Adient reports Q1 financial results; reaffirms FY24 outlook

Rhea-AI Summary

Adient (ADNT) announced its first quarter 2024 financial results, with Q1 GAAP net income of $20M and EPS diluted of $0.21. The Q1 Adj.-EBITDA was $216M, up $4M y-o-y, and the company executed $100M of share repurchases, retiring ~3M shares in the quarter. Adient's business performance continues to build on the positive momentum established in FY23, driving expectation for improved y-o-y earnings and margin in FY24.

Positive

• Q1 Adj.-EBITDA of $216M, up $4M y-o-y
• The company executed $100M of share repurchases, retiring ~3M shares in the quarter
• Expectation for improved y-o-y earnings and margin in FY24

Negative

• None.

Insights

Financial Analyst

The reported quarterly financial results by Adient indicate a consistent year-over-year improvement in their adjusted EBITDA, which is a key indicator of the company's operating performance and ability to generate operational cash flow. The slight increase, although not substantial, suggests that the company is maintaining operational efficiency despite market challenges. The execution of $100M in share repurchases, reducing the number of shares outstanding, is typically a sign of management's confidence in the company's future and can be positive for earnings per share (EPS) metrics. However, this also needs to be assessed in the context of the company's debt levels.

Adient's gross debt remains substantial at approximately $2.5 billion and net debt at around $1.6 billion. While the company has a comfortable amount of cash and cash equivalents, investors would need to consider the debt maturity profile and interest coverage ratios to assess liquidity risk and financial stability. The company's ability to maintain a robust balance sheet while returning value to shareholders through repurchases could be seen as a positive signal for investor confidence.

Market Research Analyst

In the automotive seating industry, Adient's performance can serve as an indicator of broader sector health. The company's seventh consecutive quarter of year-over-year improvement in adjusted EBITDA reflects resilience in a sector that is often sensitive to economic cycles and consumer spending. This sustained improvement is noteworthy given the global automotive industry's recent challenges, such as supply chain disruptions and fluctuating demand due to economic uncertainty. Investors might interpret this as Adient's ability to navigate industry headwinds effectively.

Furthermore, the company's expectation for improved earnings and margin in FY24 could be indicative of a favorable outlook on cost management and pricing power. These factors are critical in the automotive supply chain, where competition is intense and margins can be thin. The company's performance and forward-looking statements could influence market sentiment towards the automotive supply chain sector, potentially impacting related stocks and investment strategies.

Debt Market Analyst

Adient's current debt levels are a crucial aspect for stakeholders, particularly those focused on the credit markets. With gross debt at approximately $2.5 billion, it's essential to evaluate not just the quantum of debt, but also its terms, interest rates and covenants. The company's net debt position and its ratio to adjusted EBITDA are important leverage metrics that credit analysts closely monitor. A stable or improving leverage ratio can be a positive sign for debt holders and can influence the company's credit ratings and the cost of borrowing.

Moreover, the cash and cash equivalents position provides a cushion for the company, which is relevant in the context of debt servicing and potential refinancing needs. The interplay between debt levels, cash reserves and operational cash flow generation is a critical aspect that influences the company's financial flexibility and its ability to respond to both opportunities and challenges in the market.

PLYMOUTH, Mich., Feb. 7, 2024 /PRNewswire/ -- Adient (NYSE: ADNT), a global leader in automotive seating, today announced its first quarter 2024 financial results.

• Q1 GAAP net income and EPS diluted of $20M and $0.21, respectively; Q1 Adj.-EPS diluted of $0.31
• Q1 Adj.-EBITDA of $216M, up $4M y-o-y, the seventh consecutive quarter of y-o-y improvement
• Gross debt and net debt totaled ~$2.5B and ~$1.6B, respectively, at December 31, 2023; cash and cash equivalents of $990M at December 31, 2023
• The company executed $100M of share repurchases, retiring ~3M shares in the quarter
• Business performance continues to build on the positive momentum established in FY23, driving expectation for improved y-o-y earnings and margin in FY24

For complete details and to see reconciliations of non-GAAP measures to their most directly comparable GAAP measures, visit the events section of the Adient investor website at www.investors.adient.com/events-and-presentations/events to download the full press release and earnings presentation.

Investor analyst conference call:

Adient's president and chief executive officer, Jerome Dorlack, and executive vice president and chief financial officer, Mark Oswald, will host a conference call today at 8:30 a.m. Eastern to discuss the results. To participate by telephone, please dial 888-455-2945 (U.S.) or 773-799-3947 (international) 15 minutes prior to the start time of the call and ask to be connected to the Adient conference call. The conference passcode is ADIENT.

