executive board director president · target china & emerging market growth optimise cost structure...

1 Copyright 201, Nexteer Automotive Corporation. All rights reserved.

Annual ResultsAnnouncement

2017

2

These materials have been prepared by Nexteer Automotive Group Limited (“Nexteer” or the “Company”) and are being furnished to you solely for informational purposes. Theinformation contained in these materials has not been independently verified. NO REPRESENTATION OR WARRANTY EXPRESS OR IMPLIED IS MADE AS TO, AND NO RELIANCESHOULD BE PLACED ON, THE FAIRNESS, ACCURACY, COMPLETENESS OR CORRECTNESS OF THE INFORMATION OR OPINIONS CONTAINED HEREIN. It is not the intentionto provide, and you may not rely on these materials as providing, a complete or comprehensive analysis of the Company’s financial or trading position or prospects.

Neither Nexteer nor any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss that may arise from any use of thispresentation or its contents or otherwise arising in connection with this presentation.

Certain statements contained in these materials constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and otherfactors, many of which are beyond our control, which may cause the actual results, performance or achievements of the Company to be materially different from those expressed by, orimplied by the forward-looking statements in these materials. The Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of newinformation, future events or otherwise. Many factors may cause the actual development to be materially different from the expectations expressed here. Such factors include, forexample and without limitation, changes in general economic and business conditions, fluctuations in currency exchange rates or interest rates, the introduction of competing products,the lack of acceptance for new products or services and changes in business strategy.

In this document, all references to “Booked Business Amount” are to our estimation of the value of all booked business under contracts that have been awarded to us. The BookedBusiness Amount is based on estimated lifetime volume of the programs derived from indicative production arrangements provided by the applicable OEM customers and informationprovided by third-party industry sources. In calculating the Booked Business Amount, we also assume that the relevant contracts will be performed in accordance with their terms. Anymodification or suspension of the contracts related to the booked business by our customers could have a material and adverse effect on the value of the booked business. The value ofbooked business is not a measure defined by International Financial Reporting Standards (“IFRS”), and our methodology for determining the Booked Business Amount may not becomparable to the methodology used by comparable companies in determining the value of their booked business. While we believe that our current Booked Business Amount is arelevant financial metric, the information in relation to the booked business and the Booked Business Amount included in this document does not constitute a projection, forecast orprediction of our profits, and the actual contract value may be different from the estimated Booked Business Amount due to various factors and uncertainties beyond our control. Wecannot assure you that our estimated Booked Business Amount contained in this document will be indicative of our future operating results.

This document does not constitute an offer, solicitation, invitation, or recommendation to purchase or subscribe for any securities and no part of it shall form the basis of or be relied uponin connection with any contract, commitment or investment decision in relation thereto.

Safe Harbor Statement

3

Michael RichardsonExecutive Board DirectorPresident

Business Highlights

4

Strategy for Profitable Growth

Strengthen Technology Leadership

Expand & Diversify Revenue Base

Capitalise on EPS as enabler for ADAS

Target China & Emerging Market Growth

Optimise Cost Structure

Pursue Select Acquisitions & Alliances

Well-Defined Plan to Drive Stakeholder Value

演示者演示文稿备注In conclusion, Nexteer posted record financial performance in 2016 driving year over year improvements across every key financial metric. We accomplished this as a team, with all of our colleagues around the globe executing against the various business levers that we control to drive increasing stakeholder value. We certainly believe that this performance provides strong support that our strategy for profitable growth is sound.This concludes our formal presentation and we will now hand it over to the operator for any questions. We want to thank you all for participating in our call today as well as your continued support of, and interest in, Nexteer.Thank you

5 STRICTLY PRIVATE AND CONFIDENTIAL

Demonstrated market leadership with successful launch of 32 new customer programs across multiple product lines, regions & customers

Maintained Order-to-Delivery Backlog of US$23.9 billion

Continued expanding and rotating global business footprint

Enhanced innovation leadership to drive core business growth

Increased focus on operational efficiency improvement

2017 Business Highlights


• Renault LodgyDriveline

• Tata Ace, Iris, Majic, Zip, OspreyDriveline

• GM Velite & EquinoxDriveline

• SGMW Confero S, Cortez & C-SUVCEPS

• BMW 1-Series & X1SPEPS

• Changan CS55, Eado PHEV (C207)CEPS

• GM CrosslandSPEPS

• PSA Citroen C3 AircrossSPEPS

• FCA Argo & CronosCEPS

• GM Enclave / TerrainEquinox / TraverseREPS & Driveline

• FCA Jeep WranglerColumns & Driveline

• Ford Expedition / NavigatorREPS & Columns

Launched 32 Major Customer Programs

12 416


50 Million Electric Power SteeringUnit Production Milestone


* Booked business information is compiled through our internal records, and such information has not been audited nor reviewed by our auditors.

