Adient (ADNT) Down 2.5% Since Q3 Loss, Slashes FY21 View

Adient PLC’s ADNT shares have depreciated 2.5% since the company announced third-quarter fiscal 2021 results on Aug 5, before the opening bell. Investors were left disappointed as Adient slipped to a loss in the June-end quarter, snapping its profit streak since fiscal fourth-quarter 2020. Supply-chain disruptions amid shortage of semiconductors and rising commodity prices hurt third-quarter fiscal 2021 results.

Adient reported adjusted loss per share of 53 cents per share for the fiscal third quarter. The Zacks Consensus Estimate for quarterly earnings was pegged at 8 cents. This downside stemmed from lower-than-anticipated contribution across the Americas and EMEA markets. However, the bottom line compares favorably with the year-ago loss of $2.78 per share.

For the reported quarter, Adient generated net sales of $3,242 million, significantly up from the $1,626 million recorded in the prior-year period. The top-line figure also topped the Zacks Consensus Estimate of $3,205 million.

Adient PLC Price, Consensus and EPS Surprise

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

Segmental Performance

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

For the reported quarter, the Americas segment recorded revenues of $1,440 million compared with the $593 million generated in the year-ago period. The reported sales, however, lagged the consensus metric of $1,530 million. The segment posted adjusted EBITDA of $23 million for the fiscal third quarter, reversing the loss of $83 million recorded in the prior-year period. This upside was driven by improved volume & mix and positive business performance, partially offset by premiums and temporary operating inefficiencies. The reported EBITDA, nonetheless, lagged the consensus metric of $67 million.

For the fiscal third quarter, the EMEA segment registered revenues of $1,328 million, surging 90.3% year over year but missing the Zacks Consensus Estimate of $1,490 million. Its quarterly EBITDA came in at $22 million, reflecting a turnaround of the prior-year loss of $94 million but lagging the consensus mark of $65 million. The year-over-year upside resulted from improved volume & mix and an impressive business performance, partially negated by premiums and temporary operating inefficiencies.

For the June-end quarter, revenues in the Asia segment came in at $516 million, up from the $346 million generated in the year-ago quarter and beating the Zacks Consensus Estimate of $468 million. The segment’s adjusted EBITDA was $92 million, increasing from the $71 million reported in third-quarter fiscal 2020 and surpassing the consensus mark of $33.2 million. The results were driven by improved volume and mix, and an upbeat business performance.

Financial Position

Adient had cash and cash equivalents of $1,000 million as of Jun 30, 2021 compared with $1,692 million on Sep 30, 2020. As of Jun 30 2021, long-term debt amounted to $3,542 million, down from $4,097 billion on Sep 30, 2020. Capital expenditure declined to $60 million for the fiscal third quarter from the $73 million recorded in the prior-year period.

Fiscal 2021 View Down

Amid the macro headwinds impacting Adient, the company has lowered its fiscal 2021 guidance. Adient expects fiscal 2021 revenues within $14.3-$14.5 billion, lower than the prior outlook of $14.6-$15 billion. Adjusted EBITDA is anticipated in the band of $925-$975 million, lower than the previous guidance of $1-$1.1 billion. The company projects free cash flow of approximately $100 million compared to the previous forecast of $50-$150 million.

Adient — which shares space with Magna International MGA , Meritor MTOR and American Axle & Manufacturing AXL — currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report