EX-99.1 2 a02042022adientform8-kex991.htm EX-99.1

Document

Exhibit 99.1

Appendix

Page 1

Adient plc

Condensed Consolidated Statements of Income

(Unaudited)

						Three Months Ended December 31,
(in millions, except per share data)						2021						2020
Net sales						$	3,480					$	3,848
Cost of sales						3,307						3,507
Gross profit						173						341
Selling, general and administrative expenses						162						149
Restructuring and impairment costs						4						7
Equity income (loss)						33						97
Earnings (loss) before interest and income taxes						40						282
Net financing charges						50						59
Other pension expense (income)						(1)						(2)
Income (loss) before income taxes						(9)						225
Income tax provision (benefit)						21						52
Net income (loss)						(30)						173
Income attributable to noncontrolling interests						24						23
Net income (loss) attributable to Adient						$	(54)					$	150
Diluted earnings (loss) per share						$	(0.57)					$	1.58
Shares outstanding at period end						94.8						94.0
Diluted weighted average shares						94.6						94.8

Appendix

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Adient plc

Condensed Consolidated Statements of Financial Position

(Unaudited)

						December 31,						September 30,
(in millions)						2021						2021
Assets
Cash and cash equivalents						$	2,080					$	1,521
Accounts receivable - net						1,597						1,426
Inventories						942						976
Assets held for sale						—						49
Other current assets						472						1,114
Current assets						5,091						5,086
Property, plant and equipment - net						1,558						1,607
Goodwill						2,209						2,212
Other intangible assets - net						549						555
Investments in partially-owned affiliates						367						335
Assets held for sale						10						25
Other noncurrent assets						935						958
Total assets						$	10,719					$	10,778
Liabilities and Shareholders' Equity
Short-term debt						$	174					$	184
Accounts payable and accrued expenses						2,599						2,519
Liabilities held for sale						—						16
Other current liabilities						969						792
Current liabilities						3,742						3,511
Long-term debt						3,482						3,512
Other noncurrent liabilities						775						797
Redeemable noncontrolling interests						41						240
Shareholders' equity attributable to Adient						2,344						2,376
Noncontrolling interests						335						342
Total liabilities and shareholders' equity						$	10,719					$	10,778

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Adient plc

Condensed Consolidated Statements of Cash Flows

(Unaudited)

						Three Months Ended December 31,
(in millions)						2021						2020
Operating Activities
Net income (loss) attributable to Adient						$	(54)					$	150
Income attributable to noncontrolling interests						24						23
Net income (loss)						(30)						173
Adjustments to reconcile net income (loss) to cash provided (used) by operating activities:
Depreciation						75						70
Amortization of intangibles						13						10
Pension and postretirement benefit expense (benefit)						1						—
Pension and postretirement contributions, net						(5)						(9)
Equity in earnings of partially-owned affiliates, net of dividends received						(32)						(96)
Derivative loss on the 2021 Yanfeng Transaction						3						—
Deferred income taxes						(3)						(2)
Non-cash restructuring and impairment charges						7						6
Equity-based compensation						10						13
Other						2						(3)
Changes in assets and liabilities:
Receivables						(175)						246
Inventories						26						(6)
Other assets						—						(78)
Restructuring reserves						(24)						(53)
Accounts payable and accrued liabilities						104						(84)
Accrued income taxes						14						44
Cash provided (used) by operating activities						(14)						231
Investing Activities
Capital expenditures						(60)						(71)
Sale of property, plant and equipment						11						10
Settlement of derivatives						(30)						—
Proceeds from business divestitures						731						—
Cash provided (used) by investing activities						652						(61)
Financing Activities
Increase (decrease) in short-term debt						(6)						3
Repayment of long-term debt						(2)						(18)
Dividends paid to noncontrolling interests						(59)						(52)
Other						(12)						(1)
Cash provided (used) by financing activities						(79)						(68)
Effect of exchange rate changes on cash and cash equivalents						—						25
Increase (decrease) in cash and cash equivalents, including cash classified within current assets held for sale						559						127
Less: Change in cash classified within current assets held for sale						—						1
Increase (decrease) in cash and cash equivalents						$	559					$	128

Appendix

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Footnotes

1. Segment Results

Adient manages its business on a geographic basis and operates in the following three reportable segments for financial reporting purposes: 1) Americas, which is inclusive of North America and South America; 2) Europe, Middle East, and Africa ("EMEA") and 3) Asia Pacific/China ("Asia").

