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8-K - 8-K - Adient plc | q32017earningsreleaseform8k.htm |
RECENT HIGHLIGHTS
ADIENT • FISCAL THIRD QUARTER 2017 EARNINGS • 1
Adient reports solid Q3
results; repurchases ~0.6M
shares of its common stock
> GAAP net income and EPS diluted increased to $204M
and $2.17, respectively; adjusted-EPS diluted up 4% to
$2.52
> Adjusted-EBIT expanded to $336M (margin of 8.4%)
> Cash and cash equivalents of $669M at June 30, 2017
> Gross debt and net debt totaled $3,399M and
$2,730M, respectively, at June 30, 2017
> Repurchased ~0.6M shares of common stock for
approximately $40M; paid ~$26M in quarterly
dividends
“Adient remains focused on
executing its plan, which helped
drive another quarter of earnings
growth, margin expansion
and cash generation. We are
confident in our ability to deliver
our goals in 2017 and beyond.”
R. Bruce McDonald,
Chairman and Chief Executive Officer
FY 2017 Q3 RESULTS OVERVIEW
REVENUE
$4,017M
ADJ. EBIT
$336M
+3%
AS REPORTED
AS ADJUSTED
vs. Q3 16
ADJ. EBIT MARGIN
8.4%
+90 bps
EBIT
$296M
NET INCOME
attributable to Adient
$204M
ADJ. NET INCOME
attributable to Adient
$237M
+4%
$2.17
EPS DILUTED
ADJ. EPS DILUTED
$2.52
+4%
Announced in fiscal Q3 Adient
Yanfeng Seating Mechanism Co.,
Ltd. plans to open a new 90,000
square meter seating mechanism
plant in Changshu, China.
Prepaid $200 million of the $1.4
billion outstanding Term Loan during
fiscal Q3 using proceeds from a new,
lower cost Euro 165M European
Investment Bank loan plus cash; no
required loan amortization payments
until June 2020.
Returned approximately $66M to
shareholders in fiscal Q3 through
share repurchases and quarterly
dividends.
Unconsolidated seating revenue
in fiscal Q3 increased to $2.2B.
FY 2017 THIRD 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.
July 27, 2017
CONTACTS
GLEN PONCZAK
+1 414 220 8989
Glen.L.Ponczak@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 THIRD QUARTER 2017 EARNINGS • 2
SALES
CONSOLIDATED
UNCONSOL.
SEATING
UNCONSOL.
INTERIORS
ADJ. EQUITY
INCOME a
INTEREST
EXPENSE a
ADJ. EFFECTIVE
TAX RATE a
Q317 $4,017M $2,163M $2,224M $101M $31M 15.1%
Q3 16 $4,362M $1,911M $1,866M $94M $33M 15.1%
Down 7% adjusting
for foreign
exchange; passenger
car production
adjustments &
business run-off also
contributed to the
decline
Up 13% adjusting
for foreign
exchange and
out of period
adjustment
Up 25%
adjusting for
foreign exchange;
up 15% when
adjusting for
foreign exchange
and low margin
cockpit sales
Strong growth
continued; up 13%
adjusting for foreign
exchange
In-line with
expectations
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
Q3 17 Q3 16 6/30/17 9/30/16a
OPERATING CASH FLOW $157M $150 CASH & CASH EQUIVALENTS $669M $550M
CAPITAL EXPENDITURES $(115)M $(126)M TOTAL DEBT $3,399M $3,521
ADJ. FREE CASH FLOW $42M $24M NET DEBT $2,730M $2,971
NET LEVERAGE 1.69x 1.95x
a/ - 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 ~$135 million ($140 million prior)
> 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 is committed to enhancing shareholder value as evidenced by the
company’s strong financial performance, competitive dividend and opportunistic
share repurchases.”
