Adient(US:ADNT)2024-05-03 20:17Financial 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].