Financial Data and Key Metrics Changes - Adjusted EBITDA for Q2 was $233 million, up 3% year on year, with EBITDA margins expanding by 40 basis points to 6.5% [28][29] - Consolidated sales were approximately $3.6 billion, a decrease of $139 million compared to Q2 fiscal year 2024, primarily due to lower customer volumes and foreign exchange impacts [30][31] - Free cash flow for Q2 was an outflow of $90 million, consistent with internal expectations reflecting normal seasonality [37] Business Line Data and Key Metrics Changes - In the Americas, sales increased due to favorable comparisons with the previous year, while EMEA and Asia saw declines in sales [30][31] - Adjusted EBITDA in the Americas improved by $15 million, driven by favorable commercial actions and lower input costs [34] - EMEA experienced a year-over-year decline in volume mix, negatively impacting results by $9 million, but business performance improved due to restructuring benefits [35][36] Market Data and Key Metrics Changes - The company outperformed industry volumes in the Americas, while EMEA faced headwinds from weaker market demand [30][31] - In Asia, sales in China underperformed due to lower volumes from traditional luxury OEM customers, but overall performance outside China remained strong [31][32] Company Strategy and Development Direction - The company is focused on mitigating tariff impacts through resourcefulness and leveraging its global footprint to create value for customers [11][15] - Adient aims to capitalize on growth opportunities by localizing production and optimizing its supply chain to reduce tariff exposure [15][16] - The company is committed to driving operational excellence and innovation, with a focus on product development and automation [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage tariff impacts and maintain strong business performance despite macroeconomic uncertainties [25][26] - The outlook for the second half of fiscal year 2025 remains positive, with expectations for continued operational improvements and manageable volume headwinds [41][43] - Management reiterated guidance for fiscal year 2025, assuming no significant changes to current tariff policies [43][44] Other Important Information - A non-cash goodwill impairment of $333 million was recorded in the EMEA reporting unit due to a significant decline in market value [27][21] - The company ended the quarter with a strong cash balance of $754 million and total liquidity of $1.6 billion [39][40] Q&A Session Summary Question: Can you clarify the status of tariff recoveries? - Management indicated that 75% of the tariff exposure has been resolved, with ongoing negotiations and cost offsets for the remaining 25% [54][56] Question: How is the EMEA region performing? - Management noted that while there are still challenges, recent restructuring actions have led to improved business performance, though variability is expected [57][58] Question: What is the outlook for margins and cost efficiency? - Management expects to see improvements in margins over time, particularly as lower-margin businesses roll off and new higher-margin products are introduced [60][70] Question: What is the company's approach to capital allocation? - The company will take a measured approach to capital allocation, focusing on investments in the business while considering share repurchases based on cash generation and market conditions [78][80] Question: Can you comment on potential acquisitions? - Management refrained from commenting on specific M&A transactions but emphasized that any acquisition would need to add value for shareholders and customers [86][88]