- 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 THIRD QUARTER 2017 EARNINGS • 3
Appendix
Page 1
Adient plc
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended
June 30,
(in millions, except per share data) 2017 2016
Net sales $ 4,017 $ 4,362
Cost of sales 3,646 3,916
Gross profit 371 446
Selling, general and administrative expenses 169 315
Restructuring and impairment costs — 75
Equity income 94 89
Earnings before interest and income taxes 296 145
Net financing charges 31 2
Income before income taxes 265 143
Income tax provision 39 136
Net income (loss) 226 7
Income attributable to noncontrolling interests 22 21
Net income (loss) attributable to Adient $ 204 $ (14)
Diluted earnings per share $ 2.17 $ (0.15)
Shares outstanding at period end 93.1 93.7
Diluted weighted average shares 93.9 93.7
Appendix
Page 2
Adient plc
Condensed Consolidated Statements of Financial Position
(Unaudited)
(in millions)
June 30,
2017
September 30,
2016*
Assets
Cash and cash equivalents $ 669 $ 105
Restricted cash — 2,034
Accounts receivable - net 2,015 2,082
Inventories 654 660
Other current assets 833 810
Current assets 4,171 5,691
Property, plant and equipment - net 2,302 2,195
Goodwill 2,190 2,179
Other intangible assets - net 102 113
Investments in partially-owned affiliates 1,967 1,748
Other noncurrent assets 1,328 1,064
Total assets $ 12,060 $ 12,990
Liabilities and Shareholders' Equity
Short-term debt $ 6 $ 79
Accounts payable and accrued expenses 2,918 3,206
Other current liabilities 908 975
Current liabilities 3,832 4,260
Long-term debt 3,393 3,442
Other noncurrent liabilities 739 913
Redeemable noncontrolling interests 22 34
Shareholders' equity attributable to Adient 3,927 4,210
Noncontrolling interests 147 131
Total liabilities and shareholders' equity $ 12,060 $ 12,990
* Amounts have been revised for ASU 2015-03 to reclassify debt issuance costs of $43 million from other non-current assets
to long-term debt.
Appendix
Page 3
Adient plc
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
June 30,
Nine Months Ended
June 30,
(in millions) 2017 2016 2017 2016
Operating Activities
Net income (loss) attributable to Adient $ 204 $ (14) $ 545 $ (656)
Income attributable to noncontrolling interests 22 21 68 61
Net income (loss) 226 7 613 (595)
Adjustments to reconcile net income to cash provided (used) by operating activities:
Depreciation 84 77 248 240
Amortization of intangibles 4 4 13 13
Pension and postretirement benefit expense 1 — 3 2
Pension and postretirement contributions (7) (17) (23) (35)
Equity in earnings of partially-owned affiliates, net of dividends received (84) 21 (229) (129)
Deferred income taxes (5) (3) (9) 801
Non-cash restructuring and impairment charges — 41 — 41
Equity-based compensation 11 14 33 20
Other 2 (11) 3 (4)
Changes in assets and liabilities:
Receivables 235 40 81 27
Inventories 11 25 15 16
Other assets 55 (86) 48 153
Restructuring reserves (72) 8 (144) 89
Accounts payable and accrued liabilities (298) 31 (349) (180)
Accrued income taxes (6) (1) (3) (15)
Cash provided (used) by operating activities 157 150 300 444
Investing Activities
Capital expenditures (115) (126) (417) (312)
Sale of property, plant and equipment 10 3 27 14
Business divestitures — — — 18
Changes in long-term investments — — (6) —
Other — (3) (2) 2
Cash provided (used) by investing activities (105) (126) (398) (278)
Financing Activities
Net transfers from (to) Parent prior to separation — 156 606 (56)
Cash transferred from former Parent post separation — — 315 —
Increase (decrease) in short-term debt (13) (111) (38) 6
Increase in long-term debt 183 — 183 —
Repayment of long-term debt (201) (3) (301) (7)
Share repurchases (40) — (40) —
Cash dividends (26) — (26) —
Dividends paid to noncontrolling interests (30) (12) (47) (34)
Other (1) — 2 —
Cash provided (used) by financing activities (128) 30 654 (91)
Effect of exchange rate changes on cash and cash equivalents 16 — 8 1
Increase (decrease) in cash and cash equivalents $ (60) $ 54 $ 564 $ 76
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
June 30,
(in millions) 2017 2016
Net Sales
Seating $ 4,017 $ 4,362
Total net sales $ 4,017 $ 4,362
Three Months Ended
June 30,
(in millions) 2017 2016
Adjusted EBIT
Seating $ 317 $ 306
Interiors 19 26
Becoming Adient costs (1) (20) —
Separation costs (2) — (122)
Restructuring and impairment costs (3) — (75)
Purchase accounting amortization (4) (10) (9)
Restructuring related charges (5) (10) (3)
Other items (6) — 22
Earnings before interest and income taxes 296 145
Net financing charges (31) (2)
Income before income taxes $ 265 $ 143
Appendix
Page 5
(1) Reflects incremental expenses associated with becoming an independent company. Includes non-cash costs of $4 million
in the three months ended June 30, 2017.
