This article first appeared on GuruFocus.
Release Date: November 05, 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) delivered a strong adjusted EBITDA margin of 6.1% and free cash flow of $134 million in Q4, exceeding the high end of their guidance range.
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The company successfully mitigated tariff exposure through commercial negotiations and supply chain management.
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Adient PLC (NYSE:ADNT) generated $881 million of adjusted EBITDA and $14.5 billion in sales for the full year, maintaining a solid performance despite customer volume reductions.
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The company returned $125 million to shareholders through share buybacks, representing a 7% reduction in share count.
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Adient PLC (NYSE:ADNT) secured $1.2 billion of new business in China, with nearly 70% of wins from domestic China OEMs, strengthening its position as a premier seating supplier in the region.
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Adient PLC (NYSE:ADNT) faced challenging business conditions, including customer volume reductions and dynamic tariff policies throughout the year.
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Adjusted EBITDA and adjusted EBITDA margin were down year-on-year due to the timing of commercial settlements and equity income impacts.
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The company experienced a decline in sales in Europe due to customer mix and intentional portfolio actions.
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Adient PLC (NYSE:ADNT) anticipates margin compression in China due to growth with domestic OEMs and volume headwinds from luxury global OEMs.
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The company expects a significant decremental impact in Q1 fiscal year ’26 due to F-150 downtime and Nexperia chip supply challenges.
Q: Can you provide more details on the 1% forecast underperformance versus S&P, particularly regarding the F-150 and European business wind-downs? A: The 1% underperformance is primarily due to the F-150 downtime and the wind-down of unprofitable business in Europe. For the F-150, we have factored in the known downtime but not the recovery, as Ford has not specified the recovery plan. In Europe, the exit of business at our Sarlouis and Nova Mesto plants contributes to this underperformance. These factors combined capture the 1% drag. – Jerome Dorlech, CEO
Q: The volume mix drag seems high at a 26% decremental. Can you explain why it’s so significant? A: The high decremental is due to several factors, including the F-150 downtime, which involves staffing challenges and subpay during downtime, and the Nexperia chip shortage impacting North America operations. Additionally, the mix of platforms called off by S&P and the initial lower margins from new business in China contribute to this. – Jerome Dorlech, CEO
Q: Can you elaborate on the $85 million investment for future growth and its expected payback period? A: The investment is necessary for driving growth, particularly in North America and China. It includes program growth and engineering costs, as well as automation and AI initiatives. The payback period for the automation and AI investments is typically 1.5 to 2 years, with expected savings of about $40 million on a run-rate basis. – Jerome Dorlech, CEO and Mark Oswald, CFO
Q: What is the status of onshoring efforts, and when will they impact revenue? A: The onshoring project with Nissan on the Rogue is already in production and included in our 2026 figures. Another Japanese customer project is expected to launch at the end of fiscal year 2026. We are also in final negotiations for a significant program moving from Mexico to the US, which should be finalized in the next 3 to 4 months. – Jerome Dorlech, CEO
Q: How should we view the 2026 margin outlook given the unique volume mix issues, and is the midterm 8% EBITDA margin target still realistic? A: The 2026 margin outlook is impacted by volume challenges, but we continue to drive positive business performance and invest in growth. The balance in balance out strategy and portfolio mix changes will support margin improvement. We remain committed to the midterm 8% EBITDA margin target, with growth expected in 2027 and beyond. – Mark Oswald, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.