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Adient plc – ‘8-K’ for 8/5/22 – ‘EX-99.1’

On: Friday, 8/5/22, at 6:54am ET · For: 8/5/22 · Accession #: 1670541-22-74 · File #: 1-37757

  As Of               Filer                 Filing    For·On·As Docs:Size

 8/05/22  Adient plc                        8-K:2,9     8/05/22   11:4.3M

Current Report — Form 8-K

Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                      HTML     33K 
 2: EX-99.1     Miscellaneous Exhibit                               HTML    526K 
 6: R1          Cover                                               HTML     47K 
 9: XML         IDEA XML File -- Filing Summary                      XML     11K 
 7: XML         XBRL Instance -- adnt-20220805_htm                   XML     22K 
 8: EXCEL       IDEA Workbook of Financial Reports                  XLSX      8K 
 4: EX-101.LAB  XBRL Labels -- adnt-20220805_lab                     XML     69K 
 5: EX-101.PRE  XBRL Presentations -- adnt-20220805_pre              XML     34K 
 3: EX-101.SCH  XBRL Schema -- adnt-20220805                         XSD     10K 
10: JSON        XBRL Instance as JSON Data -- MetaLinks               12±    17K 
11: ZIP         XBRL Zipped Folder -- 0001670541-22-000074-xbrl      Zip     41K

‘EX-99.1’ — Miscellaneous Exhibit

This Exhibit is an HTML Document rendered as filed. [ Alternative Formats ]

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Document

Exhibit 99.1

Appendix

Page 1

Adient plc

Condensed Consolidated Statements of Income

(Unaudited)


	Three Months Ended June 30,
(in millions, except per share data)	2022		2021
Net sales	$	3,485	$	3,242
Cost of sales	3,312		3,092
Gross profit	173		150
Selling, general and administrative expenses	142		136

Restructuring and impairment costs	12		8
Equity income (loss)	16		38
Earnings (loss) before interest and income taxes	35		44
Net financing charges	39		87
Other pension expense (income)	(4)		(4)
Income (loss) before income taxes	—		(39)
Income tax provision (benefit)	20		10
Net income (loss)	(20)		(49)
Income attributable to noncontrolling interests	10		22
Net income (loss) attributable to Adient	$	(30)	$	(71)

Diluted earnings (loss) per share	$	(0.32)	$	(0.75)

Shares outstanding at period end	94.8		94.2
Diluted weighted average shares	94.8		94.2

Appendix

Page 2

Adient plc

Condensed Consolidated Statements of Financial Position

(Unaudited)


	June 30,		September 30,
(in millions)	2022		2021
Assets
Cash and cash equivalents	$	892	$	1,521
Accounts receivable - net	1,761		1,426
Inventories	953		976
Assets held for sale	—		49
Other current assets	456		1,114
Current assets	4,062		5,086

Property, plant and equipment - net	1,443		1,607
Goodwill	2,122		2,212
Other intangible assets - net	504		555
Investments in partially-owned affiliates	348		335
Assets held for sale	7		25
Other noncurrent assets	829		958
Total assets	$	9,315	$	10,778

Liabilities and Shareholders' Equity
Short-term debt	$	20	$	184
Accounts payable and accrued expenses	2,697		2,519
Liabilities held for sale	—		16
Other current liabilities	670		792
Current liabilities	3,387		3,511

Long-term debt	2,707		3,512

Other noncurrent liabilities	723		797
Redeemable noncontrolling interests	45		240
Shareholders' equity attributable to Adient	2,123		2,376
Noncontrolling interests	330		342
Total liabilities and shareholders' equity	$	9,315	$	10,778

Appendix

Page 3

Adient plc

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended June 30,
(in millions)	2022		2021
Operating Activities
Net income (loss) attributable to Adient	$	(30)	$	(71)
Income attributable to noncontrolling interests	10		22
Net income (loss)	(20)		(49)
Adjustments to reconcile net income (loss) to cash provided (used) by operating activities:
Depreciation	72		71
Amortization of intangibles	14		10
Pension and postretirement benefit expense (benefit)	(3)		(1)
Pension and postretirement contributions, net	(7)		(6)
Equity in earnings of partially-owned affiliates, net of dividends received	10		245