Adient evaluates the performance of its reportable segments using an adjusted EBITDA metric defined as income before income taxes and noncontrolling interests, excluding net financing charges, qualified restructuring and impairment costs, restructuring related-costs, net mark-to-market adjustments on pension and postretirement plans, transaction gains/losses, purchase accounting amortization, depreciation, stock-based compensation and other non-recurring items ("Adjusted EBITDA"). Also, certain corporate-related costs are not allocated to the segments. 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.

Financial information relating to Adient's reportable segments is as follows:

						Three Months Ended December 31,
(in millions)						2021						2020
Net Sales
Americas						$	1,498					$	1,737
EMEA						1,230						1,604
Asia						784						554
Eliminations						(32)						(47)
Total net sales						$	3,480					$	3,848

						Three Months Ended December 31,
(in millions)						2021						2020
Adjusted EBITDA
Americas						$	9					132
EMEA						43						114
Asia						114						151
Corporate-related costs (1)						(20)						(19)
Restructuring and impairment costs (2)						(4)						(7)
Purchase accounting amortization (3)						(14)						(11)
Restructuring related charges (4)						(1)						(4)
Stock based compensation						(10)						(13)
Depreciation						(75)						(70)
Other items (5)						(2)						9
Earnings (loss) before interest and income taxes						40						282
Net financing charges						(50)						(59)
Other pension income (expense)						1						2
Income (loss) before income taxes						$	(9)					225

Refer to the Footnote Addendum for footnote explanations.

Appendix

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2. Earnings Per Share

The following table reconciles the numerators and denominators used to calculate basic and diluted earnings (loss) per share:

						Three Months Ended December 31,
(in millions, except per share data)						2021						2020
Income available to shareholders
Net income (loss) attributable to Adient						$	(54)					$	150
Weighted average shares outstanding
Basic weighted average shares outstanding						94.6						94.0
Effect of dilutive securities:
Stock options, unvested restricted stock and unvested performance share awards						—						0.8
Diluted weighted average shares outstanding						94.6						94.8

Potentially dilutive securities whose effect would have been antidilutive are excluded from the computation of diluted earnings per share, which for the three months ended December 31, 2021 is a result of being in a loss position.

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3. Non-GAAP Measures

Adjusted EBIT, Adjusted EBIT margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income attributable to Adient, Adjusted effective tax rate, Adjusted earnings per share, Adjusted equity income, Adjusted interest expense, Free cash flow and Net debt 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 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 guidance for any future period have not been provided due to the unreasonable efforts it would take to provide such reconciliations.

•			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, other significant non-recurring items, and net mark-to-market adjustments on pension and postretirement plans. Adjusted EBIT margin is adjusted EBIT as a percentage of net sales.
•			Adjusted EBITDA is defined as adjusted EBIT excluding depreciation and stock based compensation. Certain corporate-related costs are not allocated to the business segments in determining Adjusted EBITDA. Adjusted EBITDA margin is adjusted EBITDA as a percentage of net sales. Adjusted EBITDA excluding adjusted equity income, each as defined herein, is also presented.
•			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, expenses associated with becoming an independent company, other significant non-recurring items, net mark-to-market adjustments on pension and postretirement plans, the tax impact of these items and other discrete tax charges/benefits.
•			Adjusted effective tax rate is defined as adjusted income tax provision as a percentage of adjusted income before income taxes.
•			Adjusted earnings per share is defined as Adjusted net income attributable to Adient divided by diluted weighted average shares.
•			Adjusted equity income is defined as equity income excluding amortization of Adient's intangible assets related to its non-consolidated joint ventures and other unusual or one-time items impacting equity income.
•			Adjusted interest expense is defined as net financing charges excluding unusual or one-time items impacting interest expense.
•			Free cash flow is defined as cash provided by operating activities less capital expenditures.
•			Net debt is calculated as gross debt (short-term and long-term) less cash and cash equivalents.

