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

Thank you, Jacqueline. Good morning, and thank you for joining us as we review Adient's results for the fourth quarter and full year 2020. The press release and presentation slides for our call today have been posted to the Investors section of our website at adient.com. This morning, I'm 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 fourth quarter and full year financial results. In addition, Jeff will provide our outlook for fiscal 2021. After our prepared remarks, we will open the call to your questions. Before I turn the call over to Doug and Jeff, there are a few items I'd like to cover. First, today's conference call will include forward-looking statements. These statements are based on the environment as we see it today and therefore, involve risks and uncertainties. I would caution you that our actual results could differ materially from these forward-looking statements made on the call. Please refer to slide two of the presentation for our complete Safe Harbor statement. In addition to the financial results presented on a GAAP basis, we will be discussing non-GAAP information that we believe is useful in evaluating the company's operating performance. Reconciliations for these non-GAAP measures to the closest GAAP equivalent can be found in the appendix of our full earnings release. This concludes my comments. I'll now turn the call over to Doug. Doug?

Thanks Mark. Good morning. Thanks to our investors, prospective investors, and analysts joining the call this morning as we review our fourth quarter results and outlook for fiscal 2021. I hope you and your families are staying safe and healthy in these difficult times. Turning to slide four, let me begin with a few comments related to fourth quarter, specifically Adient’s strong finish to a challenging fiscal year. Remaining focused on our priorities combined with increasing vehicle production continued to drive improved business performance in the most recent quarter. Q4’s adjusted EBITDA of $287 million was up $72 million or 33% year-on-year. No doubt a strong result, but even more impressive when you consider Adient’s consolidated revenue was down about 8% in that same period. Lower year-on-year global vehicle production and Adient’s specific launches were our primary drivers of lower sales. On the far right hand side of the slide, you can see our cash and liquidity. We’re extremely strong at September 30. Total liquidity of about $2.5 billion made up of cash on hand at approximately $1.7 billion and approximately $800 million of undrawn revolver capacity. As noted and included in our cash on hand is the approximate $500 million of cash proceeds collected during the quarter from closing on our previously announced strategic actions. With our operations restarted, vehicle production is trending higher and proceeds from our previously announced strategic actions in the bank, the team began to voluntarily pay down a portion of the company's outstanding debt. Just over $103 million in principal of Adient’s 10-year 4.875% senior unsecured notes were repurchased using just under $100 million cash. Again, a strong financial finish to the year, Jeff will provide additional details on Adient’s Q4 and full year's financial performance in just a few minutes. Turning to slide…

Great. Thanks, Doug. And good morning everyone. Let me echo Doug's earlier comments and hope everyone is safe and well. And starting on slide 14, and adhering to our typical format, the page is formatted with our reported results on the left and our adjusted results on the right side. We will focus our commentary on the adjusted results, which exclude special items that we view as either one time in nature or otherwise skew important trends and underlying performance. For the quarter, the biggest drivers of the difference between our reported and adjusted results relate to restructuring cost, asset impairments, purchase accounting amortization, and pension mark-to-market. Details of these adjustments are in the appendix of the presentation. Sales were $3.6 billion, down 8% year-over-year, which as Doug noted, was driven by lower year-on-year global production and specific Adient launches. Adjusted EBITDA for the quarter was $287 million, up $72 million or 33% year-on-year, more than explained by improved business performance, lower SG&A and an increase in equity income. Speaking of equity income, which is included in our adjusted EBITDA result, Q4 2019 included $14 million of income related to our Interiors JV that we sold earlier this year. Therefore, on an apples-to-apples comparison, Adient’s seating equity income was up $28 million, or 47% year-over-year. Finally, adjusted net income and EPS were up significantly year-over-year at $109 million and $1.15 respectively. I'll also point out that a tax benefit contributed to the year-over-year improvement in net income. The tax benefit was driven primarily by the write-offs of certain deferred tax liabilities relating to the sales of Wi-Fi and Adient’s fabrics business. As a reminder, Adient’s effective tax rate is currently quite volatile, and arguably provides little value as you model the company given the valuation allowances recorded in recent years.…

All right, Our first question comes from John Murphy. Your line is open.

