FY26 First Quarter Earnings Call February 4, 2026 Important Information Adient has made statements in this document that are forward-looking and, therefore, are subject to risks and uncertainties. All statements in this document other than statements of historical fact are statements that are, or could be, deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In this document, statements regarding Adient's expectations for its deleveraging activities ...

Financial Performance - Adient reported Q1 FY2026 revenue of $3,644M, a 4% increase compared to Q1 FY2025, with adjusted EBITDA of $207M, up $11M year-over-year[1][2] - The company raised its FY26 guidance for revenue to $14.6B (up from $14.4B) and adjusted EBITDA to $880M (up from $845M), reflecting strong business performance and improved vehicle production outlook[6][12] - Adient's adjusted net income attributable to the company was $28M, representing a 22% increase year-over-year, with adjusted EPS of $0.35, a 30% increase compared to the previous year[1][6] - The company achieved an adjusted EBITDA margin of 5.7%, an increase of 10 basis points from the previous year[2][6] - Net sales for the three months ended December 31, 2025, were $3,644 million, an increase of 4.3% compared to $3,495 million in the same period of 2024[24] - Gross profit for the same period was $217 million, slightly up from $216 million year-over-year[24] - Adjusted EBITDA for the three months ended December 31, 2025, was $207 million, compared to $196 million in the prior year, reflecting a year-over-year increase of 5.6%[31] - The adjusted EBITDA margin for the consolidated results was 5.7%, compared to 5.6% in the same quarter of 2024[31] - Net income attributable to Adient for the three months ended December 31, 2025, was a loss of $22 million, compared to a profit of $0 in the same period of 2024[24] - The company reported a cash provided by operating activities of $80 million for the three months ended December 31, 2025, down from $109 million in the same period of 2024[28] - Adjusted EBITDA for Q1 2025 was $207 million, up from $196 million in Q1 2024, representing a 5.6% increase[36] - Adjusted EBIT for Q1 2025 was $130 million, compared to $122 million in Q1 2024, reflecting an increase of 6.6%[36] - Net income attributable to Adient for Q1 2025 was a loss of $22 million, compared to a profit of $0 in Q1 2024[33] - Adjusted net income attributable to Adient for Q1 2025 was $28 million, up from $23 million in Q1 2024, indicating a 21.7% increase[37] - Basic earnings per share for Q1 2025 was $(0.28), while diluted earnings per share was also $(0.28)[33] - Adjusted diluted earnings per share for Q1 2025 was $0.35, compared to $0.27 in Q1 2024, marking a 29.6% increase[39] - Total net sales for Q1 2025 were $3,644 million, up from $3,495 million in Q1 2024, a growth of 4.3%[36] Debt and Cash Management - Adient's gross debt and net debt were approximately $2.4B and $1.5B, respectively, as of December 31, 2025, with cash and cash equivalents totaling $855M[6][11] - Cash and cash equivalents decreased to $855 million from $958 million at the end of the previous quarter[26] - Long-term debt remained stable at $2,380 million, compared to $2,386 million at the end of the previous quarter[26] - Net debt as of December 31, 2025, was $1,536 million, an increase from $1,439 million as of September 30, 2025, indicating a rise of 6.73%[43] - The net leverage ratio increased to 1.72 as of December 31, 2025, compared to 1.63 as of September 30, 2025[43] Shareholder Returns - The company returned $25M to shareholders in Q1 FY2026 through the repurchase of approximately 1.2M shares[6][11] Sustainability Initiatives - Adient's sustainability initiatives include a 42% reduction in Scope 1 and 2 emissions since 2019 and an increase in renewable electricity usage to 30% of total consumption[17] - The company completed 1,990 continuous improvement projects in FY2025, resulting in estimated annual savings of 5,689 metric tons of CO2e and 72.6 million kWh of energy[4][14] Growth and Market Position - The company is positioned for growth, capitalizing on approximately 150K units of incremental annual volume in the Americas and expecting to significantly outpace the market in Asia[5] - Adient's new modular seat design, ModuTec, aims to enhance automation and efficiency in the seat building process, significantly reducing assembly time[3] Other Financial Metrics - Total assets as of December 31, 2025, were $8,774 million, a decrease from $8,954 million as of September 30, 2025[26] - Free cash flow for Q4 2025 was $15 million, down from $45 million in Q4 2024, reflecting a decrease of 66.67%[42] - Operating cash flow for Q4 2025 was $80 million, down from $109 million in Q4 2024, a decline of 26.61%[42] - Capital expenditures for Q4 2025 were $65 million, slightly up from $64 million in Q4 2024[42] - Trade working capital decreased to $187 million in Q4 2025 from $234 million in Q4 2024, a reduction of 20.04%[42] - Restructuring cash charges for Q4 2025 were $19 million, down from $34 million in Q4 2024, a decrease of 44.12%[42] - Dividends from partially owned affiliates were $0 in Q4 2025, compared to $6 million in Q4 2024[42] - Non-income related taxes (VAT) increased to $44 million in Q4 2025 from $22 million in Q4 2024, a rise of 100%[42]

