Adient (ADNT) reported adjusted earnings per share (EPS) of 68 cents for the fourth quarter of fiscal 2024. Earnings rose from 51 cents recorded in the year-ago period and surpassed the Zacks Consensus Estimate of 56 cents. The company generated net sales of $3.56 billion, which decreased 4.5% year over year but beat the Zacks Consensus Estimate of $3.48 billion. Stay up-to-date with the quarterly releases: See Zacks Earnings Calendar. Segmental Performance Adient currently operates through three reportable ...

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ADIENT FY 2024 Fourth Quarter Earnings Call November 8, 2024 ！！ / / / / 【 】 ！！ 【 】 】 】 】 】 】 】 】 】 】 】 【 】 】 】 】 】 】 】 】 】 】 】 】 】 】 】 】 】 】 】 】 】 】 】 】 】 】 】 【 】 】 】 】 】 【 】 】 】 】 】 【 】 】 】 】 】 【 】 】 】 】 】 【 】 】 】 】 】 【 】 】 】 】 】 【 】 】 】 】 】 】 【 】 】 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, dee ...

Financial Data and Key Metrics Changes - Adient's Q4 results showed a 4% year-over-year decline in revenue, but margins expanded by 30 basis points despite this decline [8][9] - Adjusted EBITDA remained flat at $235 million, with over $190 million generated in free cash flow [9][37] - Full year sales were approximately $14.7 billion, down about 5%, with adjusted EBITDA at $880 million, a 6% decrease from the previous year [39][40] Business Line Data and Key Metrics Changes - In the Americas, improved business performance of $52 million in Q4 was primarily due to net material margin performance driven by customer recoveries and reduced input costs [47] - EMEA faced weak volume and mix, negatively impacting results by $16 million, while business performance was positive by $7 million [49] - Asia saw positive business performance of $12 million, with volume mix negatively impacted by $15 million [52] Market Data and Key Metrics Changes - Sales in Asia grew by 2%, driven by approximately 5% year-on-year growth in China, while sales in the Americas and EMEA declined [41] - The European market is expected to contract by an additional 5% in light vehicle production in fiscal '25, with volumes not expected to return to pre-COVID levels [15][19] Company Strategy and Development Direction - The company is focusing on restructuring in Europe and finding efficiencies, with expected net savings of approximately $60 million annually by the end of 2027 from restructuring actions [16][19] - Adient views its China business as a growth engine, targeting local OEMs and expecting double-digit annual growth between fiscal year '24 and fiscal year '27 [21][25] - The company is leveraging automation and AI to drive efficiencies, including launching an AI welding inspection tool and developing automated sewing cells [29][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macro environment but emphasized the resilience of the business model, expecting continued strong performance despite lower industry volumes [12][34] - The first half of fiscal year '25 is likely to be the low point for margin recovery in EMEA, with expectations for improvement in fiscal year '26 [19][20] - Management expressed confidence in the ability to manage costs and improve profitability through restructuring and operational efficiencies [19][34] Other Important Information - The company returned $275 million to shareholders through share repurchases in fiscal 2024, representing approximately 10% of outstanding shares at the beginning of the period [56] - Adient's debt position totaled about $2.4 billion, with a net leverage of just under 1.7 times, within the targeted range [57] Q&A Session Summary Question: Operating environment and volume forecasts - Management highlighted their ability to manage costs and implement austerity measures in response to lower volumes, emphasizing collaborative discussions with customers for commercial recoveries [68][70] Question: Underperforming contracts in Europe - Management indicated clear sunsetting on two-thirds of underperforming contracts, with visibility improving for the roll-off of these contracts [76][78] Question: Q4 performance and future expectations - Management noted that Q4 performance was strong due to timing of commercial recoveries and operational improvements, but anticipated volume declines in fiscal year '25 [81][83] Question: Actions in Europe and competitive footprint - Management explained a measured approach to restructuring in Europe, focusing on long-term profitability and capacity management rather than immediate drastic actions [84][86] Question: Cash restructuring and savings - Management clarified that the $100 million cash restructuring for fiscal year '25 is related to previous actions, with potential future savings tied to capacity management rather than immediate net savings [88][90] Question: China operations and unconsolidated ventures - Management expressed confidence in the growth of their consolidated activities in China, viewing their unconsolidated ventures as valuable partners contributing to equity income [92][95]

