Earnings call transcript: Adient Q4 2025 shows revenue growth, stock dips

Adient PLC reported its Q4 2025 earnings, revealing a revenue of $3.7 billion, a 4% increase year-over-year, and an adjusted EBITDA of $226 million. Despite exceeding EPS expectations with $0.52 compared to the forecasted $0.50, the stock dropped 13.55% in pre-market trading, closing at $21.73.

Key Takeaways

• Revenue for Q4 2025 reached $3.7 billion, marking a 4% year-over-year increase.
• EPS surpassed expectations, coming in at $0.52 versus the forecasted $0.50.
• Adient’s stock fell 13.55% in pre-market trading despite beating EPS estimates.
• The company announced significant investments in AI and automation.
• Adient provided a 2026 revenue guidance of approximately $14.8 billion.

Company Performance

Adient’s performance in Q4 2025 showed resilience with a 4% increase in sales compared to the previous year, reaching $3.7 billion. However, full-year sales for 2025 saw a slight decline of 1% year-over-year, totaling $14.5 billion. The company continues to focus on innovation and strategic partnerships to strengthen its market position.

Financial Highlights

• Revenue: $3.7 billion, up 4% year-over-year
• Full-Year Revenue: $14.5 billion, down 1% year-over-year
• Adjusted EBITDA: $226 million for Q4, maintaining a 6.1% margin
• Full-Year Adjusted EBITDA: $881 million
• Free Cash Flow: $204 million in 2025

Earnings vs. Forecast

Adient reported an EPS of $0.52 for Q4 2025, surpassing the forecasted $0.50, resulting in a 4% earnings surprise. This marks a positive deviation from expectations, although the impact on stock performance was negative.

Market Reaction

Despite beating EPS forecasts, Adient’s stock fell 13.55% in pre-market trading to $21.73. This decline follows a broader trend of investor caution, possibly due to concerns about margin compression in key markets like China.

Outlook & Guidance

Looking ahead, Adient projects 2026 revenue to be approximately $14.8 billion, with an adjusted EBITDA of around $925 million. The company anticipates continued growth in China and North America, despite potential margin challenges.

Executive Commentary

CEO Jerome Dorlack emphasized the company’s commitment to "flawless execution and planting the seeds for future growth." He highlighted ongoing investments in innovation and capital allocation as key strategies for enhancing shareholder value.

Risks and Challenges

• Margin compression in China due to competitive pressures.
• European market production challenges could impact growth.
• Currency fluctuations and macroeconomic uncertainties.
• Potential supply chain disruptions affecting key markets.

Q&A

During the earnings call, analysts inquired about the impact of F-150 production disruptions and the company’s restructuring efforts in Europe. Adient addressed concerns about decremental margins and reaffirmed its focus on strategic investments and free cash flow optimization.

Full transcript - Adient PLC (ADNT) Q4 2025:

Denise/Linda Conrad, Moderator/Investor Relations, Adient: Welcome to Adient’s fourth quarter and full year 2025 earnings call. Parties will be in a listen only mode until the question and answer session of today’s call. I’d like to inform all participants that today’s call is being recorded. If you have any objections, you may disconnect at this time. I will now turn the call over to Linda Conrad. Thank you. You may begin. Thank you, Denise. Good morning everyone and thank you for joining us. The press release and presentation slides for our call today have been posted to the Investors section of our website at adient.com. This morning I am joined by Jerome Dorlack, Adient’s President and Chief Executive Officer, and Mark Oswald, our Executive Vice President and Chief Financial Officer. On today’s call, Jerome will provide an update on the business.

Mark will then review our Q4 and full year financial results as well as our guidance for fiscal year 2026. After our prepared remarks, we will open the call to your questions. Before I turn the call over to Jerome and Mark, there are a few items I’d like to cover. First, today’s conference call will include forward looking statements. These statements are based on the environment as we see it today and therefore involve risks and uncertainties. I would caution you that our actual results could differ materially from these forward looking statements made on the call. Please refer to slide 2 of the presentation for our complete Safe Harbor Statement. In addition to the financial results presented on a GAAP basis, we will be discussing non-GAAP information that we believe is useful in evaluating the company’s operating performance.

