Adient announces strategic transformation in China March 12, 2021 Exhibit 99.2
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Agenda - Transactions overview - Rationale - Use of proceeds & pro forma Adient - Q & A Douglas Del Grosso President and CEO Jeffrey Stafeil Executive VP and CFO
Overview of transactions Adient and Yanfeng Automotive Trim Systems Company Ltd. (YF) will end their Yanfeng Adient Seating Co., Ltd. (YFAS) JV in China. Adient will sell its 49.99% interest in YFAS to YF for ~$1.2B. Adient will acquire certain assets of YFAS – its 50% ownership of Chongqing Yanfeng Adient Automotive Components Co., Ltd. (CQYFAS), bringing Adient’s ownership stake to 75%, and its subsidiary Yanfeng Adient (Langfang) Seating Co., Ltd. (YFAS-LF). YF will operate remainder of YFAS as a wholly owned enterprise. Adient is also selling its minority interests in certain other JVs with YFAS to YF. Cash received by Adient: ~$1.5B before tax, or ~$1.4B after tax, after acquisition of CQYFAS and YFAS-LF. ~$800M of cash to be received by Adient on or before closing (including dividends); ~$700M of cash to be received by calendar year end. Upon closing, CQYFAS and YFAS-LF will be consolidated/controlled by Adient: Sales of ~$700M - $800M with EBITDA margins historically over 10%. The transactions, which are subject to customary government and regulatory approvals, and certain PRC state-owned asset required approvals and processes, are expected to be completed in the second half of calendar year 2021. In conjunction with the YFAS transaction, Adient has signed an agreement with Chongqing Boxun Industrial Co., Ltd. (Boxun), its joint venture partner in CQYFAS. The agreement provides Boxun with a put right to sell; and, if exercised, requires Adient to buy Boxun’s 25% interest in CQYFAS. The put right (valued at ~$125M) is contingent upon the closing of the YFAS transaction. After closing, if Adient buys Boxun’s 25% interest, Adient would own 100% of CQYFAS. Separately, Adient previously agreed to sell its 50% equity interest in Shenyang Jinbei Adient Automotive Components Co., Ltd. (SJA), to Shenyang Jinchen Automobile Technology Development Co. Ltd. (Jinchen), an entity 100% beneficially owned by Jinbei Automotive Company Limited (Jinbei), for $58M. Closing expected in the first half of calendar year 2021. YFAS transactions 1 SJA transaction 1 - Cash proceeds from YFAS transactions based on current USD to RMB exchange rate
Post transactions, Adient China business projected to have ~$4.5B in sales and extensive customer and geographic coverage Changchun Hangzhou Liuzhou Foshan Guangzhou Wuhan Nanchang Chongqing Changsha Chengdu Hefei Shenyang Beijing Dalian Langfang Tianjin Daqing Ningbo North South West & Central Xi’an Shanghai Region Operations OEM Customers Main growth engines North CFAA BJA1 FAW-VW, Audi, FAW-Toyota Hyundai, Daimler Premium Audi Daimler Japanese Toyota Int’l VW South GAAS1 CAA GAC-Honda, GAC-Toyota, GAC-Mitsu, Japanese Honda, Toyota, Mitsubishi West & Central CQYFAS1 Ford Volvo NIO Xpeng Premium Lincoln Volvo EV, NIO, Xpeng Components Keiper (mechs.) FAA (mechs) YFAT (trim) Langfang1 (metal) All OEMs Exporting Dai/Hyundai Upon closing of the YFAS, CQYFAS and SJA transactions, Adient China will have 9 major entities with ~12,000 employees & projected sales of ~$4.5B in FY21, covering high-growing segments, incl. Premium, Japanese & EV Adient China will have 3 Global Tech Centers with over 800 engineers, and complete in-house engineering capabilities Approximately one-fourth of business in China would be consolidated Positions Adient as Top 3 complete seat players in China market (~12% share in rapidly growing NEV market) Sales content improved by ~10% 1. Post closing (incl. majority owned JVs and wholly owned entities)
Rationale Aligns with China auto industry trend in post-JV era Global manufacturers such as Tesla, VW, BMW have moved towards majority-owned business model and away from JV model after China abolished its JV requirements in 2018 with OEMs Similar trend taking place with leading Chinese manufacturers Enables Adient to drive strategy in China independently and opportunity to capture growth in profitable and expanding segments (Japanese manufacturers, luxury, EVs, etc.) Improves integration of Adient China operation – potential to achieve significant synergies across multiple locations Will provide more certain value realization relative to status quo where cash and value is generated from dividends at entities not in Adient’s control Monetizes significant value that has accumulated at the JV without jeopardizing future opportunities for growth The transaction is consistent with other strategic actions the company has completed recently to further its portfolio optimization strategy, which includes focusing on Adient’s profitable, large-volume core seating business YFAS transaction SJA transaction
Consolidated sales expected to increase annually by ~$700M - $800M Unconsolidated sales expected to decline annually by ~$3.5B - $4.0B Consolidated EBITDA expected to increase annually by ~$90M - $100M Equity income expected to decline annually by ~$155M Net leverage target between 1.5x – 2.0x (dependent on level of debt repayment and other uses of proceeds) Pro forma Adient (post closings, compared to the company’s current FY21 outlook) 1 Use of proceeds / pro forma Adient Use of proceeds Adient intends to use the anticipated after-tax proceeds of ~$1.4B for: Debt repayment (consistent with the company’s near-term capital allocation plans), Ability to fund Boxun’s put right, if exercised (~$125M), and other corporate purposes Transformational change in Adient’s future earnings profile and balance sheet - - - - - Net income and EPS accretive 2, driven by significantly lower debt levels and the corresponding benefit of lower financing costs 1 – FY21 outlook provided with Adient’s Q1FY21 earnings results released on Feb. 5, 2021 Cash proceeds from YFAS transactions based on current USD to RMB exchange rate 2 – Post closing and assuming approximately $2B of debt paydown by December 2021, annual interest expense estimated at ~$100M (vs. guidance of $235M in FY21) and cash taxes increasing by ~$10M
Title / Date / Public-Internal-Confidential-Restricted Q & A