We're gonna be continuing here, as we continue the Barclays Global Automotive and Mobility Tech Conference. Thank you. Very pleased to have with us Adient the number one player, depending on market share? Market share, yeah. All right. Okay. The largest or one of the largest seating players in the world. So very pleased to have with us Jerome Dorlack, who's currently CFO, but in roughly 30 days, is going to be the new CEO. Jerome's gonna go through a series of slides, and then we will have a discussion fireside chat style. Anyone who has questions, please feel free to raise your hands. Those folks have questions from the webcast, you can email them to my colleagues, Joshua Cho, Daniel Lai, first name.last name@barclays.com. They can ask announcements. So with that, thank you. All right. Thank you very much. So yeah, if you can pull up the slide deck, please. Got this. There we go. All right. Thank you. So just wanted to walk through a couple of slides today and really go through a couple of things that are, I think, some unique dynamics in not only the seating industry, but also kind of the automotive industry and how it's impacting the seating industry, and how Adient's been responding to that. So looking at the first slide, and we kind of went through this in our earnings call, but thought it'd be good to recap it. C oming out of 2023 we've kind of had these four tenets. You know, first, you know, we are the leading supplier in terms of seating. We've really been able to strengthen our leading position through strong execution, and then working through sustainability and using that as what we think is this differentiator that we can pivot off of, but then also underpinning that through strong execution. And then also, there's this new element of this really changing dynamic of EVs, but really EVs in China, and leveraging our China operation and using that as this really platform to accelerate upon moving outside of China. I'll talk about that a little bit today. O ne of the things that we've talked about a lot in the past is this ES3 concept, and bringing together e verything from J.D. Power through to market research, VAVE, warranty analysis, benchmarking, and IHS. What I'll go through today on the last three slides are really tangible outputs of ES3, whether that be things like long-distance JIT. We'll go through today, really an industry first around an Adient cushion module assembly, and then some backframe module assemblies, and then also a reusable backframe architecture that we're launching first in China that we'll then be able to read across to other regions. T hen the last point before I get into some of these trends is really, you know, the seating content growth that we see, really first in China, now starting to spread across into Europe and outside of Europe into North America. What you see on the page there is what we call a Zero-gravity seat that we've launched with NIO within the China region, which has, if you look at the amount of content that's in there, I mean, it has everything from side airbags through to comfort systems, heating mats, massage systems, very advanced lumbar systems. It has a belt to seat system that's in it. So the content growth that we see is really explosive, that's driving, you know, not only significant growth again, within China, but we see that now reading across into Europe as the European manufacturers are seeing this content growth, saying, "This is really becoming table stakes," and also now starting to read across into North America. You know, not only does it pair itself with, as we would, you know, ADAS, but also just kind of core comfort systems. So really, you know, the question is really moved from if, when this additional content will be realized, but really a question of when. Then I'll skip the executive summary and really move on to: so what are we doing now to kind of capitalize on this? So the first one is really looking at, you know, modular seat assembly. So modular seat assembly is something that we've been working on, I think, quietly in the background. And so you've seen a lot of talk, I think, from one of our peers on what they've been able to do with the backframe and packaging up components in the backframe, and then bringing potentially to market a modular comfort assembly for the backframe. What we've actually been able to do is on the cushion assembly, which is far more labor-intensive to assemble, is in 2024 calendar year, we'll be bringing to market a full modular assembly on the cushion itself. So taking all of the components of the cushion, so you're thinking about the vent system that's in the cushion, the ECU system that's on the cushion, the wire harness that's on the cushion, the occupant detection system that's on the cushion. These are components that are historically assembled in the high-cost JIT plant. We're actually, by working with our customer, working with our own engineering team, and working with our partners, such as Gentherm and some of the other ECU suppliers, we've been able to redesign the cushion assembly and move that content out of our JIT plant and put it into our metals plant, and actually displace that labor and not even do it one for one. If we're taking 20 heads out of a JIT plant, we're replacing those with less heads into our metals plant, and take that entire system and now create a modular assembly in our metals plant in a low-cost country, and now basically deliver that assembly sequenced into our JIT facility. What that allows us to do is basically take 20% of the total labor content on the front assembly line and displace it. Then when you marry that