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ADNT Adient

Participants
Mark Oswald Vice President of Investor Relations
Doug DelGrosso President and Chief Executive Officer
Jeff Stafeil EVP and Chief Financial Officer
Aileen Smith Bank of America Merrill Lynch
Rod Lache Wolfe Research
Brian Johnson Barclays
Emmanuel Rosner Deutsche Bank
Armintas Sinkevicius Morgan Stanley
Joe Spak RBC Capital Markets
Call transcript
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Operator

Welcome and thank you for standing by. And at this time, all participants are in a listen-only mode until the question and answer session of the call. [Operator Instructions] Today’s conference is being recorded. Any objections, you may disconnect at this time.

I would now like to turn over the meeting to Mark Oswald. you. Thank

begin. may You

Mark Oswald

slides Good website review thank second Adient’s XXXX. Investor and fiscal Andorra. been today us to adient.com. posted quarter for as year the presentation release press we results of The our morning you, call you have our and section joining of for at Thank for the

Financial call, our Adient’s After will open Executive we Officer; Chief will morning, am the Executive President update business, This Vice and questions. of I today’s more our remarks, joined who followed President by financial Officer. and an to provide by detail. call Chief Jeff results prepared in Doug will Doug Stafeil, On QX DelGrosso, the our and review Jeff, your

to like items Doug a few cover. to over there call are Jeff, the I’d and turn I Before

First, and presentation include today’s statements therefore differ Please complete Slide forward-looking statements. on the our statements. today X I refer as our Safe to from our are these results uncertainties. involve that would based These and conference we you statement. actual face of will environment Harbor for risks materially forward-looking call could caution

in believe the Appendix be these the In basis, useful will on that the full to results the discussing measures release. non-GAAP Company’s can evaluating is we found non-GAAP of equivalent a financial we in be operating performance. information to GAAP presented addition to Reconciliations earnings GAAP closest our

to the turn over will Doug. I comments. call my concludes Doug? This

Doug DelGrosso

second I healthy difficult investors, you this investors, and us are morning in families as review Mark, with morning, Thanks, and to quarter hope times. safe joining analysts spending and good results. call the these your thanks our prospective and staying and time our we

and few and the steps comments me our ability continue the we’ll operation past recent the industry of against COVID-XX we what pandemic Slide begin crisis. to my focus operations to finally to for and today, then specifically, impact we’ve Adient’s comments as to move the our Turning restart take are expectation the around the majority taken we to of let mitigate from related X, I’ll doing developments. with

Slide see can which the late established accelerating XXXX. of were built top Adient’s solid on On XXXX headlines, demonstrate when you momentum the These and you COVID-XX, what’s of and the ahead in turnaround of our Financials, further impact results plan phase improvement QX schedule. and exclude of X,

pandemic. year-on-year. Sales contributed at decrease $XXX million down were $X.X billion $XXX volume EBITDA up Adjusted $XX million, million over the production to last $XXX and to year was just the versus increases lost with QX associated million

Excluding million. eclipse the first quarter appropriate similar approximate $XXX on quarter to were of million earnings The by second year’s $XXX achieved company in impact the from year. outperformance COVID-XX, the this last pace

over breakeven by $XXX drivers the worth which Also versus free ago, a flow lower time improvement. cash our essentially improved period year-to-date million were year primary of earnings, same improved noting, CapEx

with cash conservation ensure to $XXX restart successful operations flexibility and Adient’s senior ready initiatives. million our the financial are notes of These included a impact In company of level help the pandemic quarter financial of the the to highlighted took the implementation proactive the procedures the Actions in cash to including intensified Adient bolstered progress. development safety and actions issuance box, of health secured we’ve bottom the as the at reopen protect as protocols the place. high of proper

minute. We running to these in are a

the manufacturing initiatives. Adient who for I’d the of Namely for to page, Finally, and this like their production in local work communities and highlight through supports to face to parts printing team various leaving tirelessly design protection thank provide before members facial. XD

Q&A to at a I a XD you’ve to quickly. chance download like materials a do end few on points. this ample planned expand me the had the to time I of and let X, Slide call. relatively to for slide Turning key know leave

The we China are current encouraged. environment although automotive to remains uncertain look we as global

are Wuhan while building XX vehicles of opened open, fact in Hubei two running with and are shifts in and plants year. plants advocating X,XXX Adient’s have up per its XX SGM All plants and customers running are

encouraging the data point to an We’ve the on China production up the playbooks decisively through it have and acted Europe the profitability ramp team month applied because it’s resumed. normalized to levels Now related and proven in the taken Americas. Adient’s first improve costs. to Margins variable and quickly since to production returned

place. and while in Beginning the reduced variable cost our COVID cash reopen safety our same at with improved actions developing plans and to with burn, time, precautions significant detailed

We our weeks, production production some in Certain started in JIT these are with plants OEs, various quick Progress steps. resumed pulling past of XX% Europe XXX%. of over reopening ten of days. from rates from the to ranging in customers have XX

We production The XX% month. is the the expect XX% the of to UK restart. will be to to OEs of in end be the country by last expected

to plans week May for certain delays, planned Xth meaningful the continue restart limited weeks of May restarts are North We of May the XX. to and customer after in In occur evolve XX. anticipate America, restarts

