Welcome, and thank you for standing by. At this time, all participants will be on 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 time. May I introduce your speaker for today, Mark Oswald. Please go ahead.

Good morning, and thank you for joining us as we review Adient’s results for the Fourth 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 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, there are few items that 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 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 of 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 will now turn the call over to Bruce McDonald. Bruce?

Thank you, Mark, and good morning, everybody. We do have quite a bit to go through this morning with our fourth quarter and full-year results, as well as we are going to be providing some information of our backlog and our guidance for 2018 since this is our fiscal year-end. It’s hard to believe it’s been a year since we first formatted as an independent company. And I’m happy to report our fourth quarter results released this morning solidified a very successful year for us. Equally important to executing a successful year one, our results for this year laid a firm foundation for delivering on our midterm financial commitment, and I’m proud to say we’re solidly on track. If you flip to Slides 4 and 5, I’d like to talk about a number of accomplishments, especially during the fourth quarter. Starting off with our financial performance, let me first touch on a few of the key metrics, and obviously, Jeff will get into this in a little more detail in his section. First of all, Q4 adjusted EBIT of $296 million was up about 3% year-over-year, with the corresponding margin of 7.4%, which was up 10 basis points year-over-year. For the full-year, we demonstrated solid execution against our commitment to grow our earnings, and with revenues being down, adjusted EBIT and corresponding margins were up about 8% and 80 basis points year-over-year, respectively. We’re well on our way to achieve 200 basis points of margin expansion that we’ve committed to achieve. As you would expect, the operating performance dropped down to the bottom line and our EPS, which benefited from our rate dropping in line with the planning initiatives that Jeff laid out last quarter, EPS decreased 9% here in the fourth quarter at $2.34 a share. In addition to…

Thanks, Bruce. Good morning, everyone. A lot to cover, so I’ll go kind of quickly, but certainly a lot to cover in our financials today. Turning to our financial, hopefully, you’ve had a chance to actually review the presentation that we posted earlier. And as Bruce stated in his remarks, Adient’s fourth quarter financial solidified a very successful year one. We mentioned on our third quarter call that we intended to finish the year strong and considering the headwinds that we faced during Q4, I’d say, the team did a good job delivering on our 2017 financial commitments. Before jumping into the numbers, let me make a quick point on our Futuris acquisition. Although we closed on September 22, the impact was negligible in the quarterly earnings, but the balance sheet reflects the full transaction price. I’ll call out the details on the impact shortly. As you can see on Slide 13, we had a good quarter in many fronts, including our continued execution on driving earnings growth and margin expansion. Adhering to our typical format, the page is formatted with reported results in the left and our adjusted results on the right side. While the reported results show roughly $420 million increase in EBIT and over $13 per share 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 the underlying performance. For the quarter, these items included $151 million gain related to our China joint venture consolidation; the $40 million restructuring charge, Bruce referenced, primarily relating to SG&A, headcount reductions; and $45 million mark-to-market gain related to our pension and post-retirement plans. On a side note and speaking of pensions, as a result of higher discount…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from John Murphy. Your line is now open.

Good morning, guys. This is Aileen Smith on for John. Your 2018 CapEx outlook of $575 million to $600 million, presumably you are not going to have the standup IT and facility capital costs that you did in 2017. So is it fair to assume that the higher CapEx is driven largely by a greater expected top line for 2018 and beyond, or CapEx related to recent acquisitions, or is there an item in the CapEx budget that we should be thinking about?

No, that’s not the exactly. It’s the Futuris – the CapEx associated with Futuris and the CapEx to start to build up our backlog.

Yes. As we get closer to a lot of that backlog coming on, Aileen, more of that capital will have to go out. So it’s a bit of a reallocation to some of that capital towards some of those growth programs.

Okay, great. And then, thanks for the commentary earlier on the margin improvement plan and the restructuring actions underway. So far, your data appears that the margin improvement has been largely driven by SG&A. Do you think it’s fair to assume that in addition to the benefits of restructuring you mentioned, your gross margins would improve next year, as you get some revenue growth that might drive operating leverage in the business?

