Welcome, and thank for standing by. At this time all participants are in a listen-only mode until the question and answer session of today’s conference. [Operator Instructions] This call is being recorded. If you have any objections, you may disconnect at this point. Now I would like to turn the call over to Mr. Mark Oswald. Sir, you may begin.

Thank you, Brendon. Good morning, and thank you for joining us as we review Adient's results for the third quarter of fiscal year 2017. The press release and presentation slides for our call today have been posted to the Investor Section of our website at Adient.com. This morning, I'm joined by Bruce McDonald, our Chairman and Chief Executive Officer; and Jeff Stafeil, our Executive Vice President and Chief Financial Officer. On today's call, Bruce will provide a few opening remarks, followed by Jeff, who will review the financial results in greater detail. At the conclusion of Jeff's comments, we will open the call to your questions. Before I turn the call over to Bruce and Jeff, there are a few items I would 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 2 of the presentation for a 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 equivalents can be found in the appendix of our full earnings release. This concludes my comments. I'll now turn the call over to Bruce.

All right. Thank you, Mark, and good morning everybody. We really appreciate your taking time out of your busy schedule here of earnings season to join us for our Adient’s third quarter results call here. So, three quarters and late to one year here in fiscal 2017 and I guess my overall comments is I think we are solidly on track in terms of delivering the commitments that we’ve made to the investment community, both here in the short-term but also the trajectory on to deliver our mid-term commitments. Our team is extremely focused on delivering earnings growth, margin expansion and if you’ll – I think that the results here in the third quarter demonstrates not only our commitment but the success that we’ve had and the positive momentum that we’ve made throughout the year here. Maybe just turning to Slides 4 and 5, I would like to touch on a number of accomplishments. First of all, starting off with our financial performance and Jeff is going to talk about these in a lot more detail in his section, I would like to just touch on a few of the key metrics. If you look at our EBIT, adjusted EBIT for the quarter here of $336 million, up 3% year-over-year, and really nice to see here despite the top-line weakness that our corresponding margin was 8.4%, up 90 basis points on a year-over-year. So, really good performance on the margin side. I am really proud of the work the team has done. Still a lot more to do going forward but off to a great start. I didn’t expect the operating performance fell through to the bottom-line like our adjusted EPS; we came in at 4% high or $2.52 for the third quarter. Just maybe talking about China and on…

Great. Thanks, Bruce. Good morning everyone. Turning to our financial performance, hopefully you’ve all had a chance to review our third quarter results that were posted earlier this morning. I am pleased to report Adient’s third quarter continued to build on a positive momentum established earlier this year. As you can see on Slide 9, we had a good quarter on many fronts including our continued execution on driving earnings growth and margin expansion. As expected, our revenue was down, but I’ll cover that more in the next slide, but meanwhile, our earnings were up again year-on-year and quarter-on-quarter. And getting to our typical format, this page is formatted with our reported results in the last and our adjusted results on the right-hand side of the page. While the reported results show roughly a 100% increase in EBIT, an over $2 per share increase of EPS growth, we will focus our commentary on the adjusted numbers. These adjusted numbers exclude various items that we view as either one-time in nature or otherwise skew important trends in underlying performance. Adjusted EBIT improved 3% or $10 million versus last year, which represented a 90 basis point improvement. Meanwhile, equity income was up 7% year-over-year, but if you exclude or adjust for FX, it was up 13%. Finally, adjusted net income and EPS were both up 4% year-over-year at $237 million and $2.52 respectively. Clearly our third quarter continued to build on our strong first half performance. Now let’s turn to Slide 10 and let’s breakdown our revenue in more detail. We reported consolidated sales of just over $4 billion, a decrease of $345 million, compared to the same period a year ago. T he benefit of positive commercial actions which reflects efforts by our team to collect on items such as premium…

[Operator Instructions] Our first question comes from Colin Langan. Langan, I am sorry.