up with the front seat back, so now taking the front seat back cushion front seat back comfort module, and basically looking at similar to what our competitors said, you know, marrying that up into a module as well, doing that same process, by the time we get to 2026, you're now talking about 30% of the total labor on the front seat assembly line, displacing that out of the JIT plant. And so 2024, the cushion module will launch, well ahead of what some of our peers are looking at, and by 2026, we'll have the cushion module or sorry, 2026, we'll also have the front seat back module launched, and in place as well. The next thing that we're also able to do that's really industry-leading is, in areas, especially in Europe, we're able to engage in what is long-distance JIT. So where you have some of these very complex module assemblies as this content comes in, we're, we're really able to leverage where you have smaller programs, especially in the European operating area, where you have a lot of programs that are, you know, 70,000 units or 80,000 units, and multipurpose our JIT facilities and engage in a long-distance JIT concept. So where you maybe have two or three OE platforms running in one JIT manufacturing facility, you run them side by side, you're better leveraging your capital, you're less dependent then on one manufacturer. You run them, and then you basically long distance that out of a low-cost country. You have a sequencing center potentially right next to your customer's plant, where you then do just the final, stand-up assembly portion of it, maybe just the marriage, and you then deliver that in sequence to your end customer. Again, this is something that Adient's been doing well ahead of some of our peer group. T hen the last one, which we've really been pioneering out of our China operation, is a common structure. So if you take, generally speaking, when you launch a new structure for a customer, you have very limited reuse. So somewhere between zero to maybe, at the most, 35% of structure reuse. What we've been able to do in China with our customers there is to basically take and this is really critical because this is where we see the majority of this high amount of content in, is to work with them and say: "The only way this is going to work when you want 18-month or 12-month development cycles, is you have to work with us and use a high amount of content, and really to have an Adient standard seating structure to read across multiple customers and multiple platforms." And so what we've been able to do across, now you see there are at least four customers, is they have an Adient standard design structure with anywhere between 55 up to, in some cases, 100% standard design content structure. What this means is you have, you know, 12-month development cycle lead times compared to sometimes two to four years. You have extremely limited engineering bills, you have extremely limited launch risk, and you have customers in the end where you become a supplier of choice. W e've piloted this, launched it successfully in China, and now we're rolling this across other over into our other regions of the world. And so as we look at what's happening in seating, as you see this content now being rolled across, you know, really outside of China, you see it coming into our Asia operation, ex-China, you see it coming into Europe, you see it coming into North America. It's rolling these principles into those other regions of the world. W ith that, those were the opening comments, and turn it over to Dan to start the fireside chat. Thank you. All right, so actually, I have a set list of questions, but I actually want to ask some questions first on these, on these slides. Yeah. Some interesting stuff. And the way that I just when I zoom out, the way I interpret this is, you know, the story of Adient, the last, you know, call it four years, really, when Doug took over, was a focus on back to basics, streamlining operations and business performance. That's the key opportunity here. And I think the question that's been coming up is: seems like you cleared out a lot of the low-hanging fruit on the business performance side. People are asking, "Okay, what are the next legs that you can push on business performance to drive to your margin targets?" Is the answer what we just saw in these slides, these are some of the core components? Yeah, I think these are some of those really key building blocks of those components, if I go back a couple slides to the modularity, you know, as an example, when you think about what's happening, in particular in North America, where you have, you know, ever-increasing labor costs and things along those lines, you know, things like this, along modularity, where because of our metals footprint, and, you know, the modularity on the cushion is really enabled because we have a world-class metals footprint in this case. In order to make the cushion happen, you have to have the metals because of the assembly sequence. You've got to have that cushion real estate. You have to own that real estate. And that's an area where we deliver an extremely unique value proposition. B ecause of our ES3 process, you know, customers see the value we can bring. T hat's launching again in 2024. But immediately after kind of some of the UAW negotiations settled, you know, we went in, and one of the D3 came to us on a body-on-frame platform and said, "Okay, we want to engage in discussions on you about this type of a solution." Because they see the value in, you know, looking at how to better engineer the value chain. And so I think it's transitioned from this