Good morning, guys, and thanks for taking the question. I have a number of questions real quick. On EVs, obviously it sounds like Tesla is insourcing their seating. Just curious is there anything else that you think could shift as the market heads toward EVs or is this a net neutral ultimately to you? I mean, how do you think about that?

I think Tesla’s insourcing in the U.S. is unique to them. It's a decision they made. It was a make-buy decision. We still maintain a fair amount of content, and in fact that's been problematic for them. We've continued that production for an extended period of time as they've looked to make their move. In contrast; in China, it's not the approach they've taken. They recently awarded us the Model Y, it's been an extremely successful launch. And in Europe, it's too early to comment on what their strategy is. There, we are picking up a significant amount of content on the product in Europe. I don't really see that being a trend anywhere else. One comment I would make on the transition to alternative propulsion system is many of our customers, as you know John are really, relooking at their product plans and the cadence of launches. And it's going to be interesting to see how fast they accelerate that conversion. I think it’s happening quicker than what we anticipated. But from a seating perspective, we've always said, we're somewhat agnostic. A seat that goes into an EV or hybrid vehicle is essentially the same. There’s some minor technical differences, but essentially the same. So long-term, we don't really see it as being an impact on us, though we're -- we pay a little bit closer attention as that conversion happens to make sure we're on the right platforms.

And just a second question, and Jeff, you kind of alluded to sort of the risk of supply shortages or disruptions as a result of COVID. Obviously, this is an impossible situation for any of us to call exactly, but is there anything that you're seeing at the moment, maybe in Mexico, or Eastern Europe, or China, where you're actually seeing -- you're sort of flashing yellow or red signs in the supply chain?

Yes, John, this is Doug. I'll take the question to start out with and then Jeff can comment. So, relative to the supply chain, when COVID first hit, we put in like many others a dedicated group that tracks all of our supplier activity on a daily basis, and we look at the number of indicators where problems can arise. We try to be a little bit proactive. We don't wait for something to happen, then put a contingency plan in place. And the factors, include, we look at what the financial stability was of any high risk supplier that we had where they are operating, is there a regional risk from COVID, we track COVID infection rates and government lockdown activities to see what we could expect as you would imagine. There's a number of yellow and red areas. Mexico has been an area of concern as COVID impacted that region, particularly along the border in Juarez [ph]. I think the other element that we have is we're working extremely closely with our customers to mitigate those risks. And so far, we've been extremely successful. And in Europe, as governments have taken lockdown actions and infection rates have come down, we feel a bit more confident that the supply chains are protected, but quite frankly, it's a daily battle. And what I think is good about what we're doing is, we've committed dedicated resources. It's not a purchasing activity with us, it's a business activity. So that activity includes our operations and then when working very closely together we take steps. In the case of Mexico to mitigate the risk by moving production to less infected regions, and coordinate that with our customer to protect the supply line. So, that's just something that's now become normal course of business as expected. It will be around for a while, so we continue to double down on our efforts.

Got you. And then just lastly, with the cash flow being flat to $100 million in the fiscal year 2021, when you look at slide 19, I'm just curious what opportunities you are -- you think there are to rework the balance sheet, maybe even a little bit more than what you'll be going after? I mean, obviously, the four and the 2026s [ph] or something you were looking at, but I’m just curious is that what you just keep going after and hammering or are there other opportunities to potentially refi and swap out that? I'm just curious what you think about there, Jeff?

