Core Viewpoint - Adient reported a decline in adjusted earnings per share (EPS) and net sales for the third quarter of fiscal 2024, missing consensus estimates [1] Financial Performance - Adjusted EPS for Q3 2024 was 32 cents, down from 98 cents in the same period last year, and below the Zacks Consensus Estimate of 67 cents [1] - Net sales totaled $3.72 billion, an 8% decrease year over year, and also missed the Zacks Consensus Estimate of $3.81 billion [1] Segmental Performance - **Americas Segment**: Revenues were $1.74 billion, an 8.6% decline year over year, missing the estimate of $1.76 billion. Adjusted EBITDA increased to $99 million from $95 million, exceeding the estimate of $67 million due to efficiencies [2] - **EMEA Segment**: Revenues fell to $1.29 billion, a 10.4% decline year over year, missing the estimate of $1.35 billion. Adjusted EBITDA dropped significantly to $25 million from $103 million, missing the estimate of $91 million due to lower customer releases [3] - **Asia Segment**: Revenues were $712 million, down 4% year over year, missing the estimate of $729 million. Adjusted EBITDA rose 1% to $101 million, beating the estimate of $95 million due to efficiencies [3] Financial Position - Cash and cash equivalents stood at $890 million as of June 30, 2024, down from $1.11 billion as of September 30, 2023 [4] - Long-term debt was reported at $2.4 billion [4] - Capital expenditures totaled $70 million, an increase from $60 million in the prior-year quarter [4] - The company repurchased approximately 2.6 million shares for $75 million during the quarter [4] Revised Guidance for 2024 - Adient revised its fiscal 2024 revenue guidance to $14.6 billion, down from the previous range of $14.80-$14.90 billion [5] - Adjusted EBITDA is now estimated at $870 million, reduced from the prior guidance of $900-$920 million [5] - Free cash flow is anticipated to be $250 million, with capital expenditures and cash tax estimates adjusted to $285 million and $100 million, respectively [5]

Core Viewpoint - Adient plc's Q3 FY 2024 results were disappointing, primarily due to underperformance in the EMEA segment, but a potential turnaround is anticipated in FY 2025 based on a positive outlook for the European automotive industry [1][4]. Financial Performance - Q3 FY 2024 results showed revenue, normalized EBITDA, and non-GAAP adjusted EPS were -3%, -12%, and -49% below consensus forecasts, respectively [3]. - Year-over-year (YoY) comparisons for Q3 FY 2024 indicated a decrease in top line by -8%, non-GAAP adjusted EBITDA by -27%, and normalized EPS by -67% [3]. - The EMEA segment's non-GAAP adjusted EBITDA fell by -76% YoY to $25 million, while the Americas and Asia segments saw increases of +4% and +1%, respectively [3]. Guidance and Outlook - Full-year FY 2024 revenue and non-GAAP adjusted EBITDA guidance were revised downwards by -2% and -4% to $14.6 billion and $870 million, respectively [3]. - Q4 FY 2024 is expected to see declines of -7% YoY in revenue and -4% YoY in normalized EBITDA [3]. - The company is proceeding with caution in the European market due to declining volume and insourcing issues [3]. Future Prospects - Consensus data suggests a +3% revenue growth and +11% EBITDA growth for FY 2025, contrasting with FY 2024's expected declines [5]. - The European automotive manufacturing volume is projected to rebound by +2.3% in 2025 after a -3.0% decrease in 2024 [5]. - Adient is taking steps to optimize costs and improve profitability in the EMEA segment, with plans to assess customer relationships for better efficiency [5]. Valuation - Adient's stock is currently valued at 5.5 times trailing twelve months' EV/EBITDA, close to its historical mean of 6.3 times [6]. - The consensus annualized EBITDA growth rate estimate for FY 2023-2027 is projected at +6.6% [6].

Core Insights - Adient reported $3.72 billion in revenue for the quarter ended June 2024, marking an 8.4% year-over-year decline and an EPS of $0.32 compared to $0.98 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $3.81 billion, resulting in a surprise of -2.53%, while the EPS surprise was -52.24% against a consensus estimate of $0.67 [1] Revenue and Earnings Performance - Light Vehicle Production in North America was 4.2 million, exceeding the average estimate of 3.95 million [3] - Light Vehicle Production in China was 7 million, slightly below the average estimate of 7.28 million [4] - Light Vehicle Production in EMEA was 4.4 million, close to the average estimate of 4.47 million [5] - Light Vehicle Production in South America was 0.7 million, compared to the average estimate of 0.73 million [6] - Net Sales in Asia were $712 million, below the estimated $728.63 million, reflecting a -4% change year-over-year [7] - Net Sales from Eliminations were -$21 million, better than the estimated -$25.52 million, showing a -16% change year-over-year [8] - Net Sales in the Americas were $1.74 billion, slightly below the average estimate of $1.76 billion, with an -8.6% year-over-year change [9] - Net Sales in EMEA were $1.29 billion, under the average estimate of $1.35 billion, representing a -10.4% year-over-year change [10] Stock Performance - Adient shares have returned -8.3% over the past month, compared to the Zacks S&P 500 composite's -5.9% change, with a current Zacks Rank of 5 (Strong Sell) indicating potential underperformance in the near term [11]

