Adient plc

Welcome, and thank you for standing by. At this time, all parties are in a listen-only mode until the question and answer segment of today's conference, at which time you may press star 1 on your touch-tone phone to ask a question. I would also like to inform all parties that today's conference is being recorded. If you do have any objections, please disconnect at this time. I would now like to go ahead and turn today's call over to Mr. Mark Oswald, sir, you may begin.

Thank you, Jacqueline. Good morning, and thank you for joining us as we review adding results for the fourth quarter in full year 2020. The press release and presentation slides for our call today have been posted to the investor section of our website at adiant.com. This morning, I'm joined by Doug DelGrosso, Adiant's President and Chief Executive Officer, and Jeff Stafile, our Executive Vice President and Chief Financial Officer. On today's call, Doug will provide an update on the business, followed by Jeff, who will review our fourth quarter and full year financial results. In addition, Jeff will provide our outlook for fiscal 21, After our prepared remarks, we will open the call to your questions. Before I turn the call over to Doug and Jeff, there are a few items I'd like to cover. First, today's conference call will include forward-looking statements. These statements are based on the environment as we see it today, and therefore involve risks and uncertainties. I would caution you that our actual results could differ materially from these forward-looking statements made on the call. Please refer to slide two of the presentation for our complete safe harbor statement. In addition to the financial results presented on a GAAP basis, we will be discussing non-GAAP information that we believe is useful in evaluating the company's operating performance. Reconciliations for these non-GAAP measures to the closest GAAP equivalent can be found in the appendix of our full earnings release. This concludes my comments. I'll now turn the call over to Doug. Doug?

