cash
performance
Tax rate driven
by geographic
composition of
earnings (U.S.
representing a
larger share of
profit)
a/ - On an adjusted basis including pro forma adjustments to Q2 2016. For complete details and to see reconciliation of non-GAAP measures to their most
directly comparable GAAP measures refer to the appendix.
KEY OPERATING METRICS
Q2 17 Q2 16 3/31/17 9/30/16b
OPERATING CASH FLOW $156M $204 CASH & CASH EQUIVALENTS $729M $550M
CAPITAL EXPENDITURES $(95)M $(78)M TOTAL DEBT $3,352M $3,521
CASH FROM FORMER PARENT a $87M - NET DEBT $2,623M $2,971
ADJ. FREE CASH FLOW $148M $126M NET LEVERAGE 1.64x 1.95x
a/ - Represents final cash payments from Johnson Controls International.
b/ - Pro forma cash balance based on preliminary funding of Adient’s opening cash balance on October 31, 2016; for non-GAAP and adjusted results which
include certain pro forma adjustments for FY15 and FY16, see appendix for detail and reconciliation to U.S. GAAP.
CASH FLOW & BALANCE SHEET
FY 2017 OUTLOOK
> Revenue of $16.15 to $16.25 billion
> Adjusted EBIT of $1.24 to $1.26 billion
> Depreciation & amortization of ~$375 million
> Interest expense of $140 million
> Tax rate: 14% to 15%
> Adjusted net income between $875 and $900 million
> Capital expenditures between $575 and $600 million
> Free cash flow ~$400 million
“ADNT’s increased earnings expectations for FY 2017 are supported by the
company’s strong first half results and positive outlook for the remainder of the
year.”
- Jeffrey Stafeil, Executive Vice President and Chief Financial Officer
Cautionary Statement Regarding Forward-Looking Statements:
Adient plc 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 ability of Adient to meet debt service requirements, the availability 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,
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, 2016 filed
with the SEC on November 29, 2016 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.
Use of Non-GAAP Financial Information:
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.
ADIENT • FISCAL SECOND QUARTER 2017 EARNINGS • 3
Appendix
Page 1
Adient plc
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended
March 31,
(in millions, except per share data) 2017 2016
Net sales $ 4,212 $ 4,298
Cost of sales 3,833 3,868
Gross profit 379 430
Selling, general and administrative expenses 178 252
Restructuring and impairment costs 6 169
Equity income 91 77
Earnings before interest and income taxes 286 86
Net financing charges 33 4
Income before income taxes 253 82
Income tax provision 37 838
Net income (loss) 216 (756)
Income attributable to noncontrolling interests 24 23
Net income (loss) attributable to Adient $ 192 $ (779)
Diluted earnings per share 2.04 $ (8.31)
Shares outstanding at period end 93.7 93.7
Diluted weighted average shares 94.1 93.7
Appendix
Page 2
Adient plc
Condensed Consolidated Statements of Financial Position
(Unaudited)
(in millions)
March 31,
2017
September 30,
2016*
Assets
Cash and cash equivalents $ 729 $ 105
Restricted cash — 2,034
Accounts receivable - net 2,197 2,082
Inventories 645 660
Other current assets 869 810
Current assets 4,440 5,691
Property, plant and equipment - net 2,188 2,195
Goodwill 2,114 2,179
Other intangible assets - net 100 113
Investments in partially-owned affiliates 1,852 1,748
Other noncurrent assets 1,225 1,064
Total assets $ 11,919 $ 12,990
Liabilities and Shareholders' Equity
Short-term debt $ 19 $ 79
Accounts payable and accrued expenses 3,080 3,206
Other current liabilities 988 975
Current liabilities 4,087 4,260
Long-term debt 3,333 3,442
Other noncurrent liabilities 670 913
Redeemable noncontrolling interests 46 34
Shareholders' equity attributable to Adient 3,632 4,210
Noncontrolling interests 151 131
Total liabilities and shareholders' equity $ 11,919 $ 12,990
* Amounts have been revised for ASU 2015-03 to reclassify debt issuance costs of $43 from other non-current assets to
long-term debt.