Adient is also presenting pro forma fiscal 2021 financial information by adjusting previously reported fiscal 2021 results to reflect the impacts of certain strategic transactions that have been completed, as described below. Adient believes the pro forma information provides helpful comparisons between the current year and prior year results by adjusting the prior year to be on a consistent basis with the current year.

•			"Americas footprint actions" and "EMEA footprint actions" refer to miscellaneous closures / roll off of business.
•			"EMEA deconsolidation" refers to the sale of a metals business in Turkey effective October 1, 2021 to a nonconsolidated JV in which Adient retains a noncontrolling interest.
•			"China strategic transaction" refers to the disposition of the YFAS JV and the consolidation of CQADNT and LFADNT, all of which were effective on September 30, 2021.
•			"China footprint actions" refers to divestitures of smaller, non-core businesses (i.e. remaining fabrics business and Futuris entity).

Appendix

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Summarized Income Statement Information

(Refer to the Footnote Addendum for footnote explanations and details

of reconciling items between GAAP results and Adjusted results)

						Three Months Ended December 31,
						2021																		2020
(in millions, except per share data)						GAAP Results						Adj.						Adjusted Results						GAAP Results						Adj.						Adjusted Results
Net sales						$	3,480					$	—					$	3,480					$	3,848					$	—					$	3,848
Cost of sales (6)						3,307						(1)						3,306						3,507						5						3,512
Gross profit						173						1						174						341						(5)						336
Selling, general and administrative expenses (7)						162						(15)						147						149						(14)						135
Restructuring and impairment costs (2)						4						(4)						—						7						(7)						—
Equity income (loss) (8)						33						1						34						97						(3)						94
Earnings (loss) before interest and income taxes (EBIT)						40						21						61						282						13						295
Memo accounts:
Depreciation																		75																		70
Equity based compensation																		10																		13
Adjusted EBITDA																		$	146																	$	378
Net financing charges (9)						50						(3)						47						59						1						60
Other pension expense (income) (12)						(1)						—						(1)						(2)						—						(2)
Income (loss) before income taxes						(9)						24						15						225						12						237
Income tax provision (benefit) (10)						21						4						25						52						(1)						51
Net income (loss) attributable to Adient						(54)						18						(36)						150						12						162
Diluted earnings (loss) per share						(0.57)						0.19						(0.38)						1.58						0.13						1.71
Diluted weighted average shares						94.6						—						94.6						94.8						—						94.8

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Segment Performance:

						Three months ended December 31, 2021
						Americas						EMEA						Asia						Corporate/Eliminations						Consolidated
Net sales						$	1,498					$	1,230					$	784					$	(32)					$	3,480
Adjusted EBITDA						$	9					$	43					$	114					$	(20)					$	146
Adjusted EBITDA margin						0.6		%				3.5		%				14.5		%				N/A						4.2		%
						Three months ended December 31, 2020
						Americas						EMEA						Asia						Corporate/Eliminations						Consolidated
Net sales						$	1,737					$	1,604					$	554					$	(47)					$	3,848
Adjusted EBITDA						$	132					$	114					$	151					$	(19)					$	378
Adjusted EBITDA margin						7.6		%				7.1		%				27.3		%				N/A						9.8		%

The following table presents adjusted EBITDA excluding adjusted equity income:

						Three Months Ended December 31,
(in millions)						2021						2020
Adjusted EBITDA						$	146					$	378
Adjusted Equity Income						34						94
Adjusted EBITDA Excluding Adjusted Equity Income						$	112					$	284
% of Sales						3.2		%				7.4		%