Reconciliations for these non-GAAP measures to the closest GAAP equivalent can be found in the appendix of our full earnings release. It is my pleasure to turn the call over to Jerome.

Jerome Dorlack, President and Chief Executive Officer, Adient: Thanks Linda. Good morning everyone and thank you for joining us to review our fourth quarter and full year fiscal 2025 results. We will also discuss our fiscal 2026 outlook and share additional information and how we are positioning ourselves for long term success. Turning now to Slide 4 which summarizes our fourth quarter and full year results. With business execution remaining strong, we delivered an adjusted EBITDA margin of 6.1% and free cash flow of $134 million in the quarter. It’s worth noting that full year free cash flow ended at $204 million versus the previous high end of our guidance range of $170 million, leaving us with ample liquidity when it comes to 2026 capital allocation, which Mark will cover in his section. This performance comes amidst challenging business conditions not just in the fourth quarter but throughout the year, including customer volume reductions and dynamic tariff policies.

The Adient management team would like to recognize all of our employees for stepping up and meeting these challenges. By working together with both our customers through commercial negotiations and remapping value chains and our suppliers through supply chain management, we have successfully mitigated the lion’s share of our tariff exposure this year. On a full year basis, we generated $881 million of adjusted EBITDA and $14.5 billion in sales with an adjusted EBITDA margin of 6.1%. Customer volume reductions continue to be offset with strong business performance. From a cash perspective, we were able to generate an additional $204 million of free cash flow this year net of funding our European restructuring program.

Given our solid cash generation, we’re able to return capital to our shareholders through $125 million of share buybacks, which represented a 7% reduction of our beginning year share count and 18% since the start of the program. Mark will provide additional details in his section, but we also want to highlight the amendment and extension of our ABL revolver. The team has worked diligently to optimize our debt structure and day to day cash needs over the last few years. We have taken the opportunity to better align our liquidity needs and reduce interest expense. Moving now to slide five, let’s take a moment to emphasize some of our accomplishments this year. Our operational performance and focused execution have continued, whether it’s launching new business, managing the uncontrollables such as tariffs, or driving continuous improvement.

The Adient team has delivered over $100 million of business performance this year, excluding the net impact of tariffs. We have actively pursued and won onshoring opportunities and will continue to do so as customer footprint strategies evolve. We have pursued and won important conquest and replacement business, including replacement business on one of our largest platforms, the F-150, which we will talk about on the next slide. We have won $1.2 billion of new business in China with nearly 70% of those wins with domestic China OEMs. As we aggressively work to confirm ourselves as the premier seating supplier in China, we are winning new profitable business in Europe, putting us on track to drive revenue and margin growth in the region in the out years. Adient is committed to driving long term shareholder value by investing in innovation across every facet of our business.

We are strategically integrating artificial intelligence into our operations, from manufacturing and engineering to support functions to enhance safety, efficiency, quality, and scalability. To ensure we maximize the benefits of these technologies, we are proactively equipping our workforce with the skills needed to leverage AI and adapt to a rapidly evolving digital environment. These initiatives position Adient to capitalize on emerging opportunities, strengthen our competitive advantage, and deliver sustainable growth for our investors. Turning now to page six, we continue to prioritize winning new and Conquest business while also successfully launching several new programs. As previously mentioned, we have secured the replacement of the JIT and foam business on the Ford F-150. In addition, we were able to Conquest incremental content and secure the trim business as well, which we will talk more about on the next slide.

In addition to the F-150 in the Americas, we have one conquest JIT foam and trim business with an Asian OEM on a full-size SUV and another conquest win on metals content on the Mercedes GLE and GLS in the Americas and replacement on the S-Class in EMEA and Asia. We continue to grow with leading domestic China OEMs including BYD. We have also continued to penetrate new domestic OEMs such as Chery with our recent complete seat win on their upcoming pickup truck. We could not continue to win the new businesses like those just mentioned without delivering on our customers’ expectations. Through successful launches, these programs continue to showcase our high level of execution and our ability to meet the rigorous safety, quality, and on-time delivery standards of our customers, reinforcing our supplier of choice status.