discussion of, yes, there's still, you know, some low-hanging fruit. We've talked about the roll-on/roll-off of some contracts that need to execute. Now it's really executing upon the core tenets of, you know, that ES3 principle of how do you deliver value to your customers day in, day out, around really understanding the value chain, executing on driving, you know, and simplifying that value chain, and doing what we do best, which is harnessing, you know, the value creation in a seating system. And I really do think that's what we do better than anyone else, because of our world-class footprint that we have on metals, that we have on JIT, that we have on trim, that we have on foam. And that's what we continue to be laser-focused on, is executing upon that. When we need to turn to our partners, we have partners like Gentherm, like L&P, you know, those guys that we can turn to that help make, you know, these things a reality. When I look at something like this modular seat assembly, this seems like a very different approach in the manufacturing. I mean, what is enabling the shift? You know, is this straightforward, or are there challenges here? And how different is this from how your competitors are approaching assembly? I mean, I think what really enables this type of an activity is our customers have to allow us to control the value chain. I n this case, you know, this will launch in 2024 with a customer who allows us to really control that value chain, control the design, and they see the value that we can deliver by doing that. And especially on the cushion assembly, you've really got to own that real estate and control it. And I think that's what really drives the difference in it. And I think as we go forward, as more customers and traditionally, it's the Japanese that allow you to do that. And I think we've been very transparent in the past, those are the customers that see the value and allow that. I think more and more customers now are seeing the value that you can bring with these types of solutions by really, you know, going back to what made this business beautiful when it first started, when you know, before all this disaggregation began, you know, in kind of the 2000s and the, you know, 2010s, when they said, "Well, we want to take it over. We think we can build a better mousetrap if we disaggregate it," and they started sourcing things. I think, you know, as they now start to look at ways to hand control back, I think we're best positioned to capitalize on it because of things like owning the metals footprint that we own and having the JIT, or having the foam footprint that we have and having the trim footprint that we have, it will allow us to really accelerate these types of activities. The way that we thought about VAVE in the past is you find a way to generate some amount of saves, you keep a portion, you pass a portion to your customer, and that's the win-win. How much of this is being spurred by customers that are really feeling a variety of cost pressures, and now you need to react in some way to say, "Okay, here's a way for us to have a win-win." We get our margin targets, and you still find ways to trim content out of the total cost. I think when you look at, you know, things like long-distance JIT, I think those are very proactive approaches to that type of VAVE, where you're engaged, you know, up front because it takes design, even before start of production, to really go after core cost targets on vehicles. Where, you know, you jointly work towards a cost target on a vehicle, and you're setting forth to hit that cost target and in turn, that margin target on a vehicle. And I think more and more, we see that type of high-quality engagement with customers, where it's, you know, not as much of the reactive cost share. Now, that's not to say that, you know, the traditional VAVE isn't important, because the way I think about the traditional VAVE is it, it still is very much in the business, and it still is very critical of the business. But more of that is being driven by what I'd call the innovation of processes and technologies that occur from a time a program launches to a time a program ends. And so an example is, you know, you get mid-flight through a vehicle, and consumer preferences change for trim styles. As an example, you know, you go through and you realize on mid-size SUVs, you know, the preference for leather is no longer there, and, you know, they can't upsell it anymore. And so you take leather out of vehicle, you change that over to a PU or a PVC. You know, those types of things still occur. You know, you engage actively with your customers because you're constantly. If I go back to the ES3 slide, you know, you're constantly engaged with your customers in the market resorts, market research portion of it, the benchmarking portion of it. You know, going to them and saying, you know, "Hey, you know, GM," or, "Hey, Toyota," "Hey, Ford, you know, customer A just launched their newest version of their mid-size SUV. They don't have a leather option anymore. Here's what they're selling. It's been in production for 12 months. You know, why do you still have a leather option out there? You're no longer able to upsell it. Why don't you take it out as a VAVE and change your marketing material for 2024?" That's also the value that we're able to deliver by, you know, actively going to our customers and showing them that, and engaging in that kind of VAVE activity. Or, you know, other examples are, you know, as different types of technology becomes available on foaming and things along those lines, you know, that's always ongoing in our business