About Adient:

Adient (NYSE: ADNT) is a global leader in automotive seating.  With 70,000+ employees in 29 countries, Adient operates more than 200 manufacturing/assembly plants worldwide. We produce and deliver automotive seating for all major OEMs. From complete seating systems to individual components, our expertise spans every step of the automotive seat-making process. Our integrated, in-house skills allow us to take our products from research and design to engineering and manufacturing — and into millions of vehicles every year. For more information on Adient, please visit www.adient.com.

Cautionary Statement Regarding Forward-Looking Statements:

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, the timing, benefits and outcomes of those activities, as well as its future financial position, sales, costs, earnings, cash flows, other measures of results of operations, capital expenditures or debt levels and plans, objectives, market position, outlook, targets, guidance or goals are forward-looking statements. Words such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "should," "forecast," "project" or "plan" or terms of similar meaning are also generally intended to identify forward-looking statements. Adient cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond Adient's control, that could cause Adient's actual results to differ materially from those expressed or implied by such forward-looking statements, including, among others, risks related to: the effects of local and national economic, credit and capital market conditions (including the persistence of high interest rates and volatile currency exchange rates) on the global economy, work stoppages, including due to strikes, supply chain disruptions and similar events, wage inflationary pressures due to labor shortages and new labor negotiations, volatile energy markets, Adient's ability and timing of customer recoveries for increased input costs, the availability of raw materials and component products (including components required by our customers for the manufacture of vehicles), geopolitical uncertainties such as the Ukraine and Middle East conflicts and the impact on the regional and global economies and additional pressure on supply chain and vehicle production, the ability of Adient to execute its restructuring plans and achieve the desired benefit, automotive vehicle production levels, mix and schedules, as well as our concentration of exposure to certain automotive manufacturers, the ability of Adient to effectively launch new business at forecast and profitable levels, the ability of Adient to meet debt service requirements and, terms of future financing, the impact of global tax reform legislation, uncertainties in U.S. administrative policy regarding trade agreements, tariffs and other international trade relations, shifts in market shares among vehicles, vehicle segments or away from vehicles on which Adient has significant content, changes in consumer demand, global climate change and related emphasis on ESG matters by various stakeholders, and the ability of Adient to achieve its ESG-related goals, cancellation of or changes to commercial arrangements, and the ability of Adient to identify, recruit and retain key leadership. A detailed discussion of risks related to Adient's business is included in the section entitled "Risk Factors" in Adient's Annual Report on Form 10-K for the fiscal year ended September 30, 2023 filed with the U.S. Securities and Exchange Commission (the "SEC") on November 17, 2023, and in subsequent reports filed with or furnished to the SEC, available at www.sec.gov. Potential investors and others should consider these factors in evaluating the forward-looking statements and should not place undue reliance on such statements. The forward-looking statements included in this document are made only as of the date of this document, unless otherwise specified, and, except as required by law, Adient assumes no obligation, and disclaims any obligation, to update such statements to reflect events or circumstances occurring after the date of this document. In addition, this document includes certain projections provided by Adient with respect to the anticipated future performance of Adient's businesses. Such projections reflect various assumptions of Adient's management concerning the future performance of Adient's businesses, which may or may not prove to be correct. The actual results may vary from the anticipated results and such variations may be material. Adient does not undertake any obligation to update the projections to reflect events or circumstances or changes in expectations after the date of this document or to reflect the occurrence of subsequent events. No representations or warranties are made as to the accuracy or reasonableness of such assumptions, or the projections based thereon.

Use of Non-GAAP Financial Information:

This document also contains non-GAAP financial information because Adient's management believes it may assist investors in evaluating Adient's on-going operations. Adient believes these non-GAAP disclosures provide important supplemental information to management and investors regarding financial and business trends relating to Adient's financial condition and results of operations. Investors should not consider these non-GAAP measures as alternatives to the related GAAP measures. Non-GAAP measures include Adjusted EBIT, Adjusted EBITDA, Adjusted net income, Adjusted effective tax rate, Adjusted earnings per share, Adjusted equity income, Adjusted interest expense, Free cash flow, Net debt and Net leverage.  For further detail and reconciliations to their closest GAAP equivalents, please see the appendix to the earnings presentation. Reconciliations of non-GAAP measures related to FY2024 guidance have not been provided due to the unreasonable efforts it would take to provide such reconciliations.

ADNT-FN

 

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SOURCE Adient

FAQ

What was Adient's Q1 GAAP net income?

Adient's Q1 GAAP net income was $20M.

What was the Q1 Adj.-EBITDA for Adient?

Adient's Q1 Adj.-EBITDA was $216M, up $4M y-o-y.

How much did Adient execute in share repurchases in the quarter?

Adient executed $100M of share repurchases, retiring ~3M shares in the quarter.

What is the expectation for Adient's earnings and margin in FY24?

Adient expects improved y-o-y earnings and margin in FY24.