Core Insights - Adient reported $3.56 billion in revenue for the quarter ended September 2024, a year-over-year decline of 4.5%, with an EPS of $0.68 compared to $0.51 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $3.48 billion, resulting in a surprise of +2.25%, while the EPS also surpassed expectations by +21.43% [1] Revenue Performance by Region - Net Sales in Asia reached $765 million, exceeding the estimated $715.33 million, reflecting a year-over-year increase of +2.3% [3] - Net Sales in the Americas were reported at $1.72 billion, slightly below the average estimate of $1.74 billion, indicating a year-over-year decline of -6.3% [3] - Net Sales in EMEA amounted to $1.10 billion, surpassing the estimated $1.07 billion, but showing a year-over-year decrease of -6.1% [3] - Net Sales from Eliminations were reported at -$25 million, worse than the estimated -$23.63 million, representing a year-over-year change of -10.7% [3] Stock Performance - Adient's shares have returned -9.1% over the past month, contrasting with the Zacks S&P 500 composite's +4.9% change [4] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [4]

Group 1 - Adient reported quarterly earnings of $0.68 per share, exceeding the Zacks Consensus Estimate of $0.56 per share, and showing an increase from $0.51 per share a year ago, resulting in an earnings surprise of 21.43% [1] - The company posted revenues of $3.56 billion for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 2.25%, although this is a decrease from $3.73 billion in the same quarter last year [2] - Adient's shares have declined approximately 45.3% year-to-date, contrasting with the S&P 500's gain of 25.2% [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is $0.85 on revenues of $3.61 billion, and for the current fiscal year, it is $2.67 on revenues of $14.7 billion [7] - The Zacks Industry Rank for Automotive - Original Equipment is in the bottom 32% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Financial Performance - Q4 2024 revenue was $3,562M, a decrease of 4% year-over-year, with a full-year revenue of $14,688M, down 5% compared to FY 2023[2] - Q4 2024 adjusted EBITDA was $235M, flat year-over-year, while full-year adjusted EBITDA totaled $880M, reflecting a 6% decrease from FY 2023[3] - Net sales for the three months ended September 30, 2024, were $3,562 million, a decrease of 4.5% compared to $3,729 million for the same period in 2023[18] - Gross profit for the three months ended September 30, 2024, was $245 million, down from $250 million in the prior year, reflecting a decline of 2%[18] - Net income attributable to Adient for the three months ended September 30, 2024, was $79 million, a decrease of 41.5% from $135 million in the same period last year[18] - Diluted earnings per share for the three months ended September 30, 2024, were $0.91, compared to $1.42 for the same period in 2023, representing a decline of 36%[18] - Adjusted EBITDA for the twelve months ended September 30, 2024, was $880 million, down from $938 million in the previous year, indicating a decrease of 6.2%[29] - Adjusted net income attributable to Adient for the twelve months ended September 30, 2024, was $166 million, consistent with $205 million in the previous year[30] Cash Flow and Debt - Free cash flow for FY 2024 was $277M, with $275M returned to shareholders through share repurchases, equating to approximately 10% of shares outstanding at the beginning of FY 2024[3] - Cash provided by operating activities for the three months ended September 30, 2024, was $263 million, compared to $294 million in the same period of 2023, reflecting a decrease of 10.6%[20] - Cash used in investing activities for the three months ended September 30, 2024, was $(70) million, compared to $(65) million in the same period of 2023[20] - The company experienced a cash increase of $55 million for the three months ended September 30, 2024, compared to an increase of $202 million in the same period of 2023[20] - Net debt as of September 30, 2024, was $1,460 million, slightly up from $1,425 million a year earlier, indicating a 2.5% increase[39] - Total debt as of September 30, 2024, was $2,405 million, down from $2,535 million a year earlier, a reduction of 5.1%[39] - Gross debt and net debt as of September 30, 2024, were approximately $2.4B and $1.5B, respectively, with cash and cash equivalents of $945M[1] Operational Initiatives - Adient's automation initiatives include an AI welding inspection tool and a joint development agreement with Paslin to enhance efficiency in traditional sewing operations[3] - The company launched a Global Water Initiative, resulting in 235 water-related continuous improvement projects that conserve over 53,000 cubic meters of water annually[11] - Adient joined the RACE initiative to improve recycling methods for automotive plastics, aiming to increase recycling rates by up to 75%[13] - Adient plans to continue restructuring actions to align with market conditions and improve operational efficiencies in response to declining automotive production volumes[3] Future Outlook - For FY 2025, Adient expects consolidated sales in the range of $14.1B to $14.4B and adjusted EBITDA between $850M and $900M, anticipating flat performance despite lower production volumes[9] - Interest expense for FY 2025 is forecasted at approximately $185M, with cash taxes expected to be around $105M[9] Segment Performance - Adjusted EBITDA for the Americas segment was $116 million with a margin of 6.7%, compared to $100 million and a margin of 5.4% in the same quarter of 2023[23] - The EMEA segment's adjusted EBITDA margin decreased to 2.5% in Q4 2024 from 4.1% in Q4 2023[23] - The Americas segment's adjusted EBITDA for the twelve months ended September 30, 2024, was $375 million, with a margin of 5.5%[24] Non-GAAP Measures - Adient's management emphasized the importance of non-GAAP financial measures, including Adjusted EBITDA, to provide supplemental information regarding financial trends[17] - The company is focused on evaluating its ongoing operations through non-GAAP measures to provide supplemental information regarding financial and business trends[28]