70%3%

11%

16%

Order to Delivery Backlog* as of December 31, 2017

$23.9B

Business Rotation to a Richer Product Mix

Dec 31,2016

2017Revenue

PSA/GM DealProgram

CancellationRelated

Net NewOrder

Booking

Dec 31,2017

25.623.9-3.9

-1.6+3.8

EPS

HPS

CIS

DL

Chart1

EPS

HPS

Column

Halfshaft

Sales

0.7

0.03

0.11

0.16

Sheet1

Sales

EPS70%

HPS3%

Column11%

Halfshaft16%

To resize chart data range, drag lower right corner of range.

10

4New NEV ProgramsNew EPSCustomers3

… and a Broader Customer Base


Expanding Global Manufacturing, Customer Service Center and Technical Center Footprint

CSC,Atsugi, Japan

Cikarang, Indonesia

Dongfeng JV, Wuhan, China

Porto Real, Brazil

Juarez, Mexico New APAC TC,

Suzhou, China

Keysborough, Australia (closure)

Wholly-owned Plant Liuzhou, ChinaDongfeng JV formed

Brazil Porto Real new facility grand openingMexico Juarez new plant grand opening

Q2 Indonesia Cikarang new plant grand opening

Q3 Japan Atsugi customer service center opening

New APAC Technical Center groundbreakingChina Liuzhou own-property plant groundbreakingAustralia Keysborough manufacturing facility closed

Q4

Q1


Rotating Product Planning &Engineering Closer to Customer


Expanding the Nexteer Difference

Full-Service Provider| Customer Focused | Service-Oriented | Flexible |

Design Prototyping Validation Software Electronics SystemIntegration


North America Truck of the YearLincoln Navigator

Nexteer Technologies: Steering Column, Rack Electric Power Steering

Motor Trend Truck of the YearFord Super Duty TruckNexteer Technology: Steering

Column

Motor Trend Car of the YearChevy Bolt

Nexteer Technology: Column Electric Power Steering


Advanced Technology Suite

演示者演示文稿备注Steer by Wire: Center Link in Our Advanced Technology SuiteThe mechanical connection between the road wheels and the steering wheel is replaced with electronics and actuators on the steering column and rackSupports both manual and automated drivingOpens new possibilities for advanced safety, functionality and packagingFor example, SbW enables… Quiet Wheel™ SteeringAllows the steering wheel to remain still during automated driving mode – even while the vehicle is in the process of turning. Eliminates potential distraction/hazard of a fast-rotating steering wheel in front of the driver during hands-off driving SoDWith the press of a button or simply by grabbing the steering wheel, SoD enables the safe, intuitive transitions of steering control between manual driving and automated drivingShown here with a Stowable Steering Column -- Vehicles equipped with Quiet Wheel and/or SoD, may also be fitted with a stowable column that retracts when automated driving is engaged, increasing available space for driver comfort and other activities.

High Availability Electric Power Steering – Our Safety Net is Always ONIntelligently optimized with dual componentry (hardware) AND simultaneous, multi-path processing (software)Strengthens the safety net as the industry moves toward varying levels of automation Cyber-Secure Advanced SteeringEnhances safety by integrating multi-layer cyber security at a steering system level for maximum protectionHardware + Software: Consists of specifically designed hardware modules on the semi-conductor level, as well as a multi-layered cryptographic software structure, that identifies and authorizes information and command flow between the steering system and other in-vehicle or external controllersCyber-secure steering becomes even more critical as vehicles adopt advanced electronics to enable automated driving, V2X communication and internet connectivity