Yes thanks for taking my question. I guess, the first question, just a clarification, I’ve gotten several questions about commercial settlements which you highlight on Slide 10. That’s a pretty big $50 million benefit and I think that’s been the case if you look at the Qs the last few quarters, I mean how should we think about that going forward? Is that going to be a headwind as we move forward as you had benefits this year that maybe aren’t sustainable or how should we think about that number going forward?

Yes, Colin, good question. They tend to, I mean, part of our business is commercial settlements, I’d say, there is a lot of commercial activity as design changes happen to the products that we make. A lot of times there is changes in design characteristics driven by the customer or whatever requirements and we go and capture that an additional price and we call that out in these financial bridges. I’d say, it’s generally pretty consistent year in and year out that quarterly mix of them can be a little different. Sometimes that are little higher, sometimes a little lower. Probably a little bit of a higher mix this particular quarter, but I’d say in total a year it probably averages out to be large.

Yes, and Colin, I wouldn’t – it’s Bruce here. I wouldn’t read into that because we are showing it on the sales side of $50 million that it is $50 million bottom-line benefit. These are things like the content change, maybe the customer how the - a vinyl seat that they change to leather. Those kind of items not like the price increases fall to the bottom-line.

Usually things that – good point, usually things that drive our own cost base out and this is a recapture.

Yes.

Got it. And when I am looking at Q4, I am not sure whether my number is right, but it seems to imply that margins are maybe flat or even slightly down year-over-year in Q4, is there any – and you had such great progress every quarter year-to-date, I mean, is there any challenges that we should be thinking about in Q4 that make at all the margins start difficult?

I think one thing to focus on a little bit is, on July 1 last year, we were essentially internally set freed up from Jonathan Controls from a financial standpoint. So, we’ve been able a lot of our SG&A savings and others as we’ve gotten out of that structure and built our own environment. So the fourth quarter of last year is about our comparable point or a harder comparable point, because we had certainly a good quarter last year as we were able to benefit from some of that. And hopefully here, with the environment Colin, we are able to perform better, but as we look here today, little cautionary on where sales and the environment is set, we still feel comfortable with that overall guidance. We’ll obviously look to beat it.

And just lastly, you mentioned SG&A, I think the original target was 150 within the first two years. How much of that is completed and I was sure on the slides and in the Ks anything on the sales base maybe more challenging, do you think you could still get to 150 without – with the sales coming at a bit lower and do you think you could get it within the two years?

I mean, when we say – just let me clear, 150 basis points in both terms, or any time $50 million, two-thirds will have done this year and the one during next year and yes, we are absolutely confident we can get it. The fact that actually is sales are dropping here, because we haven’t backed away for the 250, from a basis point value it be a little bit better but we are very comfortable with the – two-thirds of the way done. If you just look at annualizing what we’ve done, that’s sort of in the bag we have some work to do to get to next year, but we’ve got roadmaps and we are continuing to work those. So, very constantly, I mean, the self help part of ourselves is cutting SG&A 100% within our control and the improvements that we need to make in the metals operation are 100% within our control and then there is nothing that the market influences those two initiatives.

Great, thank you for taking my questions.

Thanks, Colin.

Thanks, Colin.

Thank you. Our next question comes from Mr. Joseph Spak. Mr. Spak your line is now open.

Thanks. Good morning everyone. Just to be clear on the commercials, I mean, you said it’s a recovery but that’s an intra-quarter recovery. So it’s not a recovery from an expense experienced in the prior quarter?

It would be really more likely on current production. So it’s stuff that we generally would be shipping quite often and we would come up with some sort of an adjustment, usually sometimes in a retro area, sometimes with some delay, but it’s usually on current production, Joe. And you’d see that we generally have it quite a bit period-over-period.

Okay. And then just on the guidance, within the adjusted EBIT, should we still be thinking about equity income of about 400 because, the – and correct me if I am wrong. But I don’t know if that sort of interiors investment was sort of always plan. So, I don’t know if there is a little bit of an offset there and then currency has obviously changed as well. So I just wanted to get some of the guts there.