Financial Performance - Adient reported Q4 GAAP net income of $79 million and diluted EPS of $0.91, with adjusted EPS of $0.68 [2] - Q4 adjusted EBITDA was $235 million, remaining flat year-over-year, while the adjusted EBITDA margin increased by 30 basis points to 6.6% [2] - For the full fiscal year 2024, Adient generated $277 million in free cash flow and returned $275 million to shareholders through share repurchases, alongside paying down approximately $130 million in debt [2] Debt and Cash Position - As of September 30, 2024, Adient's gross debt and net debt were approximately $2.4 billion and $1.5 billion, respectively, with cash and cash equivalents totaling $945 million [2] Future Outlook - Looking ahead to fiscal year 2025, Adient anticipates approximately flat adjusted EBITDA, with business performance expected to offset lower volumes, leading to flat to improved total margins [2]

Core Viewpoint - Adient (ADNT) is expected to report quarterly earnings of $0.56 per share, reflecting a 9.8% increase year-over-year, while revenues are forecasted to decline by 6.6% to $3.48 billion [1] Earnings Estimates - There has been a downward revision of 7.6% in the consensus EPS estimate over the last 30 days, indicating analysts' reassessment of their initial forecasts [2] - Changes in earnings estimates are crucial for predicting investor reactions to the stock, as empirical research shows a strong correlation between earnings estimate revisions and short-term stock price performance [3] Revenue Forecasts - Analysts project 'Net Sales- Asia' to reach $715.33 million, a decrease of 4.4% year-over-year [5] - 'Net Sales- Americas' is expected to be $1.74 billion, indicating a year-over-year decline of 5% [5] - 'Net Sales- EMEA' is forecasted to be $1.07 billion, reflecting a 9.2% decrease year-over-year [5] EBITDA Projections - 'Adjusted EBITDA- Americas' is projected at $89.61 million, down from $100 million reported in the same quarter last year [6] - 'Adjusted EBITDA- Asia' is expected to be $123.70 million, an increase from $113 million reported in the same quarter of the previous year [6] - 'Adjusted EBITDA- EMEA' is anticipated to be $27.91 million, significantly lower than the $48 million reported in the same quarter last year [7] Stock Performance - Adient shares have decreased by 7.5% over the past month, contrasting with the Zacks S&P 500 composite's increase of 3.2% [7] - With a Zacks Rank 3 (Hold), ADNT is expected to closely follow overall market performance in the near term [7]

Core Insights - Adient has entered into a joint development agreement with Paslin to enhance automation solutions in automotive seating production [1][2][3] Group 1: Agreement Details - The joint development agreement aims to leverage the expertise of both companies to create innovative automation solutions for Adient's traditional sewing operations and future product offerings [3][4] - The collaboration will focus on developing high-quality, low-cost solutions such as automated sewing cells with integrated robotics to improve accuracy and efficiency in manufacturing processes [4][5] Group 2: Company Profiles - Adient is a global leader in automotive seating, employing over 70,000 people across 29 countries and operating more than 200 manufacturing plants [6] - Paslin, founded in 1937, specializes in automation solutions and emphasizes a customer-centric approach to align projects with client ambitions [7]