Core Viewpoint - Adient reported its first quarter 2026 financial results, highlighting a net loss but improved adjusted earnings and guidance for the fiscal year [1][6]. Financial Performance - Q1 GAAP net loss was $22 million, with diluted EPS of $(0.28); however, adjusted EPS was $0.35 [6]. - Adjusted EBITDA for Q1 was $207 million, reflecting an $11 million year-over-year improvement, with adjusted EBITDA margins increasing from 5.6% to 5.7% [6]. - Gross debt and net debt stood at approximately $2.4 billion and $1.5 billion, respectively, as of December 31, 2025, with cash and cash equivalents of $855 million [6]. Shareholder Returns - The company returned $25 million to shareholders in Q1 FY2026 through the repurchase of approximately 1.2 million shares [6]. Future Guidance - Adient raised its FY26 guidance for revenue, adjusted EBITDA, and free cash flow to $14.6 billion, $880 million, and $125 million, respectively, supported by an improved vehicle production outlook and expectations of continued positive business performance [6]. Company Overview - Adient is a global leader in automotive seating, employing over 65,000 people across 29 countries and operating around 200 manufacturing and assembly plants worldwide [4]. - The company produces automotive seating for all major OEMs, covering the entire process from research and design to manufacturing [4].

Core Insights - The article discusses the investment positions held by the author in LEA and MGA, indicating a beneficial long position in these shares [1]. Group 1 - The author expresses personal opinions on the stocks mentioned, emphasizing that the article is not receiving compensation beyond Seeking Alpha [1]. - There is a clear distinction made that the author is not a licensed financial advisor, and the content should not be construed as financial advice [2]. - The article highlights the importance of due diligence and research by investors before making any investment decisions, particularly in high-risk trading styles [2]. Group 2 - The article notes that past performance does not guarantee future results, and no specific investment recommendations are provided [3]. - It clarifies that the views expressed may not reflect those of Seeking Alpha as a whole, indicating a diversity of opinions among analysts [3].

Core Viewpoint - The article emphasizes the importance of value investing and highlights Adient (ADNT) as a strong value stock based on its favorable valuation metrics and earnings outlook [2][7]. Group 1: Value Investing Strategy - Value investing focuses on identifying companies that are undervalued by the market, relying on traditional analysis of key valuation metrics [2]. - Zacks has developed a Style Scores system to identify stocks with specific traits, particularly in the "Value" category, which is of interest to value investors [3]. Group 2: Adient (ADNT) Valuation Metrics - Adient (ADNT) has a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential as a value stock [4]. - The stock's P/E ratio is 11.5, significantly lower than the industry average of 17.57, suggesting it may be undervalued [4]. - ADNT's PEG ratio is 0.82, which is slightly below the industry average of 0.84, indicating favorable earnings growth expectations [5]. - The P/CF ratio for ADNT is 19.42, which is attractive compared to the industry average of 25.98, further supporting its undervaluation [6].

Core Insights - The ModuTec assembly process significantly reduces assembly time from minutes to seconds, enhancing efficiency and lowering costs while enabling unprecedented automation in the automotive seating industry [1][2]. Group 1: ModuTec Assembly Process - ModuTec allows for offline assembly of seat modules, which are then integrated into the main Just-In-Time (JIT) line [1]. - This innovative approach is expected to transform manufacturing by simplifying production workflows and enhancing overall assembly efficiency [5]. Group 2: Industry Impact - The introduction of ModuTec represents a fundamental shift in how vehicle seats are manufactured, emphasizing cost efficiency, engineering criteria, and manufacturing best practices [2][3]. - Adient's vice president highlighted that ModuTec is a bold step towards the future of the automotive seating industry [2]. Group 3: Company Overview - Adient is a global leader in automotive seating, employing over 65,000 people across 29 countries and operating approximately 200 manufacturing and assembly plants worldwide [4]. - The company provides comprehensive automotive seating solutions for all major Original Equipment Manufacturers (OEMs), covering every aspect from research and design to engineering and manufacturing [4].

