Improving the experience of a world in motion
Executive summary
ADIENT
Leading competitive position in a strong and vital market
> Adient maintains one of the largest market shares (~33%) in a concentrated segment with few global competitors
> Well diversified customer mix - no customer is greater than 12% of total consolidated sales
> High barriers to entry; replacement business typically won at a high rate (>90%) as switching costs for customers are high
Opportunity to materially increase earnings and free cash flow
> Bridging the margin gap versus key competitors represents enormous opportunity
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Cash flow for 1H2019 better than 1H2018 despite lower earnings
> Right-sizing SS&M expected to have positive impact over the next several years
New team and plan being deployed
New CEO and essentially full overhaul of structure and operating team
> Back-to-basics approach implemented to simplify structure, enhance accountability and speed up decision making
> Initiatives to improve profitabilty expected to gain momentum through second half 2019 and beyond
Joint venture structure a significant and underappreciated asset
> Highly profitable network of JVs that have consistently grown faster than underlying industry, generating significant cash flow
Approximately 45% share of China's passenger Seating market driven by strategic customer partnerships
> Approximately 70% of annual equity income converts into cash dividends
> Underlying balance sheets of Chinese JVs very strong (approximately $1.3B of net cash as December 31, 2018)
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