Yes, John, it's a great question. It's one we're managing pretty closely, obviously. We talk about somewhere between $500 million and $600 million of cash would be a more normalized number for us. So we, even though we don't have a ton of free cash flow generation estimated in our 2021, outlook, we have a lot of cash in our books today. So opportunity to go after some of this is, there we -- primary focus is to delever, waiting to have a little bit more sunlight from where COVID is heading and where the environment is heading before we probably move too aggressively in that regard. But the term loan is an opportunity for us. Those secured notes do have a call feature in a year and a half from now, but they're expensive relative to some of the other paper we have. You mentioned the sub debt. So kind of a mix of it, we continue to look and we continue to look at the trading of it. But again, kind of waiting to have a little bit more clarity from a COVID standpoint before we start to address it in a meaningful way, but we definitely have capacity to do a fairly big step of it, we believe in 2021.

So that $500 million of cash target, I mean, it gives you a little over $1 billion. I mean the timeline on that is just basically post-COVID when things settle down, it's not an actual calendar target, it's an event or situational target, is that it…

We would have done it now, yes, no, sorry to interrupt, we would have done it now had it not been for COVID and the clarity on it. So we'll continue to monitor that, but do expect us to make some moves there in 2021. We certainly would expect to make moves that in that $1 billion type of -- up to $1 billion or so in the not too distant future, once we have some clarity on COVID.

Right. Thank you very much.

Thanks, John.

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

Morning, everybody. Had a couple of housekeeping questions. First, number one, did the seat structures and mechanisms business reach EBITDA breakeven in the fourth quarter? Number two, can you can you kind of fill us in on the expectation for perspective, restructuring savings from what you're spending here? And then third, if you can size up to the presumably there's some headwinds in your fiscal fourth quarter, the first fiscal first quarter from the F series and in RAM launches?

Yes, let me start on the SS&M questions, Rod. We were EBITDA breakeven or better than EBITDA breakeven in the fourth quarter of 2020. We were actually pretty close to free cash flow breakeven in the business, I would say close to it, as we look into 2021, as we mentioned, we do -- it is fairly seasonal, but we do see ourselves getting to free cash flow breakeven in that business, but we had a good Q4 in it. I’m sorry, your second question was…

Restructuring savings that you're expecting.

Yes, it's a -- it's a bit of a mixed bag, Rod. Some of it is, has really attractive payback, where we’ve will say like a year and a half or so, the two years on a lot of it. Some of it doesn't have as much payback to some of the business. We see it permanently, at least for the next several years being down. But I'd say on about half to two thirds of it has a strong payback against it in that probably one and a half to two year times of payback. The rest is just covering for short on sales.

And then the F series and RAM headwinds that you're anticipating?

We're not, I think we were a little bit specific on the Ram truck that it was down significantly as they start building the classic that's restarted. F-Series launch has gone as planned, so it's very much consistent with IHS forecast. And so as we exit the first quarter, we think we'll be close to running at full rate on F-Series, but nothing significant outside of what either Ford or IHS have spoke to on F-Series.

Okay. And then, as we look at the 2021, your decremental margins have actually been on volume has been quite good isn't in relatively low, can you give us some color on incremental margins? And I noticed that the $800 million of consolidated EBITDA guide for 2021 is pretty consistent with where you were annualizing in the fiscal fourth quarter. You did say that there was $5 million to $10 million of temporary benefits so that, that obviously wouldn't recur. And you mentioned some, extraordinarily good mix. Are those the primary reasons why you wouldn't expect improvement from that run rate because presumably, you're getting some further upside from SS&M and the restructuring savings into next year? Your revenue is pretty similar, maybe a little bit up, as you look out to 2021 versus the run rate in the fourth quarter?

Yes, there's a lot of moving pieces around it. We've, we've seen commodity cost, jump up a bit on us Rod, which we've seen, I mentioned, for both steel and foam chemicals. They both jumped quite a bit. We do have recovery mechanisms with our customers on those. But there's a lag and in some cases, it's not full. But that's one of the pieces that sort of impacts us a bit. Doug mentioned some of the supply chain challenges and just operational challenges we have in this environment as well. We have to do a few more extraordinary events, from sometimes moving production around, sometimes operating in less than an optimal way. And with sometimes more absenteeism than we would certainly experience in a normal timeframe. All of it makes it a little bit more choppy from an operational perspective. But you're right, we've generally performed better on the decremental side, we've generally outperformed there and the incrementals we try to build into the guidance here, but we build those incrementals with a little bit of caution around a couple of things I mentioned, namely, commodity cost in just some of the production side of things. And we do have a few more launches in 2021 than we had in '20 as well.