Financial Performance - Adient recorded net sales of $3,716 million for Q3 2024, a decrease of $339 million or 8.4% compared to Q3 2023, primarily due to lower production volumes and unfavorable currency impacts[137]. - Gross profit for Q3 2024 was $207 million, representing 5.6% of net sales, down from $302 million or 7.4% in Q3 2023, attributed to lower production volumes and unfavorable material economics[138]. - Net loss attributable to Adient was $11 million in Q3 2024, compared to a net income of $73 million in Q3 2023, driven by lower production volumes and higher restructuring costs[139]. - Adient's net sales for the first nine months of fiscal 2024 decreased by $540 million or 5% compared to the same period in fiscal 2023, largely due to production disruptions and softening demand[142]. - Comprehensive loss attributable to Adient was $78 million for Q3 2024, a decrease of $84 million compared to a comprehensive income of $6 million in Q3 2023[160]. - For the first nine months of fiscal 2024, comprehensive loss was $88 million, down $249 million from a comprehensive income of $161 million in the same period of fiscal 2023[161]. - Net sales for the first nine months of fiscal 2024 were $11,126 million, down 6% from $11,666 million in the same period of fiscal 2023[170]. - Net loss attributable to Adient was $61 million for the first nine months of FY2024, compared to net income of $70 million for the same period in FY2023[159]. Segment Performance - Global light vehicle production increased by 0.5% to 22.1 million units in Q3 2024, with North America showing a 2.4% increase, while South America experienced a decline of 12.5%[136]. - The EMEA segment faced persistent operational challenges, contributing to a 4.3% decline in vehicle production in that region[135]. - EMEA segment net sales decreased by 10% in Q3 2024 to $1,288 million, down from $1,438 million in Q3 2023[174]. - Adjusted EBITDA for the EMEA segment in Q3 2024 was $25 million, a decline of 76% from $103 million in Q3 2023[174]. Costs and Expenses - Restructuring and impairment costs rose significantly to $16 million in Q3 2024, compared to $6 million in Q3 2023, indicating increased operational challenges[140]. - Cost of sales decreased by $244 million, or 7%, and gross profit decreased by $95 million, or 31%, in Q3 FY2024 compared to Q3 FY2023[143]. - SG&A expenses decreased by $27 million, or 18%, in Q3 FY2024 compared to Q3 FY2023, primarily due to lower net engineering and administrative spending[145]. - Restructuring and impairment costs increased by $10 million in Q3 FY2024 and by $122 million in the first nine months of FY2024 due to restructuring actions in EMEA[147]. - Cost of sales decreased by $440 million, or 4%, and gross profit decreased by $100 million, or 13%, in the first nine months of FY2024 compared to the same period in FY2023[144]. - SG&A for the first nine months of FY2024 decreased by $44 million, or 10%, compared to the first nine months of FY2023[146]. Cash Flow and Financing - Cash provided by operating activities decreased to $280 million in the first nine months of fiscal 2024, down from $373 million in the prior year[189]. - Adient incurred $152 million in restructuring costs during the first nine months of fiscal 2024, with expected annual operating cost reductions of approximately $100 million upon completion of the 2024 Plan[192][193]. - As of June 30, 2024, Adient had $923 million available under its asset-based revolving credit facility[183]. - The Term Loan B Agreement had an outstanding balance of $633 million as of June 30, 2024, with a maturity extended to January 31, 2031[184]. Market Conditions - The automotive industry is experiencing softening consumer demand and lower vehicle production, impacting Adient's financial results[164]. - The automotive industry has faced significant volatility in commodity costs, including steel and petrochemical prices, which may continue to impact Adient's input costs[197]. - Adient has historically managed to offset inflation effects through operating efficiencies, despite experiencing moderate cost increases[197]. Monitoring and Risk - The company is closely monitoring the financial results of its EMEA segment for potential implications on long-lived asset recoverability[134]. - Adient is closely monitoring the EMEA segment for potential impairment of long-lived assets, including goodwill, due to unfavorable trends[164]. - As of June 30, 2024, there have been no material changes to Adient's critical accounting estimates and policies since the fiscal year ended September 30, 2023[198]. - Adient has not experienced adverse changes in market risk exposures that materially affected its disclosures as of June 30, 2024[200].