Mexico’s place OEs the navigate to still layer In through in is need shelter added orders addition, complexity. of will given and - suppliers

We our suppliers successful are in launch. ensure discussions with customers and to daily

of months. a the snapshot Turning and all the the signals coming read we’ve bullets, will key point I Slide we path I to current X, Europe which likely provided highlights. but wanted two environment the hope China, for to in Americans a in

are close entertainment gradually traffic First are supermarkets, with public all returned open almost activities transit retail foot resuming, XX%. normal. and And ridership to to business China

for comparable dealers direction, got improvement retailers suggest in fact a their a the to and April opened, positive XXth to all are mentioned, April retail progressing from Xst sales between all Specific is level in year’s auto industry, are representing OEMs open March. business, sales last as big nearly

mix OEMs premium And the overall outperforming Japanese Adient in business of benefits that the a market. finally, strong retain brands are as

headcount, and to reduce a improved Slide our business variable resources EBITDA postponing volumes. breakeven few a in in to our we shutdown maintain XX% driving took in X VAVE such illustrates actions investments our the spend, These engineering optimizing reduce during period cost new XX% the despite resulted steps initiatives name capital drop margins in and structures. as flex to China to

China We’ve preserve to operations taken the long-term cost, Adient’s this to health. manage and liquidity and playbook direct applied protect

zero our the monthly experienced significant actions North X, Flipping outline to we’ve $XXX we Europe cash reduce based America. which taken million cash is to to in These a was conservation down This actions about Slide our organization. production reach parts of and rate on per monthly month. burn across April are essentially in environment rate

top employees quickly that, deferrals reports on reduction deferring from salary in were XX% an a XX% salary actions my planned included heated of to and to Myselves additional and taken rest have the the salary my am reduction. While salaries mid-July. actually U.S. plus XX% compensation XX% of I a across full On direct

also employee reduction Outside the salary. unions approximate achieve parts of an We’ve closely are worked U.S., and with Europe, and XX% in salary America Asia. e-band to reductions throughout groups employees taking Mexico, South

we’ve their their local identifying further at and reducing JVs workers governments. furloughing salaried to flex, we’ve cost subsidy keeping plants engineering from costs that plants plant reduce are and To by not delayed cash investments direct burn, and opportunities delaying By our reduced operational. critical merit increases,

dividends ensure receivables closely and Jeff highly our JV cautioned. and it’s finance the monitoring to team are

conservation results control I’ll I in say government but the Adient within won’t of time investigating direct stimulus. cash also lot addition to on our to is opportunities spend a Slide then of measures XX,

China has share across posted regions. use developing collaboration ensure The practices XX, through restart Moving that those proven guidelines. a detailed best playbook, you we to restart extremely to procedures a the to helpful plants. operational assembled the and the as and of Slide beginning procedures for when our are Adient challenges was from Important manage an our framework, Adient’s remind crisis, team the website. Since on global our leadership

also Adient’s Bottom-line, prepared leveraging are for a business operations situation our work which clean-up only to employees, to from restart the a includes perspective. COVID safe environment business commercial not providing but

of share and initiatives send the could reduction with list took cost ago, One all immediately a that. to of associated acted few of to upon we customers we'd a our be be benefit ideas developed that willing to the weeks was

addition, In resolution. these sweep to with push times customers our opportunity prior extraordinary to all commercial restart to we've of towards issues the taken our open using

premium to an enhanced for And certain we relationship where customers, special the liquidity. restart non-profitable had opportunity end, taken that with, and had gone improve asked terms say we’ve post the situation, of we’ve Some business. this I’ll with exit on customers the opposite to

similar is significant behaves to We launches us XXXX situation to for COVID cost push to continue opportunity The down. our and there reduce to customers program will new delay structure think XXXX, development. anticipating

doubt consumer. there XX, Slide economic the to for Turning is pandemic unrest has created no

explored We’ve advance will U.S., Europe vehicles. to such seen alternative that stimulus being We in into of the reform requirements that drive are cash options Europe softening being in are many optimistic and help COX heard incentives different and consumption. and the cautiously compliance as in potential propulsion the market put

Adient expects as any with to are powertrain one from of these mix. benefit essentially we to regard agnostic alternatives

manufacturers payment now buy first consumers financing, to incentives to it's deferrals, vehicle and discounts addition, selling X% time spring are advertising In from season, with ranging combining a persuade expanded responder the car.

