Adient reports strong Q2 financial results; provides update to FY24 outlook

Rhea-AI Summary

Adient, a leading automotive seating company, reported strong Q2 2024 financial results with $227M in Q2 Adj.-EBITDA, up $12M year-over-year. Despite a GAAP net loss, the company executed $50M in share repurchases, retiring ~1.5M shares in the quarter. Adient updated its FY24 outlook due to slow launches and softer electric vehicle production in the Americas and EMEA.

Positive

• Q2 Adj.-EBITDA of $227M, up $12M y-o-y

• Executed $50M in share repurchases, retiring ~1.5M shares

Negative

• Q2 GAAP net income and EPS diluted of $(70)M and $(0.77), respectively

• Recognition of slow ramp of launches and softer electric vehicle production affecting FY24 outlook

Insights

Financial Analyst

The Q2 financial results for Adient showcase a mixed bag of performance metrics. Positive attention should be given to the improvement in Adjusted EBITDA, which rose by $12M year-over-year and an impressive increase of 60 basis points in Adjusted EBITDA margin, now sitting at 6.1%. This margin improvement indicates that Adient is becoming more effective at converting revenue into actual profit. On the flip side, the GAAP net loss of $70M and a diluted EPS of $(0.77) certainly raise concerns. It's important to understand the factors behind these figures, such as potential one-off expenses or adjustments, which could make the situation seem worse than it is on an operational level. The share repurchase program, where Adient executed $50M in buybacks this quarter, is typically seen as a sign of confidence in the company's future by management. However, investors must weigh this against the overall debt levels, which remain substantial at approximately $2.5B. Finally, the revised FY24 outlook acknowledges challenges, including a slower ramp-up in product launches and a shift in customer mix. This could be indicative of broader industry trends and warrants close monitoring by investors to understand potential impacts on future earnings.

Market Research Analyst

From a market standpoint, Adient's update concerning the anticipated slow progress in launches, a less favorable customer mix and softer electric vehicle production, particularly in the Americas and EMEA, must be scrutinized. Such trends could signal underlying demand fluctuations in the automotive industry, especially within niche markets like electric vehicles where growth expectations are typically high. This update could presage potential market share shifts or operational inefficiencies that may need to be addressed. Moreover, as the automotive industry faces transitions towards more sustainable models, Adient's ability to adapt to these changes and the performance of its electric vehicle seating solutions will likely be a key determinant of its long-term success. Investors should consider these factors as indicative of not just Adient's trajectory, but also of broader sector trends that could inform portfolio diversification strategies.

PLYMOUTH, Mich., May 3, 2024 /PRNewswire/ -- Adient (NYSE: ADNT), a global leader in automotive seating, today announced its second quarter 2024 financial results.

• Q2 GAAP net income and EPS diluted of $(70)M and $(0.77), respectively; Q2 Adj.-EPS diluted of $0.54
• Q2 Adj.-EBITDA of $227M, up $12M y-o-y, with Adj.-EBITDA margin of 6.1%, a 60 bps improvement vs. prior year
• Gross debt and net debt totaled ~$2.5B and ~$1.6B, respectively, at March 31, 2024; cash and cash equivalents of $905M at March 31, 2024
• The company executed $50M of share repurchases, retiring ~1.5M shares in the quarter; year to date share repurchases total $150M and ~4.5M shares
• The company provided an update to its FY24 outlook, recognizing slow ramp of launches, adverse customer mix and softer electric vehicle production in the Americas and EMEA

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

<p>What was Adient's Q2 2024 GAAP net income and EPS diluted?</p>

Adient reported Q2 GAAP net income of $(70)M and EPS diluted of $(0.77).

<p>How much did Adient execute in share repurchases in the quarter?</p>

Adient executed $50M in share repurchases, retiring approximately 1.5M shares.

<p>Why did Adient update its FY24 outlook?</p>

Adient updated its FY24 outlook due to slow ramp of launches and softer electric vehicle production in the Americas and EMEA.