18

Advanced Technology Demonstration

19

Advanced Technology Demonstration


7 ADAS Development Contracts secured in 2017

2 Steer-by-Wire Development Contracts secured in 2017

Advanced Technology ProjectsLateral Directional Control

21

VisionAccelerating Trusted Motion Control through Collaboration


Strategic Alliances

Entered into new joint ventures for expanding

driveline and EPS businesses in China

New Alliances to expand addressable market in China


Exclusivity with a leading global supplier

of CV technologies

Motion control systems and for automated driving

Strategic AlliancesStrategic Partnerships delivering full dynamic

control - for light and commercial vehicle


Operational Efficiency


Nexteer Suzhou Plant and GM China Joint Team Won

the 1st Prize in China Association for Quality National Lean Project

Competition

Saginaw & Suzhou Plants won GM Supplier Quality

Excellence Award

Nexteer Zhuozhou Plant Black Belt Team Won the 1st

Prize Award in China Association for Quality

National Six Sigma Project Competition

Nexteer Liuzhou Plant Won 2017 Best Supplier Award from

SGMW

Nexteer Juarez Plant Won Toyota Quality

Performance Certificate

Nexteer Saginaw Plant (Column) Won FCA 2016

Outstanding Quality Award

Nexteer India won Excellence Award in the

National Level Quality Circle Competition

Nexteer Suzhou Plant awarded 2017 Excellent Supplier from Dongfeng Peugeot Citroen (DPCA)

Industry Recognition

Nexteer Suzhou Plant Won Ford Annual World Excellence

Award

Nexteer Liuzhou Plant Won 2017 Excellent Supplier Award from

Dongfeng Liuzhou Motor

27

Bill QuigleySenior Vice PresidentChief Financial Officer

Financial Highlights

演示者演示文稿备注Thanks Mike and good day to everyone joining on us the call.Lets move to the next slide for a quick overview of Nexteer’s financial performance for 2017.

28

2017 Financial Highlights

Record financial results for 2017 Revenue in-line with key customer production Strong earnings and margin expansion

− Non-recurring tax benefit from U.S. Tax Reform

Committed investment to new product technologies Working capital management and capital investment discipline Significant cash flow performance and strong balance sheet Continued delivery of superior value to shareholders

演示者演示文稿备注Mike highlighted in his comments the various business accomplishments achieved by Nexteer during 2017 and our 2017 financial results certainly followed the same path. We posted another year of record financial performance across all of our key metrics.As we shared with you during past updates and discussions, revenue for the year was in-line with the production of our key customers around the world and within our expectations.Earnings performance was strong both from an absolute and relative basis compared to 2016 reflecting continued focus on managing our cost levers as well as maintaining a strong contribution margin profile on changes in regional customer production.While I will provide more detail in a coming slide, given the enactment of tax reform in the U.S. in late December 2017, we recognized a one-time tax expense benefit of $39 million for the remeasurement of our year-end gross deferred tax positions to the lower statutory corporate federal tax rate. Even adjusting for this one-time benefit, our 2017 net profit margin rose 40 basis points compared to 2016. But a little more on that later in my presentation.Finally, increased earnings and focused working capital management drove strong cash flows in 2017, while we continued to invest in the business to support customer programs and drive future opportunities.We certainly believe these results reflect our on-going commitment of delivering superior shareholder value and Mike and I want to thank all of our colleagues around the world for their continued focus, discipline and collaboration in serving our customers and driving our value proposition.So lets review our 2017 financial performance in more detail.

29

$3,842$3,878

2016 2017

Revenue(in millions)

* Net Profit Attributable to Equity Holders

2017 Financial Highlights

+ 0.9%

$578$621

2016 2017

EBITDA(in millions)

+ 7.5%

$295

$352

2016 2017

Net Profit*(in millions)

+ 19.4%

$226

$267

2016 2017

Free Cash Flow(in millions)