Yes, I mean, our operating leverage won’t move too much in 2018 for a couple of reasons. But in 2018, as we mentioned, we definitely, at least, in the first-half of the year will have to work through some of these metals launch issues, where we have a number of launches that are certainly stressing the company today, which has resulted in a lot of that premium freight and the excess cost we talked about, which will be particularly acute in the first quarter, which will drive some of that margin down. But as we exit the year, definitely those things will start to come into play. And as new revenue comes in, that should also help improve our margin as we move forward on it.

Great. Thank you. That’s very helpful.

And integrating Futuris will definitely help as well.

Operator, do we have the next question, please?

Yes. Our next question comes from Colin Langan. Your line is now open.

Oh, great. Thanks for taking my question. I guess, start off with maybe a minor question. You highlighted you were able to consolidate or change to a joint venture.

Yes.

Did that impact the – I mean, does that impact, what is the sort of the consolidation impact on sales? I mean, is that part of the year-over-year sales growth?

Yes. So…

And also does it affect the backlog in the China joint venture, too?

Yes. So, Colin, two parts there. So first of all, the sales in the joint venture in Q4 added about $65 million, so that’s a quarter. So think about next year it adds just below $200 million, so of our growth about $200 million will be the year-over-year impact of the consolidation, and we’ll get that obviously in Q1, two and three only. And then secondly, the fact that the – I don’t have at the tip of my fingertips what the impact was like pulling that out of the unconsolidated into the consolidated, but it would be very minor?

Okay. And when I look at the trade show, the backlog was for 2018 like $1.25 billion and now at $800,000 million. I mean, what would have lowered it?

For unconsolidated, you’re talking?

Yes, for unconsolidated, sorry?

Yes, and maybe I missed that in my lengthy comments. But we did have a couple. There was a BMW and a Volkswagen program that we had in 2018 that actually was pulled forward and launched in 2017. So when you look at our 14% growth that we had this year, we benefited kind of from pulling that into 2017 at the expense of the 2018 backlog.

Got it.

Okay.

And then in terms of the metals business, so I think it’s fair to say you originally break-even-ish starting this year, slight loss, now you’re losing money again?

Losing a little more money, yes.

A little more money. And then when does it inflects in the second-half? Is that when the plants actually close that are in the high cost regions? Is that a pretty…

The biggest issue we have right now is not related to those plants. Those plants will close. The biggest one will close into the tail end of 2019, but it’s the launches relating to the next-generation mechanisms and some of these large global structure programs that were – that we’ve launched, Colin, both of which we struggle to get up to the jobs per hour and delivery on them and has just required a lot of excess cost, a lot of excess freight and then just all that activity has reflected in our financial statements. So we have gone, as you mentioned, about 45 basis points negative from where we started in that metals business. As we look forward, we think those are relatively short-term hurdles, although they will be acute for a couple of quarters that we will get through. And there is a lot of those improvements we’ve talked about structurally to improve the business that plan we still have a lot of confidence in is just going. That’s always – the improvements always been more of a 2019 and 2020 and beyond, but there is a little bit of noise with all the launch activities in the business today.

Yes, I’d say, Colin, as the sort of margin expansion story shifts from being SG&A and metals that sort of a just our structures and mechanisms turn on. I think, when we get together here in – at the Deutsche Bank Conference, we’ll be a little bit more clear in terms of, let’s dissect our profitability of our seats – of our metals business by the plants that are sort of like long-term keepers, the ones that are winding down in the launch costs. So you can – and the equity income, so you can see it in the four buckets.

Got it. And then just lastly on cash flow. I know in the past, you’ve given color on sort of restructuring cost, one-time Adient cost. I mean, are there any of those costs that are impacting cash flow guidance for 2018?

Yes. I think it’s about $175 million roughly…

Yes.

…between restructuring and the finishing up of some of the IT separation, right?