We have just been talking about what we are doing to win new business, but it’s not just about our execution, excellence and which programs we are winning. It’s about how we are driving sustainable value for our customers which is the cornerstone of our future growth. Turning to slide 7, winning the F-150 business was not just about winning the JIT and foam replacement business. It was also about working with our customer to drive enhanced craftsmanship through design collaboration. By collaborating on design to optimize foam, trim and JIT manufacturing, we have been able to improve overall quality, appearance and the customer experience. It is this kind of partnership that reinforces the value we bring to our customers every day and why we remain a supplier of choice.

On the innovation front, we have continued to see more demand from our customers on enhanced safety features as consumer seating trends for comfort and autonomy drive additional requirements for occupant out of position protection. Through our joint development agreement with Autoliv as announced earlier this month, we are providing our customers with enhanced safety solutions built around the principle of multidimensional collaborative protection. Adient’s ZGuard is a dynamic safety system designed to protect occupants in the event of a collision when in deeply reclined positions. As electrification and smart technologies continue to evolve the passenger experiences, this will position Adient and Autoliv at the forefront. Seating and Safety Solutions, each of these items just mentioned are meaningful by themselves, but it’s the combination of them, together with the execution, excellence, customer collaboration, and investments in innovation that will collectively drive our future growth.

When we look forward to 2027, Adient has line of sight to double digit growth over market in China, mid single digit growth over market in North America, and growth at market in Europe. As we turn to slide 8, we would like to highlight our commitment to that growth through a new strategic partnership. We are pleased to announce that we have secured a partnership in China that builds on Adient’s long standing local business model and strong customer relationships. This agreement expands our operational footprint, which accelerates and deepens our engagement with China’s leading OEMs to further strengthen our competitive position and support sustainable growth in this key market. The new unconsolidated joint venture is targeted to close in Q1 fiscal year 2026. Moving to slide 9, it is clear that Adient’s end to end innovation strategy is creating sustainable value for shareholders across every area of our business.

We are focused on initiatives that strengthen our competitive position and drive long term growth. Here are just a few examples that demonstrate this. First, automation by design. We are working closely with our customers on product design, optimizing plant layouts for more efficient automation, and enabling long distance JIT and modularity. We have recently launched our first long distance JIT operation in North America and are looking to expand this with other programs and customers in the region in the future. This approach reduces cost, improves efficiency, and offers greater flexibility for our customers in the dynamic North American market where an ever shifting tariff landscape and geopolitical landscape requires greater flexibility when it comes to process automation. We have introduced smart manufacturing technologies such as AI driven relaxed ovens in partnership with the University of Michigan, which improve quality, enhance energy efficiency, and optimize labor on product innovation.

We recently launched our Deep Recline Mechanical Massage Seat which sets a new standard for occupant comfort and fatigue relief while maintaining industry leading safety and durability. We already have two programs in production with more actively being quoted across multiple customers. Through design innovation, we are launching Sculpted Trim in Q2 fiscal year 2026 which is the next generation of seat trim that delivers complex shapes that were previously unachievable with current cut and sew processes. This product offers greater design flexibility, superior craftsmanship and continued labor optimization. Not only that, it leapfrogs automated sewing by replacing the sewing process. With this end to end innovation mindset, we will be able to capitalize on enhanced in cabin customer experiences, mobility trends and evolving customer requirements to drive value for all of our stakeholders.

As we move to slide 10, let’s take a look at the key initiatives that each of our regions will focus on in fiscal year 2026. In the Americas, the key driver will be what happens with production volumes. Right now the forecast is based on October’s S&P and that shows a decline in 2025. We also expected volumes in the region to decline and they did not. If that repeats again in North America in 2026, our outlook would improve significantly. In the meantime, we will continue to drive business performance, capture onshoring opportunities, and invest in new and conquest business. For EMEA, the key drivers are successful launches, business performance, and continuing to make progress on our multi-year restructuring plan. Balance end, balance out will begin, but it is being impacted by changes in customer programming timing where program end of productions are being delayed.

