Core Viewpoint - Adient's international operations are crucial for assessing its financial strength and growth potential, especially in a globally interconnected economy [1][2]. Group 1: International Revenue Performance - In the recent quarter, Adient's total revenue was $3.75 billion, a decline of 4.1% year-over-year [2]. - Asia contributed $742 million, or 19.8% of total revenue, which was a surprise of -4.07% compared to the consensus estimate of $773.51 million [3]. - EMEA generated $1.37 billion, accounting for 36.5% of total revenue, slightly below the expected $1.38 billion, representing a surprise of -0.63% [3]. Group 2: Future Revenue Projections - Analysts project total revenue for the current fiscal quarter to reach $4.06 billion, reflecting a 0.1% increase from the same quarter last year [4]. - For the full year, total revenue is expected to be $15.44 billion, indicating a 0.3% increase year-over-year [4]. - Revenue contributions from Asia and EMEA for the full year are anticipated to be $3.13 billion (20.3%) and $5.27 billion (34.1%), respectively [4]. Group 3: Stock Performance and Market Position - Adient's stock has decreased by 9.6% over the past month, while the Zacks S&P 500 composite fell by only 0.4% [7]. - Over the last three months, Adient's shares declined by 19%, contrasting with a 4.9% increase in the S&P 500 [7]. - The company currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance compared to the broader market in the near term [6].

Financial Performance - Adient recorded net sales of $3,750 million for Q2 fiscal 2024, a decrease of $162 million or 4.1% compared to Q2 fiscal 2023, primarily due to lower production volumes in the Americas and EMEA regions [136]. - Gross profit for Q2 fiscal 2024 was $230 million, or 6.1% of net sales, down from $250 million or 6.4% in Q2 fiscal 2023, attributed to lower production volumes and unfavorable foreign currency impacts [137]. - Net loss attributable to Adient was $70 million in Q2 fiscal 2024, compared to a net loss of $15 million in Q2 fiscal 2023, mainly due to higher restructuring costs and unfavorable foreign currency impacts [139]. - Adient's net sales for the first six months of fiscal 2024 decreased by $201 million, or 3%, compared to the same period in fiscal 2023, due to lower production volumes across all regions [142]. - Net sales for the three months ended March 31, 2024, decreased by 6% to $1,660 million compared to $1,761 million in the same period of 2023 [169]. - Net sales for the six months ended March 31, 2024, decreased by 5% to $3,307 million compared to $3,485 million in the same period of 2023 [169]. - Comprehensive loss attributable to Adient was $168 million for the second quarter of fiscal 2024, a decrease of $196 million compared to comprehensive income of $28 million in the same quarter of fiscal 2023 [159]. Cost and Expenses - Cost of sales decreased by $142 million, or 4%, in Q2 fiscal 2024, while gross profit decreased by $20 million, or 8%, compared to Q2 fiscal 2023 [144]. - Selling, general and administrative expenses decreased by 18% to $115 million in Q2 fiscal 2024, down from $141 million in Q2 fiscal 2023 [140]. - Cost of sales decreased by $196 million, or 3%, and gross profit decreased by $5 million, or 1%, in the first six months of fiscal 2024 compared to the same period in fiscal 2023 [145]. - SG&A expenses decreased by $26 million, or 18%, in the second quarter of fiscal 2024 compared to the second quarter of fiscal 2023 [146]. - Restructuring and impairment costs surged over 100% to $125 million in Q2 fiscal 2024, compared to $17 million in Q2 fiscal 2023 [140]. - Restructuring actions under the "2024 Plan" resulted in charges of $138 million, expected to reduce annual operating costs by approximately $80 million upon completion [188]. Equity and Income - Equity income increased to $18 million in Q2 fiscal 2024 from $4 million in Q2 fiscal 2023, driven by favorable production volumes at partially-owned affiliates [138]. - Equity income was $18 million for the second quarter of fiscal 2024, a significant increase from $4 million in the same quarter of fiscal 2023 [150]. - Income tax provision for the second quarter of fiscal 2024 was $8 million, a decrease of 68% compared to $25 million in the same quarter of fiscal 2023 [155]. Market Conditions - The automotive industry is facing inflationary pressures and volatile commodity pricing, impacting Adient's operating environment [133]. - The decrease in net sales during the second quarter of fiscal 2024 was primarily due to lower production volumes from slower product launches, totaling a negative impact of $103 million [170]. - The unfavorable impact of foreign currencies on net sales was $2 million for the three months ended March 31, 2024 [170]. Financing and Liquidity - Adient believes its current financial resources will be sufficient to fund its liquidity requirements for at least the next twelve months [179]. - Adient maintains an asset-based revolving credit facility with a total line of credit up to $1,250 million, including $950 million for North America and $300 million for Europe, with $974 million available as of March 31, 2024 [180]. - The Term Loan B Agreement had an outstanding balance of $635 million as of March 31, 2024, with an amended maturity date extended to January 31, 2031, and a reduced applicable margin from 3.25% to 2.75% [181]. - Adient issued $500 million in senior secured notes and $500 million in senior unsecured notes in March 2023, with total net proceeds of $988 million used primarily to redeem $350 million of the Term Loan B Agreement [183]. Operational Efficiency - Operating cash flows decreased to $122 million for the six months ended March 31, 2024, down from $170 million year-over-year, primarily due to a higher net loss [185]. - Working capital decreased by $111 million to $467 million as of March 31, 2024, due to decreases in cash and inventories [187]. - The company experienced an increase in capital expenditures to $124 million for the first six months of fiscal 2024, attributed to timing of program spend on product launches [186]. - Adient's management continues to analyze operations for efficiency improvements and cost reductions in response to changes in the automotive market [189]. - The company continues to monitor market conditions within the automotive industry and may consider further restructuring actions as needed [149].