Yes, there’s definitely a fair amount. I don’t have the exact number on me, Colin. We’ll make sure to put that out, and we have a couple of 8-Ks that we’ll do attached to a couple of equity conferences we’re going to do in a couple of weeks. So we’ll make sure that’s out there.

Great. Thank you so much.

Operator? Great. Thanks, Colin. Operator, can we have one last question, please?

Yes, thank you. Our next question comes from Ryan Brinkman. Your line is now open.

Hi, good morning. This is Samik on behalf of Ryan. Just wanted to firstly start off with the full-year guidance for 2018 of – for our fiscal 2018, I think, in your prepared remarks you mentioned that the when we exclude equity income, the margins for the consolidation [Multiple Speakers] roughly flat year-over-year. And in your prepared – I think, you mentioned SG&A is going to be a benefit and you sort of get 40 to 50 basis points of benefit there. So just trying to sort of directionally get some sizing about what the headwinds look like from the launches, as well as sort of the growth investments in 2018 in terms of what the relative sizes will be?

The – I’m sorry, of the growth investments – some of the headwinds, I guess, there is two names, big ones. The big ones are going to be metals. And we mentioned, first quarter is expected to be down year-over-year. We said $60 million. You can assume that’s pretty much all on a net basis is really related to the metals business and the launch commentary that we talked through. We also are putting in some growth investment. Our order book growing as fast as it has. We’ve also put a little bit more money into innovation and engineering resources to support those launches. Those things have a net counter as well. Metals should start to improve in the back-half of the year and it should start to have year-over-year improvements. But those things, essentially the SG&A benefits, the reductions or the improvements we’re making in our other operations in the total year will be offset pretty much exactly we think from a margin perspective with the metals and some of those growth investments, I just mentioned.

Okay.

Did that help you, or did you want some...

No, that helps. So it seems like in terms of size, the metals one of the bigger and growth investment is slightly smaller?

For sure it’s bigger and it’s also more short-term. It’s going to be weighing on our first-half and particularly on our first quarter more.

Got it. And then on – just as a follow-up to that, we understand sort of the SG&A part of the margin plan was sort of front-loaded and the growth investment sort of back-end loaded here. I’m sorry, the metals improvement is sort of the back-end loaded, but whether the growth part fit in here, which is what I was trying to get in terms of the cadence there, there’s some amount in FY 2018, but where is the junk of that going to sit?

You’re talking about for metals or for the growth investment.

Yes, for growth.

Yes, the growth investment, oh, I’m sorry. So the growth investment was we mentioned about 15 basis points in 2017, it’s going to accelerate. I’d say, think about more on the 40-ish to 50 basis points of investment in 2018 and that’s reflected in those numbers I gave you.

Great.

So in total versus our LTM 2016, that would be about 60-ish basis points of growth investment versus that time, which we factored into that margin expansion.

Great. Thanks, Samik.

Thank you. Right now, I would like to turn the call over to Bruce McDonald for the closing remarks.

Yes. Thank you, everyone. And I know, we had a lot to cover and we didn’t have much time for questions. So Mark and the team here will be available for follow-up questions, we apologize for that. But just before we wrap up, I think, the takeaways here, we had a great year one. We really very feel good about the foundation that we’ve laid here to deliver our midterm commitment and we’re solidly on track. We’re pleased with our results. We got a lot of hard work ahead of us, and we intend to build on the positive momentum here that we’ve established to further position Adient for the long-term success. We’ve clearly recognized that we have some short-term challenges in our seat structures and mechanisms business. We tend to think these are short-lived. They will be issues that we got to get behind us here in the first and second quarters this year. But once we do, we will start to see in the back-half of 2018 and 2019 and beyond, the solid margin expansion story that we’ve talked so long about here. And then just in closing, I would like to thank all of our employees around the world for their hard work and dedication in serving our customer in delivering value for our shareholders. We’ve had a lot of change here in Adient in the last year, and I just couldn’t be more pleased in terms of the accomplishments of our global team. So thank you, and thank you, everybody.

Great. Thank you.

Thank you. That concludes today’s conference. Thank you for your participation. You may now disconnect.