Core Insights - The article emphasizes the importance of the price-to-book (P/B) ratio as a valuation tool for identifying undervalued stocks with high growth potential, alongside more commonly used ratios like price-to-earnings (P/E) and price-to-sales (P/S) [1][5]. Group 1: Understanding P/B Ratio - The P/B ratio is calculated by dividing market capitalization by the book value of equity, helping investors assess whether a stock is under- or overvalued [1][5]. - A P/B ratio of less than one indicates that a stock is trading below its book value, suggesting it may be undervalued and a good buy, while a ratio above one may indicate overvaluation [5][6]. - The P/B ratio is particularly relevant for industries with tangible assets, such as finance and manufacturing, but may be misleading for companies with high R&D expenses or negative earnings [8]. Group 2: Stock Recommendations - Five stocks with low P/B ratios and strong growth potential are highlighted: BioMarin Pharmaceutical (BMRN), General Motors (GM), Harmony Biosciences (HRMY), Adient plc (ADNT), and Gibraltar Industries (ROCK) [2][9]. - BioMarin Pharmaceutical has a projected 3-5 year EPS growth rate of 20.11% and holds a Zacks Rank of 2 with a Value Score of A [15]. - General Motors is projected to have a 3-5 year EPS growth rate of 10.65% and has a Zacks Rank of 1 with a Value Score of A [16]. - Harmony Biosciences has a projected 3-5 year EPS growth rate of 25.66% and a Zacks Rank of 2 with a Value Score of A [16]. - Adient has a projected 3-5 year EPS growth rate of 15.7% and a Zacks Rank of 2 with a Value Score of A [17]. - Gibraltar Industries has a projected 3-5 year EPS growth rate of 15.0% and a Zacks Rank of 2 with a Value Score of A [18].

Core Viewpoint - Adient's stock has experienced a significant increase, driven by positive developments in business contracts and a rating upgrade from UBS, indicating strong future prospects for the company [1][2]. Group 1: Stock Performance - Adient shares rose 10% in the last trading session, closing at $23.6, with trading volume significantly higher than usual [1]. - The stock has gained 13.1% over the past four weeks, reflecting positive market sentiment [1]. Group 2: Business Developments - UBS upgraded Adient's rating from neutral to buy, citing frequent business wins as a positive indicator for the company's future [2]. - In fiscal 2025, Adient secured $1.2 billion in new contracts in China, with nearly 70% coming from domestic automakers, enhancing its market position [2]. - The company is also focusing on higher-margin business opportunities in Europe, which is expected to improve revenues and profitability in the coming years [2]. Group 3: Earnings Expectations - Adient is projected to report quarterly earnings of $0.19 per share, representing a year-over-year decline of 29.6%, with revenues expected to be $3.46 billion, down 1% from the previous year [3]. - The consensus EPS estimate for the quarter has been revised slightly higher over the last 30 days, indicating a positive trend that may lead to price appreciation [4]. Group 4: Industry Context - Adient holds a Zacks Rank of 2 (Buy) within the Zacks Automotive - Original Equipment industry, suggesting favorable conditions compared to peers [5]. - Another company in the same industry, EVgo Inc., saw a 6.1% increase in its stock price, although it has returned -4.5% over the past month, highlighting varying performance within the sector [5].

Core Viewpoint - Adient (ADNT) is currently viewed as a better value opportunity compared to Mobileye Global (MBLY) based on various financial metrics and rankings [1]. Valuation Metrics - Adient has a Zacks Rank of 2 (Buy), indicating a stronger earnings outlook compared to Mobileye Global, which has a Zacks Rank of 4 (Sell) [3]. - The forward P/E ratio for Adient is 10.16, significantly lower than Mobileye Global's forward P/E of 29.00 [5]. - Adient's PEG ratio stands at 0.65, while Mobileye Global's PEG ratio is 1.01, suggesting that Adient may be undervalued relative to its expected earnings growth [5]. - Adient has a P/B ratio of 0.75, compared to Mobileye Global's P/B of 0.83, indicating a more favorable market value relative to its book value [6]. Investment Grade - Adient has earned a Value grade of A, while Mobileye Global has received a Value grade of D, reflecting a significant difference in perceived value [6]. - The combination of Zacks Rank and Style Scores suggests that value investors are likely to prefer Adient over Mobileye Global at this time [7].

Core Insights - Value investing remains a preferred strategy for identifying strong stocks across various market conditions, utilizing fundamental analysis and traditional valuation metrics to find undervalued stocks [2] Company Analysis: Adient (ADNT) - Adient (ADNT) has a Zacks Rank of 2 (Buy) and an A grade for Value, indicating strong potential for value investors [4] - The Forward P/E ratio for ADNT is 11.5, significantly lower than the industry average of 18.52, with historical values ranging from a high of 12.68 to a low of 4.91 [4] - ADNT's PEG ratio stands at 0.82, which is below the industry average of 0.89, with a historical range from 0.84 to 0.22 [5] - The P/CF ratio for ADNT is 19.42, compared to the industry average of 27.06, with historical values fluctuating between 28.08 and 3.32 [6] Company Analysis: Continental (CTTAY) - Continental (CTTAY) is rated 1 (Strong Buy) with an A grade for Value, making it another attractive option for value investors [7] - The Forward P/E ratio for CTTAY is 9.29, which is favorable compared to the industry average of 18.52, with historical values ranging from 10.00 to 6.50 [7][8] - CTTAY's PEG ratio is 0.69, also below the industry average of 0.89, with historical values between 0.72 and 0.25 [8] - The P/B ratio for CTTAY is 2.82, compared to the industry's price-to-book ratio of 3.30, with historical values ranging from 2.97 to 0.76 [8] Investment Outlook - Both Adient and Continental are likely undervalued based on their financial metrics, making them strong candidates for value investment at this time [9]