FY2024 Second Quarter Earnings Call May 3, 2024 ...

Financial Performance - Q2 FY2024 revenue was $3,750M, a 4% decrease year-over-year, primarily due to lower volumes and FX headwinds[2] - Adjusted EBITDA for Q2 FY2024 was $227M, up $12M year-over-year, with an adjusted EBITDA margin of 6.1%, reflecting a 60 basis points improvement[2] - The company reported a net loss of $(70)M for Q2 FY2024, with adjusted net income of $49M, representing a 58% increase year-over-year[2] - Adient reported net sales of $3,750 million for the three months ended March 31, 2024, a decrease of 4.1% compared to $3,912 million in the same period of 2023[18] - The gross profit for the quarter was $230 million, down from $250 million year-over-year, reflecting a gross margin of 6.1%[18] - Adjusted EBITDA for the three months ended March 31, 2024, was $227 million, compared to $215 million for the same period in 2023, reflecting an increase of 5.6%[38] - Adjusted net income attributable to Adient for the three months ended March 31, 2024, was $49 million, up from $31 million in the same period in 2023, representing a 58.1% increase[39] - Adjusted EBIT for the three months ended March 31, 2024, was $147 million, compared to $134 million for the same period in 2023, indicating a growth of 9.7%[38] - The adjusted EBITDA margin for the three months ended March 31, 2024, was 6.1%, compared to 5.5% for the same period in 2023, showing an improvement of 0.6 percentage points[38] - Basic and diluted earnings per share for the three months ended March 31, 2024, were both $(0.77), compared to $(0.16) for the same period in 2023[33] Cash Flow and Capital Management - Cash and cash equivalents stood at $905M as of March 31, 2024, down from $1,110M at the end of FY2023[6] - The company reported free cash flow of $(2)M year-to-date FY2024, compared to $53M in the same period last year[6] - Cash provided by operating activities was $81 million, down from $126 million year-over-year[25] - Operating cash flow for Q1 2024 was $81 million, down from $126 million in Q1 2023, highlighting challenges in cash generation[49] - Free cash flow for the three months ended March 31, 2024, was $12 million, down from $70 million in the same period of 2023, primarily due to increased capital expenditures[49] - Capital expenditures for the three months ended March 31, 2024, were $69 million, compared to $56 million in the same period of 2023, reflecting ongoing investments in growth[49] Shareholder Actions - Year-to-date share repurchases totaled $150M, retiring approximately 4.5M shares, with $385M remaining in the current share repurchase authorization[1] Future Guidance - The company expects FY2024 consolidated sales to be in the range of $14.8B to $14.9B, down from prior guidance of $15.4B to $15.5B[8] - Adient anticipates adjusted EBITDA for FY2024 to be between $900M and $920M, revised from a previous estimate of $985M[8] Restructuring and Cost Management - The company plans to implement restructuring actions with $125M in charges expected in Q2 FY2024, aimed at achieving ~$60M in reduced annual operating costs by FY2027[2] - The company incurred restructuring and impairment costs of $125 million in the latest quarter, significantly higher than $17 million in the prior year[18] - The company is focused on restructuring plans and managing input cost recoveries amid ongoing economic uncertainties[16] Segment Performance - The Americas segment generated net sales of $1,660 million, while EMEA and Asia reported $1,370 million and $742 million, respectively[28] Debt and Financial Health - Adient's long-term debt remained stable at $2,401 million, with total liabilities amounting to $3,658 million[21][22] - The net debt as of March 31, 2024, was $1.63 billion, an increase from $1.43 billion as of September 30, 2023, reflecting changes in cash and debt management[53] - The company reported a net leverage ratio of 1.71 as of March 31, 2024, compared to 1.52 in the previous period, indicating a slight increase in leverage[52] - The net leverage ratio is calculated as net debt divided by adjusted EBITDA for the last four quarters, providing insight into the company's financial health[34] Equity and Investment Performance - Equity income for the three months ended March 31, 2024, was $18 million, compared to $4 million in the same period of 2023, indicating strong performance in equity investments[45] - Net financing charges decreased to $47 million in Q1 2024 from $59 million in Q1 2023, showing effective cost management[47]