Yes, I think the 400 is still a good number. Some weakness on the YFAI with some of those investments, but then constraints on the unconsolidated seatings. So, I think it’s still a good number, Joe.

And then, what about – just from a straight translation perspective it looks like the currency has moved in your favor on China and then even on the consolidated results, shouldn’t – is there – what was your prior euro assumption and what is it now?

Well, yes, it’s a good point. So, our prior euro assumption for the year was probably something closer to 110-ish or may even a little inside that. So it definitely will help us a little bit on – we’ll say the sales and the nominal EBITDA - on EBIT in the fourth quarter versus our original assumption. Meanwhile, though, we have on the debt side from the leverage we’ll have a higher debt number just due to the exchange on the guidance.

Yes, I think.

It’s not terribly material though, Joe. It’s not like…

And I think Joe on the…

$2 million.

I think as we – if you look at kind of where the Chinese currency is, it’s kind of come back to where we started the year – throughout the year, I think we are kind of getting a little bit – starting to see us handle. But which is going to come back to where we thought it would going to be.

Okay, and then, sorry, just one more quick one. I guess, on the commercial side, I mean, so, that’s helping the top-line you are saying doesn’t really help the EBIT. So, what – like what does that fall under the broader scope of operational performance or volume or where is it in the EBIT?

Yes, on Page – it’s going to fall in the operational performance line.

Okay.

And some would be in the volume side too.

Okay, thanks.

Okay.

Thank you. Our next question comes from Mr. David Leiker.

Good morning. How are you all?

Hi, David.

Hi, David.

I wanted to try and dig through some of what you are seeing on the bookings here over the last year, it’s – since you were interest free. Can you give us some characterization of those bookings of how much is replacing existing business versus conquest kind of relationship?

Yes, I mean, we tend to update on our backlog which is the new incremental is not as a lots to say, but in January at the Deutsche Bank Conference, so that’s what we are planning to do. You – if you recall, last year we came out and said we had a backlog number of $2.4 billion which is up from I think, $2.1 billion in the year before. And when you kind of looked at the under that, what you saw in 2017 and 2108 – I am sorry, 2017, we had no growth in our consolidated seating business and as you look to 2018 and 2019, you saw growth in the consolidated operations picking back up. When we sort of move the clock here and I lock of 2017, which have been a negative to 2017 and we replace it with in 20. We expect to see an acceleration in the upward trajectory in terms of the consolidated, so if you look at 2019, sorry, 2018, 2019, our consolidated seating business was growing. And the backlog for those years is increasing. 2020 will accelerate the rate of that increase. So I don’t really want to get into what it is right now, but it’s accelerating. So, I would say, the mix of the new is higher than the past.

Okay, great. And then on metals, you had talked about a number of lines. Just can you talk a little bit about the timing magnitude of that as – presumably those are products that are coming in with better margins on and then some of the yield stuff you had?

Yes, I mean, it’s a combination of some things that – our own – like our recliner, for instance, our T 3000 replaces – I am sorry 2000 replaced by our 3000. Because there are so many like – cushion recliner side, so many launches that we have in metals. It’s kind of hard to pinpoint like some big ones. But we do have fairly significant – another sort of key driver is kind of get to some of these mega launches that we talked about things like for Volkswagen Gen 2 launch, just $300 million, $400 million program. Our BMW, Daimler combined IKD launch is underway right now. Those things are sort of getting behind us. So it’s a combination of some improved margins on metal economics that I think you sort of referencing, all been the…

Yes.

There is a margin enhancement on old to new products. There is I talked about some restructuring being done here in Europe. Some big, big migration in metals from west to east in Europe. And then there is a tampering down of launch activity. Those are all the drivers that are kind of happening but, I would say, if you look at sort of some of these new programs that we talked about in my comments like, on the Camry, and the A-8, the Tiguan, sort of things. I mean, they are helpful. But it’s a whole bunch of more things.

Yes. Great. Thank you very much.

All right. Thanks David.

Thank you. [Operator Instructions] Our question will be coming from Mr. Brian Johnson. Mr. Johnson, your line is now open.

