Welcome and thank you for standing by. I’d like to inform all participants that your lines have been placed on a listen-only mode until the question-and-answer session of today’s call. Today’s call is being recorded. If anyone has any objections, you may disconnect at this time. I would now like to turn the call over to Mark Oswald. Thank you. You may begin.

Thank you, Amanda. Good morning and thank you for joining us as we review Adient’s results for the fourth quarter of fiscal year 2019. 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 am joined by Doug DelGrosso, Adient’s President and Chief Executive Officer; and Jeff Stafeil, our Executive Vice President and Chief Financial Officer. On today’s call, Doug will provide an update on the business, followed by Jeff, who will review our Q4 results and expectations for fiscal year 2020. After our prepared remarks, we will open the call to your questions. Before I turn the call over to Doug and Jeff, there are few items I’d like to cover. First, today’s conference call will include forward-looking statements. These statements are based on the environment as we see it today and therefore involve risks and uncertainties. I would caution you that our actual results could differ materially from these forward-looking statements. Please refer to Slide 2 of the presentation for our complete Safe Harbor statement. In addition to the financial results presented on a GAAP basis, we will be discussing non-GAAP information that we believe is useful in evaluating the company’s operating performance. Reconciliations to 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 Doug. Doug?

Great. Thanks Mark. Thanks to our investors, prospective investors and analysts for joining the call this morning, spending time with us, as we review our fourth quarter results. Turning to Slide 4. First a few comments on recent developments, including certain of our financial metrics, which are called out at the top of the slide. Although, our fourth quarter results are down year-over-year, Adient’s financial results improved sequentially for the third consecutive quarter as benefits related to turnaround actions implemented earlier this year more than offset industry weakness in China and the impact of the labor strike at GM, a good outcome and further evidence that the turnaround continues to track in the right direction. Sales and adjusted EBITDA for the quarter totaled $3.9 billion, $215 million respectively; sales were generally in line with our internal expectations adjusting for the GM strike, lower production in China, combined with the impact of the labor strike in GM more than explained the $35 million year-over-year decline into EBITDA. Adjusted earnings per share fell to $0.63 in the most recent quarter as the lower level of operating profit dropped right to the bottom-line. With regard to our balance sheet, we ended the quarter with $924 million of cash on hand. Our fourth quarter financial results recorded today enabled the company to deliver on our full-year 2019 commitments which were to stabilize the business and improve the company's financial performance in the second half of the year compared to first half results. This was a significant first step for the team as we set out to re-establish our credibility with you and other key stakeholders. Outside of the financial results, other recent developments include the reduction of the company's ownership stake in Adient Aerospace to 19.99% from 50.01% in mid-October. As you know, Adient…

Good morning. Thanks, Doug. Turning to Slide 10. Adhering to our typical format, the page is formatted with the reported results on the left and our adjusted results on the right hand side of the page. We will focus our commentary on the adjusted results which excludes special items that we view as either one-time in nature or otherwise few important trends and underlying performance. For the quarter, the biggest drivers of the difference between our reported and adjusted results relate to our pension mark-to-market and purchase accounting amortization, restructuring, and an asset impairment associated with an engineering center in India being held-for-sale. The details of these adjustments are in the Appendix of the presentation. Sales of $3.9 billion, down 4% year-over-year excluding the impact of FX. Adjusted EBITDA for the quarter was $215 million, down $35 million or 14% year-on-year more than explained by the impacts of lower volumes in the mix within the Americas and Asia. Included in the Americas region was between $7 million and $10 million of headwind related to the labor strike at General Motors. I'll also note that last year's results included about $20 million of temporary SG&A benefit each quarter that did not repeat this year. Finally, adjusted net income and EPS were down approximately 52% year-over-year at $59 million and $0.63 respectively. As you can see, most of this difference relates to tax expense. As we've discussed, our tax expense is highly volatile due to bookings valuation allowances in several geographies. Full-year results are shown in Slide 11. Sales of $16.5 billion finished the year in line with our expectations. FX accounted for over half of the $900 million year-over-year decline in 2018. In addition, significant weakness in the China market and lower sales in our European complete seat business also impacted…

Thank you. [Operator Instructions]. Our first question comes from Armintas Sinkevicius with Morgan Stanley. Your line is open.

Great, good morning. Thank you for taking the question. As we think about the operational improvements and I think you did a nice job highlighting them, what do we have to think of going forward? I know common front seat architecture was a concern last year previous to that it was the SS&M transition to next-generation mechanisms that that seems to be behind us. But maybe you could talk through some of the puts and takes into fiscal 2020 and where you see operational improvement and maybe areas of where you still have to improve operationally?