Appendix
Page 3
Adient plc
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
Six Months Ended
March 31,
(in millions) 2017 2016 2017 2016
Operating Activities
Net income (loss) attributable to Adient $ 192 $ (779) $ 341 $ (642)
Income attributable to noncontrolling interests 24 23 46 40
Net income (loss) 216 (756) 387 (602)
Adjustments to reconcile net income to cash provided (used) by operating activities:
Depreciation 81 81 164 163
Amortization of intangibles 4 5 9 9
Pension and postretirement benefit expense 1 1 2 2
Pension and postretirement contributions (7) (11) (16) (18)
Equity in earnings of partially-owned affiliates, net of dividends received (66) (65) (145) (150)
Deferred income taxes (13) 831 (4) 804
Equity-based compensation 16 5 22 6
Other 1 5 1 7
Changes in assets and liabilities:
Receivables (335) (235) (154) (13)
Inventories 3 (4) 4 (9)
Other assets 10 189 (7) 239
Restructuring reserves (30) 115 (72) 81
Accounts payable and accrued liabilities 272 52 (51) (211)
Accrued income taxes 3 (9) 3 (14)
Cash provided (used) by operating activities 156 204 143 294
Investing Activities
Capital expenditures (95) (78) (302) (186)
Sale of property, plant and equipment 4 4 17 11
Business divestitures — — — 18
Changes in long-term investments — — (6) —
Other 1 1 (2) 5
Cash provided (used) by investing activities (90) (73) (293) (152)
Financing Activities
Net transfers from (to) Parent prior to separation — (201) 606 (212)
Cash transferred from former Parent post separation 87 — 315 —
Increase (decrease) in short-term debt (34) 92 (25) 117
Repayment of long-term debt (100) (1) (100) (4)
Dividends paid to noncontrolling interests (5) (15) (17) (22)
Other 1 — 3 —
Cash provided (used) by financing activities (51) (125) 782 (121)
Effect of exchange rate changes on cash and cash equivalents 5 2 (8) 1
Increase (decrease) in cash and cash equivalents $ 20 $ 8 $ 624 $ 22
Appendix
Page 4
Footnotes
1. Segment Results
During the first quarter of fiscal 2017, Adient began evaluating the performance of its reportable segments using an adjusted
EBIT metric defined as income before income taxes and noncontrolling interests, excluding net financing charges, qualified
restructuring and impairment costs, restructuring related-costs, incremental "Becoming Adient" costs, separation costs, net mark-
to-market adjustments on pension and postretirement plans, transaction gains/losses, purchase accounting amortization and other
non-recurring items ("Adjusted EBIT"). Prior period information has been recast to the new performance metric. The reportable
segments are consistent with how management views the markets served by Adient and reflect the financial information that is
reviewed by its chief operating decision maker.
Adient has two reportable segments for financial reporting purposes: Seating and Interiors.
• The Seating segment produces automotive seat metal structures and mechanisms, foam, trim, fabric and complete seat
systems.
• The Interiors segment, derived from its global automotive interiors joint ventures, produces instrument panels, floor
consoles, door panels, overhead consoles, cockpit systems, decorative trim and other products.
Financial information relating to Adient's reportable segments is as follows:
Three Months Ended
March 31,
(in millions) 2017 2016
Net Sales
Seating $ 4,212 $ 4,298
Total net sales $ 4,212 $ 4,298
Three Months Ended
March 31,
(in millions) 2017 2016
Adjusted EBIT
Seating $ 312 $ 288
Interiors 22 17
Becoming Adient (1) (23) —
Separation costs (2) — (72)
Restructuring and impairment costs (3) (6) (169)
Purchase accounting amortization (4) (9) (10)
Restructuring related charges (5) (10) (3)
Other items (6) — 35
Earnings before interest and income taxes 286 86
Net financing charges (33) (4)
Income before income taxes $ 253 $ 82
Appendix
Page 5
(1) Reflects incremental expenses associated with becoming an independent company.
(2) Reflects expenses associated with and incurred prior to the separation from the former Parent.
(3) Reflects qualified restructuring charges for costs that are directly attributable to restructuring activities and meet the
definition of restructuring under ASC 420.
(4) Reflects amortization of intangible assets including those related to the YFAI joint venture recorded within equity income.
(5) Reflects restructuring related charges for costs that are directly attributable to restructuring activities, but do not meet
the definition of restructuring under ASC 420.
