Adient NYSE: ADNT executives said the company delivered a “solid start” to fiscal 2026 and raised full-year guidance following a first-quarter performance that navigated several temporary customer and supply disruptions. On the company’s earnings call, President and CEO Jerome Dorlack and CFO Mark Oswald pointed to improving North American production expectations, continued growth in China, and progress on automation and new product innovation as key factors supporting the updated outlook.
First-quarter results and operational disruptions
Dorlack said the quarter began with uncertainty tied to the “Novelis fire, the Nexperia shortage, and JLR productions,” but management expects most of the impact to be mitigated over the balance of the fiscal year as volumes recover. Revenue increased 4% year-over-year, which Dorlack attributed primarily to foreign exchange tailwinds from Europe. He added that, excluding FX, revenue in China rose “significantly as expected,” more than offsetting production headwinds in North America.
Oswald reported first-quarter sales of $3.6 billion and adjusted EBITDA of $207 million. Despite production disruptions, adjusted EBITDA margin improved 10 basis points year-over-year to 5.7%, which he said demonstrated the “resilience” of Adient’s operating model. On an adjusted basis, Adient recorded net income of $28 million, or $0.35 per share.
Oswald highlighted that a one-time, non-recurring tax settlement in a non-U.S. jurisdiction—previously discussed on the company’s fourth-quarter call—was recorded in the quarter and was “the key driver” of the company’s GAAP net loss of $22 million.
Regional performance and new business activity
Oswald said the year-over-year increase in consolidated sales reflected FX tailwinds and favorable volume and pricing. Regionally, Adient’s sales in the Americas were generally in line with the market, while EMEA trailed due to customer mix and “deliberate portfolio actions.” Asia outperformed, driven by China growth as new domestic OEM programs ramped. Oswald noted that the remainder of Asia lagged broader industry trends, particularly in Japan and India, where Adient’s customer presence is more limited.
Dorlack described ongoing launch activity and commercial focus across regions:
- Americas: Positive business performance despite disruptions, with key launches including the Kia Telluride and Rivian R2, plus automation expansion efforts.
- Europe: A challenged environment due to volumes, capacity constraints, and vehicle imports from China, alongside a “complex launch with a German customer” and restructuring actions “on track.”
- Asia: Continued pursuit of innovation and new business, with the China team strengthening relationships with domestic OEMs and suppliers.
On recent awards and launches, Dorlack said Adient won new metals business with Ford in EMEA on a compact crossover SUV, and successfully launched complete seat business on the Mercedes-Benz GLB in the region. In Asia, he highlighted “new conquest business” with domestic OEMs and the launch of the Hyptec HT featuring a “zero-gravity passenger seat.” In the Americas, he pointed to replacement wins including Honda Pilot and MDX metals business, and a long-distance JIT program launch with the Chevy Bolt.
Onshoring pipeline and longer-term growth framework
Management emphasized onshoring as a major growth opportunity in North America. Dorlack said Adient has won about 150,000 units of direct onshoring business to date and an additional 25,000 units of indirect opportunities, while also citing approximately 100,000 units of new and conquest business to the Americas. He said the combined impact of wins and anticipated wins represents an estimated $500 million in incremental revenue, with $300 million expected to impact fiscal 2027 and the full $500 million impacting fiscal 2028.
In the Q&A, Dorlack and Oswald said the onshoring and conquest opportunity has grown from a previously discussed $175 million to $500 million, including a conquest win they characterized as roughly $100 million to $150 million. Dorlack added the company is in the “final stages” of the quote process with a domestic OEM moving production from Mexico into the U.S., which he said is included in the $500 million estimate and could be decided in the “next couple weeks.” He and Oswald said they do not expect the opportunity to push out into 2029, noting some programs are already launching this year, with additional volume coming on in 2027 and 2028.
When asked about additional reshoring activity, Dorlack said the company is seeing an “acceleration” in customer discussions and also sees potential for more activity beyond the programs outlined, particularly with Japanese OEMs evaluating manufacturing footprint decisions that could affect 2028 and 2029 timeframes. He reiterated that Adient expects to be a “net beneficiary” of onshoring.
Innovation, sustainability, and Europe strategy
Dorlack said Adient recently introduced ModuTec, a modular seat design intended to simplify seat builds and enable higher levels of automation. He said early benefits from modularity include “upwards of 20% total value chain savings,” driven by labor and freight efficiencies, and nearly a 15% reduction in JIT floor space requirements. He positioned the initiative as supporting margin expansion, capital efficiency, and free cash flow conversion.
On sustainability, Dorlack said Adient issued its 2025 sustainability report and highlighted several metrics discussed on the call, including a 42% reduction in Scope 1 and Scope 2 emissions since 2019, 30% of electricity attributable to renewable resources, a 6% year-over-year reduction in total water withdrawal, and sustainability ratings completed for 80% of suppliers.
Regarding Europe, Dorlack said Adient is managing competitive pressure from imported Chinese vehicles by focusing on higher segments that are “insulated” from the A and B segment competition, and by pursuing components and JIT content opportunities as Chinese OEMs localize within Europe. He also referenced a joint venture arrangement tied to a supplier relationship connected to Geely as a way to access export opportunities into Europe.
Cash flow, capital allocation, and raised fiscal 2026 guidance
Oswald said Adient generated $15 million in free cash flow in the first quarter, which exceeded internal expectations. He noted an approximately $20 million timing impact from the non-U.S. tax settlement, now expected to be paid in the second quarter. He reiterated that cash flow is typically second-half weighted and said full-year free cash flow expectations increased to $125 million.
Adient ended the quarter with $855 million in cash and total liquidity of $1.7 billion, including $823 million of undrawn revolver capacity. Oswald said the company repurchased approximately 2.1 million shares for $25 million during the quarter, leaving $110 million of remaining authorization. He also noted that, after quarter end, Adient repriced its Term Loan B, achieving a 25-basis-point reduction and about $1.5 million in annual savings. Net leverage was 1.7x at December 31, 2025, which he said was within the company’s 1.5x to 2.0x target range.
For fiscal 2026, Oswald said North America vehicle production is now expected to be around 15 million units, up from 14.6 million when the company provided its prior outlook. As a result, Adient raised guidance to:
- Sales: approximately $14.6 billion (from $14.4 billion)
- Adjusted EBITDA: around $880 million (from $845 million)
- Free cash flow: $125 million (from $90 million)
Oswald said the updated guidance reflects current production schedules and FX rates and assumes “no significant changes” to current tariff policies. He added that second-quarter results are expected to be affected by Chinese New Year seasonality, with Q2 EBITDA expected to look “very similar” to the first quarter.
About Adient NYSE: ADNT
Adient plc NYSE: ADNT is a leading global supplier of automotive seating and interior components. Established in 2016 through a spin-off from Johnson Controls, the company designs, engineers and manufactures complete seat assemblies, seat structures, mechanisms, foams, textiles, trim and electronics. Adient’s product portfolio spans a wide range of seating solutions, from entry-level designs to luxury and high-performance seats, and extends to interior modules such as door panels and center consoles.
Serving major original equipment manufacturers (OEMs) around the world, Adient works closely with automakers to develop lightweight, comfortable and safety-oriented seating systems.
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