XX, taking a turning be consumption being efforts Jeff corresponding are down. be encouraged call flipping demand, restart before will also to the the volumes Slide with realistic down that the to and despite over and stimulate Finally, to we post approach will

in cost this structure further to are sales environment. new we to such, flow improve earnings As taking additional cash our and actions flex

think I of in phases. three this

do that, is The of taken many which survival, first we morning. weather you the shared phase. We've steps just phase this storm to with

is as line sales be view taking likely sales and cost be new accordingly sales expected norm, time structure and lower The resizing in the for adding period environment a us phase environment levels. flow of with the will and it profitable but and to to the positive the steps as be in second a with size business cash lower

the company we’ve cash a accelerating to Phase business. our turnaround the as peers. anticipate business the Adient lowering includes the with When and of enable resize will fully earnings industry to we comparable generation that to SS&M actions X, our cost This base stronger to emerge closest and taken plans recovers, those

to turn over can for through call so Jeff, performance us With he quarter. the Adient’s that, financial the take I’ll

Jeff Stafeil

morning and safe and thanks, and echo Doug, comments I everyone, and Good your everyone hope well. earlier is

side. our Adhering right formatted results is the the page XX. in results to Slide in format, on typical start our and with I’ll the the left adjusted reported

the trends our as focus commentary adjusted and the nature or view that otherwise results skew on underlying either one-time excludes which in items will special We we performance. important

of our quarter, relate presentation. adjustments drivers biggest between Details Appendix difference and the of results adjusted the cost amortization. and our the are these of For restructuring the accounting purchase reported the in to

COVID-XX to and over year-over-year included EBITDA $X.X of and $XXX the Adjusted impact EBITDA COVID-XX. to down is despite due across million business quarter up about explained EMEA headwind, million were impact million, the XX% Sales $XXX more improved $XX year-on-year which million negative billion, related performance and for $XXX included estimated Americas, by than was Asia. was

income down we a the equity as that due quarter had to COVID-XX in year ago. $XX for equity the quarter income Note million was $XX million of versus only

is of As out arises of February have our heavily China, both income March. income the our the in bulk equity equity impact virus hit and the

respectively. were significantly income adjusted Finally, and year-over-year up $XX net at $X.XX EPS million and

the can As and see, a improvement. operating year-over-year you the rate effective periods lower improved between tax drove results

outlook made XXXX rate tax of necessary in an a impact shift calculation effective since annual on practical. the taxes, entity-based of rate actual The tax fiscal has was based tax effective calculation. estimated legal QX Speaking an was methodology the Adient’s rate in pandemic versus

mix Now, in America, million, consolidated year-ago. same the billion, Europe our results Asia, sales starting period XX. results approximately million. $XXX impacted a on year-over-year Lower of quarter and decrease reported let’s to a Slide across We breakdown $X.X $XXX revenue compared more and the of detail, by North volume with second

was production of Approximately, volume $XXX pandemic. with the volume million to the attributed decrease associated lost

the the in impact, between two the periods million. primarily negative the Europe impacted $XX to addition quarter In movements by currency

exposure side as than manufacturers about It’s production worth Japanese benefit was better sales vehicle those Adient’s down down luxury – noting the right XX% outperformed of XX%. which China the the the on a is China, approximately slide, in market. OEMs out in to side was call and year-on-year overall consolidated right-hand our

Adient’s noted excluding down Thailand, strategic in in outpacing Also the driven period. which to primarily China, through line XX% seating decline our with China’s sales unconsolidated regard are over network revenue, sales in essentially same were JV in FX the production industry Adient were XX% vehicle With production.

the as that to encouraging note, – China important in and fortunately Also sales improved accelerated an in April. quarter progressed sign

not corporate Moving allocated labeled to finance, back that the the provided executive marketing. excitement Slide bridge represents legal to EBITDA adjusted bucket The of operations we’ve XX, and a between such periods. of costs show communications, to central are as our performance corporate office, the

versus EBITDA up related versus adjusted was of last was last million adjusted XXX $XXX in $XXX basis quarter approximately the the current QX EBITDA versus Big points margin million million $XXX $XXX year. million to corresponding The picture, X%, year.

our income, margins EBITDA to X% very X.X% on decline from the the especially result, year good considering equity revenue. last this consolidated Excluding business year, increased sharp a in

EBITDA noted COVID-XX. As $XXX contains this about earlier, second year’s quarter headwind from million

turnaround was improvement $XXX to a to Excluding proof our of million, year, of year-over-year accelerating was on the pace posted first ahead plan point Adient the show one a quarter similar that Adient’s in this schedule. good

a that, is to did with can COVID margins in also associated $XXX the job I’ll the about I’ll keeping equity Based decremental the remaining our on mention, see one-third consolidated impact, related million nice teams in our mentioned the two-thirds decline check. at of you Adient’s business, income.

is business waste the performance in lower costs. improved performance. ops improvements and year-over-year up business by SG&A The improved driven the adjusted launch, freight bulk made of largely and Lower EBITDA

With of spread regard the the associated out deconsolidation and to positive the divestiture aerospace $XX between efficiencies, Adient’s the again the in reduction drivers increased of approximate Recaro. benefits SG&A included, and regions, is costs, million with which

of to not that included next that associated also temporary temporary And net the call employee are important the COVID of year, this likely repeat impact a with relate to point concentrations benefits million. million portion $XXX in $XX it, event out, improvements, was to

call impact million. $XX improvements decline $XX a to call also both by and impacted driven extent, in of income which of these million mix, it, a equity negative comparison, Partially the and periods, offsetting million were primarily it, year-over-year between pandemic. was the FX volume the $X much but lesser

improving noted bottom $XX with positive the last approximately in of direction results Americas million versus as year’s about and plant Finally the million manufacturing with $XX were and slide, SS&M QX actually XXXX. QX in compared EMEA

provided the portion costs, volumes of SG&A partially from our the Appendix performance – of ensure by Q&A in takeaway of we’ve call, To segment performance business EMEA enough by impact time is the regions. Americas lower improved presentation, allocated to the slides to primary or offset detailed lower and the lower the the and

consolidated In revenue Asia, business income has COVID-XX significant our better SG&A was and impacts and performance equity by offset to lower partially or costs.