Okay. But your incrementals -- you're expecting in the 15% to 20% range similar to what you're seeing on the decremental side?

I think that’s probably a good blending average, should be a little bit higher than what we lost on the decremental side.

Right. Thank you.

Yes, thanks, Rod.

Thank you. Our next question comes from James Picariello with KeyBanc. Your line is open.

Hey, good morning, guys. Appreciate the great color in the -- in the guidance framework. Just as we -- as we think about the cadence for fiscal 2021, you've laid out expectations for global production to be down in the second half. That makes sense. There's some clear puts and takes with respect to net backlog impacts. More broadly, is there a first half versus second half range, you can provide in terms of what the split could look like, for Adient’s revenue and EBITDA?

It's hard to you know, I would say that's hard to tell in some fashion. I would say Q1, we would expect to be on the high side. I think our Q1 is, is probably pretty strong. As we look out, it becomes a little murkier. And but Q2 has our fiscal Q2 has the Chinese Lunar New Year, which generally will bring equity income down as production is lower. So, in general, I'd say first quarter, I think should be strong. But as you mentioned the back half of the year will be -- we expect to be weaker right now the current expectations.

Okay, got it. And then just for equity income. In China production will still be up for fiscal 2021. Adient’s revenue I presume on consolidated revenue should also be higher. Why should equity income trend flat year-over-year? I know you mentioned that the negative impact of commodity prices. But I mean, it seems as though that that might not be the only headwind kind of factored into the that guidance. Can you provide any color there? Thanks.

Yes, it's a good question. I mentioned in the call that we do expect our Q1 equity income this quarter to be strong. We would -- it's typically pretty strong. We do see, as China was shut down and has recovered better than the rest of the world from COVID, we saw production spike up in our fiscal Q3 a bit, and then our fiscal Q4. And we've seen that they're finishing the year, we'd say strong. As we, as we look into next year, it's going to obviously depend on what their market does and sort of their ability to continue to produce at this rate. But current expectations is we'd expect sales to be a big part of it. We think sales in the first -- our first quarter are going to be quite a bit higher than where we're seeing Q2 through Q4. And then we mentioned, chemical prices and steel prices, we think are both going to be a headwind in that region, as well. So it's, but it's primarily going to be driven by sales at this point. And we don't see sales being that much different between 2020 and 2021.

Got it. Thanks.

Thank you. Our next question comes from Brian Johnson of Barclays. Your line is open.

Thank you. I know you put the regional profitability in the back, but want to drill in a bit on that. So two questions around EMEA and Asia Pacific. So EMEA, you've got back to a 6%-ish margin, pre-COVID you're at 4%. And two questions around Europe then, kind of is this 6% something to think about going forward? And second is the restructuring cash expense which you noted was 2 times higher in 2021, primarily devoted to restructuring Europe? And if so, can we expect further EBITDA margin improvements from those restructuring efforts?

You know, good questions. The Europe, Europe is the primary location where those restructuring dollars are going. As you know, it's more expensive and more challenging to restructure in Europe than other parts of the globe. In today's environment and that's reflected in our numbers. So I'd say the vast majority of what you're seeing and restructuring is earmarked for EMEA. As it relates to margins, we do see continued opportunity to increase over the 6%, we've obviously had good improvement, that's been driven by a number of things, mentioned the SS&M business continuing to perform better, that's driving up margin, but you know, a number of things are doing on, their Foam and Trim as well as the JIT side as is driving that. We would see opportunities to continue to go up. I think we'll have to probably leave it to say we expect it to go up, but kind of come back to you with where it can get to as we move a bit further. But the overall objective for the company, Brian, as you know, is to close the margin gap we have with some of our peers, and Europe's going to be a big piece of the story on that.