Deferred income taxes	13		(2)
Non-cash restructuring and impairment charges	1		1

Equity-based compensation	7		10
Other	—		8
Changes in assets and liabilities:
Receivables	(83)		315
Inventories	8		(87)
Other assets	7		14
Restructuring reserves	(11)		(23)
Accounts payable and accrued liabilities	37		(277)
Accrued income taxes	(22)		(7)
Cash provided (used) by operating activities	23		222
Investing Activities
Capital expenditures	(53)		(60)
Sale of property, plant and equipment	6		11

Business acquisitions	(13)		(271)
Proceeds from business divestitures	—		53

Settlement of an affiliate loan	—		15

Cash provided (used) by investing activities	(60)		(252)
Financing Activities
Increase (decrease) in short-term debt	—		30
Increase (decrease) in long-term debt	—		214
Repayment of long-term debt	(144)		(185)
Debt financing costs	—		(7)



Dividends paid to noncontrolling interests	(3)		(7)

Other	—		(1)
Cash provided (used) by financing activities	(147)		44
Effect of exchange rate changes on cash and cash equivalents	(42)		—
Increase (decrease) in cash and cash equivalents, including cash classified within current assets held for sale	(226)		14
Less: Change in cash classified within current assets held for sale	—		2
Increase (decrease) in cash and cash equivalents	$	(226)	$	16

Appendix

Page 4

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 June 30,
(in millions)	2022		2021
Net Sales
Americas	$	1,673	$	1,440
EMEA	1,215		1,328
Asia	627		516
Eliminations	(30)		(42)
Total net sales	$	3,485	$	3,242


	Three Months Ended June 30,
(in millions)	2022		2021
Adjusted EBITDA
Americas	$	70	$	23
EMEA	31		22
Asia	64		92
Corporate-related costs (1)	(22)		(19)
Restructuring and impairment costs (2)	(12)		(8)
Purchase accounting amortization (3)	(14)		(11)
Restructuring related charges (4)	(1)		—


Stock based compensation	(7)		(10)
Depreciation	(72)		(71)
Other items (5)	(2)		26
Earnings (loss) before interest and income taxes	35		44
Net financing charges	(39)		(87)
Other pension income (expense)	4		4
Income (loss) before income taxes	$	—	$	(39)

Refer to the Footnote Addendum for footnote explanations.

Appendix

Page 5

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 June 30,
(in millions, except per share data)	2022		2021
Income available to shareholders
Net income (loss) attributable to Adient	$	(30)	$	(71)

Weighted average shares outstanding
Basic weighted average shares outstanding	94.8		94.2
Effect of dilutive securities:
Stock options, unvested restricted stock and unvested performance share awards	—		—
Diluted weighted average shares outstanding	94.8		94.2

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 June 30, 2022 and 2021 is a result of being in a loss position.

Appendix

Page 6

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 making pro forma adjustments to fiscal 2021 financial information to reflect the impacts of certain transactions (collectively, “portfolio actions”) as described below. Adient believes these pro forma adjustments provide 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 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 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

Page 7

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 June 30,
	2022						2021
(in millions, except per share data)	GAAP Results		Adj.		Adjusted Results		GAAP Results		Adj.		Adjusted Results
Net sales	$	3,485	$	—	$	3,485	$	3,242	$	—	$	3,242
Cost of sales (6)	3,312		(2)		3,310		3,092		28		3,120
Gross profit	173		2		175		150		(28)		122
Selling, general and administrative expenses (7)	142		(15)		127		136		(12)		124

Restructuring and impairment costs (2)	12		(12)		—		8		(8)		—
Equity income (loss) (8)	16		—		16		38		1		39
Earnings (loss) before interest and income taxes (EBIT)	35		29		64		44		(7)		37

Memo accounts:
Depreciation					72						71
Equity based compensation					7						10
Adjusted EBITDA					$	143					$	118