as at working XX and and I’ll capital year-to-date free move less shift capital structure CapEx the Slide on in Now the helps to $X was of focus let cash million. movements. me on our some XX. defined XX, cash Adjusted results, about as longer timeframe minus flow breakeven volatility flow operating cash

improvement million The of vast $XXX decline free EBITDA, versus last in $XXX capital million million million $XX in and spending $XX flow explain improvements majority year. restructuring adjusted in the cash the in reduction

throughout working to capital, was Trade mentioned is tends the which volatile and past quite partial be each a offset. in quarter

Essentially, how to cash working production flow. the the on are capital, working Adient’s we’ve working between May will highlighted result and in March capital slide, expected of of Speaking capital swings. right-hand impact side the movements stoppage

generally drain one, March period. benefit we into during Upon reversing We and ultimately May but offsets. followed few restart, the month benefit have and months of April, in remainder of the shutdown neutral expect a by an expect to initial a in

impact launch of an Going our capital the the as COVID-XX anticipate, plans customers spending, in partially new decline opportunities launch the reduce well back given spending. likely will as to program developments, spending to over materialize. plans, We delays scrutiny year-over-year the of increased timing related to and further customer is and

flexibility. to increase forward Slide actions our XX, to several Adient financial Flipping executed

in quarter our we combined end, was on $X.X end. March. million of draw of This undrawn with provided remaining with included balance quarter Adient $XXX asset-based $X.X a on availability of at partial of our cash about in First, billion at hand the which revolver took million draw liquidity $XXX billion

balance the with shutdown important said, shrinking That situation In in not associated the Adient’s significant facility decline the amount it’s due as receivable such to world. the is in liquidity the of to underlying changes note, across fluctuates other a static ABL and words, today, the automotive available business.

to ahead After to balance of declining revolver five $XXX customers, in senior $XXX entered experiencing Looking shutdown debt contraction into due April. note a pay markets be AR the and a required the to were quarter end, year million, we due and our of we’d availability issued we the million balance. ABL our of realizing successfully secured ABL

In our was XXth in repayment due addition, estimated we’ve facility not rather but million. on the Thus on repaid represented expected declines end. May voluntarily late the drawn additional This further to at voluntary was the ABL required, $XXX at million immediately the April $XXX AR amount month balances. required in repayment

especially monthly environment, $XXX for to we on on factoring Based in liquidity liquidity about current forma level stats our require taken would the an new XX in our cash billion. down Pro we’ve month. ABL of $X.X March $XXX the and to pay the storm believe April, to been mandatory weather secured notes adequate million our per million have when reduce burn the

estimated out we This in as experienced on that, and burn essentially based in were negative shutdown variety Americas. is the flow just Europe taken the note month pointed mitigate earlier, to to of cash we’ve both noted. lower period, is approximately the million production Also production due zero the to $XXX figure burn $XXX million which actions we per cash able rate, our from April, during the environments

strategic close JVs, profitable $XXX expect of In our of cash actions previously enhances consistent the liquidity. China to of further million. dividend, before proceeds our strong network fiscal and providing Adient’s our addition, about balance sheet highly announced a end on we year with

$XXX billion fiscal $X.X XXXX. at are balance on noted of March seating the XX, JVs approximately slide, net the As in dividends approximately and cash a million had cash expected of

debt and position, to structure XX, March pro $X.X showing On in reflecting Adient’s net XX, issuance billion capital respectively we’ve $X.X totaled a look and which billion Slide also provided our at addition senior at forma debt this notes. provides after the believe down debt the pay to capital crisis. structure to not only storm, flexibility more past but flexibility million, $XXX the of cycle weather the it We importantly, we five secured year provides

a Improving Adient’s cash priority. generation top remains

out, to cash be a and improve Adient environment. earnings – the to take As actions designed are Doug actions plan smaller sales pointed and profitable in our taken flow to has the taken

yielding pay to we Over the the the crisis rearview once crisis, debt in is - liquidity. look some down mirror, excess

Over have a ABL somewhere with million cash balance balance outstanding time, run zero we the million. in post-crisis, in $XXX $XXX of the and and to expect area between

Finally, a few closing remarks on Slide XX.

as our by a Adient’s challenges and are firm its hand continues QX First, results, operating addressed. historical wheel on evidenced team The against the to execute being has commitments.

