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Adient Plc (ADNT) SEC Filing 8-K Material Event for the period ending Tuesday, May 5, 2020

Adient Plc

CIK: 1670541 Ticker: ADNT



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Appendix
Page 1

Adient plc
Condensed Consolidated Statements of Income
(Unaudited)

Three Months Ended
March 31,
(in millions, except per share data) 20202019
Net sales$3,511  $4,228  
Cost of sales3,274  4,031  
Gross profit237  197  
Selling, general and administrative expenses127  168  
Restructuring and impairment costs52  113  
Equity income (loss) 62  
Earnings (loss) before interest and income taxes66  (22) 
Net financing charges50  40  
Other pension expense (income)(2) —  
Income (loss) before income taxes18  (62) 
Income tax provision (benefit)16  64  
Net income (loss) (126) 
Income attributable to noncontrolling interests21  23  
Net income (loss) attributable to Adient$(19) $(149) 
Diluted earnings (loss) per share$(0.20) $(1.59) 
Shares outstanding at period end93.9  93.6  
Diluted weighted average shares93.8  93.5  




Appendix
Page 2

Adient plc
Condensed Consolidated Statements of Financial Position
(Unaudited)


March 31,September 30,
(in millions)20202019
Assets
Cash and cash equivalents$1,640  $924  
Accounts receivable - net
1,344  1,905  
Inventories775  793  
Assets held for sale40  —  
Other current assets477  494  
Current assets4,276  4,116  
Property, plant and equipment - net1,591  1,671  
Goodwill2,018  2,150  
Other intangible assets - net381  405  
Investments in partially-owned affiliates1,279  1,399  
Assets held for sale157  —  
Other noncurrent assets944  601  
Total assets$10,646  $10,342  
Liabilities and Shareholders' Equity
Short-term debt$846  $30  
Accounts payable and accrued expenses2,490  3,073  
Liabilities held for sale36  —  
Other current liabilities851  732  
Current liabilities4,223  3,835  
Long-term debt3,717  3,708  
Liabilities held for sale10  —  
Other noncurrent liabilities778  559  
Redeemable noncontrolling interests35  51  
Shareholders' equity attributable to Adient1,541  1,848  
Noncontrolling interests342  341  
Total liabilities and shareholders' equity$10,646  $10,342  




Appendix
Page 3

Adient plc
Condensed Consolidated Statements of Cash Flows
(Unaudited)


Three Months Ended
March 31,
(in millions)20202019
Operating Activities
Net income (loss) attributable to Adient$(19) $(149) 
Income attributable to noncontrolling interests21  23  
Net income (loss) (126) 
Adjustments to reconcile net income (loss) to cash provided (used) by operating activities:
Depreciation72  72  
Amortization of intangibles10  10  
Pension and postretirement benefit expense (benefit)—   
Pension and postretirement contributions, net(14) (7) 
Equity in earnings of partially-owned affiliates, net of dividends received(1) (35) 
Deferred income taxes10  42  
Non-cash restructuring and impairment charges—  66  
Equity-based compensation(3)  
Other —  
Changes in assets and liabilities:
Receivables113  (230) 
Inventories(53)  
Other assets40  27  
Restructuring reserves(15) (56) 
Accounts payable and accrued liabilities(199) 400  
Accrued income taxes(20) (5) 
Cash provided (used) by operating activities(56) 168  
Investing Activities
Capital expenditures(94) (108) 
Sale of property, plant and equipment 21  
Settlement of cross-currency interest rate swap10  —  
Loans to affiliates—  11  
Other—   
Cash provided (used) by investing activities(80) (72) 
Financing Activities
Increase (decrease) in short-term debt835   
Repayment of long-term debt(2) (1) 
Debt financing costs(1) (4) 
Dividends paid to noncontrolling interests(5) (7) 
Other(1) —  
Cash provided (used) by financing activities826  (11) 
Effect of exchange rate changes on cash and cash equivalents(15) —  
Increase (decrease) in cash and cash equivalents$675  $85  