Financial Performance - Q2 GAAP net income and EPS diluted were $(70)M and $(0.77), respectively, while Q2 Adj-EPS diluted was $0 54 [1] - Q2 Adj-EBITDA increased by $12M y-o-y to $227M, with Adj-EBITDA margin improving by 60 bps to 6 1% [1] - Gross debt and net debt stood at ~$2 5B and ~$1 6B, respectively, as of March 31, 2024, with cash and cash equivalents totaling $905M [1] Share Repurchases - The company repurchased $50M worth of shares in Q2, retiring ~1 5M shares, bringing year-to-date share repurchases to $150M and ~4 5M shares [1] FY24 Outlook Update - The company updated its FY24 outlook, citing slow ramp of launches, adverse customer mix, and softer electric vehicle production in the Americas and EMEA [1] Conference Call - Adient's president and CEO, Jerome Dorlack, and CFO, Mark Oswald, will host a conference call to discuss the results at 8:30 a m Eastern today [2] Company Overview - Adient is a global leader in automotive seating with 70,000+ employees in 29 countries and operates more than 200 manufacturing/assembly plants worldwide [3] - The company produces and delivers automotive seating for all major OEMs, covering complete seating systems to individual components [3]

Company Layoffs and Restructuring - Adient plans to cut jobs overseas and shift positions to countries with lower labor costs to reduce expenses [1] - The exact number of job cuts is unknown, but the company is moving some positions out of Europe [1] - Adient expects to incur $125 million in restructuring charges and save $60 million annually starting in 2027 [1] Financial Performance and Market Reaction - Adient's Q1 results showed lackluster sales, prompting the layoffs and job shifts [1] - ADNT stock is up slightly on Monday but down 20 9% year-to-date [2] Industry Trends - Adient joins a growing list of companies announcing layoffs to combat a tough economy [2] - Inflation continues to weigh on both consumers and businesses, leading to headcount reductions [2] Related Market News - Other notable stock market stories include Nike layoffs and Salesforce stock falling [2]