(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 a third quarter 2016 $14 million favorable legal settlement and an $8 million multi-employer pension credit
associated with the removal of costs for pension plans that remained with the former parent.
2. Earnings Per Share
The following table reconciles the numerators and denominators used to calculate basic and diluted earnings per share:
Three Months Ended
June 30,
(in millions) 2017 2016
Income available to shareholders
Net income (loss) attributable to Adient $ 204 $ (14)
Basic and diluted income available to shareholders $ 204 $ (14)
Weighted average shares outstanding
Basic weighted average shares outstanding 93.4 93.7
Effect of dilutive securities:
Stock options, unvested restricted stock and unvested performance
share awards 0.5 —
Diluted weighted average shares outstanding 93.9 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 June 30,
(in millions, except per share data) 2017 2016
As reported As adjusted As reported As adjusted*
Net sales $ 4,017 $ 4,017 $ 4,362 $ 4,362
Equity income 94 101 89 94
Earnings before interest and income taxes 296 336 145 326
Net financing charges 31 31 2 33
Income before income taxes 265 305 143 293
Income tax provision 39 46 136 44
Net income attributable to Adient 204 237 (14) 228
Diluted earnings per share 2.17 2.52 (0.15) 2.43
* 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
June 30,
(in millions) 2017 2016
Equity income as reported $ 94 $ 89
Purchase accounting amortization (2) 6 5
YFAI restructuring 1 —
Adjusted equity income $ 101 $ 94
Appendix
Page 9
The following table reconciles net income attributable to Adient to adjusted EBIT and pro-forma adjusted EBIT:
Three Months Ended
June 30,
(in millions) 2017 2016
Net income attributable to Adient $ 204 $ (14)
Income attributable to noncontrolling interests 22 21
Income tax provision 39 136
Financing charges 31 2
Earnings before interest and income taxes 296 145
Separation costs (1) — 122
Becoming Adient (1) 20 —
Purchase accounting amortization (2) 10 9
Restructuring related charges (3) 10 3
Other items (4) — (22)
Restructuring and impairment costs (5) — 75
Adjusted EBIT $ 336 332
Pro-forma IT dis-synergies (8) (6)
Pro-forma adjusted EBIT $ 326
Net sales $ 4,017 $ 4,362
Adjusted EBIT and Pro-forma adjusted EBIT, respectively $ 336 $ 326
Adjusted EBIT margin and Pro-forma adjusted EBIT margin,
respectively 8.4% 7.5%
Adjusted EBIT/Pro-forma adjusted EBIT by segment:
Seating (includes 2016 pro-forma IT dis-synergies) $ 317 $ 300
Interiors 19 26
$ 336 $ 326
The following table reconciles net financing charges as reported to pro-forma adjusted net financing charges:
Three Months Ended
June 30,
(in millions) 2017 2016
Net financing charges as reported $ 31 $ 2
Pro-forma net financing charges (8) 31
Pro-forma adjusted net financing charges $ 33
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 June 30,
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 $ 265 $ 39 14.7% $ 143 $ 136 *
Adjustments, including prior year
pro-forma impacts 40 7 17.5% 150 (92) *
As adjusted $ 305 $ 46 15.1% $ 293 $ 44 15.1%
* 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
June 30,
(in millions) 2017 2016
Net income attributable to Adient $ 204 $ (14)
Separation costs (1) — 122
Becoming Adient (1) 20 —
Purchase accounting amortization (2) 10 9
Restructuring related charges (3) 10 3
Other items (4) — (22)
Restructuring and impairment costs (5) — 75
Tax impact of above adjustments and other tax items (7) 65
Adjusted net income attributable to Adient $ 237 238
Pro-forma IT dis-synergies (8) (6)
Pro-forma net financing charges (8) (31)
Tax impact of above pro-forma adjustments 8
Pro-forma effective tax rate adjustment (8) 19
Pro-forma adjusted net income attributable to Adient $ 228
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
June 30,
2017 2016
Diluted earnings per share as reported $ 2.17 $ (0.15)
Separation costs (1) — 1.30
Becoming Adient (1) 0.20 —
Purchase accounting amortization (2) 0.11 0.10
Restructuring related charges (3) 0.11 0.03
Other items (4) — (0.23)
Restructuring and impairment costs (5) — 0.80
Tax impact of above adjustments and other tax items (0.07) 0.69