The following table reconciles income (loss) before income taxes to adjusted income before income taxes and presents the related effective tax rate and adjusted effective tax rate:

						Three Months Ended December 31,
						2021																		2020
(in millions, except effective tax rate)						Income (loss) before income taxes						Tax impact						Effective tax rate						Income (loss) before income taxes						Tax impact						Effective tax rate
As reported						$	(9)					$	21					nm						$	225					$	52					23.1%
Adjustments						24						4						16.7%						12						(1)						(8.3)%
As adjusted						$	15					$	25					nm						$	237					$	51					21.5%

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The following table reconciles net income (loss) attributable to Adient to adjusted net income (loss) attributable to Adient:

						Three Months Ended December 31,
(in millions)						2021						2020
Net income (loss) attributable to Adient						(54)						150
Restructuring and impairment costs						4						7
Purchase accounting amortization						14						11
Restructuring related charges						1						4
Derivative loss on Yanfeng transaction						3						—
Interest accretion on deferred consideration						—						(1)
Other items (5)						2						(9)
Impact of adjustments on noncontrolling interests (11)						(2)						(1)
Tax impact of above adjustments and other tax items (10)						(4)						1
Adjusted net income (loss) attributable to Adient						$	(36)					$	162

Refer to the Footnote Addendum for footnote explanations

The following table reconciles diluted earnings (loss) per share as reported to adjusted diluted earnings per share.

						Three Months Ended December 31,
						2021						2020
Diluted earnings (loss) per share as reported						$	(0.57)					$	1.58
Restructuring and impairment costs						0.04						0.07
Purchase accounting amortization						0.15						0.12
Restructuring related charges						0.01						0.04
Derivative loss on Yanfeng transaction						0.03						—
Interest accretion on deferred consideration						—						(0.01)
Other items (5)						0.02						(0.09)
Impact of adjustments on noncontrolling interests (11)						(0.02)						(0.01)
Tax impact of above adjustments and other tax items (10)						(0.04)						0.01
Adjusted diluted earnings (loss) per share						$	(0.38)					$	1.71

Appendix

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The following table presents calculations of net debt:

						December 31						September 30,
(in millions)						2021						2021
Cash and cash equivalents						$	2,080					$	1,521
Total short-term and long-term debt						3,656						3,696
Net debt						$	1,576					$	2,175

The following table reconciles cash from operating activities to free cash flow:

						Three Months Ended December 31,
(in millions)						2021						2020
Cash provided by operating activities						$	(14)					$	231
Capital expenditures						(60)						$	(71)
Free cash flow						$	(74)					$	160

The following table reconciles adjusted EBITDA to free cash flow:

						Three Months Ended December 31,
(in millions)						2021												2020
Adjusted EBITDA						$	146											$	378
(+/-) Net equity in earnings						(32)												(93)
(-) Restructuring (cash)						(24)												(55)
(+/-) Net customer tooling						2												(8)
(+/-) Trade working capital (Net AR/AP + Inventory)						75												250
(+/-) Accrued compensation						(61)												(19)
(-) Interest paid						(41)												(66)
(+/-) Tax refund/taxes paid						(8)												(12)
(+/-) Non-income related taxes (VAT)						36												(67)
(+/-) Commercial settlements						(54)												(9)
(+/-) Other						(53)												(68)
Operating cash flow						(14)												231
Capital expenditures						(60)												(71)
Free cash flow						$	(74)											$	160

Appendix

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Pro Forma Fiscal Year 2021 Reconciliations:

Net sales						Q1						Q2						Q3						Q4						FY2021
Americas - as reported:						1,737						1,644						1,440						1,343						6,164
Americas footprint actions						(20)						—						—						(1)						(21)
Americas - pro forma						1,717						1,644						1,440						1,342						6,143
EMEA - as reported:						1,604						1,636						1,328						996						5,564
EMEA JV deconsolidation						(25)						(28)						(11)						(35)						(99)
EMEA footprint actions						(18)						(7)						(6)						1						(30)
EMEA - pro forma						1,561						1,601						1,311						962						5,435
Asia - as reported:						554						588						516						465						2,123
China strategic transactions						234						199						231						227						891
China footprint actions						(44)						(33)						(31)						(13)						(121)
Asia - pro forma						744						754						716						679						2,893
Elimination/corporate:						(47)						(49)						(42)						(33)						(171)
Total Adient - as reported						3,848						3,819						3,242						2,771						13,680
Total Adient - pro forma						3,975						3,950						3,425						2,950						14,300

Adjusted EBITDA						Q1						Q2						Q3						Q4						FY2021
Americas - as reported:						132						64						23						13						232
Americas footprint actions						(5)						1						—						(1)						(5)
Americas - pro forma						127						65						23						12						227
EMEA - as reported:						114						141						22						—						277
EMEA JV deconsolidation						(4)						(5)						—						(8)						(17)
EMEA footprint actions						(6)						(2)						(1)						(1)						(10)
EMEA - pro forma						104						134						21						(9)						250
Asia - as reported:						151						121						92						122						486
China strategic transactions						(31)						(2)						10						(38)						(61)
China footprint actions						(7)						(5)						(2)						—						(14)
Asia - pro forma						113						114						100						84						411
Elimination/corporate:						(19)						(23)						(19)						(17)						(78)
Total Adient - as reported						378						303						118						118						917
Total Adient - pro forma						325						290						125						70						810

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Footnote Addendum

(1) Corporate-related costs not allocated to the segments include executive office, communications, corporate development, legal and corporate finance.

(2) Reflects qualified restructuring charges for costs that are directly attributable to restructuring activities and meet the definition of restructuring under ASC 420 along with one-time asset impairment charges, as follows:

						Three Months Ended December 31,
(in millions)						2021						2020
Restructuring charges						$	3					$	(1)
Held for sale asset adjustments						(7)						(6)
						$	(4)					$	(7)

(3) Reflects amortization of intangible assets including those related to partially owned affiliates recorded within equity income.

(4) Reflects non-qualified restructuring charges for costs that are directly attributable to restructuring activities, but do not meet the definition of restructuring under ASC 420 including restructuring costs at partially owned affiliates recorded within equity income.

(5) Other items include:

						Three Months Ended December 31,
(in millions)						2021						2020
Transaction costs						$	(2)					$	(4)
Brazil indirect tax recoveries						1						8
Gain on previously held interest at YFAS in an affiliate						—						5
Other						(1)						—
						$	(2)					$	9

(6) The adjustments to cost of sales include:

						Three Months Ended December 31,
(in millions)						2021						2020
Restructuring related charges						$	(1)					$	(3)
Brazil indirect tax recoveries						1						8
Other						(1)						—
						$	(1)					$	5

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(7) The adjustments to selling, general and administrative costs include:

						Three Months Ended December 31,
(in millions)						2021						2020
Purchase accounting amortization						$	(13)					$	(10)
Transaction costs						(2)						(4)
						$	(15)					$	(14)

(8) The adjustments to equity income include:

						Three Months Ended December 31,
(in millions)						2021						2020
Gain on previously held interest at YFAS in an affiliate						$	—					$	(5)
Restructuring related charges						—						1
Purchase accounting amortization						1						1
						$	1					$	(3)

(9) The adjustments to net financing charges to calculate adjusted interest expense include:

						Three Months Ended December 31,
(in millions)						2021						2020
Interest accretion on long-term receivable						$	—					$	1
Derivative loss on Yanfeng transaction						(3)						—
						$	(3)					$	1

(10) The adjustments to income tax provision (benefit) include:

						Three Months Ended December 31,
(in millions)						2021						2020
Brazil indirect tax recoveries						$	(3)					$	3
Other reconciling items						(1)						(2)
						$	(4)					$	1

(11) Reflects the impact of adjustments, primarily purchase accounting amortization on noncontrolling interests.