Despite that, we expect margins to begin improving toward the mid single digits beyond fiscal year 2026. In Asia we are driving for growth especially with local China OEMs. We know that there will be some margin compression as we pursue this business, but expect incremental growth to help offset this and sustain double digit regional margins and strong cash flow generation as we focus on fiscal year 2026. What Adient must deliver is clear, but it is also clear that the world will continue to be dynamic with many uncertainties, tariff policies, the geopolitical landscape and ever changing supply chains, just to name a few. With that said, the management team wants to assure you that Adient will continue to execute on what we can control and aggressively mitigate what we cannot control to maximize the results for our shareholders.

Moving now to slide 11, so what do we want to leave you with today? Adient is clearly focused on flawless execution and planting the seeds for our future growth, both of which are needed to drive long term sustainable value. We are investing in innovation and our people. We have created a team fully dedicated to automation to expand innovation across all of our plants globally. We will continue to leverage our world class footprint and are laser focused on our strategic objectives and delivering value to all of our stakeholders. We will deliver on our European restructuring plan, and if needed, we will pursue additional restructuring as customer requirements evolve. We will continue to be good stewards of capital and execute our balanced capital allocation strategy. We are committed to being a supplier of choice for our customers.

We are driving profitable new business including onshoring opportunities as they arise and replacing legacy contracts that have weighed on our bottom line for too long. These are the key drivers that make Adient well positioned for future growth, cash flow generation and sustainable shareholder value. With that, I’d like to hand it over to Mark to take you through our financials and our outlook.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: Thanks, Jerome. Let’s jump into the financials. Adhering to our typical format, slides 13 and 14 detail our reported results on the left side and our adjusted results on the right side. We will focus our commentary on the adjusted results, which exclude special items which we view as either one time in nature or otherwise skew important trends in underlying performance. Details of all adjustments are in the appendix of the presentation. High level for the quarter, sales of $3.7 billion were 4% better than fiscal year 2024 with adjusted EBITDA of $226 million and adjusted EBITDA margin of 6.1%.

Adjusted EBITDA and adjusted EBITDA margin were both down year on year primarily due to the timing of commercial settlements in equity income, reflecting the impact of modifications to our Kuiper Joint Venture Agreement, which are partially offset by favorable cost impacts in business performance for both the Americas and EMEA. In addition, equity income was also impacted by a few one-time non-recurring items within the JVs such as an income tax adjustment and timing of engineering expense and recovery and a reported adjusted net income of $42 million or $0.52 per share for the full year. As shown on slide 14, sales came in at approximately $14.5 billion, down 1% year over year due to lower customer volumes and unfavorable mix which was partially offset by FX tailwinds.

Adjusted EBITDA landed at $881 million, essentially flat with 2024 despite the increase decrease in volume, positive business performance offset the unfavorable volume mix, headwinds as well as lower equity income year on year. For the year we reported adjusted net income of $161 million or $1.93 per share, which represents a 5% improvement on adjusted EPS versus the prior year. I’ll go through the next few slides briefly as details of the results are included on the slides. This should ensure we have sufficient time for Q and A digging deeper into the quarter and beginning with revenue on Slide 15, we reported consolidated sales of approximately $3.7 billion in Q4, which was a $126 million increase compared to Q4 fiscal year 2024, primarily driven by FX tailwinds and favorable volume and pricing in the quarter.

Shifting gears to the right side of this slide, Adient’s consolidated sales were favorable to the broader markets in the Americas, while sales in EMEA underperformed due to customer mix and intentional portfolio actions. Sales in China trailed the market due to production declines from our traditional premium OEM customers, while the rest of Asia outperformed due to customer launches in prior years, ramping to full production this year. In Adient’s unconsolidated revenue, year on year results declined approximately 4% adjusted for FX. Results were primarily affected by JV portfolio rationalization items in the Americas that were finalized in Q1 of fiscal year 2025, we saw growth in both EMEA and China unconsolidated businesses. Turning to slide 16, we provided a bridge of adjusted EBITDA to show the segment performance between periods.

Adjusted EBITDA was $226 million during the quarter, down $9 million year on year. The primary drivers of the year on year performance include, as mentioned earlier, the timing of commercial settlements, which tends to be lumpy from quarter to quarter and was particularly impacted by certain actions pulled into our third quarter of this year. A year over year decline in equity income mentioned previously, which was partially offset by positive business performance in the Americas and to a lesser extent in EMEA. FX and net commodities provided modest tailwinds in the quarter, and overall business performance was favorable year on year despite a net $4 million tariff impact during the quarter. Moving to Slide 17 in our full year results, Adient’s adjusted EBITDA was $881 million, essentially flat with the prior year.