I appreciate the question. I guess I look at it this way. I think when we walked through we're overcoming $200 million negative EBITDA headwinds with to get the projected guidance earnings growth on a year-over-year basis. That really is made up of approved launch performance, operational improvements, commercial activity, reduction of activity in SS&M. So I guess, at a macro level, that's how you should think of -- that really is the pillars of the improvement on a year-over-year basis.

Okay. And then in common front seat architecture how is that trending? Just trying to get a sense of the operational stamp that that you've been able to put on the business in the last year?

Yes. In our formal comments, I think Jeff has reflected on the year-over-year improvement as well as I did particularly in Europe, which that common hardware was pretty significant burden to us in 2019 particularly in the first half of 2019. And then if you walk into 2020, that comes down significantly when we look at launch expense. And what we call operational standard cost, cost of poor quality.

Maybe Armintas just to give you some numbers perhaps that might -- on some of that. Slide 31, I believe of the last page of the Appendix section, we have a supplementary section on the old SS&M business. So we don't report it as a segment but we continue to give you some of that detail. And as you know, as we started fiscal 2019, we were kicking off that front seat architecture at Europe and while we had some improvements in fiscal 2018, when we ran into the second launch and really a more challenging and bigger launch in Europe, you can see our numbers kind of progressed at the beginning of fiscal 2019. But if you look through the year, we went from -- and I just -- the numbers went from minus 72 in first quarter to minus 51 to minus 38 to minus 21, starting to see a bigger improvement. The fourth quarter really represents the first quarter where we beat the prior-year. And I think as we go-forward, we have seen stabilization in that, we’re still working a number of fronts, I would say, we're nowhere near done. And as you look, one of the big opportunities for us that we're laser-focused on, just going to take some time to improve is that simplified free cash flow you see on the page where last year we were at minus $168 million of EBITDA with $255 million of CapEx. This year $182 million of EBITDA, so a little worse in total but trending much better as the year progressed with $222 million of CapEx, we’re seeing big improvements on the EBITDA line and opportunities to take more CapEx as we move out into future period. And that's we will continue to show you the scorecard at least for a while as we stabilize this business but this is really one of the fundamental areas that there's no real fire burning, we have customers are taken care of here. But from an overall P&L impact at Adient we expect to have continued improvement in this area.

And just one more here, adjusted EBITDA is better, but cash interest taxes and CapEx is a bit lower. How are we getting the break-even free cash flow? Is it just working capital or are there other some puts and takes to think about?

Yes, I mean, I think if you look at working capital for the year, back to that slide, if you look at essentially to that -- I always say that the working capital pieces is pretty heavily driven by timing. In 2018, we had a benefit of $174 million for the year. If you look 2019, we effectively gave it back, right. So the combination of those two years is pretty stable. So we assume and we're planning for a more stable working capital swing for the year as one component to get ourselves to break-even.

Thank you.

This probably is a big one in addition to just earnings improvement.

Thank you. Our next question comes from Rod Lache with Wolfe Research. Your line is open.

Good morning, everybody. Just wanted to ask first of all on the EBITDA bridge to 2020. Looks like you're assuming consolidated EBITDA goes from $501 million to somewhere between $555 million and $585 million. And you talked about the $200 million roughly impact from volume mix in FX. So you presumably are assuming business performance improves by $250 million to $280 million, which is quite a bit better than the run rate we're seeing in Q4. So I was hoping you can give us a little bit more color on how that's coming through. What’s -- the launch comments that you made Doug in your prepared remarks? What does that actually mean in terms of dollars? And what are you expecting in terms of restructuring savings and will we presumably see this in SS&M mostly in the near-term?

Yes. There's a few components to unpack, I will maybe start a little bit, Ron. The SS&M businesses is one that I think from a continuing improvement, I just read through the chart, and I have you focused on that, we continue to see improvements but it’s the business that did $20 million negative in the fourth quarter but had $182 million negative for the year, continuing to stabilize, that is going to be probably the biggest component of those improvements. But we're seeing and we showed the second half versus first half. And you start to think of some of those improvements, especially on our consolidated business. We had over 100 basis points of improvement in the operations in the second half in Europe and the Americas. And we are continuing to see improvement as we go-forward, better commercial discipline. As we have resurrected and improved a bunch of the commercial issues we had with our customers, and I'd say we have a much more stable relationship, the VAVE opportunities, Doug has mentioned the collaboration between ourselves and our customers has increased greatly, and we're seeing more of those type of opportunities come to us and collaboration between ourselves and the customer, which gives us both opportunities to have win-win and improve operating performance. So it's a lot of little things. There's nothing by itself here, but we're starting to see a lot of this momentum build and the improvements are coming through really in all areas.