Net financing charges (9)	39		(2)		37		87		(38)		49
Other pension expense (income) (12)	(4)		3		(1)		(4)		1		(3)
Income (loss) before income taxes	—		28		28		(39)		30		(9)
Income tax provision (benefit) (10)	20		(11)		9		10		7		17
Net income (loss) attributable to Adient	(30)		38		8		(71)		21		(50)
Diluted earnings (loss) per share	(0.32)		0.40		0.08		(0.75)		0.22		(0.53)
Diluted weighted average shares	94.8		0.9		95.7		94.2		—		94.2

Appendix

Page 8

Segment Performance:


	Three months ended June 30, 2022
	Americas			EMEA			Asia			Corporate/Eliminations		Consolidated

Net sales	$	1,673		$	1,215		$	627		$	(30)	$	3,485

Adjusted EBITDA	$	70		$	31		$	64		$	(22)	$	143

Adjusted EBITDA margin	4.2		%	2.6		%	10.2		%	N/A		4.1		%


	Three months ended June 30, 2021
	Americas			EMEA			Asia			Corporate/Eliminations		Consolidated

Net sales	$	1,440		$	1,328		$	516		$	(42)	$	3,242

Adjusted EBITDA	$	23		$	22		$	92		$	(19)	$	118

Adjusted EBITDA margin	1.6		%	1.7		%	17.8		%	N/A		3.6		%

The following table presents adjusted EBITDA excluding adjusted equity income:


	Three Months Ended June 30,
(in millions)	2022			2021
Adjusted EBITDA	$	143		$	118

Adjusted Equity Income	16			39

Adjusted EBITDA Excluding Adjusted Equity Income	$	127		$	79
% of Sales	3.6		%	2.4		%

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 June 30,
	2022					2021
(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	$	—	$	20	nm	$	(39)	$	10	(25.6)%
Adjustments (10)	28		(11)		(39.3)%	30		7		23.3%
As adjusted	$	28	$	9	32.1%	$	(9)	$	17	nm

Appendix

Page 9

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


	Three Months Ended June 30,
(in millions)	2022		2021
Net income (loss) attributable to Adient	(30)		(71)
Restructuring and impairment costs	12		8
Purchase accounting amortization	14		11
Restructuring related charges	1		—
Pension mark-to-market and curtailment/settlement (gain)/loss (12)	(3)		(1)

Write off of deferred financing costs upon repurchase of debt (9)	—		10
Derivative loss on Yanfeng transaction (9)	—		24
Foreign exchange loss on intercompany loan in Russia (9)	2		—

Premium paid on repurchase of debt (9)	—		4

Other items (5)	2		(26)
Impact of adjustments on noncontrolling interests (11)	(1)		(2)
Tax impact of above adjustments and other tax items (10)	11		(7)
Adjusted net income (loss) attributable to Adient	$	8	$	(50)

Refer to the Footnote Addendum for footnote explanations

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


	Three Months Ended June 30,
	2022		2021
Diluted earnings (loss) per share as reported	$	(0.32)	$	(0.75)
Restructuring and impairment costs	0.13		0.08
Purchase accounting amortization	0.15		0.12
Restructuring related charges	0.01		—
Pension mark-to-market and curtailment/settlement (gain)/loss (12)	(0.03)		(0.01)

Write off of deferred financing costs upon repurchase of debt (9)	—		0.11
Derivative loss on Yanfeng transaction (9)	—		0.25
Foreign exchange loss on intercompany loan in Russia (9)	0.02		—

Premium paid on repurchase of debt (9)	—		0.04

Other items (5)	0.02		(0.28)
Impact of adjustments on noncontrolling interests (11)	(0.01)		(0.02)
Tax impact of above adjustments and other tax items (10)	0.11		(0.07)
Adjusted diluted earnings (loss) per share	$	0.08	$	(0.53)

Appendix

Page 10

The following table presents calculations of net debt:


	June 30,		September 30,
(in millions)	2022		2021
Cash and cash equivalents	$	892	$	1,521
Total short-term and long-term debt	2,727		3,696
Net debt	$	1,835	$	2,175

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


	Three Months Ended June 30,				Nine Months Ended June 30,
(in millions)	2022		2021		2022		2021
Cash provided (used) by operating activities	$	23	$	222	$	38	$	362
Capital expenditures	(53)		(60)		(170)		(186)
Free cash flow	$	(30)	$	162	$	(132)	$	176