(6) Reflects $22 million of favorable settlements from prior year business divestitures, a $7 million multi-employer pension
credit associated with the removal of costs for pension plans that remained with the former parent, and a $6 million
favorable legal settlement during the three months ended March 31, 2016.
2. Earnings Per Share
The following table reconciles the numerators and denominators used to calculate basic and diluted earnings per share:
Three Months Ended
March 31,
(in millions) 2017 2016
Income available to shareholders
Net income (loss) attributable to Adient $ 192 $ (779)
Basic and diluted income available to shareholders $ 192 $ (779)
Weighted average shares outstanding
Basic weighted average shares outstanding 93.7 93.7
Effect of dilutive securities:
Stock options, unvested restricted stock and unvested performance
share awards 0.4 —
Diluted weighted average shares outstanding 94.1 93.7
Pro-forma adjusted diluted weighted average shares outstanding (1) n/a 93.8
(1) Pro-forma adjusted diluted weighted average shares outstanding includes the effect of dilutive securities that are excluded
from reported diluted weighted average shares outstanding.
Appendix
Page 6
3. Non-GAAP Measures
Adjusted EBIT, Adjusted EBIT margin, Pro-forma adjusted EBIT, Pro-forma adjusted EBIT margin, Pro-forma adjusted
EBITDA, Adjusted net income attributable to Adient, Pro-forma adjusted net income attributable to Adient, Adjusted effective
tax rate, Pro-forma adjusted effective tax rate, Adjusted earnings per share, Pro-forma adjusted earnings per share, Adjusted
equity income, Pro-forma adjusted net financing charges, Free cash flow, Net debt and Net leverage as well as other measures
presented on an adjusted basis are not recognized terms under U.S. GAAP and do not purport to be alternatives to the most
comparable U.S. GAAP amounts. Since all companies do not use identical calculations, our definition and presentation of these
measures may not be comparable to similarly titled measures reported by other companies. Management uses the identified non-
GAAP measures to evaluate the operating performance of the Company and its business segments and to forecast future periods.
Management believes these non-GAAP measures may assist investors and other interested parties in evaluating Adient's on-
going operations and 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. Reconciliations of non-GAAP measures to their closest U.S. GAAP equivalent
are presented below. Reconciliations of non-GAAP measures related to FY 2017 guidance have not been provided due to the
unreasonable efforts it would take to provide such reconciliations.
Appendix
Page 7
• Adjusted EBIT is defined as income before income taxes and noncontrolling interests excluding net financing charges,
restructuring, impairment and related costs, purchase accounting amortization, transaction gains/losses, expenses
associated with becoming an independent company, other significant non-recurring items, and net mark-to-market
adjustments on pension and postretirement plans. General corporate and other overhead expenses are allocated to business
segments in determining Adjusted EBIT. Adjusted EBIT margin is Adjusted EBIT as a percentage of net sales.
• Pro-forma adjusted EBIT is defined as Adjusted EBIT excluding pro-forma IT dis-synergies as a result of higher stand-
alone IT costs as compared to allocated IT costs under our former Parent. Pro-forma adjusted EBIT margin is Pro-forma
adjusted EBIT as a percentage of net sales.
• Pro-forma adjusted EBITDA is defined as Pro-forma adjusted EBIT excluding depreciation and stock based
compensation.
• Adjusted net income attributable to Adient is defined as net income attributable to Adient excluding restructuring,
impairment and related costs, purchase accounting amortization, transaction gains/losses, Becoming Adient/separation
costs, other significant non-recurring items, net mark-to-market adjustments on pension and postretirement plans, and
the tax impact of these items.
• Pro-forma adjusted net income attributable to Adient is defined as Adjusted net income attributable to Adient excluding
pro-forma IT dis-synergies as a result of higher stand-alone IT costs as compared to allocated IT costs under our former
Parent, pro-forma interest expense that Adient would have incurred had it been a stand-alone company, the tax impact
of these items and the pro-forma impact of the tax rate had Adient been operating as a stand-alone company domiciled
in its current jurisdiction.
• Adjusted effective tax rate is defined as adjusted income tax provision as a percentage of adjusted income before income
taxes.