Yes. I want to talk a little bit about just kind of bridging kind of the backlog to bookings. You mentioned strong bookings, but can you give us a sense with the roll-offs and sort of that backlog level you came into existence with how – what that means for the revenue this year and especially next year there?

Yes, maybe, make up has been little bit overly confident. On our bookings, because some of our – some of the auto sector, talk to those bookings, and some people talk about bookings over like life time awards and things like that. So maybe just could be clear, so when we talk about bookings, we are talking about annual revenue for one year of both new and replacement. When we talk about and that’s what obviously also at the net of a loss. So if we had a $200 million replacement business, that we re-won and $100 million new contract that we won, we would call that $3 million in orders. For backlog purposes, anything that we move on replacements are negative. So if we just win our current book of business, we would have a zero backlog. So backlog is entirely not incremental to new business. So that’s kind of the methodology here. Is that we were looking for Brian?

Well, I guess, kind of within that the tenor of the conversations with customer level of competition you’ve had, couple of competitors especially some of the smaller ones talking about big wins, is it getting more competitive? Could it put pressure on future margins? And then, I guess, as – kind of the competitive environment, your main competitor talked a lot yesterday about the synergies between wiring harnesses in these systems as seats – especially in China become more complex and laid in with electronic features. How do you see that in terms of competition for seat awards?

First of all, I have never lost a piece of business because we didn’t have wire harness capability. So I will start with that one. But I mean, in China, I think it’s fair to say that, Adient, as well as our global competitors, are all beneficiaries of the Chinese suppliers and in-house seating move into the big global players on the seating side. So, I think we are all in the same boat. That’s a positive for all of us. What I would tell you there is, we are winning more than our fair share. I am confident that our market share, which is already significantly stronger than all off our competition, almost combined, that we are continuing to win share in that market. If you then look at the – if I then look, tell me a little bit more about what’s in your backlog. We have significant business in there with some of the customers that we have lost here with over the last three or four years time at Johnson Controls. So for recapturing business that was ours previously, we have a good book of incremental new business with Japanese customers and so there our competition for that business is not the people. They do follow buying and it’s more like you are talking about – Hitachi, F&K those types of players. We have metals, incremental metals program in our backlog and again if you look at our vertical integration versus again the key focus, that you cover we are much stronger on the metals side. And then, I would say, some of our competitors here in some of the tier-1 competitors have had some launch issues and we’ve been in that beneficiary of picking up replacements, our custom – and competitors’ replacement program which are essentially share gains for us. So we have some performance issues that have translated into a positive for us. And I think when we go – when we talk through our backlog in January, I think we will do a deeper dive and kind of go through how we are moving, because it’s not – we are going in with a lower margin, so that we can get this business growing again. We are committed to the margins expansion that we’ve talked about in our investment thesis and taken on a bunch of business that’s going to be below that when it launches in two or three years time and that’s a little gain for us. So that’s not what it’s about.

Okay, great. And just final question, you can say have a car now with your massage sheets which are amazing.

Thanks for that.

Thank you.

In the showrooms and as you go through these bookings and are you seeing on the one hand any positive mix in terms of just features like that or on the other hand, as kind of interest rates and trading values go down any evidence of the consumer saying I’ll skip the massage on my next car?

I can’t really answer that question, because we don’t sort of, I’d say overall though…

Fully loaded seat versus a fabric manual sliding seat?

Maybe that’s something slightly different than being able to answer that specific area. We have seen increases in content per vehicle with the seating which would suggest that people are looking for more features, more comfort, more premium stuff, more safety-related items in their seat. Yes. When we quote a program…

And that need to be getting at the mix shifts there?

Correct.

Yes, yes.

Yes, that’s again, it’s going up within a SUV it’s going up.

Yes.

Yes.

Okay, thanks.

Thanks, Brian.

Thanks, Brian.

Thank you. Our next question comes from MR. John Murphy. Mr. Murphy, your line is now open.

