Adient: This Is A 2025 Turnaround Story

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].