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Adjusted EBITDA: $233 million, up 3% year over year.
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Adjusted EBITDA Margin: Improved by 40 basis points to 6.5%.
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Revenue: Approximately $3.6 billion, a decrease of $139 million compared to the previous year.
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Net Income: Adjusted net income of $58 million or $0.69 per share.
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Free Cash Flow: Outflow of $90 million, in line with expectations due to seasonality.
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Cash Balance: $754 million at the end of the quarter.
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Total Liquidity: $1.6 billion, including cash and undrawn credit capacity.
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Goodwill Impairment: $333 million noncash impairment recorded in EMEA.
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Debt and Net Debt: Total debt of $2.4 billion and net debt of $1.6 billion.
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Net Leverage: 1.9 times, within the targeted range of 1.5 to 2 times.
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Interest Expense: Expected to be slightly higher at $190 million for the fiscal year.
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Free Cash Flow Forecast: Adjusted to a range of $150 million to $170 million for fiscal 2025.
Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Adient PLC (NYSE:ADNT) reported strong Q2 results with an adjusted EBITDA of $233 million, reflecting a 3% year-on-year increase.
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The company achieved a 40 basis point improvement in adjusted EBITDA margins, demonstrating operational resilience.
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Adient PLC (NYSE:ADNT) has a strong cash balance of $754 million and total liquidity of $1.6 billion, indicating financial stability.
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The company won several prestigious awards, including the GM Supplier of the Year award and the Best Supplier Award for ESG management from Hyundai Motor Group.
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Adient PLC (NYSE:ADNT) is effectively managing tariff impacts, with 75% of its gross tariff exposure already resolved and plans in place to address the remaining 25%.
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Adient PLC (NYSE:ADNT) recorded a $333 million noncash goodwill impairment in its EMEA reporting unit due to market uncertainties.
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The company faces ongoing volume and mix headwinds, particularly in EMEA and Asia, impacting revenue.
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Adient PLC (NYSE:ADNT) is dealing with a significant tariff exposure, particularly from parts imported from China, which are subject to a 145% tariff.
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The company experienced a $90 million free cash flow outflow in Q2, reflecting normal seasonality but also indicating cash management challenges.
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Adient PLC (NYSE:ADNT) adjusted its free cash flow forecast for fiscal 2025 to a range of $150 million to $170 million, down from a previous guide of $180 million, due to potential accelerated European restructuring costs and tariff-related uncertainties.
Q: Can you clarify the progress on tariff resolutions, specifically the resolved 75% and roadmap 25%? A: Jerome Dorlack, President and CEO, explained that the resolved 75% includes agreements for price recoveries, while the roadmap 25% involves ongoing price negotiations and resourcing efforts. Some documentation and negotiations are still required to finalize these recoveries.
Q: How did EMEA perform this quarter, and is this performance sustainable? A: Mark Oswald, CFO, noted that while EMEA showed improved business performance, this should not be seen as a trend. The region benefited from restructuring actions, but results may vary due to commercial actions and customer recoveries. The expectation is for gradual improvement, with significant changes anticipated in 2026.
Q: Can you elaborate on Adient’s direct tariff exposure, particularly regarding USMCA compliance and Annex 1? A: Jerome Dorlack clarified that 95% of parts imported from Mexico are USMCA compliant and not subject to tariffs. Adient does not ship parts listed under Annex 1, which would incur tariffs, and most parts from China are subject to a 145% tariff due to the stacking effect of IEEPA and reciprocal tariffs.
Q: What is the outlook for margin improvements and cost efficiencies? A: Mark Oswald stated that Adient aims to achieve margins of 7.5% to 8% by focusing on restructuring in Europe, rolling off lower-margin businesses, and launching higher-margin products. The company sees significant opportunities for improvement over the next few years.
Q: How is Adient managing its European restructuring efforts, and what are the expected benefits? A: Mark Oswald mentioned that restructuring in Europe is ongoing, with potential acceleration of actions. The company expects net savings of $50 million annually, with about a third of restructuring costs being accretive to EBITDA. The focus is on prudent spending to align with reduced vehicle production in the region.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.