impact used liquidity the is February strong globally; to the The being flexibility playbook of storm. in and COVID-XX is China third, believe in weather and is Second, applied ample March being Adient’s successfully addressed. and provides we

around uncertainty providing or of thought Doug outlook level time, industry XXXX the unprecedented broaden ways pointed. ourselves phases global can is the as its in landscape possible specific out guidance our economic not impact this at the Given on be three auto for the of and remainder

to to those days, a generation the ensuring Early team we cash manage lower burn liquidity is and – resize of cash of additional team its adequate protect our liquidity health the the to drive sales executed executed, profitability executing and the now actions crisis. financial level focusing to business on With limiting actions to in measures the environment. have company,

enable be our normal. closest the us stronger time, the the period comparable did does two, game new not cost a to changed be anticipate the Although it business emerge a have to will with a think for plan the industry as not the lower same. to sales to peers. recovered, possibly end smaller that as our of year COVID-XX actions taken Adient to we remains when those generation is The or a company will aim we base we cash and expect the we resize fully of environment

on focused executing enhance to actions shareholder is than ever value. more team The

Operator, With call. that, the please? first of to the portion let’s move Q&A the question

Operator

Our of from question comes America. with Instructions] Murphy Bank [Operator first John

open. line Your is

Aileen Smith

looking Smith in cash Aileen achieve all monthly you’ve is John. This for on stoppage. everyone. for at the been improvement that Thanks the production commentary. of million When morning, $XXX to period rate burn Good able the through

of more is persist that with is will more flow translate is gets on you cost as side other production? How stronger estimate structural temporary and cash much what back crisis not this the added free and versus into may

Jeff Stafeil

stopping Aileen. I’ll in The the a environment. Doug in. a during question production – and the more start good these lot jump of really Yes, are of can no bleeding category

putting actions spending and associated taking plants production reduced with on the salaries, capital on and reduced So, for employees we compensation the our environment. no furloughs, have

during our the more But is, we the So, getting the about or point $XXX of million now permanent talked the talked to we opportunity measures move the we benefit of do an that immediate will about improve zero to to we period taking so forward. though temporary immediate get actions of million equip as a a actions are profitability lot from $XXX savings or production.

Aileen Smith

downs? was leverage a the around Great. but targets helpful. pay debt as $XXX much net specifically, market or can withstands remind any us raise debt the That’s view pressure, structure, million and the understood near-term liquidity bolstering and you what sustainable ideal longer-term, that to longer-term a very current capital move you recent over And

Jeff Stafeil

$XXX range, my to between mentioned obviously and in lot Yes, I that the we question. $XXX million no, than cash today. I somewhere mean, that and remarks more looked have the a for we million

we We fiscal complete, to also of the should to have or $XXX before the million year. – plan coming expect we transactions say, completed from that I the end

the it But is just, And creates. time get period the for would we the additional year with mentioned. production us the never COVID-XX fixed limited taken raise that do is have crisis, a back half always dividend, utility of it the liquidity, our where to I uncertainty prudent but it thought as ABL notes. during drew we the the shutdown amounts of we It cost, was to the the with of amount for

$XXX debt this, pay and to get that to down $XXX liquidity that we down use to get to million range. the of other excess we look will to million As side

pay under measures today. for low term look to We have obviously other it. get debt million ability the reduce we’ll loan B to which is side the to we $XXX And too our little as other of opportunistic

two-times as long-term say, at us other on sort to close our a would back on overall capital COVID to come setback. side looked debt that a to, leverage we’ve to inside something has goal of ideally From But structure, expect that on a the get mission where bit I structure little down obviously given a we out our of pandemic. this

Aileen Smith

last any America, the anything you China the question, customer over And two than other or month or releases and two? Okay. do Europe month have those the ramp next visibility to production examples beyond the around the that in in past particularly in North regions inform

Doug DelGrosso

Sure.

with come we a we Europe back China, get what’s at remarks, XX the think all system. in formal our we JIT typically both We’ve that’s I plants and to get to that broadcast just are of commented expect production customers moving reflected. very beyond in XXX% pretty online week our visibility our So, and quickly got and

on bit we’d there are And Mexico reliance heavy in the the opportunity place time. area the work. still place is of fluid go then, providing is the back at in right and the that’s staying little is this that the say which state has that, governments to - fact And now a only OEs the just coordination to Americas

I the restart. until will the only weeks little over anticipate the bit reason is discounting The couple next a get occur our shifts system we in through am and we that releases that are

Operator

you. Thank

Our Lache next from Wolfe Research. question Rod with comes

is Your line open.

Rod Lache

Good morning everybody.

Doug DelGrosso

Morning.

Rod Lache

a of I about if might EBITDA that help might follow-up, to wondering an extrapolate of had to was $XXX your consolidated rate through we think annualized of a the us you EBITDA. questions, want million walk couple just and kind some was of I to adjustments

suspect $XX think – there of benefits I we want comp was would you I that that might that to you unusual million mentioned track.

of was this of it a also non-recurring from periods. give quarter was on million of looks of you be how was talked that like little commercial year-over-year there last Could maybe about $XX a kind normal had of runrate you basis and at of that us some some and revenue? – a of the settlements from true-up might bit positive And just what sense EBITDA prior level of

Jeff Stafeil

good questions, so Yes, Rob.

million a offset the of think $XXX $XXX EBITDA for that quarter, took roughly back mentioned million some $XX there of by the million like from if you posted we issues. we compensation. issues incentive million debt we On Effectively, was $XXX of total that COVID-XX-related it in impact that our