Yes. So maybe the way I would look at it is you chunk it into two pieces you have what I would call off-place and launch-related activities. Going back to the number that’s offsetting the $200 million headwinds. And then you have commercial activity. And it's roughly it's always about equally split and there's a lot of grail, what you want and how you bucket between ops waste and launch in commercial activities. But if you think about that improvement to the offset is roughly equally split. The biggest piece on the upside is just driving productivity in our plants and that is definitely a big component of that is the mechanisms business. The commercial side, I think there's a lot of typical activity that you would have this commercial discipline, the big piece that we're expecting to significantly help us on a year-over-year basis is VAVE activity and how we bring that activity forward. And how we can utilize that vehicle if you will to reduce customers’ expectations on LTAs and how we blend those two activities together. But that's really how I think about piecing that overcoming the headwinds, and if you want to box it that way.

Okay, thanks that's helpful. And just two housekeeping things. At one point you had talked about, I think it was $100 million decline in CapEx mostly from SS&M, is that still the case? Should we expect CapEx to kind of return to a downward trajectory as we go beyond 2020? And can you quantify how big these the RAM and F series temporary disruptions are that you cited in your prepared remarks?

Sure. Let me just a point to make on SS&M to that. It should have been addressed, should address in a couple other questions. If we project SS&M sales for the next three years is coming down approximately $400-ish million. Obviously there's a huge component of capital that comes down that's aligned with that volume drop and a better asset utilization of our existing asset base today. So, yes, capital will be coming down in that segment. It's been a big part of the dropping capital on a year-over-year basis from 2018 to 2019 and we expect to see that continue. The only really significant capital investments that we have coming into this year, the SS&M business is the last phase of our recliner capacity in Europe. And we're not particularly concerned about that because that’s just incremental volume, that product has been in production now well over a year from a manufacturing standpoint, it’s been thoroughly debugs this incremental spend won’t come with some of the same burdens that the initial investment had associated with it and then relative to F series.

Yes, call it $125 million, give or take, maybe $125 million to $150 million in that range.

Thank you. Our next question comes from Dan with Credit Suisse. Your line is open.

Hi, good morning. Thanks for taking the questions. First, I wanted to just talk to your long-term targets. Just want to get a mark-to-market for what you're ultimately paying for earlier this year. I think you highlighted the opportunity to close the gap in margins versus your peers, I think was like a 400 basis point gap using the fiscal year 2018 margin and since then obviously margin compressed in 2019. But could we just get an update on that target that 400 basis point improvement versus 2018. Is that still in play and I think you would talk to pass something like 200 to 250 bps from core jet and 100 to 250 from SS&M, just trying to get a sense, if that's still ultimately what you're aiming for down the road?

Yes that has not changed. I would say we are when we spoke, we were pretty open that that was something that was going to take multiple years to achieve and we were looking out into 2022, 2023 timeframe to get there. I think we're on pace to achieve that. I think our quarter-on-quarter improvement reflects that. So our expectation is not changed at all in that being our target in that timeframe being the timeframe, we plan to achieve it.

Yes. And I think the target is probably loosely defined is just making sure we're at least at our competitor level of profitability and that you're right, that that spread is probably increased, but the goal here of closing the gap between ourselves and our peers is certainly still the goal on the expectation over the next few years.

Great, thank you. And then just second, I know we spend a lot of time on SS&M for obvious reasons. It sort of along the way, sometimes it feels like on our end, the core jet seating business, which is really your much larger business gets reflected and I know over the past couple of years, we've seen a wide variety of launch headwinds dragging down. I mean, you can do some math and back it out, you are sort of that in EBITDA margin of call it in the 7% range there. That's down a few points versus what you've been posting a few years ago a few hundred million dollars of sort of business performance headwinds along the way. Could we just talk about specific to the core jet seating business, how we should think about the reversal of those business performance headwinds? And we see a lot of your initiatives here for operational improvements and launch headwinds. Can those be applied similarly to SS&M and jet seating? Or is there a different approach that you're applying to jet seating along the way, something that's a bit more nuanced to that particular business?

I would say the -- from a launch operation, we're applying the same discipline. And in fact, we've consolidated those groups because in many cases, we've got both jet and hardware on the program and we talked about that in unison and not separate when we had it as a separate business unit. That certainly the business -- the fundamentals from an operation standpoint is slightly different. Jet is labor intense flight assembly for the most part and the metals business is kind of the opposite. It's more automated, capital intense with a lighter portion of labor. So we're applying the different level of operation discipline in the way we operate that business. We've done a lot of work to look at our manufacturing footprint and combine both plants instead of separating them, so we can utilize logistics locations better and historically we've done. I would say what's significantly different on the jet side compared to the metal side is the value chain from a material standpoint. And that's where we're spending much more activity on the jet business finding ways to drive down material as a percent of sales. And I think that really underpins our improvement on the jet side. So when we talk about VAVE activity, when we talk about heightening our activity in our purchasing environment to drive down material costs, I think that's where it's more difficult to do in the metals business because you just don't have the same number of components. It's very much material economic base on metals, where the jet you can look for opportunities in the trim covers and phone in metals included in that in option content within a complete seat to drive cost reduction or offset customer productivity. So it's just a more total products segment for us to drive what I've been look at is material to sales ratios.