+ 18.3%

演示者演示文稿备注This slide provides our 2017 financial performance with a comparison to the previous year for a number of our key financial metrics.We posted 2017 revenue of about $3.9 billion, or about 1% higher than 2016. Increased customer production volumes in North America, in particular full size truck demand, as well as stronger volumes and the impact of new customer programs in Europe and South America more than offset currency headwinds and lower key customer demand in Asia Pacific.We posted 2017 EBITDA of $621 million, $43 million or about 7.5% higher than 2016, and EBITDA margin expanded by 100 basis points to 16% compared with 2016. All of our segments posted increased EBITDA margins in 2017 and in a coming slide I will share a little more color on each of our segments performance.2017 Net Profit rose 19.4% to $352 million, providing a margin of 9.1%, 140 basis points higher than 2016. As I highlighted in my opening comments, $39 million of this improvement our 2017 Net Profit includes a one-time $39 million tax benefit driven by enacted U.S. tax reform in late December 2017. Adjusting for this one-time benefit, our 2017 Net Profit increased some plus 6%, with increased EBITDA performance more than offsetting higher depreciation and amortization expense and slightly higher tax expense given the increased profitability of the business.2017 free cash flow rose $41 million compared with the prior year to $267 million reflecting the strong cash quality of our earnings, focus on working capital management and lower cash taxes more than offsetting higher capital investment.All in all – very strong performance reflecting the financial impact of all of the business accomplishments in 2017 that Mike reviewed with you.

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U.S. Tax Reform Impact on Net Profit

2017 Net Profit(in millions)

One-time benefit from deferred tax remeasurement

+ 19.4%$39

+6.1%

$313$295

+13.3%

$352

2016 2017 Adj. 2017

Reduced Corporate federal tax rate Preferential tax rate on foreign derived

intangible income Immediate expensing of certain

capitalised assets

Ongoing Impacts from U.S. Tax Reform

Favo

rabl

eU

nfav

orab

le Section 199 (deduction of U.S. manufacturing expense) repealed

Base Erosion Anti-abuse Tax (‘BEAT’) implementation

Interest expense deductibility limits

演示者演示文稿备注We want to spend a little time with all of you highlighting the impact of the U.S. Tax Cuts and Job Acts that was signed into law on December 22, 2017. This is certainly a significant piece of legislation and we have been evaluating the financial impact to Nexteer. While my intent is not to make you all “U.S. tax experts” on this call, we thought it would be helpful to share with you certain of the key provisions of this Act and the expected impact on Nexteer – in both 2017 and beyond. On the left of this slide, we have separated the 2017 one-time tax benefit of $39 million from our 2017 Net Profit performance, which I spoke to in my previous comments. Given the enactment of this legislation in late 2017, we were required to remeasure our gross deferred tax positions at the 2017 year-end and basically mark those to the new federal corporate tax rate of 21% compared to the previous rate of 35%, which derived the $39 million tax benefit. At year-end our total gross net deferred tax liabilities totaled about plus $270 million – comprised largely of temporary differences around the book and tax treatment of engineering development costs as well as the depreciation of our capital investment – and applying the lower tax rate that these liabilities will now be settled at in future periods provides this one-time benefit at year-end 2017. Or put another way, this $39 million benefit reflects the future cumulative cash impact of lower corporate taxes that will ultimately be paid when these temporary differences turn.To the right of this slide, we have highlighted several provisions of the Act that provide both upside and some downside.Certainly the 40% reduction in the federal corporate tax rate from 35% to 21% is the largest benefit to Nexteer given our strong presence and business in the US. Preferential rates on Foreign Derived Intangible Income, of FDII, is also a benefit given that our Intellectual Property is largely held in the US and where we charge foreign jurisdictions for the use of that IP, we are able to exclude 37.5% of qualifying intangible income from our U.S. taxable income. Finally from a cash tax basis, the immediate expensing of 100% of qualified U.S. capital investments through 2023 accelerates the cahs benefit into current periods.The Act repealed Section 199 deductions for U.S. manufacturing expenses given the reduction in the corporate tax rate which is a small penalty comparatively – yet the rate reduction more than compensates for this repeal.Finally, we are monitoring both the Base Erosion and Anti-Abuse Tax – or BEAT – which is effectively a separate tax in the event that deductible payments we make to foreign affiliates for services or interest reduces our corporate tax liability below 10%; and interest expense limitations of 30% based on defined Adjusted Taxable Income calculations; at this time we do not expect any significant impacts in the near term from these sections.Overall, we believe in the near term period, this Act will provide Nexteer an effective tax tailwind of around of 3 to 5 points comparatively.