and in our industry. And because program life cycles are so long, seven years, and in some cases on the ICE side, they're getting extended to 10 years, you know, that will always happen. And we'll always be engaged in that because it, it delivers value to our customer. They expect it, and we expect to deliver it to them. But there is more and more now upfront, working towards a target cost model, and delivering program margins for our customer. Do you think that, I mean, maybe you could just tie this into your, your win rate. Do you think that this set of capabilities is unique enough that it is, you know, at least supporting your win rate or even could accelerate your win rate? Because as customers are feeling more pressure on the cost side, you know, you have some unique opportunities here where you can work with your customers to unlock more, more cost outs, and that's- I mean, we absolutely believe it accelerates our win rate. And I wouldn't say to look at the top line necessarily, because we've talked a lot about, you know, Adient isn't a top-line-focused company. We're a company that's focused on cash generation, and how you generate cash in this business is really around, you know, disciplined capital deployment, but also, when you win a JIT business, you really want to win the JIT, plus the trim, plus the foam, you know, plus the metals, if the metals make sense. And what this really allows you to do is, you know, if you look at our 2022 win rate, 98% had JIT, plus trim, plus an element of foam or some mixture thereof. If you look at our 2023 win rate, you know, 95% or greater had some element of JIT, plus trim, plus foam or some element thereof. So what we're really focused on is, you know, winning with customers that allow us to book, you know, not just the JIT. Because winning just the JIT is, you know, not what we're about. I mean, we want JIT plus an element of that vertical integration that it has in it, and this really allows us to do that. In addition to that, you know, this, with the customers that find value in it, has allowed us to go and demonstrate conquest wins. I mean, if you look at w hether that be with our Japanese customers, with our Chinese domestic customers, with some of our D3 customer in particular, I mean, this process has led to conquest wins, absolutely. Maybe we could talk about the benefits of vertical integration. You're saying you're getting a lot of a significant portion of your wins have some form of vertical integration. Yeah. I think this is interesting in that, you know, you're touting the metals and structures business as a structural benefit. It's interesting because if we just rewind four years ago, the core effort was in a way, unwinding some of the metals business that had caused some operational pain. So should we look at this as a pivot that, okay, the metals and structures business is now where it needs to be? You've gone through the efforts in cleaning it up, in reducing the amount of business where you alone are serving as a tier two to someone else. I think it was, like, well over half of the business. Yeah. Is it now where it needs to be? No. I mean, I think there's still a portion of that metals business that really needs to wind off in the 2025, in particular, back half of 2026 timeframe. Third party, the third-party piece of it, that still is due to wind off in the 2025, 2026 timeframe, really back half of 2026. That gets it where it needs to be. Yeah, so it's not- not where it needs to be yet, from that standpoint. We really, really have been focused on, you know, metals for, you know, JIT, you know, where we can service ourselves. That makes a lot of sense for us. But there is a portion of it, yeah, that still does need to wind out of the portfolio. And then just one more on the vertical integration side. In the past, what we've seen is there's clear opportunity for margin upside from vertical integration, but there's also execution risk. Yeah. If you actually think back to when you were part of JCI some, you know, 12 years ago, and you bought Keiper, Recaro, and Hammerstein. Yeah. There was a lot of pain associated with that. So how do we make sure that these shifts in processes don't, you know, are executed well, and there's not execution risk along with it? Yeah, I think what's really key is, and I'll, you know, if I go forward, yeah, to this guy here, I think that's what's really excellent about this, is it is modularizing the things that we're excellent at. And so we're not having to go out and reinvent the wheel in terms of, you know, we're not going and doing an ECU in-house. We're not going and doing a lumbar system in-house. You know, we're going to an ECU manufacturer. We're going to our partner, like a Gentherm, for the cooling system, and saying: "Here's how we need you to partner with us to modify the cooling system, to allow us to make our assembly process modular." And so, you know, we're working with our partners who are experts at those types of components to allow us to modularize our assembly process. W e're staying, you know, we're doing what we're really good at, which is the assembly process. That's our core competency from that standpoint. W e're drawing on, you know, the asset base we already have in-house from that standpoint, to stay with the vertical integration we already have in-house. So on top of this, you know, comes the trim assets we already have in-house, the foam assets we already have in-house, the just-in-time assets we already have in-house, all get trimmed out on top of this. And it goes into a metals plant that we already have established today, and it