Adient plc Q4 FY2025 earnings call

• Business execution was strong with adjusted EBITDA margin of 6.1% and free cash flow of $204 million for the full year. - Won significant new business like replacing JIT and foam on Ford F-150 and conquesting trim business. - Invested in innovation, including AI and automation for manufacturing and engineering. - Focused on European restructuring plan and growing in China with local OEMs. - Delivered over $100 million of business performance excluding tariff impact.

In the Americas, the team expanded margins by 40 basis points for the full year and drove $41 million of incremental favorable business performance through lower launch costs, commercial actions, and input costs despite a $17 million net tariff impact. In EMEA, fiscal year '25 results were influenced by a $36 million volume mix headwind due to lower customer production volumes, but had $17 million positive business performance. In Asia, business performance was a $34 million tailwind during the year, offsetting a $33 million volume mix headwind, with FX being a $17 million tailwind. Adjusted EBITDA for the quarter was $226 million, down $9 million year-on-year, with drivers including timing of commercial settlements, equity income changes, and business performance in regions.

• Fiscal year '26 outlook is based on S&P vehicle production forecast, FX rates, with revenue expected to have growth over market in China but headwinds in Europe and North America. - Expected free cash flow of approximately $90 million based on current volume assumptions, but $170 million at constant volume. - Equity income guidance remains ~$70 million, interest expense expected $185 million - $190 million. - Impact of F-150 downtime and Nexperia chip supply challenges factored into guidance.

• Tariff policies, geopolitical landscape, and supply chain uncertainties. - Uncertainty around F-150 downtime mix and recovery timing. - Nexperia chip supply challenges impacting production. - Volume mix headwinds in Europe and China affecting margins.

Q: Colin Langan asked about the 1% forecast underperformance, including F-150 downtime and European business wind-down.

A: Jerome Dorlack responded that F-150 downtime includes known downtime through Nov 10 with no recovery, and European business wind-down of plants like Star Louis and Novamesto contributes to the 1%.

Q: Emmanuel Rosner inquired about growth investments, $85 million investment for the future.

A: Jerome Dorlack said it's needed for growth, with $60 million spent on AI and automation yielding $40 million in savings, and payback on innovation typically 1.5-2 years.

Q: Dan Levy asked about margin targets and '27 growth.

A: Mark Oswald stated '26 is transition year but positive margin trajectory remains on track, with growth in '27 from launches and portfolio rotation.

Q: Nathan Jones asked about Q1 '26 revenue margins.

A: Mark Oswald said Q1 '25 had $195 million EBITDA, and Q1 '26 may see decline due to F-150 and Nexperia issues, with Q2+ improving.

Q: Joe Spak asked about F-150 volume incrementals and free cash flow.

A: Mark Oswald said incrementals depend on how volume returns, and free cash flow restructuring drops to ~$120 million in '26, normalizing to ~$50 million+ run rate.