So the net was million number. a $XXX

I the So use can more number. a normalized you think million as XXX

settlement As commercial, amount that’s we what called the negotiation end of a time, all of where it out we a question to the relates quarter, have your business we is it our on period that part in unusual year our – fourth with because customers. of an

same. accrual much during moved quarter. I If look the It at roughly it’s our overall commercial the on our balance has sheet,

claims VAVE Doug performance business customers weren’t we being volume about doing or other turnaround other or things with talked things. to the our opportunities elements before of we to well and due doing more and that talked contracts working that’s the has the what about say sticking I’d have either to of just So as from

what commercial a seeing would settlement I are for more quarter activity. normal from you on it’s this much say, us So in

Rod Lache

That’s helpful. $XXX Okay. just impact, that a impact. million But was to clarify, corresponding revenue COVID there also

of then, the So, sort adjustment of to $XXX for which if like and just make of just annualized was runrate and would a the revenue, just the at make annualize $XX million look, adjustments we the things part the maybe say, for you billion and consolidated the comp we EBITDA EBITDA were adjustment are that?

Jeff Stafeil

environment, into you you trying Yes, impact, down million on less – sound bringing the it SG&A we’ll, like of so, a another was I guess million $XXX of are the about. to – if it of talked million $XXX if the variable depends we build lower your $XX volume

$XXX like start income. about about thinking a sales that estimated of million impact in you, look we reduced from I about business, guess the $XXX that operating we want with you and quarter, million to about we to – related The a and two-thirds COVID if consolidated tell I environment, equity related tour third said the what of impacts talked would for

margins were just that under XX% level. So the decremental on

perhaps to an estimate. use revenue So, you can arriving in EBITDA to whatever that in at level fill you use want

Doug DelGrosso

year particularly of Yes, delayed, the that caution –the of in like in activity launch had in the increases bit relatively only F-series, significantly look amount thing half. directly, that still half, we going first launches would Americas into roll like particularly even half second the I extrapolating the that’s at to little though a second you maybe the on we the the that’s when a

an With see and material cost margin pretty or as et improvement cetera just ops in comes that taking the out, we waste, we it when it commercial overall have strides launch exception, are SG&A can stands well. thus performance we be to that you are making that freight, good as

Jeff Stafeil

just maybe that hack give And maybe another Rod, to direction. from at different you, question a

equity consolidated the $XX COVID. million said $XXX important million side impact million. due net the The consolidated we of income net two-thirds roughly on excluding of $XX is to already That

environment. be reduce that range any can adjustment volume you want in – on you into post-COVID case then you to we’d reduced and make the of So XXX-ish to to kind closer want if

Operator

you. Thank

question next from with comes Barclays. Brian Our Johnson

is line open. Your

Brian Johnson

exiting some potentially on unprofitable about product just Yes, to or follow-up comments customer want - relationships. made segments you

of accelerate You’ve the talked business way? to downsizing, in time, portions to over shutdown Tier-X about SS&M any the that

Doug DelGrosso

China, to primarily be long-term we interest comments best acquisition took don’t Actually, some our portfolio. with more specifically, they customers want we Futuris have and our in were we directed specific, that a specific felt in to the just in result of towards some the were associated made. were They actions

– – ways able That of on that associated that, We’ve path more but business. see were and there find significant we And time that. few a reducing settlements beyond deemphasize, been to then, a I with some terms commercial customers this to finding to result, towards facilities. that finding think that, not a being in disclose at want that cost is we to prefer we as And SS&M. consolidate

Brian Johnson

I two Okay. And of terms in just mentioned, you the questions. cash, think housekeeping

proceeds use to the revolver do the down, of does paid to that? ABL the that mean with loan down receivables First, coming you needs will that and term some that be

especially the or for product big product, And coming world lines great in second of one the of largest then, country a question, with launch. the up largest kind

about accelerated launch activity be you for or something place production agreements that’s even to going You Is OEMs. mentioned and getting in that something from restarts? looking payments as are have

Jeff Stafeil

the take roughly balance and yes, standpoint, the of on I at give first about quarter one, was that it’s first From Doug cash $X.X the the of billion. I’ll then our maybe, thinking second. And part an end ABL guess,

down the and represented of half to that about is represented our the normal we So cash. draw half pay ABL. It just that ABL true have

payment required be is million said, down in a May another made what way. April $XXX pay have to mentioned best April. going in $XXX million We down in to of require that We voluntary our any guess we pay reflect in

$XXX we the of $X.X we can have to think, billion repayments. you So, make proceeds million the use that base or those

that We in also $XXX the for April of have note million. proceeds the came

today. So, we have on significant a cash amount of hand

Doug DelGrosso

that have of lot our the terms fund with Yes. And a successful offering. regard to book customers, we initially activity before started with favorable

So us positive we that is we every equation were issue. helps we our there relationship particularly when it. as took short-term, of we go if some have, customer a this say, this alleviated that dealing very some can what with working way opportunity to in work But the and with capital-related we say, particularly

had were of many tooling, area the I though would the the in we say, actually success we was where our of in with cycle most customers. launch of

sometimes a schedule of to tooling a were really upon there. ahead true-up customers and for of successful it we really get push on go launch can to bureaucratic compensation relatively before to lag tooling our and up specific we issues for year months, those we payments on activities and took Sometimes, kind many ourselves

Operator

you. Thank

comes Our Deutsche Rosner with Emmanuel Bank. from next question

line Your open. is

Emmanuel Rosner

everybody. morning Hi, good

Doug DelGrosso

Good morning, Emmanuel.