utilizes, you know, those operators we already have today from that standpoint. So it's drawing on the core competencies we have in-house, and it's utilizing the external partners that we have today in order to execute this, while driving, you know, savings in the value chain. It takes working capital out of the loop. It takes freight out of the loop. I t's really drawing on the things we already do in an excellent fashion today from that standpoint, without investing excess capital into the network. Okay. Just one more. One of your competitors has gone to a very significant level of depth on vertical integration in a way that, you know, others haven't, bringing heating and massage capabilities in-house, that historically, these are fully tier two. You would use a Gentherm. Yeah. Why is that not the right approach for you? Lear, yeah, it's obviously one of our competitors, but Lear, I mean, they're extremely smart. You know, Ray and Jason, they're very smart, and I think, you know, they've got their way of looking at it. It's a return on capital type of decision. And for us, I mean, we have, in our mind, world-class assets in foaming, in trim, in JIT, in metals. And for these components, you know, we can build modular assemblies by relying on our partners, such as Gentherm, a New Development, an AEW, or others on the outside. On the cushion assembly, the bottom picture there, you can really only get to that from a modular assembly if you own the metals, which we own. On the back frame piece of it, you know, they've shown their modular assembly piece that they've developed. You know, Gentherm announced two weeks ago their own version of a modular assembly, that if we want to, we can buy from them, or we can develop it in-house. New development in China already has its own modular assembly to, you know, to basically compete with Lear, that we can buy from them, or we can develop in-house as well. And so it's just a field that they've went into that is extremely, extremely competitive. You know, it's not an oligopoly. It's got multiple players in it, is the first answer. And then the second answer is, based on feedback from our customers, there's not really a tie-in to if you have the comfort system, that they're gonna source you the JIT piece of it. So it's, it's not like the tail wagging the dog. And so we wanna focus on what we're excellent at, which is, you know, executing, building seats, focusing on, you know, these things like modular assembly, where we'll already be in production in FY 2024, and really driving that through to excellence, and we think we can get there through a partner-type approach. Okay, great. Folks in the audience, any questions? We've heard from Ford today, changing their dynamics in their supply chain, and even moving away from single source. They targeted major savings, cost reductions, supply chain. Not new news, but they can do it through commercial pressure, or they can do it through your approach. It sounds like your approach on taking more costs out of the system is like, in terms of industry impact, three, four, five years to kind of fade in. Is that fair? I n terms of the industry impact of your type of system change. So I'm trying to figure out the pressure that's gonna be coming at you commercially in 2024 and 2025, when some of these big design changes really aren't even available yet to the OEMs. Ultimately, I'm kind of getting back to the issue of it's always tough, but is 2024 and 2025 going to be even more difficult in terms of the pricing pressure from, from the OEMs? But hear even more onerous commentary from Stellantis, Renault worldwide. Yeah, I mean, as you said, I mean, this industry's never easy. I mean, you wake up today, and you think the halcyon days were yesterday. So that never really changes. What I would say is, you know, if you take lessons from the Chinese, time from idea to implementation is 12 months. You know, the Adient modular cushion assembly, from the time we started working with the customer to the time of implementation, was less than two years. We've got the blueprint. You know, the customer we're talking about with it now at the body-on-frame vehicle, we think we can get it done in 18 months and take some significant cost out. You know, there's ways that we can take real cost out of the network in a pretty short timeframe, from that standpoint. So I think there are ways that working collaboratively with our customers, we can help them take real cost out of the network, without compressing margins from that standpoint. And even working, you know, in the case of some of our customers, because they have so many trapped inefficiencies in the system that are impacting both of us to expand margins, whether that be, you know, you look at their mix, you know, they may have 300 variants of the vehicle, and they only sell 150 of them. Those other 150 cost both of us. And there are customers that are finally starting now, after the union negotiations, to listen to that, you know, to get that waste out of the system that's costing both of us, you know, amounts of money, amounts of, you know, trapped cash that's in the network. I think this time, I'm optimistic that there finally will be traction on getting, you know, this wasted energy out of both of our networks. So it's never easy, and there's going to be pressure that's in the system. But, you know, at some point, the waste has got to come out with it. What's the timing of getting this case was, at least on one customer, but to start to scale this out more widely, think we should assume any benefits that would accrue to you would really only be later in