• Pro-forma adjusted effective tax rate is defined as Pro-forma adjusted income tax provision as a percentage of Pro-forma
adjusted income before income taxes. Pro-forma adjusted income tax provision includes the tax impact of the pro-forma
IT dis-synergies and pro-forma interest expense, and the impact of the tax rate had Adient been operating as a stand-
alone company domiciled in its current jurisdiction.
• Adjusted earnings per share is defined as Adjusted net income attributable to Adient divided by diluted weighted average
shares.
• Pro-forma adjusted earnings per share is defined as Pro-forma adjusted net income attributable to Adient divided by
diluted weighted average shares.
• Adjusted equity income is defined as equity income as reported excluding amortization of intangible assets related to
the YFAI joint venture.
• Pro-forma adjusted net financing charges are defined as net financing charges as reported excluding interest expense
that Adient would have incurred had it been a stand-alone company.
• Free cash flow is defined as cash from operating activities plus payments from our former Parent (related to
reimbursements for cash management actions and capital expenditures), less capital expenditures.
• Net debt is calculated as gross debt less cash and cash equivalents.
• Net leverage is calculated as net debt divided by the last twelve months of Pro-forma adjusted EBITDA.
Appendix
Page 8
Summarized Income Statement Information
Three Months Ended March 31,
(in millions, except per share data) 2017 2016
As reported As adjusted As reported As adjusted*
Net sales $ 4,212 $ 4,212 $ 4,298 $ 4,298
Equity income 91 96 77 82
Earnings before interest and income taxes 286 334 86 298
Net financing charges 33 33 4 36
Income before income taxes 253 301 82 262
Income tax provision 37 42 838 37
Net income attributable to Adient 192 235 (779) 202
Diluted earnings per share 2.04 2.50 (8.31) 2.15
* Includes certain pro-forma adjustments as reflected in the reconciliation tables below.
The following table reconciles equity income as reported to adjusted equity income:
Three Months Ended
March 31,
(in millions) 2017 2016
Equity income as reported $ 91 $ 77
Purchase accounting amortization (2) 5 5
Adjusted equity income $ 96 $ 82
Appendix
Page 9
The following table reconciles net income attributable to Adient to adjusted EBIT and pro-forma adjusted EBIT:
Three Months Ended
March 31,
(in millions) 2017 2016
Net income attributable to Adient $ 192 $ (779)
Income attributable to noncontrolling interests 24 23
Income tax provision 37 838
Financing charges 33 4
Earnings before interest and income taxes 286 86
Separation costs (1) — 72
Becoming Adient (1) 23 —
Purchase accounting amortization (2) 9 10
Restructuring related charges (3) 10 3
Other items (4) — (35)
Restructuring and impairment costs (5) 6 169
Adjusted EBIT $ 334 305
Pro-forma IT dis-synergies (8) (7)
Pro-forma adjusted EBIT $ 298
Net sales $ 4,212 $ 4,298
Adjusted EBIT and Pro-forma adjusted EBIT, respectively $ 334 $ 298
Adjusted EBIT margin and Pro-forma adjusted EBIT margin,
respectively 7.9% 6.9%
Adjusted EBIT/Pro-forma adjusted EBIT by segment:
Seating (includes 2016 pro-forma IT dis-synergies) $ 312 $ 281
Interiors 22 17
$ 334 $ 298
The following table reconciles net financing charges as reported to pro-forma adjusted net financing charges:
Three Months Ended
March 31,
(in millions) 2017 2016
Net financing charges as reported $ 33 $ 4
Pro-forma net financing charges (8) 32
Pro-forma adjusted net financing charges $ 36
Appendix
Page 10
The following table reconciles income before income taxes to adjusted income before income taxes and presents the related
effective tax rate and adjusted effective tax rate:
Three Months Ended March 31,
2017 2016
(in millions, except effective tax
rate)
Income
before
income taxes
Tax
impact
Effective
tax rate
Income
before
income taxes
Tax
impact
Effective
tax rate
As reported $ 253 $ 37 14.6% $ 82 $ 838 *
Adjustments, including prior year
pro-forma impacts 48 5 10.4% 180 (801) *
As adjusted $ 301 $ 42 14.0% $ 262 $ 37 14.0%
* Measure not meaningful.