Core Viewpoint - Adient reported adjusted earnings per share (EPS) of 31 cents for Q1 fiscal 2024, a decline from 34 cents in the previous year and below the Zacks Consensus Estimate of 47 cents. Net sales were $3.66 billion, down 1% year over year, also missing the consensus estimate of $3.72 billion [1]. Segmental Performance - The Americas segment generated revenues of $1.65 billion, a 4% decline year over year, but exceeded the Zacks Consensus Estimate of $1.64 billion. Adjusted EBITDA for this segment was $80 million, up from $69 million in the prior year, surpassing the consensus estimate of $57 million [2]. - The EMEA segment reported revenues of $1.27 billion, a 7.6% increase year over year, exceeding the Zacks Consensus Estimate of $1.25 billion. EBITDA for this segment was $45 million, up from $28 million in the previous year, also beating the consensus estimate of $40.99 million [3]. - The Asia segment's revenues were $770 million, down 6.2% year over year, missing the Zacks Consensus Estimate of $844 million. Adjusted EBITDA fell 17.4% year over year to $114 million due to program transitions and timing of recoveries [3]. Financial Position - As of December 31, 2023, Adient had cash and cash equivalents of $990 million, down from $1.11 billion as of September 30, 2023. Long-term debt was $2,403 million, slightly up from $2,401 million [4]. - Capital expenditures for Q1 fiscal 2024 totaled $55 million, compared to $61 million in the prior-year quarter. The company repurchased nearly three million shares for $100 million during the quarter [4]. Revised Guidance 2024 - Adient revised its fiscal 2024 revenue guidance to a range of $15.40-$15.50 billion, down from the previous estimate of $15.60-$15.70 billion. Adjusted EBITDA is now estimated at $985 million, reduced from $1.01 billion. Free cash flow is projected at $300 million, with interest expenses and cash tax estimated between $185 million and $105 million, respectively [5].

Core Insights - Adient, a global leader in automotive seating, will participate in the Wolfe Research Global Auto and Auto Tech Conference on February 15, 2024 [1] - The company's Executive Vice President and CFO Mark Oswald, along with Executive Vice President Americas Jim Conklin, will engage in a fireside chat at 8:20 a.m. Eastern time [1] - A live webcast of the discussion will be accessible on the investor section of Adient's website [1] Company Overview - Adient operates with over 70,000 employees across 29 countries and manages more than 200 manufacturing and assembly plants globally [2] - The company specializes in producing automotive seating for all major Original Equipment Manufacturers (OEMs), offering complete seating systems as well as individual components [2] - Adient's integrated in-house capabilities allow it to handle the entire automotive seat-making process, from research and design to engineering and manufacturing, supplying millions of vehicles annually [2]