31

5% 5%16% 16%

17% 15%

2016 2017EPS HPS Columns DL

2016 2017NA APAC EU / SA

65% 65%

24% 22%

11% 13%$3,842 $3,842 $3,878

- 5%

0%

- 9%

+ 1%

- 5%

+ 14%

$3,878

Revenue Growth with Richer Product Mix

62% 64%

Revenue Distribution by Product and Region

Revenue by Product(in millions)

Revenue by Region(in millions)

演示者演示文稿备注Now lets get back to the business – with slide ____ providing our product line and segment revenue comparisons.EPS revenue totaled $2.482 billion in 2017, higher than 2016 by $98 million or 4% and rose to 64% of our total revenue. Stronger full size truck volumes in North America and new program launches in all regions more than offset pricing and currency headwinds as well as softer key customer demand in Asia Pacific.HPS and Columns revenue totaled $814 million, or about 21% of revenue, and $8 million lower than 2016. Columns revenue was largely flat to last year with HPS lower by $10 million with the final roll-off a GM platform in North America being the principal driver.Driveline revenue of $582 million in 2017 was lower 9 percent compared with the prior year principally due lower overall passenger car demand in North America from both GM and FCA as well as continued weaker demand from Great Wall and DPCA in Asia Pacific.Turning now to our segment revenue performance which is highlighted on the right of this slide.North America posted revenue of $2.534 billion, about 1% higher than 2016 revenue of $2.514 billion, and represented 65% of our total 2017 revenue. Higher overall full size truck and SUV production and the impact of carryover and new program launches more than offset lower passenger car demand and customer pricing.Asia Pacific revenue came in at $854 million compared to 2016 performance of $899 million. Currency provided a headwind of around $10 million on a year to year basis. Lower demand from key customers, principally DPCA, Great Wall and to a lesser extent SGM-Wuling, and customer pricing were additional contributors to the lower revenue.Finally, Europe and South America revenue increased by $61 million, or plus 14%, reflecting favorable currency of $11 million, higher overall OEM production volume in Europe and a Brazil recovery and the favorable impact of new and carryover customer launches with PSA and FCA, were the main drivers of the strong revenue growth.Overall, while each of our segments faced both headwinds and tailwinds, Nexteer’s 2017 revenue was in-line with our expectations as well as achieved a record level of performance.

32

$455

$578$621

2015 2016 2017

EBITDA Margin

Profit and Margin Progression

+ 100 bps

(in millions)

Net Profit Margin(in millions)

16.0%15.0%

13.6%

$205

$295

$352

2015 2016 2017

+ 140 bps

9.1%

7.7%

6.1%

8.1%

+ 40 bpsExcl. tax benefit

演示者演示文稿备注Slide ____ highlights our EBITDA and Net Profit performance.The Nexteer team remains very focused on driving increasing stakeholder value by executing against the six elements that underlie our strategy for profitable growth. We are also focused on taking advantage of increased revenue when presented to drive incremental contribution margins as well as maintaining a disciplined approach to our overall cost structure. Our record 2017 EBITDA and Net Profit performance continues to be a strong reflection of that focus.While revenue increased by about 1% compared with 2016, EBITDA rose by almost 7.5 percent, or $43 million, to $621 million in 2017. Our EBITDA margin expanded significantly as well, rising 100 basis points to 16%. This strong performance was driven by several factors.First, our operations favorably converted incremental revenue driving strong contribution margins. Second – year-over-year gross manufacturing efficiencies of $26 million more than offset related economics in the business. Third – our materials initiatives, including supplier cost reductions and material design efforts, provided year over year benefits of $87 million. In aggregate, these factors more than offset economics and customer pricing, driving both higher earnings and margin expansion. [I should note that in the first half of 2016, our EBITDA performance did benefit from a non-recurring FX gain of $15 million related to the repayment and extinguishment of an intercompany loan during the period, which was partially offset by losses on currency contracts of $5 million].As highlighted on the right side of this slide, and as I have commented on previously, our EBITDA performance flowed through to our Net Profit performance for 2017, driving a 19% increase over 2016, including the $39 one-time tax benefit driven by U.S. tax reform legislation. Adjusting for this benefit, our 2017 Net Profit rose 6.1% to $313 million, providing a margin of 8.1%, 40 basis points higher than 2016.Walking from EBITDA to Net Profit, depreciation and amortization expense increased by about $31 million compared with 2016 to $193 million, including an impairment of $9.5 million associated with the cancellation of previously awarded GM / Opel programs post General Motors’ divestiture of the business to PSA earlier in 2017. Net interest expense of $21 million in 2017 was lower than 2016 by about $9 million given the pay-down of debt and higher interest income earned on increased cash balances.Income tax expense, before the $39 million deferred tax remeasurement benefit, totaled $88 million, slightly higher than 2016 by $4 million reflecting increase jurisdictional profitability. Our adjusted effective tax rate for 2017 stood at 21.6% compared with 21.8% at the end of 2016.Now lets take a quick moment to review our 2017 EBITDA performance by segment on slide ___.