The following table reconciles net income attributable to Adient to adjusted net income attributable to Adient and pro-forma
adjusted net income attributable to Adient:
Three Months Ended
March 31,
(in millions) 2017 2016
Net income attributable to Adient $ 192 $ (779)
Separation costs (1) — 72
Becoming Adient (1) 23 —
Purchase accounting amortization (2) 9 10
Restructuring related charges (3) 10 3
Other items (4) — (35)
Restructuring and impairment costs (5) 6 169
Tax impact of above adjustments and other tax items (5) 773
Adjusted net income attributable to Adient $ 235 213
Pro-forma IT dis-synergies (8) (7)
Pro-forma net financing charges (8) (32)
Tax impact of above pro-forma adjustments 8
Pro-forma effective tax rate adjustment (8) 20
Pro-forma adjusted net income attributable to Adient $ 202
Appendix
Page 11
The following table reconciles diluted earnings per share as reported to adjusted diluted earnings per share and pro-forma
adjusted diluted earnings per share:
Three Months Ended
March 31,
2017 2016
Diluted earnings per share as reported $ 2.04 $ (8.31)
Separation costs (1) — 0.77
Becoming Adient (1) 0.24 —
Purchase accounting amortization (2) 0.10 0.11
Restructuring related charges (3) 0.11 0.03
Other items (4) — (0.37)
Restructuring and impairment costs (5) 0.06 1.80
Tax impact of above adjustments and other tax items (0.05) 8.24
Adjusted diluted earnings per share $ 2.50 2.27
Pro-forma IT dis-synergies (8) (0.07)
Pro-forma net financing charges (8) (0.34)
Tax impact of above pro-forma adjustments 0.09
Pro-forma effective tax rate adjustment (8) 0.20
Pro-forma adjusted diluted earnings per share $ 2.15
The following table reconciles net income attributable to Adient to pro-forma adjusted EBITDA:
Three Months Ended
(in millions) March 31, 2017 March 31, 2016
Net income (loss) attributable to Adient $ 192 $ (779)
Income attributable to noncontrolling interests 24 23
Income tax provision 37 838
Net financing charges 33 4
Separation costs (1) — 72
Becoming Adient (1) 23 —
Purchase accounting amortization (2) 9 10
Restructuring related charges (3) 10 3
Other items (4) — (35)
Restructuring and impairment costs (5) 6 169
Stock based compensation (7) 11 5
Depreciation 78 81
Pro-forma IT dis-synergies (8) n/a (7)
Pro-forma adjusted EBITDA $ 423 $ 384
Appendix
Page 12
Six Months Ended
(in millions) March 31, 2017 March 31, 2016
Net income (loss) attributable to Adient $ 341 $ (642)
Income attributable to noncontrolling interests 46 40
Income tax provision 65 891
Net financing charges 68 6
Separation costs (1) 10 132
Becoming Adient (1) (11) 38 —
Purchase accounting amortization (2) 19 19
Restructuring related charges (3) (11) 18 7
Other items (4) (11) 13 (56)
Restructuring and impairment costs (5) 6 169
Stock based compensation (7) 15 6
Depreciation 161 163
Pro-forma IT dis-synergies (8) n/a (13)
Pro-forma adjusted EBITDA $ 800 $ 722
Twelve Months Ended
(in millions) March 31, 2017
September 30,
2016
Net income (loss) attributable to Adient $ (550) $ (1,533)
Income attributable to noncontrolling interests 90 84
Income tax provision 1,013 1,839
Net financing charges 84 22
Separation costs (1) 247 369
Becoming Adient (1) (11) 38 —
Purchase accounting amortization (2) 37 37
Restructuring related charges (3) (11) 25 14
Other items (4) (11) (10) (79)
Restructuring and impairment costs (5) 169 332
Pension mark-to-market (6) 110 110
Stock based compensation (7) 37 28
Depreciation 325 327
Pro-forma IT dis-synergies (8) (13) (26)
Pro-forma adjusted EBITDA $ 1,602 $ 1,524
Appendix
Page 13
The following table presents net debt and net leverage ratio calculations:
(in millions, except net leverage)
March 31,
2017
September 30,
2016
Cash (9) $ 729 $ 550
Total debt (10) 3,352 3,521
Net debt $ 2,623 $ 2,971
Pro-forma adjusted EBITDA (last twelve months) $ 1,602 $ 1,524
Net leverage: 1.64 x 1.95 x
The following table reconciles cash from operating activities to free cash flow:
Three Months Ended
March 31,
Six Months Ended
March 31,
(in millions) 2017 2016 2017 2016
Operating cash flow 156 204 143 294
Less: Capital expenditures (95) (78) (302) (186)
Cash from former Parent 87 — 315 —
Adjusted free cash flow $ 148 $ 126 $ 156 $ 108
The following table reconciles adjusted EBITDA to free cash flow:
Three Months
Ended
March 31,