So the -- is the reduction of sort of launch complexity that it seems like that that's almost a little easier on the jet side than it is in metals, am I interpreting that correctly?

Yes, to a certain degree. I would look at it this way, a bad launch jet is easier to fix than a bad launch on metals. And that's why some of the problems we've had on metals has lingered because with metals, bad launch usually involves having to fix tools, having to fix automated lines where the jet business again flight assembly and driving engineering change and improving repeatability from a build standpoints just easier to get to. But they both can be very expensive if not properly executed. So the discipline from a launch management standpoint that we put in place is very much the same. And I think that discipline is really fundamentally changed launch costs particularly in the second half of this year and as we move into 2020, we have much better handle on our launches. We are much more proactive with our customers, driving resolution of issues well in advance of any kind of volume production. That's really where above products, our problems have to be solved if you wait till you are actually in production. It's not going to turn out very well.

Thank you. Our next question comes from Joseph Spak with RBC Capital Markets. Your line is open.

Thanks. Good morning, everyone. I just wanted to maybe talk about the EBITDA bridge one more time. I know as was pointed out earlier on a consolidated basis at the mid-point, it looks like you're guiding it, almost $70 million higher. I think just the unconsolidation of aerospace is $30 million. So you're talking about another 40 bps or $40 million or 25 bps of improvement? And I think aerospace was in Americas. So but maybe ex-that, can you just talk about how you expect some of the performance regionally because it sounds like you're talking about some poor mix in the Americas, we saw some improvement in the Asia consolidated margin. And then Europe still seems challenging. So any color there regionally would be helpful.

Yes. I guess, first of all, on as it relates to aerospace that will be effectively call it $30 million of tailwind for the Americas. You're right. It was in the Americas numbers and effectively, it won't be there next year. And obviously a big piece of the improvement. Sales are the biggest driver. Joe, as you look through the whole numbers, I think based on where we're kind of pulling through from where the SS&M business is improving underlying these numbers, fixing a lot of those operational things Doug talked about on a consistent sales base, we could do I think we’d certainly turn in higher results, I believe. But we have built in a number of macro pieces here. So I’d say in Asia, kind of thinking through that, I think we probably have a little bit more headwinds and tailwind as we look through some of the macro pieces. And some of the specific pieces we have. I mentioned Thailand, the Thai business is very important to us. We've seen a reduction in exports in Thailand; we've seen a tightening of credit in the market too which has brought down the market a bit. But overall, I just maybe see a little bit more headwind in the Asia region in general. I would say both in Europe and in the Americas, I think we have opportunity to outperform 2019 levels and it's going to as the whole results here will depend probably more on sales and the regional mix of those sales. But fundamentally operating wise from a cash flow and from just all the metrics, Doug talked about just the conversion ratios that significant performance, you saw in the second half of the year, we don't think we're done yet. We're still seeing improvements on a monthly basis. So we'd expect those things to aid and sort of offset a lot of that sales pipeline.

Okay, thanks. And then just back to the free cash flow walk, if we use sort of the helpful bridge you provide for 2019. But then think about your guidance for 2020 on that front, if we have EBITDA again, sort of at the mid-point of 840, the interest in cash taxes. And then if we make an assumption about you getting, I guess 70% of prior-year JV income back and but then netted against the what's on the -- what's in the EBITDA that seems like another $70 million which and then you add in the $475 million CapEx -- that I know that's a lot of numbers right here, but that seems to get you basically to the free cash flow break-even. And so I just want to get back to the working capital comment because it would seem like it would have to be positive to offset the cash restructuring that you're planning for. So I just wanted to understand your working capital comment from earlier?

Yes. I mean I think right now, we're seeing a bit of a reduction in global sales. We're seeing a reduction in the SS&M piece of those sales as we think there is some opportunity that that business will go down a little bit that is somewhat of a working capital user in our structure here. But net-net if you look over the course of the two years in total, our working capital was essentially zero. I would say we're probably assuming somewhere around zero number in our 2020 assumption.

Okay. And then did you actually state cash restructuring expectation for next year or just lower?

It's going to be a little bit lower. We didn't give you an exact number.

And Amanda it looks like we're at the bottom of the hour. So again, I think that concludes the earnings call this morning. If anybody has additional questions, please feel free to reach out to Doug and to myself throughout the day. Again, thank you for your time this morning.

Thanks, everyone.

Thank you.

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