Jeff Stafeil

Good morning, Emmanuel.

Emmanuel Rosner

wanted little a your I are things to of think Slide restarting, detailed the around bit you you ask as you a the lot taking are XX. more color on actions I

exiting And blitz, some letters, of So platforms. I know that the you little customer about premiums restart it a potentially commercial you lot in very include a items, actions, bit. positive JV the spoke

does accelerate have commercial cost much longer. to I essentially that this, enable otherwise actions material is that some taken curious am just and how and you much, would

I of? of be of items know, year, move these care platform - don't take care you or can as taken that should the things you needed would can So I guess, into have – otherwise all redesigns essentially which this you like rest

Jeff Stafeil

materiality to drop, the standpoint, of some from able that kind a XX% of XX EBITDA to so, of pointed China the volume maintain we that maybe on Slide were and China Yes, despite Much preceding we levels. historic is and slides. activity captured

we So, it’s material. think

the in able we and is capture to in whether in can full as be days early capture China determined. the in Europe were we value are to Americas We

confident a really in it’s am of period somewhat restart, can fixed at same is we we fully of maintain contribution What experience whatever are with time, that. associated that, the really plants then that the gets achieve achieve fairly drop our hoping And But, to the the levers. that in cost we business we business. short volume relatively that I normalized the and minimum into a once near-term, can, side hack not

overall high had an in look – I level level of at in it. maintain we a how can we going So profitability that

Emmanuel Rosner

Okay. That’s so, flow actions then, on in cash sales be helpful and this, specifically are the executing to environments. you obviously, follow-up, the positive lower

You environment continue eventually to expecting for lower that months. or are sales XX also XX

sort that flow beyond guess, be of you I industry us be based or to even so? of low level, the – any taken soon – give current things sort much or benchmark, on at this around production next be can So, you got that you’ve positive in more as probably like timeline stabilizes cash actions would as there there your quarter the the some

Jeff Stafeil

restarts then, how truly sort we actions sooner at be to long and of that, it’s also There takes to specifically, Immanuel. production. it would of that, parts upon underway. say to do the it And I have mean, have aiming going are we how lower rather restart? lot of depends I to But market is it’s think lot – than lower and a later level of moving what

lot a are But estimates the launch sit to slow in it on there bouncing the around customers bit sort lower There much turn down. of a our slowdown and of what our really quite that that in CapEx. out in how be and is they mix that plans of vehicles

things better before roadmap. visibility into we So, few full come we a a give can to need you definitely

on won’t the and we little actions I But that now. a a might done lot things we bit of have say pretty accelerating later are aggressive being and doing them

are on get So, we little get we to of timeline a be have future you more we do We’ll we significantly that lower today. and that clarity. – what a a at think give better you prepared have of and volume as we’ll level the when definition back than we to profitable view looks

Doug DelGrosso

clear XXXX, do. very similar and new pullback and spending customers right what anyway cut there XXXX – Jeff’s that emphasize look happened in in well. Yes, a to I if there is of there new well significant we to their to what’s anticipating a which our go now bar comments, launch, - development is activity a not then, and if are a say, be could you as bit out scope and if of on intend one this it’s point would And plays with

in the capital launches. and eliminated impacts vehicles it that. And loss revenue happened XXXX kind side, like for roll new eliminated cut investment many as XXXX on do and and of of things eliminated off, activity production on, back, with that’s particularly extended engineering customers roll they the on our launch of It life that end what and what the we’ll dramatically SG&A associated

side if deeper of that fixed much that a dramatic equation soon. cost that the will both stability, have reduction on impact so, to you on allows that side we think pretty variable us and our get and the of kind go And

starting come launch That’s to product line of a view are revised with so see early launch you that cadence to activity. it’s there. customers that what’s to out too – in going But really happen see the

Operator

you. Thank

question next Our Stanley. Morgan with Sinkevicius from comes Armintas

Armintas Sinkevicius

operations Great. ability Good America. it and the the seating much and Europe optimistically labor given up at morning. think operations your in China Thank about ability thought that question. involved was taking I back to we the particularly and you is restart get as in how manual with look encouraging for North to to bodes running

about China, six Maybe you in of think and of some can really to back distancing up when you talk that measures running? et feet about you’ve cetera the taken get