Six Months
Ended
March 31,
(in millions) 2017 2017
Adjusted EBITDA $ 423 $ 800
Less: Interest expense (33) (68)
Less: Taxes (47) (66)
Less: Restructuring (cash) (39) (90)
Change in trade working capital (85) (236)
Less: Net equity in earnings (66) (145)
Other 3 (52)
Operating cash flow $ 156 $ 143
Less: capital expenditures (95) (302)
Cash from former Parent 87 315
Adjusted free cash flow $ 148 $ 156
Appendix
Page 14
(1) Becoming Adient costs reflect incremental expenses associated with becoming an independent company. Separation
costs reflect expenses associated with, and incurred prior to, the separation from the former Parent. Of the $23 million
of Becoming Adient costs in Q2 2017, $12 million is included within cost of sales and $11 million is included within
selling, general and administrative expenses. The $72 million of separation costs in Q2 2016 is included within selling,
general and administrative expenses.
(2) Reflects amortization of intangible assets including those related to the YFAI joint venture recorded within equity income.
Of the $9 million in Q2 2017, $4 million is included within selling, general and administrative expenses and $5 million
is included within equity income. Of the $10 million in Q2 2016, $5 million is included within selling, general and
administrative expenses and $5 million is included within equity income.
(3) Reflects non-qualified restructuring charges for costs that are directly attributable to restructuring activities, but do not
fall into the severance, exit or disposal category and therefore do not meet the definition of restructuring under ASC 420.
These amounts are included within selling, general and administrative expenses.
(4) First quarter 2017 primarily consists of $12 million of initial funding of the Adient foundation. Also reflects a first quarter
2016 $13 million favorable commercial settlement, second quarter 2016 $22 million favorable settlements from prior
year business divestitures and a $6 million favorable legal settlement, and a third quarter 2016 $14 million favorable
legal settlement. Also reflected is a multi-employer pension credit associated with the removal of costs for pension plans
that remained with the former Parent in the amount of $8 million, $7 million, $8 million and $1 million in the first,
second, third and fourth quarters of 2016, respectively. These amounts are included within selling, general and
administrative expenses.
(5) Reflects qualified restructuring charges for costs that are directly attributable to restructuring activities and meet the
definition of restructuring under ASC 420.
(6) Reflects net mark-to-market adjustments on pension and postretirement plans. Of the $110 million charge in fiscal 2016,
$16 million is included within cost of sales and $94 million is included within selling, general and administrative expenses.
(7) Stock based compensation excludes $2 million and $5 million of expense in the first and second quarters of 2017,
respectively, which is included with the costs associated with becoming an independent company (Becoming Adient
costs) discussed above.
(8) Pro-forma amounts include IT dis-synergies (within cost of sales) as a result of higher stand-alone IT costs as compared
to allocated IT costs under our former Parent, interest expense that Adient would have incurred had it been a stand-alone
company and the impact of the tax rate had Adient been operating as a stand-alone company domiciled in its current
jurisdiction.
(9) Cash at September 30, 2016 is pro-forma cash based on the preliminary funding of Adient's opening cash balance on
October 31, 2016.
(10) Total debt at September 30, 2016 has been revised to include debt issuance costs as a reduction of the carrying amount
of the debt in accordance with ASU 2015-03, which was adopted retrospectively by Adient in Q1 2017.
(11) During the second quarter of fiscal 2017, Adient decided to reclassify certain Becoming Adient costs into other reconciling
categories in calculating Adjusted EBIT. As a result, Becoming Adient costs related to prior periods decreased by $16
million and restructuring related items and other items increased by $3 million and $13 million, respectively. This change
did not impact the Adjusted EBIT numbers for any prior periods.