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% [30][31] - Consolidated sales decreased to approximately $3.6 billion, a decline of $139 million compared to Q2 fiscal year 2024, primarily due to lower customer volumes and foreign exchange impacts [32][33] - Free cash flow for Q2 was an outflow of $90 million, consistent with internal expectations reflecting normal seasonality [39] Business Line Data and Key Metrics Changes - In the Americas, sales increased due to favorable comparisons with the previous year, driven by key customer programs reaching full run rates [33][34] - EMEA experienced lower production volumes but began to see improvements from restructuring efforts, with a recorded non-cash goodwill impairment of $333 million due to market value declines [22][30] - Asia's performance was flat year-on-year, with expectations for growth driven by new business with local OEMs [23][34] Market Data and Key Metrics Changes - The Americas outperformed industry volumes, while EMEA faced headwinds from weaker market demand [33][34] - In Asia, sales in China underperformed due to lower volumes from traditional luxury OEM customers, but new customer launches outside China are expected to drive growth [33][34] 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 [13][17] - Adient aims to capitalize on growth opportunities by focusing on more profitable business and investing in innovation and efficiency measures [10][17] - The company is committed to maintaining operational excellence and solid execution to navigate macroeconomic volatility [9][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage tariff exposure and emphasized the importance of USMCA compliance [15][17] - The outlook for the second half of fiscal year 2025 remains positive, with expectations for continued strong business performance despite potential volume headwinds from tariffs [45][46] - Management highlighted the resilience of the operating model and the ability to mitigate external pressures [30][31] Other Important Information - Adient received multiple awards for supplier excellence, including recognition from GM and Toyota for quality and performance [11][12] - The company has a strong cash balance of $754 million and total liquidity of $1.6 billion, with no near-term debt maturities [41][42] Q&A Session Summary Question: Can you clarify the progress on tariffs and the roadmap for recovery? - Management indicated that the roadmap includes ongoing price negotiations and cost offsets, with 75% of the gross position already resolved [57][58] Question: How is the EMEA region performing relative to expectations? - Management noted that while EMEA showed positive business performance, it is still subject to variability and should not be seen as a trend [60][62] Question: What is the outlook for margins and cost efficiency actions? - Management expects significant opportunities for margin improvement, particularly in the Americas, while cautioning that EMEA may not see inflection until 2026 [71][74] Question: How are FX assumptions impacting guidance? - Management maintained previous FX assumptions due to volatility, indicating potential translational upside if rates hold [77][78] Question: What is the current mindset on capital allocation? - Management reiterated a measured approach to capital allocation, focusing on investments in the business and potential share repurchases based on cash generation and market clarity [80][82]