Financial Performance - Adient recorded net sales of $3,660 million for Q1 fiscal 2024, a decrease of $39 million or 1.1% compared to Q1 fiscal 2023, primarily due to lower production volumes in the Americas and Asia [126]. - Gross profit for Q1 fiscal 2024 was $246 million, or 6.7% of net sales, compared to $231 million, or 6.2% of net sales in Q1 fiscal 2023, reflecting improved profitability driven by favorable pricing [127]. - Net income attributable to Adient was $20 million for Q1 fiscal 2024, a 67% increase from $12 million in Q1 fiscal 2023, mainly due to favorable business performance and pricing adjustments [129]. - Comprehensive income attributable to Adient increased by 24% to $158 million in Q1 fiscal 2024, compared to $127 million in Q1 fiscal 2023, primarily due to higher net income and favorable foreign currency translation adjustments [143]. Segment Performance - Net sales for the Americas segment decreased by 4% to $1,647 million in Q1 fiscal 2024, impacted by UAW strike-related disruptions and unfavorable material economics [153]. - EMEA segment net sales increased by 7% to $1,268 million in Q1 fiscal 2024, supported by favorable foreign currency impacts and higher production volumes [155]. - Asia segment net sales decreased by 6% to $770 million in Q1 fiscal 2024, primarily due to lower production volumes and unfavorable foreign currency impacts [157]. - Adjusted EBITDA for the Americas segment increased by 16% to $80 million in Q1 fiscal 2024, despite a $25 million unfavorable impact from UAW strike-related disruptions [154]. - EMEA segment adjusted EBITDA surged by 61% to $45 million in Q1 fiscal 2024, driven by favorable pricing and foreign currency impacts [156]. - Asia segment adjusted EBITDA decreased by 17% to $114 million in Q1 fiscal 2024, affected by lower pricing adjustments and production volumes [158]. Operational Challenges - The automotive industry continues to face challenges from supply chain disruptions, inflationary pressures, and volatile commodity pricing, impacting Adient's operating environment [124]. - The company anticipates ongoing challenges in fiscal 2024 due to economic uncertainties and geopolitical factors affecting the automotive sector [121]. Expenses and Costs - Selling, general, and administrative (SG&A) expenses rose by $9 million or 7% in Q1 fiscal 2024, attributed to higher compensation and a one-time loss on business divestiture [134]. - Restructuring and impairment costs increased by $4 million, or 57%, in Q1 fiscal 2024, reflecting ongoing restructuring efforts [135]. - Net financing charges rose to $44 million in Q1 fiscal 2024, a 7% increase from $41 million in Q1 fiscal 2023, primarily due to higher interest rates on new debt [138]. - Other pension expense decreased by 78% to $2 million in Q1 fiscal 2024, down from $9 million in Q1 fiscal 2023, due to a non-recurring curtailment loss recorded in the prior year [139]. Workforce and Restructuring - Adient committed to a restructuring plan of $11 million, estimating annual operating cost reductions of approximately $20 million upon completion, primarily from workforce reductions [168]. - Approximately 13,000 employees are targeted for workforce reductions, with 11,000 separated as of December 31, 2023, and twenty-two out of twenty-six planned plant closures completed [169]. Cash Flow and Financing - Adient's cash provided by operating activities was $41 million for the three months ended December 31, 2023, compared to $44 million for the same period in 2022 [165]. - The company experienced a decrease in capital expenditures to $55 million in the first three months of fiscal 2024, attributed to the timing of program spending on product launches [166]. - Adient maintains an asset-based revolving credit facility (ABL Credit Facility) with a revolving line of credit up to $1,250 million, including $950 million for North America and $300 million for Europe, with $938 million available as of December 31, 2023 [160]. - The Term Loan B Agreement had an outstanding balance of $635 million as of December 31, 2023, with an interest rate of Term SOFR plus a margin of 2.75% after recent amendments [161]. - Adient issued $500 million in 7% senior secured notes due 2028 and $500 million in 8.250% senior unsecured notes due 2031, with total net proceeds of $988 million used primarily to redeem $350 million of the senior secured term loan [163]. - Working capital decreased by $52 million to $526 million as of December 31, 2023, due to decreases in cash, accounts receivable, and inventories [167]. - As of December 31, 2023, $85 million was funded under supply chain financing programs, down from $170 million as of September 30, 2023 [172]. Global Production Trends - Global light vehicle production increased by 9.8% year-over-year in the first three months of fiscal 2024, with notable growth in China at 20.8% [125]. - Adient operates in three reportable segments: Americas, EMEA, and Asia Pacific/China, leveraging its global footprint to drive growth [123].

Core Insights - Adient reported $3.66 billion in revenue for the quarter ended December 2023, a year-over-year decline of 1.1% [1] - The EPS for the same period was $0.31, down from $0.34 a year ago [1] - Revenue fell short of the Zacks Consensus Estimate of $3.72 billion, resulting in a surprise of -1.50% [1] - The company experienced an EPS surprise of -34.04%, with the consensus EPS estimate being $0.47 [1] Performance Metrics - Net Sales in Asia were $770 million, compared to an estimated $844.49 million, reflecting a year-over-year decline of -6.2% [2] - Net Sales from Eliminations were reported at -$25 million, better than the estimated -$32.69 million, with a year-over-year change of -10.7% [2] - Net Sales in America reached $1.65 billion, slightly above the estimated $1.64 billion, showing a year-over-year decline of -4.5% [2] - Net Sales in EMEA were $1.27 billion, exceeding the estimated $1.25 billion, with a year-over-year increase of +7.3% [2] Stock Performance - Adient shares returned +4.7% over the past month, compared to the Zacks S&P 500 composite's +5.6% change [2] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [2]