Adient plc Q1 FY2026 earnings call

• Jerome highlighted the quarter's solid performance and updated fiscal year 2026 outlook, noting volume recovery and focus on new business wins and onshoring efforts.
• Emphasized the resilience of the operating model, with production volumes trending higher, particularly in North America.
• Discussed new business awards, including onshoring opportunities, with approximately 150,000 units of direct onshoring business won and anticipation of a significant near-term win.
• Highlighted innovation efforts like ModuTech, a modular seat design solution driving cost savings and competitive advantage.
• Addressed sustainability efforts, noting 42% reduction in Scope one and two emissions since 2019, 30% electricity from renewable resources, and progress in sustainable materials use.

Adient plc reported consolidated sales of approximately $3.6 billion in Q1, a $149 million increase year over year, primarily driven by FX tailwinds and favorable volume and pricing. In The Americas, consolidated sales were generally in line with the broader market. In EMEA, sales trailed the market due to customer mix and portfolio actions. Asia outperformed, driven by significant growth in China from new programs with domestic OEMs. Unconsolidated revenue declined approximately 3% adjusted for FX, primarily affected by a joint venture portfolio rationalization action in The Americas, while EMEA and China unconsolidated businesses experienced growth.

• Raised guidance for fiscal year 2026 revenue to approximately $14.6 billion (up from $14.4 billion), adjusted EBITDA to around $880 million (up from $845 million), and free cash flow to $125 million (up from $90 million).
• Production schedules are normalizing, with expectations of solid performance in the second half of the year, though Q2 results may be impacted by Chinese New Year seasonality.
• CapEx expected to remain elevated due to customer launch schedules and investment in innovation and automation.

• Potential disruptions in Ford's F Series production, with uncertainty around how such disruptions would impact guidance.
• Uncertainties in Europe due to customer volume concerns and the impact of Chinese vehicle imports on the region.
• Dependence on customer program decisions for the magnitude of restructuring efforts in Europe beyond fiscal year 2027.

Q: There's been media headlines about possible disruption in F1, F Series recovery. Any impact on schedule and risk to guidance?

A: Jerome noted they're not front-running Ford, and their guidance reflects best information today. If there's a meaningful disruption, they'd circle back, but currently, they anticipate making up lost production in the back half of the year.

Q: On onshoring opportunity, updated from $175 million to $500 million. Any color on near-term win?

A: Jerome mentioned a domestic OE moving production from Mexico to the US is in the $500 million, with hope to hear about it in the next couple of weeks. About 300 million of the $500 million comes in 2027, and the rest in 2028.

Q: Regarding Europe restructuring spend, update on progress?

A: Mark Oswald said restructuring spend in Europe in 2026 is around $120-130 million, but it's hard to give line of sight beyond 2027 as it depends on customer program decisions.

Q: About commercial settlement impact on cash flow?

A: Mark Oswald said it's more a timing and cadence issue, with commercial negotiations planned for the year, and the first quarter benefited from timing pull forward of certain commercial actions within the original 2026 plan.

Q: On Europe dynamics and margin management, and China OEM export opportunity?

A: Jerome said Adient is insulating from segments attacked by Chinese vehicles by going up segment, gaining components business in Europe, and exploring joint ventures to access export markets from China.