Yes, maybe just a couple other points on EMEA. When we look at the year-over-year performance, I think in addition to Jeff’s comments, we've resolved some long standing commercial issues that improved profitability. And when you look at year-over-year, the number of launches and we expect that to continue as we move into 2021, they had a heavy launch cadence in 2019 and into 2020. That, that was a bit of a drag, in contrast to the Americas, which has got the heavy launch this coming year and 2021 this year. They've got a lighter load. So we, we look at that level of performance as being sustainable. And then the restructuring just helps us on the overhead cost side of it.

And secondly, Asia Pacific ex-China also 6% margins, is that about where we should expect it to stay or since that area had a significant volume headwind as -- can we expect typical incrementals to help boost that in '21?

Yes, there's a lot of -- Asia's a really interesting one for you know, when you follow us it's hard to predict, because the margins are pretty different by country. But I would say key regions for us. Well, the key region for us, there is really Thailand. And Thailand sales, export sales have been down out of Thailand, which hurts us and overall hurts our mix, and those are margin in the region. And that's a bit of what you're seeing between, from the reduction from fiscal 2019, to heavy reduction across the, whole region. As you look forward, we do see some recovery. We continue to see, I'd say better management within each region of all those things we can control. Some, some programs will roll off in the coming years that weren't, weren't great for us that, the replacement vehicles look to be quite better. So I'd say we have opportunity there, but it's going to be heavily dependent on the mix with those exporting countries, Thailand, Japan, Korea, having those export volumes, go back up to where they were, pre-COVID will drive a lot of that margin opportunity for us in the region.

And final question just broader margins, you mentioned, of course, closing the gap to your large competitor. You divested Fabrics. I assume there were probably good reasons for that, but in discussions with the other company it appears that fabrics and leather are very high margin businesses that get them to that 7%-ish, 8% despite the lower margins on Just-in-Time seating just in time seating. So I think two questions, one I guess Fabrics wasn't that for you or you wouldn't have divest that? And two, with that us then just getting back to cash flow breakeven, where are the higher margin opportunities to get you to peer margins?

Sure. I'll start and Jeff can comment. So for us, I would agree the JIT business, albeit low margin is a great cash generator. So -- and a relatively low CapEx when you look across our network of plants, so we like that business. Trim, cut and sew trim has historically been very strong, as well as foam. The perfect blend for us is when we have that vertical integration level, so we have complete seat and we have a lot of content that includes SS&M business that performs better, when it's vertically integrated into a complete seat than when we're trying to sell it across a broader spectrum of customers. The fabric business for us is, it's not bad business. We just didn't see it adding a lot of synergy to complete seat. It's sourced separate. It's sold across a number of different customers. You can't vertically integrate it. And to us, it's a market share volume business and we had a choice. Either we increased market share, we are well positioned in Europe, in the U.S. or we look to exit for us at the multiple we exited, we felt that was a better decision. With regard to leather, I would say, yes, historically true. Leather has been a good margin business. We get the benefit of cutting leather high, it's not tanning them when we have the cut and sew business. So that's opportunistic for us. The only caution I would have on leather would be, if you look at the world going in green initiatives and you take a look at what Volvo and what's happening in electric vehicles, you can make a pretty strong argument that leather content per vehicle is going to go down in the near term. I don't think there's a lot of people who want to have leather seats in electric vehicle. So I think we approach expanding into that agreed, historically, good margins. And on a go-forward basis, I think it's something that take a look at, if there is an opportunity we might pursue it, but right now it's not high on our radar.

All right. Thanks, Brian. Jacqueline, it looks like we're at the bottom of the hour. So, I'll ask that we move to wrap up the call at this point.

Thank you. And thank you for your participation in today’s conference. You may now disconnect at this time. Have a wonderful day.