Adient(ADNT) - 2025 Q2 - Quarterly Report

Financial Performance - Adient recorded net sales of $3,611 million for Q2 2025, a decrease of$ 139 million or 3.7% compared to Q2 2024, primarily due to lower production volumes in EMEA and China [114]. - Gross profit for Q2 2025 was $261 million, representing 7.2% of net sales, an increase from$ 230 million or 6.1% of net sales in Q2 2024, driven by favorable pricing adjustments [118]. - Net loss attributable to Adient was $335 million in Q2 2025, compared to a net loss of$ 70 million in Q2 2024, largely due to a non-cash goodwill impairment charge [133]. - Comprehensive loss attributable to Adient was $229 million in Q2 2025, an increase from$ 168 million in Q2 2024, primarily due to a higher net loss from the goodwill impairment [137]. - For the first six months of fiscal 2025, net loss attributable to Adient was $335 million, compared to a net loss of$ 50 million in the same period of fiscal 2024 [136]. - Comprehensive loss attributable to Adient was $454 million in the first six months of fiscal 2025, a significant increase from a loss of$ 10 million in the same period of fiscal 2024, primarily due to a non-cash goodwill impairment of $284 million in the EMEA reporting unit [138]. Segment Performance - Net sales for the Americas segment increased by 2% to$ 1,699 million in Q2 2025 compared to $1,660 million in Q2 2024, driven by favorable pricing adjustments and higher production volumes [150]. - Adjusted EBITDA for the Americas segment rose by 18% to$ 94 million in Q2 2025, up from $80 million in Q2 2024, reflecting improved pricing and production performance [150]. - EMEA segment net sales decreased by 10% to$ 1,231 million in Q2 2025, down from $1,370 million in Q2 2024, primarily due to lower production volumes and unfavorable currency impacts [154]. - Adjusted EBITDA for the EMEA segment fell by 12% to$ 50 million in Q2 2025, compared to $57 million in Q2 2024, impacted by lower production volumes and unfavorable product mix [154]. - Asia segment net sales decreased by 5% to$ 707 million in Q2 2025, down from $742 million in Q2 2024, due to lower production volumes in China [158]. - Adjusted EBITDA for the Asia segment declined by 2% to$ 110 million in Q2 2025, compared to $112 million in Q2 2024, affected by unfavorable production volumes and mix [158]. Costs and Expenses - Selling, general and administrative expenses rose by 25% to$ 144 million in Q2 2025, compared to $115 million in Q2 2024, largely due to third-party consulting costs [116]. - Cost of sales decreased by$ 170 million, or 5%, while gross profit increased by $31 million, or 13%, in Q2 2025 compared to Q2 2024 [120]. - For the first six months of fiscal 2025, cost of sales decreased by$ 305 million, or 4%, and gross profit increased by $1 million, less than 1%, compared to the same period in fiscal 2024 [121]. - SG&A expenses increased by$ 29 million, or 25%, in Q2 2025 compared to Q2 2024, primarily due to higher net engineering and administrative spending [122]. - Restructuring and impairment costs rose by $226 million in Q2 2025, mainly due to a$ 333 million impairment charge related to EMEA's goodwill [124]. Impairment and Goodwill - A non-cash goodwill impairment charge of $333 million was recognized in EMEA as of March 31, 2025, significantly impacting net loss attributable to Adient, which totaled$ 335 million for Q2 2025 [111][118]. - Adient recorded a non-cash goodwill impairment of $333 million in the EMEA reporting unit as of March 31, 2025, with no goodwill remaining in that unit [181]. - The Americas and Asia reporting units maintained goodwill of$ 604 million and $1,180 million, respectively, as of March 31, 2025 [182]. - The fair value of reporting units showed significant declines, with differences between fair values and carrying values exceeding 10% [181]. - An impairment charge of$ 10 million was recorded for the investment in Adient Aerospace during the first six months of fiscal 2025 [186]. Cash Flow and Financing - Cash provided by operating activities was $64 million for the six months ended March 31, 2025, a decrease from$ 122 million in the same period of 2024 [167]. - Working capital decreased by $25 million to$ 383 million as of March 31, 2025, primarily due to a decrease in cash and cash equivalents [171]. - The ABL Credit Facility provides a revolving line of credit up to $1,250 million, with$ 843 million available as of March 31, 2025 [163]. - Adient's Term Loan B Agreement had an outstanding balance of $629 million as of March 31, 2025, with a reduced applicable margin of 2.25% [164]. - During the first six months of fiscal 2025, Adient repurchased 1,227,329 ordinary shares at an average price of$ 20.37, totaling $25 million [175]. - Cash used by investing activities was$ 78 million for the six months ended March 31, 2025, down from $113 million in the same period of 2024 [168]. Market Conditions and Outlook - The company faces uncertainties in the automotive industry, including weakening consumer demand and tariff impacts, which may affect future production volumes [110]. - The company continues to face uncertainties in the automotive industry, including weakening consumer demand and pricing pressures due to overcapacity in the EMEA region [141]. - Adient's results for Q2 fiscal 2025 were in line with internal expectations, but uncertainties remain regarding future vehicle production [183]. - The company expects enhanced profitability and cash flows driven by efficiency actions and strategic portfolio reviews [183]. - Adient continues to monitor economic conditions and will test for impairment annually or upon identifying triggering events [182].