the decade. Is that correct? No, I mean, I think, I think things like, you know, things like this, which are really impactful to North America, and Europe, because you're, you're arbitraging labor. I mean, you start to see these roll in 2025, 2026 type of timeframe, wherever we can really impact it, where we have the metals footprint. You know, you think about things like long-distance JIT. I mean, again, that we're now in active discussions in North America. Finally, we're starting to see some traction there. You know, you think 2026, 2027 type of, type of launch timeframe. And then commonality, the last slide that we had in there, you know, common core, common structure. You know, the Japanese have been doing it successfully for a very long time now. It's how quick could we start to deploy that across the others? I think, you know, that's gonna be a question of when the content comes and the customers really see the need for it. So maybe that's, you know, a later in the decade type of question. I think that one will end up being more tied to content. But these, you know, this and long-distance JIT, you know, particularly on a larger portion of our business in North America, I mean, really, by 2026, it'll be pretty well accelerated. If we could just anywhere running tight on time. Just more near term and on the 2024 guide, which you just provided, maybe you can just address a couple of small things. One, there was $60 million of FX headwinds, that this is all off of hedges unwinding. How much more is there that, okay, this will—you know, you have hedges that'll unwind in 2025, so is there another, you know, headwind that you have to face beyond 2024? And then what levers do you have to offset this, or this is just something you have to absorb? Yeah, I think if you, if you unpack the $60 million, I want to say $40 million was transactional, $20 million was translational. And, you know, the transactional piece, the vast majority was the, the peso, as we talked about. And it—I can't. You know, it's hard for me to say what 2025 will be. You know, the peso within the last, 'cause we watch it really closely, you know, it went from 18.1 to 17. Today, it's at 17.4. I mean, it's hard for me to say what 2025 will be because I just don't know where the peso will settle in at. I'm out of favorable hedges. I do know that. So I don't have any more of those to kind of unwind at this point. So, I don't know where 25 will end up at, so I don't anticipate any more favorable hedges unwinding. So it's just a question of, you know, where does the peso settle in at as we move forward? What I will say is yeah, if it goes to 16 to one, it's going to present, obviously, an additional headwind. As far as our ability to recover with our customers, I mean, we are in active discussions with all of our customers that are, you know, impacted from the peso side of things. And it you know, it will be resolved, you know, whether that's through as contracts reset or as we, you know, renegotiate things, in some cases, as new programs roll on, or through kind of an annual price negotiation. So just, you know, as time progresses. It's a new muscle for our customers because they, they view it as very transient in nature. I mean, the peso is an anomaly currency. You know, against the dollar, pretty much everything else is depreciated, with the exception of the peso. So it's, it's an anomaly currency. They view it as very transient, so they're very reticent to make kind of any adjustments because they think it will eventually swing back. But they, they also realize you can't have 10% labor inflation, you know, with a strengthening currency when you're transacting in dollars and expect costs to remain fixed. I mean, they, they understand that that doesn't work, so. Then just to wrap, just near-term strikes over, you said in your guide there was a $25 million strike impact. To what extent do you think you could see some of those headwinds offset in fiscal 1Q for you? Well, in fiscal Q1, no, I mean, there'll be no relief in fiscal Q1. You're not seeing recovery builds? Not in Q1. I mean, right in Q1, I mean, just... You know, you saw in Q1, Unique Fabricating went Chapter 7. I mean, that put additional pressure into the network because people were impacted by it. You had Mobis go on strike at Toledo North. That took Gladiator production down for three days. That was very public. So in Q1, I mean, Q1's not over yet, so... But Q1, I mean, there was really no relief in sight from that standpoint. Full year, I think it's, you know, yet to be seen if how much back build there is. But in Q1, it yeah, there was really no relief in Q1 between the bankruptcy and Yanfeng also had a cyber attack that was also very public, and some of the disruption that occurred from that, and, you know, which plants we supply that were disrupted. So, yeah, there was, like, no relief in Q1. All right. Okay, great. You don't have, like, a better question to end the note on? 8% still on track. I mean, 8% all-in is still very clearly the objective, yes, so. I mean, I'll just close with that. Yeah. What we're seeing today is not, I would say, an accelerated path toward 8%, but it's just this is the driver that we were. Yeah, I these are the things, bec ause we get a lot of questions around, you know, what are the things that you, you do to execute? How do you drive the business performance? And these are, these are the things we do day in, day out, that we're driving to execute, you know, to drive that business performance. Absolutely. Right. Okay, we'll leave it there. Jerome. Thank you. Thank you very much. Good luck in the new seat.