Doug DelGrosso

So, components break But we sure. it the produce. that our have business down you and products by to the in

easy time That’s So, final to a on in relatively this seat level, implement. assembly. our is just

spacing. in bit the a that’s some going case, extending respacing in So with the our engineers line line, that industrial provide little to

with come say, it do has have personal equipment, employees, protection in. to to lot screening A of you

everything in a you too point we’ve and it’s modified so list relatively very that are that tie to feel and China implemented would website to well. doing. then I and up with the much So, our it’s Americas, we as comprehensive it accordingly not Europe call gone far in We

easier had more things feet couldn’t put, a then, our in different separation. re-layout barriers provide to cut really protective the and dramatically than Mechanisms facilities Where our are of sell Metals it’s business. those business, we bit in where slightly between operations, and And within accomplish employees we six our to full I’ll say in

automated part and the fairly most That’s out. spread for

we’ve restrictions are that. that of continue our issue. intend Today, to probably safer operating we if that But big have we in a even implemented government think continue we from it’s a majority to offices We’d well. and then, way employees as headquarters, operate our what not because So, just perhaps – for still changed home. our

Armintas Sinkevicius

And implement, had or how that too it employees XX% capacity but you much ability? or to respace just like, capacity operating of levels your to sort production of that is normal your impacted to your your output. measures Are sounds impacting not were your it point, at how the you hard of given

Doug DelGrosso

all. had it’s an at frankly, not quite really impact Yes,

happened in we that our and actually and what’s labor So, efficiency. it’s China increased measure by

of to that well unique that suppliers. of in with Some as do employee customers, with many was availability our restricted us. the early stages, to had China wasn’t were with in as we That

more So that safety to aside really forced efficient. and us, become health I’ll say,

and safety we So health that where that point much an able efficiently. And that’s the that were the emergency side. Where problem we – we becomes basic felt so principles just only lean I’d implement had to is not the on caution more you, it a level. run to

feel how operate how more and plant. pretty within about – customers good It’s our operate they they We on that. what on their

we demand efficiency slower a efficiencies they in at rate, lose wanted will their in for line run plants, will they in it. facilities line if So, have our but the they and that because force automotive won’t rate,

launch that my bigger as that past in operations – opposed operations to than concern And the activities. of that to discussion spend that’s or loss Usually, to place we’ve during COVID-compliant. our into experience of capital the in productivity with be that. at burden sort we’d translates say, had having our us would say commercial I’ll some We put to

Operator

Thank you.

Our last with Spak comes Joe RBC. from question

open. is line Your

Joe Spak

very significantly margin you quarter. just I that think next back, decremental get guess, the which in pretty the different. quarter regions to guess is, kind to of look I discussion was the in impacted I much. I wanted Thank But of the mix impressive

weeks held up So, quarter? maybe maybe maybe an even of bridge us how can past sequential that of or just in indication last with this you the margins two what help are you expecting of the

Jeff Stafeil

we question, limitations have think you morning. can you than were flex. the certain ability is in went are areas, as lot on because, a said other have to aggressive flex how Joe. to worse moves, Yes, could been we I in much the kind decrementals would they various countries Europe of Good We’ve I to lower down. Europe, in of take tend labor good we one, bit little say, be a aided there from our on I a in of but because

put number of probably the the bit. work in labor us I has governments weeks cost allowed take down a say But our have that it to time a have worst flexing. But short would then programs

the Americas. saw getting Now the seems you be than standpoint quicker Europe back to mix moment, us good as news work the to a at for

and So, through the have Europe that JIT hardest twenty are facilities some have we have the area help that well. Their we as that month. restarted time coming where flex, will in continuing the and to is back in sales

So, May versus helpful decremental standpoint knock for on be here April. from wood, that should a

Joe Spak

issues of looking over it think complexity some me the portion of dealing thinking, I then, sort of with you the years, past just think in Okay. I I mean Doug, got good some just the And made, was, the it like, if launches. a out comments about of couple of

manage level So, that absolute be if there the might next volume the of industry EBITDA system? of is actually where the to of view through sort and trajectory of – is flow sort that new margin of lower, you couple we volume like look, I years, over version the of able the but understand greater improvement goes because actually better that are impacted, a of a take is launches

Doug DelGrosso

is this. true don’t I a a ahead too far there where certainly get of Yes, that statement. scenario If want of to could be

let's our think focus now, that we make create going, in. restart get is, we right I sure the the our can let's feel environment working have employees comfortable

have in our proper Let’s productivity make the plant. that sure we

the as well supply do, as know, You gradual. chain is I

will hands the benefited that launch I come scenario what way. that unforeseens make XXXX kind we manage and think, But, that to, to all if our talked happened in many again, compare XXXX, cadence suppliers of I can that were sure to a got we’ve reduced earlier. So, about on from you that

prior very with a XXXX business. spiked of and activity in lesser launches deal and years. a those improve XXXX, look to and as issue the And manage degree, difficult was what company and that and as launch was the we to we've our biggest challenging managing talked we I had to complexity the that back, XXXX in as It’s XXXX that

that that financial So performance. COVID launch prior we also as to to came – we’ve activity pointed anticipated down, and better

plays that advantage. our way, that I to think it it works scenario a So, that’s

Mark Oswald

looks Great. the of bottom hour. are we at like It the

morning. for call the concludes this So, this

If to to thank and any you not again, calls, please call. very hesitate you follow-up get do much. have you back We’ll

Doug DelGrosso

Thanks everyone.

Operator

Thank disconnect at in you this today’s for conference. time. your participation Please