33

$2,514 $2,534

2016 2017

N. America(in millions)

Margin Expansion Across all Regions

+ 1%

Asia Pacific(in millions)

EU / S. America(in millions)

Rev

enue

EBIT

DA

/ %

$396$415

2016 2017

$899$854

2016 2017

$174 $170

2016 2017

$429$490

2016 2017

$16

$42

2016 2017

15.7%16.4% 19.3% 19.9% 3.8%

8.7%

70 bps

- 5% + 14%

490 bps60 bps

演示者演示文稿备注For your reference purpose, this slide provides both revenue and EBITDA comparisons for each of our segments and I will focus my comments here on the EBITDA performance of each. North America posted 2017 EBITDA of $415 million in 2017, $19 million or about 4.8% higher than 2016, on increased revenue of $20 million. EBITDA margins rose 70 basis points to 16.4% for 2017. Strong volume conversion, favorable mix and continued cost savings actions more than offset customer pricing driving both improved absolute EBITDA dollar and margin performance.Despite currency headwinds and lower volumes from certain key customers lowering revenue by $45 million year to year, our Asia Pacific team largely mitigated the impact with 2017 EBITDA coming in at $170 million, only $4 million, or 2%, lower than 2016, while increasing EBITDA margins by 60 basis points to 19.9%. Material cost savings of $20 million and manufacturing efficiencies of $15 million were a significant offset to currency headwinds, lower production volumes and customer pricing.We continue to be pleased with the earnings performance of our Europe / South America segment, which drove a 163 percent improvement in EBITDA year to year ending 2017 at $42 million. EBITDA margin improved by 490 basis points to 8.7% compared to 2016. Favorable contribution margin on incremental revenue as well as continued execution on cost efficiencies drove the improved earnings profile of the segment. Overall, despite some headwinds from customer demand shifts, each of our segments continued to drive a higher margin profile in 2017 resulting in record EBITDA performance for the year. Slide ___ highlights our investment in engineering and product development activities targeted to drive both top-line and bottom-line growth opportunities as well as our capital spending investment to operationalize new customer programs and to improve efficiencies.

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$233 $249

2016 2017

$203 $193

2016 2017

* Including engineering and product development costs charged to income statement and development costs capitalized as intangible asset of $7.3 in 2016 and $10.7M in 2017

6.1% 5.3%

R&D and Capex Investment for the Future

R&D Expense*(in millions)

Capex(in millions)

6.4%5.0%

演示者演示文稿备注We continue to invest in resources and initiatives focused on bringing differentiated advancements in process and product technology to the market as well as expanding our global capabilities to meet the increasing needs of our customers around the world. Mike touched on many of the accomplishments we recorded during 2017, with our engineering capability being a strong and fundamental cornerstone of our capability and value proposition.For 2017, our total engineering and product development rose to $249 million compared to $233 million in 2016, or about 6.9 percent higher. This amount also includes capitalized interest of almost $11 million in 2017. Of the full year spend, $124 million was charged through the income statement with the remainder capitalized as an intangible asset that will begin amortization upon the launch of supported customers in the future.During 2017 we increased our engineering people resources by plus 7% ending the year with more than 2,000 engineering talents around world at the end of 2017. As Mike also highlighted in his comments, we have continued to focus on the globalization of our engineering footprint and at the end of 2017 about 64 percent of our engineering talents were based in North America, 23% in Asia Pacific and 13% in Europe / South America. Turning to the right of the slide, for 2017 our capital spending commitments totaled $193 million, or about 5% of revenue, and $10 million lower than 2016. Of this amount, +40 percent was in support of our EPS product line, with 40 percent dedicated to Columns, Driveline and HPS and the remaining 20 percent for plant efficiency and automation, engineering and administrative/ information technology infrastructure. As you also know, the majority of our capital investment is geared towards supporting customer programs – which represented about 70 percent of the 2017 capital spending commitments - and we align the timing of investment based on supplier lead time and customer program launch dates. As we have stated before, the key take-away from this slide is the significant on-going investment Nexteer is making in the business to drive profitable top-line results and to improve the efficiency capability of our manufacturing and engineering platforms which we believe will continue to deliver increasing stakeholder value over the long-term.

