Adient plc Q4 FY2024 earnings call

• EMEA: Took restructuring actions in fiscal 2024 focused on rightsizing engineering and SG&A expenses and improving plant efficiencies, with potential for additional restructuring. - China: Viewed as the growth engine, with 37 plants and 3 technical centers, won business from six new customers in fiscal 2024 and expects double-digit annual growth. - Automation and AI: Launched an AI welding inspection tool with Mindtrace and executed a joint development agreement with PASLIN to develop automated sewing cells to reduce labor and increase accuracy.

In Q4, Americas: improved business performance of $52 million, volume and mix was a $15 million headwind, commodities and FX combined were a $21 million headwind. EMEA: year-on-year results were influenced by weak volume and mix, negatively impacting the quarter by $16 million, business performance was positive $7 million. Asia: generated positive business performance of $12 million from improved net material margin, volume mix was negatively impacted the quarter by $15 million. China business is a growth engine, with expected revenue from Chinese OEMs reaching 60% of total revenue by the end of 2027, up from 40% last year.

• Fiscal 2025 outlook: Expect continued strong company performance to offset lower industry volumes, sales expected to be $14.1 billion to $14.4 billion, adjusted EBITDA outlook $850 million to $900 million, free cash flow expected at $200 million. - Balanced capital allocation plan with focus on return of capital to shareholders, $260 million remaining on share repurchase authorization.

• Europe: Exhibiting intensifying cyclical and secular headwinds, S&P industry forecast calls for additional 5% contraction in light vehicle production in fiscal 2025, European volumes not expected to return to pre-COVID levels. - EMEA: Under heightened risk of impairment, with impairment warning language in the 2024 Form 10-K.

Q: John Murphy asked about actions in light of volume forecasts and commercial settlements with customers.

A: Jerome Dorlack said Adient can take austerity measures, work on commercial recoveries, basket of goods discussions, and ES3 program to find engineering savings. Mark Oswald added sales are dynamic and subject to adjustment.

Q: Colin Langan asked about delay in taking more actions in Europe and competitiveness of footprint.

A: Jerome Dorlack said there are clear sunsetting dates for some contracts, with ability to reprice others, and the issue is overcapacity in Europe rather than footprint competitiveness.

Q: Joe Spak asked about cash restructuring and savings in Europe.

A: Mark Oswald clarified cash restructuring of $100 million this year is related to past actions, and there's potential for additional restructuring with savings to be seen over time.

Q: Emmanuel Rosner asked about customer mix headwinds and growth in Americas and Europe.

A: Mark Oswald said it's a mix of timing and program specific, with Americas having inventory destocking and Europe having secular and program-related factors.

Q: James Picariello asked about EMEA margins and China Asia-Pac sales outlook.

A: Mark Oswald discussed margin degradation in EMEA due to volume and business performance, and China outlook is based on more baked-in market intelligence considering past dynamics.