Company Performance - Adient reported quarterly earnings of $0.32 per share, missing the Zacks Consensus Estimate of $0.67 per share, and down from $0.98 per share a year ago, representing an earnings surprise of -52.24% [1] - The company posted revenues of $3.72 billion for the quarter ended June 2024, missing the Zacks Consensus Estimate by 2.53%, and down from $4.06 billion year-over-year [1] - Over the last four quarters, Adient has surpassed consensus EPS estimates only once and has not beaten consensus revenue estimates during the same period [1] Stock Performance - Adient shares have declined approximately 37.2% since the beginning of the year, contrasting with the S&P 500's gain of 8.7% [2] - The current Zacks Rank for Adient is 5 (Strong Sell), indicating expectations of underperformance in the near future [4] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.62 on revenues of $3.54 billion, and for the current fiscal year, it is $2.14 on revenues of $14.77 billion [4] - The trend for estimate revisions ahead of the earnings release was unfavorable, which may impact future stock performance [4] Industry Context - The Automotive - Original Equipment industry, to which Adient belongs, is currently ranked in the bottom 14% of over 250 Zacks industries, suggesting a challenging environment [5] - Strattec Security, another company in the same industry, is expected to report quarterly earnings of $0.38 per share, reflecting a year-over-year decline of 24%, with revenues projected at $141.51 million, up 7% from the previous year [5]

Financial Performance - Q3 FY2024 reported revenue was $3,716M, an 8% decrease compared to Q3 FY2023, with adjusted EBITDA of $202M, down 27% year-over-year[2] - Adjusted net income for Q3 FY2024 was $29M, with adjusted EPS diluted at $0.32, compared to a net loss of $11M and EPS diluted of $(0.12) in the same quarter last year[2] - Adient reported net sales of $3,716 million for the three months ended June 30, 2024, a decrease of 8.4% compared to $4,055 million for the same period in 2023[19] - The gross profit for the same period was $207 million, down from $302 million, reflecting a gross margin of 5.6%[19] - Adjusted EBITDA for the three months ended June 30, 2024, was $202 million, with an adjusted EBITDA margin of 5.4%[29] - Net income attributable to Adient was a loss of $11 million for the three months ended June 30, 2024, compared to a profit of $73 million in the same period last year[19] - Adjusted net income attributable to Adient was $29 million, down from $93 million in the previous year[39] - Adjusted diluted earnings per share decreased to $0.32 from $0.98 year-over-year[44] - Adjusted EBIT margin was 3.4% of net sales, down from 4.8% in the same quarter last year[38] - Total net sales for the quarter were $3,716 million, compared to $4,055 million in the prior year[38] Cash Flow and Debt - The company generated free cash flow of $88M in Q3 FY2024, compared to $143M in Q3 FY2023[10] - Cash provided by operating activities was $158 million for the three months ended June 30, 2024, down from $203 million in the prior year[26] - Net debt as of June 30, 2024, was $1,647 million, an increase of 15.6% from $1,425 million as of September 30, 2023[54] - Total debt as of June 30, 2024, was $2,537 million, slightly up from $2,535 million as of September 30, 2023[54] - The net leverage ratio increased to 1.87 as of June 30, 2024, from 1.52 as of September 30, 2023[53] Segment Performance - The Americas segment reported adjusted EBITDA of $99M, while EMEA and Asia reported $25M and $101M, respectively, with overall performance impacted by lower customer production[8] - Adient's Americas segment generated net sales of $1,737 million, while the EMEA and Asia segments reported $1,288 million and $712 million, respectively[29] - Adjusted EBITDA for the Americas segment was $99 million, up from $95 million in the same period last year, while EMEA dropped to $25 million from $103 million[31] Outlook and Strategic Initiatives - The FY2024 outlook was updated to reflect consolidated sales of approximately $14.6B, down from a prior estimate of $14.8B-$14.9B[12] - Adient China is expected to drive double-digit growth in the coming years, focusing on innovation in seating comfort, connectivity, and sustainability[4] - The company is advancing automation and AI tools to improve operational efficiency and reduce costs[5] - The company is focused on deleveraging activities and expects to improve its financial position in the upcoming quarters[16] Costs and Expenses - Corporate-related costs increased to $(23) million from $(22) million year-over-year[31] - Restructuring and impairment costs rose to $(16) million from $(6) million in the same period last year[31] - The company reported a net financing charge of $(48) million, slightly down from $(49) million in the previous year[31] - Adjusted equity income for Q2 2024 was $23 million, down 14.8% from $27 million in Q2 2023[46] - Net financing charges for Q2 2024 were $48 million, unchanged from Q2 2023[48] - Operating cash flow for Q2 2024 was $158 million, a decrease of 22.1% compared to $203 million in Q2 2023[50] - Free cash flow for Q2 2024 was $88 million, down 38.5% from $143 million in Q2 2023[51] - Adjusted EBITDA for Q2 2024 was $202 million, a decline of 26.9% from $276 million in Q2 2023[51] - Capital expenditures for Q2 2024 were $70 million, compared to $60 million in Q2 2023[50] Taxation - The company reported an adjusted effective tax rate of 40% for the three months ended June 30, 2024[17] - The effective tax rate for the three months ended June 30, 2024, was 88.9%, significantly higher than 22.8% in 2023[41]