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
March 31,
(in millions)20202019
Net Sales
Americas$1,641  $1,915  
EMEA1,488  1,778  
Asia444  599  
Eliminations(62) (64) 
Total net sales$3,511  $4,228  

Three Months Ended
March 31,
(in millions)20202019
Adjusted EBITDA
Americas$106  $34  
EMEA62  59  
Asia63  123  
Corporate-related costs (1)
(20) (25) 
Restructuring and impairment costs (2)
(52) (113) 
Purchase accounting amortization (3)
(11) (10) 
Restructuring related charges (4)
(7) (14) 
Stock based compensation (2) 
Depreciation(72) (72) 
Other items (5)
(6) (2) 
Earnings (loss) before interest and income taxes66  (22) 
Net financing charges(50) (40) 
Other pension income (expense) —  
Income (loss) before income taxes$18  $(62) 

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
March 31,
(in millions, except per share data) 20202019
Income available to shareholders
Net income (loss) attributable to Adient$(19) $(149) 
Weighted average shares outstanding
Basic weighted average shares outstanding93.8  93.5  
Effect of dilutive securities:
Stock options, unvested restricted stock and unvested performance share awards—  —  
Diluted weighted average shares outstanding93.8  93.5  


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 March 31, 2020 and 2019 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 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 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, 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.
Free cash flow is defined as cash from operating activities less capital expenditures.
Net debt is calculated as gross debt less cash and cash equivalents.



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 March 31,
20202019
(in millions, except per share data) GAAP ResultsAdj.Adjusted ResultsGAAP ResultsAdj.Adjusted Results
Net sales$3,511  $—  $3,511  $4,228  $—  $4,228  
Cost of sales (6)
3,274  (3) 3,271  4,031  (14) 4,017  
Gross profit237   240  197  14  211  
Selling, general and administrative expenses (7)
127  (19) 108  168  (11) 157  
Restructuring and impairment costs (2)
52  (52) —  113  (113) —  
Equity income (loss) (8)
  10  62   63  
Earnings (loss) before interest and income taxes (EBIT)66  76  142  (22) 139  117  
Memo accounts:
Depreciation72  72  
Stock based compensation costs(3)  
Adjusted EBITDA$211  $191  
Net financing charges50  —  50  40  —  40  
Other pension expense (income)(2) —  (2) —  —  —  
Income (loss) before income taxes18  76  94  (62) 139  77  
Income tax provision (benefit) (9)
16  (3) 13  64  (41) 23  
Net income (loss) attributable to Adient(19) 77  58  (149) 178  29  
Diluted earnings (loss) per share(0.20) 0.82  0.62  (1.59) 1.90  0.31  
Diluted weighted average shares93.8  0.4  94.2  93.5  0.3  93.8  













Appendix
Page 8


Segment Performance:
Three months ended March 31, 2020
AmericasEMEAAsiaCorporate/EliminationsConsolidated
Net sales$1,641  $1,488  $444  $(62) $3,511  
Adjusted EBITDA$106  $62  $63  $(20) $211  
Adjusted EBITDA margin6.5 %4.2 %14.2 %N/A  6.0 %
Three months ended March 31, 2019
AmericasEMEAAsiaCorporate/EliminationsConsolidated
Net sales$1,915  $1,778  $599  $(64) $4,228  
Adjusted EBITDA$34  $59  $123  $(25) $191  
Adjusted EBITDA margin1.8 %3.3 %20.5 %N/A  4.5 %


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 March 31,
20202019
(in millions, except effective tax rate)Income (loss) before income taxesTax impactEffective tax rateIncome (loss) before income taxesTax impactEffective tax rate
As reported$18  16  88.9%$(62) 64  n/m
Adjustments76  (3) (3.9)%139  (41) (29.5)%
As adjusted$94  $13  13.8%$77  $23  29.9%


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

Three Months Ended
March 31,
(in millions)20202019
Net income (loss) attributable to Adient$(19) $(149) 
Restructuring and impairment costs
52  113  
Purchase accounting amortization
11  10  
Restructuring related charges
 14  
Other items
  