35

$509

$226 $226

$283

Cash fromOps

InvestingActivities

Free CashFlow

$625

$267

$358

Cash fromOps

InvestingActivities

Free CashFlow

2016 2017

Strong Financial Flexibility to Support Future Growth

(in millions)Strong Free Cash Flow and Balance Sheet

2017 2016Cash and CapitalGross Debt $491 $564Less: Cash 601 484Net (Cash) / Debt ($110) $80

Total Equity $1,441 $1,091Total Net Capital $1,331 $1,171Net Debt to Net Capital n.a. 6.8%

LiquidityCash $601 $484Credit Facilities 456 406Total $1,057 $890

Leverage / CoverageGross Debt / EBITDA 0.8x 1.0xNet Debt / EBITDA n.a. 0.1xInterest Coverage 29.1x 19.1x

演示者演示文稿备注Turning to our cash flow and our balance sheet which is highlighted on slide ____, in 2017 we generated strong free cash flow of $267 million, $41 million higher, or 18 percent, than 2016.As noted on the left of this slide, our improvement in free cash flow was largely a result of increased cash from operations driven by higher earnings, improvement in our net working capital investment and lower cash taxes paid. This increase more than offset a higher cash use for investing activities, principally comprised of our capital spending and capitalized engineering and product development costs in support of awarded customer programs which will launch in future periods.Cash and cash equivalents at the end of 2017 were $601 million, $117 million higher than year end 2016, driven by positive free cash flow in excess of cash used to service our capital structure – debt repayments ($76), net interest paid ($35) and dividends paid to our shareholders ($60) - which totaled $171 million in 2017.We are also focused on maintaining a strong balance sheet which provides us flexibility continue to invest in the business - as well as to provide a return of capital to our shareholders. And as highlighted here, we ended 2017 in a net cash position of $110 million with minimal leverage.[As highlighted on the right of this slide, our leverage metrics remain very manageable and we have significant liquidity between cash on hand and availability under credit facilities, the largest being our U.S. $250 million revolving credit facility which remains undrawn.]

Sheet1

Cash and Capital

Gross Debt$491$564

Less: Cash601484

Net (Cash) / Debt($110)$80

Total Equity$1,441$1,091

Total Net Capital$1,331$1,171

Net Debt to Net Capitaln.a.6.8%

Liquidity

Cash$601$484

Credit Facilities456406

Total$1,057$890

Leverage / Coverage

Gross Debt / EBITDA0.8x1.0x

Net Debt / EBITDAn.a.0.1x

Interest Coverage29.1x19.1x

3636

11 3461 61 60

250

250

2018 2019 2020 2021

Other US Term EXIM

US Revolver Bond

Maturity Schedule Prior to Refinance

U.S. ABL Refinancing Completed refinancing of $250m U.S. ABL in

February 2018 Increased availability from $250m to $325m Extended maturity from 2019 to 2023

Paid-off in full remaining term loan balance ($45m at YE 2017)