Good morning guys. This is Aileen Smith on for John. If we think about how production schedules trended in the quarter, it looks like there was some tampering of production relative to expectations at the beginning, particularly for China and North America. How disruptive was the slowdown and the cadence on your business and how far in advance do you need notice from your automakers of production downtime to adjust your cost structure and production accordingly?

Yes, let me touch on North America and Jeff will start to do with it little bit more color on China. But in North America, what we are seeing is, on the passenger car side, there is too much inventory and our customers are extending or taken weeks out of their schedule and so, when they do that, that’s the case scenario for us, because then we can – where our plants are 100% dedicated to our customers and so, if they want to take a week out – like close their plants for a week, we close our plants for a week. In North America is 100% variable. And we can refine very quickly. It gets more difficult if they slow their line speed down and as one of our customers in particular is slowing their line speed down it gets a lot more difficult to say flex your labor down if they slow their assembly line down, let’s say 10%. So the issue that hit us in this quarter, specifically was, North American customers taken more down time than we have expected and that tends to – they obviously like their inventory and sales level and if you listen to their calls yesterday, and the day before, they are all commenting to get their inventory in good shape by the end of the year and we are just going to keep our eye on things. Jeff, why don’t you talk about China?

Yes. So, the China market, as I mentioned in the remarks has been – there has been a pull back in some areas of production, but it’s been largely targeted at particular brand. For instance, Hyundai and Kia is way down in the quarter and there is a few other brands, some of the local brands, some of the Japanese brands have also seen some softness in their sales and production over the course of the first half of calendar 2017. Fortunately, that mix of customers were actually fairly underrepresented on. The growth that we are – I guess, more aligned to actually we had a pretty good first half of the year. We benefited from that. We also continued to benefit as I mentioned, just from some of the content per vehicle and some of the other growth initiatives, we’ve been able to put in the region. So, while it’s been a challenging market, this is – our partner has worked very well with us. We obviously have tie-ins with our customers, as they are also our partners and we’ve been able to manage through and the teams have been able to manage to that environment fairly well. We actually saw a slight uptick in net margin on the whole group. It’s somewhat of a mix element, but as we’ve always said, we are intending to keep that market relatively stable from a margin standpoint as we continue to grow it and we’ve been very pleased with how the first half of the year, I guess the first three quarters of this fiscal year has gone.

Great. That’s very helpful. And then, a few suppliers this quarter have called out automaker price downs as a pressure point and more so that they are not being offset through operating leverage or their own cost efficiencies. Are you guys seeing anything from your side to suggest that the automakers are getting incrementally more aggressive with respect to price downs, especially as production is slowing in some of the major regions?

I’d say they are always aggressive and I wouldn’t know of anything abnormal and that’s our business, right. That this industry, we have to take out cost in line with our customers’ aspirations and if we don’t we are going to be facing significant margin deterioration quite frankly, if you can’t do that year in, year out, you are going to go out of business. So, our – if you look at our numbers here, we have cost pressure like everybody else. We are growing our margins. That’s just that’s a surprise of leader in the game. But when – in good times, there is a lot of pressure for our customers to show great numbers and then go out of pricing pressure. At that times there is a lot of pressure from our customers to mitigate the volume shortfall and there are lot of pricing pressures. So, I don’t – I wouldn’t just talk about, hey, this quarter is somewhat abnormal on the positive or negative side. So, anyway, I think we’ve kind of run up against the end of our call here and so maybe just a few comments before we sort of hang up. With three quarters got away through our fiscal year and I really do feel good about our ability to deliver on our commitments, especially, given the softness that we’ve seen in the top-line. I mean, it would have been pretty easy, I think for us to come out and talk about our top-line challenges and using that for excuse. But I really think our employees have stepped up gain here and I really want to thank them for their dedication and hard work serving our customer, deliver on these great numbers and sticking with us through us at a time of significant change. And so, I couldn’t be proud of our global team and I’d like to thank everybody on the call for their continued interest in Adient. Thank you.

Thanks everyone.

Great, thank you.

That concludes today’s conference. Thank you for your participation. You may disconnect at this time.