Thanks, Mark. Good morning. Thanks to our investors, prospective investors, and analysts joining the call this morning as we review our fourth quarter results and outlook for fiscal 2021. I hope you and your families are staying safe and healthy in these difficult times. Turning to slide four, let me begin a few comments related to fourth quarter, specifically adding a strong finish to a challenging fiscal year. Remaining focused on our priorities combined with increasing vehicle production continued to drive improved business performance in the most recent quarter. Q4's adjusted EBITDA, $287 million, was up $72 million, or 33% year-on-year. No doubt a strong result, but even more impressive when you consider ADEON's consolidated revenue was down about 8% in that same period. Lower year-on-year global vehicle production and At the end, specific launches were primary drivers of the lower sales. On the far right-hand side of the slide, you can see our cash and liquidity. We're extremely strong at September 30th. Total liquidity of about $2.5 billion made up of cash on hand, approximately 1.7, and approximately $800 million of undrawn revolver capacity. As noted and included in our cash on hand, is the approximate $500 million of cash proceeds collected during the quarter from closing on our previously announced strategic actions. With our operations restarted, vehicle productions trending higher, and proceeds from our previously announced strategic actions in the bank, the team began to voluntarily pay down a portion of the company's outstanding debt. Just over $103 million in principle of Etienne's 10-year 4.875% senior unsecured notes were repurchased using just under $100 million cash. Again, a strong financial finish to the year. Jeff will provide additional details on Etienne's Q4 and full year's financial performance in just a few minutes. Turning to slide five, Focused and resilient are the two words that come to mind when describing Adiant in fiscal 2020. Those traits were instrumental in enabling the company to deliver on its 2020 commitments. As the year began, the team was focused on advancing the company's turnaround plan. Launch management, operational improvement, continued cost reduction, and commercial discipline were cited as key enablers underpinning the expected improvement in Adiant's business performance. With our operations and financial results steadily improving, the team pivoted and began to execute on a number of strategic actions, including the closure of our transactions with our joint venture partner, Yantang, the sale of our fabrics business, and the sale of Recaro's automotive seating. In addition to these portfolio adjustments, the team also began efforts to de-risk the balance sheet, as mentioned just a few minutes ago. While executing the company's 2020 plan, Adiant's resiliency was brought to light as the team successfully managed through significant obstacles brought on by the global COVID-19 pandemic. The slide highlights certain of the measures the team took throughout the year to mitigate COVID's negative impact. Many have been discussed on prior calls. Bottom line, executing and delivering on plans within our control by managing through unplanned obstacles, as we did in 2020, positions EDIET for sustained success and, equally important, drives value to our future shareholders. Turning to slide six. Although the team is proud of the accomplishments achieved in 2020, we've turned the page and are now focused on 2021 and looking forward to build on that progress. The graphic on slide six should look familiar since ADDIAN's expected earnings growth in fiscal 21 is underpinned by the same focus areas that drove improvement last year, namely launch management, operational and cost improvement, and customer profitability management. Let me spend a few minutes discussing a few of these focused areas in more detail in slides seven and eight. First on slide seven, launch management will remain a key pillar supporting Addion's turnaround. The team made significant progress in 2020, delivering several flawless launches throughout the year. We plan to stay vigilant to ensure that the best-in-class launches continue. That said, given the significant progress made throughout the last 12 months, the contribution from launch management to our expected earnings growth this year will be less impactful compared with contributions from costs and operational improvements in our customer profitability initiatives. With regard to costs and operational improvement pillars, we've identified a number of initiatives the team is executing to drive improved business performance and ultimately earnings and cash flow growth. These initiatives span across the organization and include improved capacity utilization, especially within certain of our foam and trim facilities, align our manufacturing footprint to sales projections. In Europe, for example, we do not expect volumes to return to pre-COVID levels for a number of years. In fact, certain third-party estimates predict production in 2025 will be below 2019 levels. As such, we're spending a fair amount of time and dollars restructuring the region. Purchasing is another area of opportunity. Ensuring the business units and purchasing organizations are well aligned, including better make versus buy decisions is expected to drive significant performance enhancements in 2021. In addition to these actions, we tend to produce results relatively quickly. We're also focused on how we can position the company to ensure improvements continued several quarters down the road, initiatives such as design for manufacturability, where we're engaging the plant teams early in the design phase to reduce labor costs and improve quality, increase in automation and technology, again, looking toward the future to ensure improved cost and quality. On the commercial and customer profitability front, we turn to slide eight. Again, several initiatives are well underway. It begins with our mindset. We want to become the supplier of choice for our customer in many ways, and we're along that journey. As mentioned on previous calls, we spent significant time understanding the profitability associated with specific platforms and relationships with those customers. This has resulted in the team better understanding who they want to grow with. Of course, this needs to be profitable growth metrics such as return on capital employed continue to drive program bidding for new and incumbent business. For programs in production that are margin challenged, the team is focused on opportunities to improve margin profiles. We refer to this as our leakers and bleeders. One of the tools the team uses to enhance margin profile are VAVE initiatives. The process has evolved significantly over the past several months into what we now refer to as cost and technology optimization. The team gathers inputs from various sources, such as J.D. Power, VAV workshops, market research, IHS ratings. By bundling and leveraging this available knowledge, we can create opportunities and value for our customers to improve market performance and increase audience value-add. Moving to slide nine. spent a fair amount of time this morning discussing our 2020 accomplishments and how we plan to build on that progress in the new year. The key component of progress to date, expected improvement, relates to seat structures and mechanisms business. Although the SSNM business is managed regionally and is included in the Americas, EMEAs, and Asia regional performance, I want to take a few minutes to provide a brief update on SSNM. The turnaround is solidly on track. The operations made steady improvements in fiscal 2020 and continue to trend toward being free cash flow neutral as we exit fiscal 21. As a reminder, free cash flow calculations is a simplified definition, essentially adjusted EBITDA for the unit less capex. During the most recent year, we were able to cut 2019's free cash flow burn which was approximately 400 million by more than 50%. This was accomplished by improving both the profitability of the business as well as reducing its capital expenditures. We expect continued progress driven by continuation of our target business selection process improving cost competitiveness, essentially fixing the underperforming plants, creating cost-efficient designs, and reducing our above-plant cost structure, making better make-or-buy decisions, which will aid in asset utilization, ultimately improved earnings and focus on asset utilization to improve free cash flow for the business. Switching gears and moving to slide 10 and 11, Let me provide a few comments on Adiant's recent business wins and the status of our launches. On slide 10, you see new business wins, which clearly show our continued focus on capital allocation, return on capital, and targeting new or incumbent business has not limited our ability to secure business. We've highlighted a number of recent program wins here, including the replacement business for the Jeep Wrangler, Jeep Gladiator. New platform wins, including Tesla's Model Y, Future EV program at Ford, Ford Transit, and Geely Daimler Smart. In addition to those programs pictured on the slide, Adiant recently secured business awards for an undisclosed European manufacturer that is non-incumbent business, two GM future product programs, which include an all-new EV program, a replacement business for Chevrolet and Buick crossovers, and also a GMC crossover, which is non-incumbent business to Addiot. As our new book of business continues to launch, we expect to balance in, balance out platforms to further enable margin expansion. One additional note, as we've secured business over the past several quarters, we've also experienced content growth for certain of our new incumbent wins. For example, include the addition of FOE, to the new Ford F-150 and trim to the Nissan Pathfinder. Flipping to slide 11, we've highlighted several critical current and upcoming launches, including Ford F-150, Mustang Mach-E, Nissan Rogue, to name a few. I'm happy to report the launch is currently underway, including the F-150, one of Etienne's largest programs, and they are progressing smoothly. The second F-150 manufacturing location in Riverside, Missouri, is also well-prepared for its first quarter launch. As mentioned earlier, the team has made significant improvements to our launch management over the past several quarters. A strong focus on process discipline around launch readiness is underpinning EDIAN's successful performance. At the bottom of the slide, we provided how fiscal year 21's launch volume and complexity compared to last year. Although volume and complexity are trending higher, especially in America's region, we feel the team is well prepared. Actual launch performance over the past few quarters provides positive proof points. Turning to slide 12, let me conclude my comments with an update on various macro factors we're watching that will likely impact the industry in Addion's fiscal 21. On the positive side, continued monetary stimulus expected to result in positive economic growth. Global vehicle production and mix remain strong, driven by improved consumer demand and a rebuild of inventory. And it appears advancements are being made with regard to COVID treatment and vaccines, all of which is very good news and supportive of the industry. Factors we are watching. that are tempering expectations include the resurgence of COVID-19 cases across Europe and the Americas, labor shortages, which have become increasingly the concern since we restarted our operations in Q3, risk to the supply chain, although it's great to see vehicle production in the U.S. reach annualized levels of 16 million units, like we experienced in the fourth quarter. These sharp increases unfortunately put strains on the system. in an uptick in premium freight and increases in prices for certain commodities such as steel and chemicals. To sum it up, we're entering 21 with an encouraging backdrop, driven by our self-help initiatives and improving vehicle production. We expect to encounter challenges along the way, much of which we did in 2020, but be assured the team is ready to work hard to mitigate the headwinds that may arise. With that, I'll turn the call over to Jeff so he can take us through Eddie's fourth quarter 2020 financial performance and our specific outlook for 2021 in greater detail.