Adjusted diluted earnings per share $ 2.52 2.54
Pro-forma IT dis-synergies (8) (0.06)
Pro-forma net financing charges (8) (0.33)
Tax impact of above pro-forma adjustments 0.09
Pro-forma effective tax rate adjustment (8) 0.19
Pro-forma adjusted diluted earnings per share $ 2.43
The following table reconciles net income attributable to Adient to pro-forma adjusted EBITDA:
Three Months Ended
(in millions) June 30, 2017 June 30 2016
Net income (loss) attributable to Adient $ 204 $ (14)
Income attributable to noncontrolling interests 22 21
Income tax provision 39 136
Net financing charges 31 2
Separation costs (1) — 122
Becoming Adient (1) 20 —
Purchase accounting amortization (2) 10 9
Restructuring related charges (3) 10 3
Other items (4) — (22)
Restructuring and impairment costs (5) — 75
Stock based compensation (7) 8 14
Depreciation 83 77
Pro-forma IT dis-synergies (8) n/a (6)
Pro-forma adjusted EBITDA $ 427 $ 417
Appendix
Page 12
Nine Months Ended
(in millions) June 30, 2017 June 30, 2016
Net income (loss) attributable to Adient $ 545 $ (656)
Income attributable to noncontrolling interests 68 61
Income tax provision 104 1,027
Net financing charges 99 8
Separation costs (1) 10 254
Becoming Adient (1) (11) 58 —
Purchase accounting amortization (2) 29 28
Restructuring related charges (3) (11) 28 10
Other items (4) (11) 13 (78)
Restructuring and impairment costs (5) 6 244
Stock based compensation (7) 23 20
Depreciation 244 240
Pro-forma IT dis-synergies (8) n/a (19)
Pro-forma adjusted EBITDA $ 1,227 $ 1,139
Twelve Months Ended
(in millions) June 30, 2017
September 30,
2016
Net income (loss) attributable to Adient $ (332) $ (1,533)
Income attributable to noncontrolling interests 91 84
Income tax provision 916 1,839
Net financing charges 113 22
Separation costs (1) 125 369
Becoming Adient (1) (11) 58 —
Purchase accounting amortization (2) 38 37
Restructuring related charges (3) (11) 32 14
Other items (4) (11) 12 (79)
Restructuring and impairment costs (5) 94 332
Pension mark-to-market (6) 110 110
Stock based compensation (7) 31 28
Depreciation 331 327
Pro-forma IT dis-synergies (8) (7) (26)
Pro-forma adjusted EBITDA $ 1,612 $ 1,524
Appendix
Page 13
The following table presents net debt and net leverage ratio calculations:
(in millions, except net leverage)
June 30,
2017
September 30,
2016
Cash (9) $ 669 $ 550
Total debt (10) 3,399 3,521
Net debt $ 2,730 $ 2,971
Pro-forma adjusted EBITDA (last twelve months) $ 1,612 $ 1,524
Net leverage: 1.69 x 1.95 x
The following table reconciles cash from operating activities to free cash flow:
Three Months Ended
June 30,
(in millions) 2017 2016
Operating cash flow 157 150
Less: Capital expenditures (115) (126)
Adjusted free cash flow $ 42 $ 24
The following table reconciles adjusted EBITDA to free cash flow:
Three Months
Ended
June 30,
(in millions) 2017
Adjusted EBITDA $ 427
Less: Interest expense (31)
Less: Taxes (50)
Less: Restructuring (cash) (82)
Change in trade working capital (26)
Less: Net equity in earnings (84)
Other 3
Operating cash flow $ 157
Less: capital expenditures (115)
Adjusted free cash flow $ 42
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 $20 million
of Becoming Adient costs in Q3 2017, $14 million is included within cost of sales and $6 million is included within
selling, general and administrative expenses. The $122 million of separation costs in Q3 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 $10 million in Q3 2017, $6 million is included within equity income, $3 million is included within selling, general
and administrative expenses and $1 million is included within cost of sales. Of the $9 million in Q3 2016, $5 million is
included within equity income and $4 million is included within selling, general and administrative.
(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 cost of sales.
(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, $5 million and $3 million of expense in the first, second and third 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, prior period Becoming Adient costs decreased by $16 million and
restructuring related items and other items increased by $3 million and $13 million, respectively. This change did not
impact total Adjusted EBIT for any prior periods.