Financial Performance - Adient reported a Q3 2024 GAAP net loss of $11 million and a diluted EPS of $(0.12), while the adjusted EPS was $0.32 [1] - The adjusted EBITDA for Q3 was $202 million, impacted by lower customer production [1] - The company generated free cash flow of $88 million during the quarter [1] Debt and Cash Position - As of June 30, 2024, Adient's gross debt and net debt were approximately $2.5 billion and $1.6 billion, respectively, with cash and cash equivalents totaling $890 million [1] - The company executed $75 million in share repurchases, retiring about 2.6 million shares in the quarter, bringing year-to-date repurchases to $225 million and approximately 7.1 million shares [1] Outlook and Market Conditions - Adient updated its FY24 outlook, acknowledging the effects of lower vehicle production expectations [1] - The company operates over 200 manufacturing and assembly plants globally, producing automotive seating for all major OEMs [3]

Group 1 - Adient will participate in the J.P. Morgan Auto Conference on August 8, 2024, with a fireside chat featuring CEO Jerome Dorlack and CFO Mark Oswald at 10:15 AM Eastern Time [1] - A live webcast of the fireside chat will be available on the investor section of Adient's website [1] Group 2 - Adient is a global leader in automotive seating, employing over 70,000 people across 29 countries [2] - The company operates more than 200 manufacturing and assembly plants worldwide, producing automotive seating for all major OEMs [2] - Adient's expertise covers the entire automotive seat-making process, from research and design to engineering and manufacturing [2]

Earnings Expectations for Adient - Wall Street expects Adient to report a year-over-year decline in earnings and revenues for the quarter ended June 2024, with earnings per share (EPS) expected at $0.67, down 31.6% YoY, and revenues expected at $3.81 billion, down 6% YoY [1][2] - The consensus EPS estimate has remained unchanged over the last 30 days, reflecting analysts' collective reassessment of initial estimates [3] - The Most Accurate Estimate for Adient is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -7%, indicating analysts have recently become bearish on the company's earnings prospects [6] Earnings Surprise History and Predictions - Adient delivered a positive earnings surprise of +38.46% in the last reported quarter, beating the consensus EPS estimate of $0.39 with actual earnings of $0.54 [7] - Over the last four quarters, the company has beaten consensus EPS estimates two times [7] - A positive Earnings ESP combined with a Zacks Rank of 1, 2, or 3 has historically resulted in a positive earnings surprise nearly 70% of the time, but Adient currently carries a Zacks Rank of 5, making it difficult to predict an earnings beat [5][6] Industry Comparison - Magna, another player in the Zacks Automotive - Original Equipment industry, is expected to post earnings of $1.54 per share for the quarter ended June 2024, representing a YoY increase of 2.7%, with revenues expected at $11.12 billion, up 1.3% YoY [9] - Magna's consensus EPS estimate has been revised down by 3% over the last 30 days, and the company now has an Earnings ESP of -5.84%, combined with a Zacks Rank of 4, making it difficult to predict an earnings beat [9] - Over the last four quarters, Magna has surpassed consensus EPS estimates two times [9]

Company Overview - Adient is a global leader in automotive seating with over 70,000 employees across 29 countries [2] - The company operates more than 200 manufacturing and assembly plants worldwide [2] - Adient produces and delivers automotive seating for all major OEMs, covering the entire seat-making process from research and design to engineering and manufacturing [2] Upcoming Financial Event - Adient will host a conference call on August 6, 2024, at 8:30 a.m. (ET) to discuss its third quarter fiscal 2024 financial results [1] - A live webcast of the call and presentation materials will be available on the Adient Investor Relations website [1] - Participants can join the call by dialing specific telephone numbers and using the conference passcode ADIENT [1]