Adient (ADNT) Q1 Earnings Miss on Poor EMEA Unit Results

Adient ADNT reported adjusted earnings per share of 34 cents for the first quarter of fiscal 2023, lagging the Zacks Consensus Estimate of 40 cents. The underperformance largely stemmed from lower-than-anticipated sales and profits from the EMEA segment. The bottom line, however, reversed from the year-ago loss of 38 cents per share. In the reported quarter, Adient generated net sales of $3,699 million, up 6% from $3,480 million recorded in the prior-year period and surpassed the Zacks Consensus Estimate of $3,645 million.

Adient Price, Consensus and EPS Surprise

Adient price-consensus-eps-surprise-chart | Adient Quote

Segmental Performance

Adient currently operates through three reportable segments — the Americas, including North America and South America; Europe, the Middle East and Africa (EMEA), and Asia Pacific/China (Asia).

In the reported quarter, the Americas segment recorded revenues of $1,724 million, increasing 15% from the year-ago period and topping the consensus metric of $1,722 million. The segment posted adjusted EBITDA of $69 million, shooting up from $9 million recorded in the prior-year period. The increase was driven by favorable volume and mix and lower SG&A expenses. The figure, however, fell short of the consensus metric of $78 million.

In the fiscal first quarter, the EMEA segment registered revenues of $1,182 million, which decreased 4% year over year and also lagged the consensus mark of $1,249 million. The segment recorded EBITDA of $28 million in the quarter under review, lower than $43 million generated in the year-ago period. Labor inflation, high commodity costs, unfavorable forex translations and rising freight costs weighed on the results. The reported EBITDA missed the consensus metric of $36.14 million.

In the reported quarter, revenues in the Asia segment came in at $821 million, edging up 4.7% year over year and topping the consensus mark of $709 million. The segment’s adjusted EBITDA grew 21% to $138 million and beat the consensus mark of $114 million. Improved product and volume mix along with lower engineering costs led to the upswing.

Financial Position

Adient had cash and cash equivalents of $901 million as of Dec 31, 2022, compared with $947 million on Sep 30, 2022. Long-term debt amounted to $2,267 million in the reported quarter, up from $2,564 million as of Sep 30, 2022. Capital expenditure totaled $61 million in the fiscal first quarter of 2023 compared with $60 million in the prior-year quarter.

ADNT currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Outlook

Adient updated its fiscal 2023 forecast. It envisions revenues of $15 billion, up from the previous quarter’s 14.7 billion. The adjusted EBITDA forecast remains unchanged at $850 million for the year. Expected equity income stands at $70 million now versus the prior estimate of $90 million. Capex and FCF projections remain unchanged at $300 million and $200 million, respectively.

Peer Releases

Autoliv Inc. ALV reported fourth-quarter 2022 results on Jan 27. Its adjusted earnings of $1.83 per share beat the Zacks Consensus Estimate of $1.54. Higher-than-expected revenues from the Airbags and Associated Products segment led to the outperformance. Smart pricing strategies to offset commodity cost woes aided profits. The bottom line also shot up 40% on a year-over-year basis. The company reported net sales of $2,335 million in the quarter, which missed the Zacks Consensus Estimate of $2,403 million. The top line, however, rose 10% year over year.

Autoliv had cash and cash equivalents of $594 million as of Dec 31, 2022, down 39% year over year. Long-term debt totaled $1,054 million, decreasing from $1,662 million as of Dec 31, 2021. The company forecasts full-year 2023 organic sales growth of around 15%. Adjusted operating margin is anticipated within the 8.5-9% range. Operating cash flow is expected to be $900 million for 2023.

Oshkosh Corporation OSK reported fourth-quarter 2022 results on Jan 31. Its adjusted earnings of $1.60 per share missed the Zacks Consensus Estimate of $1.73. The underperformance can be attributed to lower-than-expected earnings across the Access Equipment, Defense and Fire & Emergency segments. The bottom line, however, rocketed 344% from 36 cents recorded in the year-ago period. In the quarter under review, consolidated net sales climbed 23% year over year to $2,203.6 million. The top line surpassed the Zacks Consensus Estimate of $2,180 million.

Oshkosh had cash and cash equivalents of $805.9 million as of Dec 31, 2022. The company recorded a long-term debt of $595 million, down from $819 million as of Dec 31, 2021. In light of current supply chain constraints that are expected to improve modestly in 2023, the company estimates its EPS to be around $5.50. This implies an improvement from $3.46/share in 2022. Revenues and operating income in 2023 are anticipated to be $8.4 billion and $530 million, respectively.

Lear LEA reported fourth-quarter 2022 results on Feb 2. Its adjusted earnings of $2.81 per share surged from $1.22 recorded in the year-ago quarter. The bottom line also surpassed the Zacks Consensus Estimate of $2.54 per share. Higher-than-expected earnings across both business segments led to the outperformance. In the reported quarter, revenues increased 10% year over year to $5,370.9 million. The top line also beat the Zacks Consensus Estimate of $5,226 million. The company had $1,114.9 million in cash/cash equivalents and long-term debt of $2,591.2 million and $2,595.2 million, respectively as of 2022-end.

Lear projects full-year net sales in the band of $21,200-$22,200 million, up from $20,891 million recorded in 2022. Core operating earnings are envisioned in the range of $875-$1,075 million, implying an uptick from $871 generated in 2022. Operating cash flow is projected within $1,075-$1,225 million. Lear anticipates FCF in the band of $375-$525 million. The capital spending forecast is $700 million. Adjusted EBITDA is envisioned within the range of $1,475-$1,675 million.

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