Interest expense savings more than offsets refinancing costs in 2018

61 61 60

325250

2018 2019 2020 2021 2023

Other EXIM US Revolver Bond

Maturity Schedule After Refinance

演示者演示文稿备注Given the strength of our cash flows, cash balances, balance sheet and related credit metrics heading into the end of 2017, we elected to refinance our existing $250 million U.S. Asset Backed Lending facility – which was set to expire in August 2019.As highlighted on this slide, we successfully completed the refinancing of the ABL facility with our bank syndicate in February of this year, increasing the size of the facility from $250 million to $325 million; at the same time paying off in total our U.S. term loan which stood at $45 million at the end of 2017 which bore variable interest at LIBOR plus 175 basis points with monthly principal amortization of about $900,000.We achieved several benefits from this refinancing including:Increased facility size to maintain our overall liquidity position post pay-off of the existing U.S. term loanExtended the maturity of the facility from 2019 to 2023Eliminated guarantor arrangements under the previous agreementEliminated property and equipment subject to liens under the previous agreementLowering LIBOR based interest rates by 25 basis points andIncreased covenant flexibilityInterest savings from the pay-off of the U.S. term loan more than offset the cost of this refinancing providing a less than one year payback.On the right of this slide, we have highlighted our debt maturity schedule post this refinancing, with the largest maturity now being our $250 million unsecured note in 2021.This was a very successful and efficient refinancing and provides us the continued flexibility to invest in the business – at a lower cost – to support both organic growth initiatives as well as to take advantage of inorganic opportunities that may present themselves that further enhance long-term shareholder value.

37

Debt Service &Capital Market

Access

Invest to DriveOrganic Growth

Pursue Select Acquisitions &

Alliances

Shareholder Returns

Sound Financial Position Supporting Capital Allocation Priorities

演示者演示文稿备注We have shared our capital allocation priorities with you previously and again highlight those priorities on slide ___. We are following a disciplined approach ensuring that:�We continue to drive cash flow performance which provides the resources to invest in the business to drive organic growthFocus on maintaining a sound and strong capital structure while ensuring capital market access which will allow us toPursue acquisitions / alliances that continue to bolster our core competencies and capabilities and finallyProvide a return to our shareholders �We believe the actions and initiatives we have taken over the last several years which have driven our strong financial performance affirm our focus on these fundamental priorities as outlined on the next slide.

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R&D spending of $249m Capital investment of $193m 3 year cumulative investment

of $1.257b

Debt Service &Capital Market

Access

Invest to DriveOrganic Growth

Pursue Select Acquisitions &

Alliances

Shareholder Returns

Sound Financial Position Supporting Capital Allocation Priorities

S&P IG rating Net cash position ABL refinancing Pay-down in full

of U.S. term loan

CNX Motion arrangement Dongfeng JV WABCO supply partnership

Net profit and margin expansion 2017 dividend of

$70m $170m 3 year

cumulative return to shareholders

演示者演示文稿备注In 2017 alone, we invested $442 million in research and product development and capital investment to support both our current business and future customer program launches as well as new technology development to address the needs of the future of mobility. Over the last three years our cumulative investment has totaled almost $1.3 billon. In October 2017, S&P upgraded our credit rating to Investment Grade – or BBB-, while Moody’s maintains a Ba1 rating – one notch below Investment Grade – and raised our outlook to Positive. In 2017, we generated $267 million of free cash flow and ended the year in a net cash position of $110 million. Over the last three years we have generated $685 million in free cash flow while continuing to invest in the business for the future. And finally we entered into a new $325 million U.S. ABL facility while paying-off the remaining balance of our U.S. term loan in February of this year.We remain intent on seeking out opportunities that will further benefit our portfolio of capabilities – be it product and/or technical expansions. Mike highlighted alliances we executed in 2017 with Continental, DongFeng and Wabco and we remain disciplined in our capital structure approach to ensure that we have the necessary resources and flexibility to execute against these type of opportunities in the future. Finally, we are also focused on providing a return to our shareholders and at our recent Board of Directors meeting, the Board approved a dividend of $70 million based on our 2017 Net Profit performance.

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Strategy for Profitable Growth

Strengthen Technology Leadership

Expand & Diversify Revenue Base

Capitalise on EPS as enabler for ADAS

Target China & Emerging Market Growth

Optimise Cost Structure

Pursue Select Acquisitions & Alliances

Well-Defined Plan to Drive Stakeholder Value

演示者演示文稿备注In conclusion, 2017 was another year of record financial performance for Nexteer and we remain thankful for all of our colleagues who drive the business and operate as “One Nexteer” in support of our strategy for profitable growth and fortifying our position as “A Leader in Intuitive Motion Control”.This concludes our formal presentation and we will now hand it over to the operator for any questions. We want to thank you all for participating in our call today as well as your continued support of, and interest in, Nexteer.Thank you

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executive board director president · target china & emerging market growth optimise cost structure...

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