The following table reconciles adjusted EBITDA excluding adjusted equity income to free cash flow:


	FY2022				FY2021
(in millions)	Q3		YTD		Q3		YTD
Adjusted EBITDA excluding adjusted equity income	$	127	$	381	$	79	$	613
(+) Dividend	26		27		283		292
(-) Restructuring (cash)	(11)		(49)		(27)		(127)
(+/-) Net customer tooling	(15)		(36)		10		10
(+/-) Trade working capital (Net AR/AP + Inventory)	(57)		(6)		(60)		37
(+/-) Accrued compensation	2		(45)		27		35
(-) Interest paid	(23)		(134)		(48)		(184)
(+/-) Tax refund/taxes paid	(25)		(63)		(20)		(52)
(+/-) Non-income related taxes (VAT)	(20)		33		5		(73)
(+/-) Commercial settlements	(22)		(66)		(8)		(87)
(+/-) Capitalized engineering	31		33		(2)		11
(+/-) Prepaids	15		(8)		(1)		(31)
(+/-) Other	(5)		(29)		(16)		(82)
Operating cash flow	23		38		222		362
Capital expenditures	(53)		(170)		(60)		(186)
Free cash flow	$	(30)	$	(132)	$	162	$	176

Appendix

Page 11

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

Appendix

Page 12

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 June 30,
(in millions)	2022		2021
Restructuring charges	$	(13)	$	(8)

Held for sale asset adjustments	1		—

	$	(12)	$	(8)

(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 June 30,
(in millions)	2022		2021
Transaction costs	$	(2)	$	(2)
Brazil indirect tax recoveries	1		28
Disposal of non-core assets	(1)		—


	$	(2)	$	26

(6) The adjustments to cost of sales include:


	Three Months Ended June 30,
(in millions)	2022		2021
Restructuring related charges	$	(1)	$	—
Brazil indirect tax recoveries	1		28
Purchase accounting amortization	(1)		—
Disposal of non-core assets	(1)		—
	$	(2)	$	28

Appendix

Page 13

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


	Three Months Ended June 30,
(in millions)	2022		2021
Purchase accounting amortization	$	(13)	$	(10)
Transaction costs	(2)		(2)



	$	(15)	$	(12)

(8) The adjustments to equity income include:


	Three Months Ended June 30,
(in millions)	2022		2021



Purchase accounting amortization	—		1
	$	—	$	1

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


	Three Months Ended June 30,
(in millions)	2022		2021
Derivative loss on Yanfeng transaction	$	—	$	(24)
Premium paid on repurchase of debt	—		(4)
Write off of deferred financing costs upon repurchase of debt	—		(10)
Foreign exchange loss on intercompany loan in Russia	(2)		—
	$	(2)	$	(38)

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


	Three Months Ended June 30,
(in millions)	2022		2021
Benefits associated with restructuring and impairment charges	$	—	$	(2)
Brazil indirect tax recoveries	—		9
Withholding tax adjustments	—		(11)
Valuation allowances	12		—


Other reconciling items	(1)		(3)
	$	11	$	(7)

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

(12) During the three months ended June 30, 2022, Adient remeasured pension plans in the Americas and recorded a mark-to-market gain of $4 million and a curtailment loss of $1 million. During the three months ended June 30, 2021, Adient remeasured a pension plan in the Americas and recorded a mark-to-market gain of $1 million.

Dates Referenced Herein and Documents Incorporated by Reference

This ‘8-K’ Filing	Date	Other Filings

Filed on / For Period end:	8/5/22
	6/30/22
	10/1/21	4
	9/30/21	10-K, 8-K
	6/30/21	10-Q, 8-K
		List all Filings

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Adient plc – ‘8-K’ for 8/5/22 – ‘EX-99.1’

On: Friday, 8/5/22, at 6:54am ET · For: 8/5/22 · Accession #: 1670541-22-74 · File #: 1-37757

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Current Report — Form 8-KFiling Table of Contents

‘EX-99.1’ — Miscellaneous Exhibit

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Dates Referenced Herein and Documents Incorporated by Reference

Current Report — Form 8-K

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