Impact of adjustments on noncontrolling interests (10)
(2) (2) 
Tax impact of above adjustments and other tax items (9)
 41  
Adjusted net income attributable to Adient$58  $29  

Refer to the Footnote Addendum for footnote explanations


Appendix
Page 9


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

Three Months Ended
March 31,
20202019
Diluted earnings (loss) per share as reported$(0.20) $(1.59) 
Restructuring and impairment costs0.55  1.20  
Purchase accounting amortization0.12  0.11  
Restructuring related charges0.08  0.15  
Other items0.06  0.02  
Impact of adjustments on noncontrolling interests
(0.02) (0.02) 
Tax impact of above adjustments and other tax items
0.03  0.44  
Adjusted diluted earnings per share$0.62  $0.31  


The following table presents calculations of net debt:

March 31,September 30,
(in millions)20202019
Cash$1,640  $924  
Total debt4,563  3,738  
Net debt$2,923  $2,814  

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

Three Months Ended
March 31,
(in millions)20202019
Operating cash flow$(56) $168  
Capital expenditures(94) $(108) 
Free cash flow$(150) $60  




Appendix
Page 10

The following table reconciles adjusted EBITDA to Free cash flow:

FY20FY19
(in millions)Q2YTDQ2YTD
Adjusted EBITDA$211  $508  $191  $367  
(+/-) Net equity in earnings(3) (110) (37) (119) 
(-) Restructuring (cash)(20) (40) (67) (90) 
(+/-) Net Customer Tooling(8) (2) (3) 30  
(+/-) Past Due Receivables(2)  20   
(+/-) Trade Working Capital (Net AR/AP + Inventory)(101) 90  71  (73) 
(+/-) Accrued Compensation(23) (84) 74  38  
(-) Interest paid(56) (105) (58) (70) 
(+/-) Tax refund/taxes paid(26) (55) (27) (48) 
(+/-) Other(28) (28)   
Operating cash flow(56) 183  168  40  
Capital expenditures(94) (185) (108) (252) 
Free cash flow$(150) $(2) $60  $(212) 








Appendix
Page 11


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
March 31,
(in millions)20202019
Restructuring charges$(52) $(47) 
Long-lived asset impairment - SS&M—  (66) 
$(52) $(113) 

(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
March 31,
(in millions)20202019
Futuris integration$—  $(2) 
Transaction costs(6) —  
$(6) $(2) 

(6) The adjustments to cost of sales include:

Three Months Ended
March 31,
(in millions)20202019
Restructuring related charges$(3) $(11) 
Futuris integration—  (2) 
Other—  (1) 
$(3) $(14) 

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

Three Months Ended
March 31,
(in millions)20202019
Purchase accounting amortization$(10) $(9) 
Transaction costs(6) (1) 
Restructuring related charges(3) (1) 
$(19) $(11) 



Appendix
Page 12

(8) The adjustments to equity income include:

Three Months Ended
March 31,
(in millions)20202019
Restructuring related charges$ $ 
Purchase accounting amortization
 —  
$ $ 

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

Three Months Ended
March 31,
(in millions)20202019
Valuation allowances$—  $(45) 
Impairment of YFAI investment—   
Tax rate change —  
Other reconciling items(4)  
$(3) $(41) 

(10) Reflects the impact of adjustments, primarily purchase accounting amortization and changes in income tax rates, on noncontrolling interests.

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Adient Plc provided additional information to their SEC Filing as exhibits

Ticker: ADNT
CIK: 1670541
Form Type: 8-K Corporate News
Accession Number: 0001670541-20-000024
Submitted to the SEC: Tue May 05 2020 6:53:43 AM EST
Accepted by the SEC: Tue May 05 2020
Period: Tuesday, May 5, 2020
Industry: Motor Vehicle Parts And Accessories
Events:
  1. Earnings Release
  2. Financial Exhibit

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