Adient drove nearly $100 million in favorable business performance year on year, which included $17 million of net tariff expense. Our commitment to operational excellence drove additional efficiencies and lower launch expenses during the year, which offset the $50 million of unfavorable volume and mix headwinds due to lower volumes in Europe and other customer mix headwinds in Asia. In addition, net commodities were a $28 million headwind year on year, primarily resulting from the timing of recoveries. Despite the challenges presented in fiscal year 2025, the Adient team was able to expand margins by 10 basis points year on year. As in past quarters, we provided our detailed segment performance slides in the appendix of the presentation.

High level for the Americas, we 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 year on year despite a $17 million net tariff impact during the year. Volume and mix was a $19 million tailwind for the year due to prior year, slowing ramp launches reaching full production volumes in 2025. Net commodities were a $28 million headwind for the year driven by the timing of contractual pass throughs. In EMEA, fiscal year 2025 results were influenced by volume mix, which was a $36 million headwind during the year due to lower customer production volumes, positive business performance of $17 million during the year due to improved net material margin and improved operating performance, partially offset by $12 million in unfavorable FX due to transactional exposure to the zloty.

Finally, in Asia, business performance was a $34 million tailwind during the year due to improved net material margin, lower launch costs, and improved engineering and administrative expenses, which offset the $33 million volume mix headwind during the year due to lower sales in China and adverse customer mix in the region. FX was a $17 million tailwind in 2025 due to the transactional impacts of Asian currencies and translational effects versus the USD. To sum up the regional performance in 2025, the team has done an outstanding job of demonstrating continued resiliency, driving positive business performance in the face of macro challenges. I would just reinforce what Jerome has already highlighted. The Adient team is doing what needs to be done to control what is in our power and to control focusing on operational execution.

Turning to Adient’s cash flow now on Slide 18 for the full year fiscal year 2025, the company generated $204 million of free cash flow which is defined as operating cash flow less CapEx. On the right side of the slide, we have highlighted the key drivers impacting the full year free cash flow. During the year, we benefited from certain fiscal year 2024 dividends that were delayed and paid in fiscal year 2025 from certain of our China joint ventures. This favorable timing of dividends was more than offset by elevated cash restructuring in EMEA and the timing of customer tooling recoveries. In addition, cash flow was favorably impacted by approximately $30 million of items pulled ahead from 2026. Excluding these actions, Adient would have been at the high end of its guidance range, call it about $170 million.

These actions resulted from a combination of timing for customer payments and actions taken by the company to proactively mitigate the potential impact of timing from Jaguar Land Rover related receivables due to their cyber event. One last item to highlight on the slide, at September 30, 2025, we had approximately $185 million of factored receivables versus $170 million at the end of 2024. Adient continues to utilize various factoring programs as a low-cost source of liquidity. Moving to Slide 19 for our liquidity and capital structure. On the right side of the slide, you’ll note that Adient ended the fiscal year with strong liquidity totaling $1.8 billion, comprised of $958 million of cash on hand and $814 million of undrawn capacity under our revolving line of credit.

During the fiscal year, the company returned a total of $125 million to its shareholders for full year 2025, retiring approximately 7% of its shares outstanding at the beginning of the fiscal year. In addition, Adient continues to proactively manage our capital structure. In September, before the close of the fiscal year, we launched an amend and extend initiative on our ABL revolver which closed in mid October. This action extended the maturity from 2027 to 2030. As Jerome pointed out earlier, the team has optimized our cash needs over the past few years, so we were able to reduce the revolver by $250 million and opportunistically reduce our annual interest expense on both drawn and undrawn capacity by approximately $2 million per year. Focusing now on our balance sheet, Adient’s total debt and net debt position totaled $2.4 billion and $1.4 billion respectively at September 30, 2025.

The company’s net leverage ratio at September 30 was 1.6 times, near the lower end of our target range of 1.5-2 times. As you can see, Adient does not have any near-term debt maturities. Moving now to slide 21, we’ll review some of the key underlying assumptions to our fiscal year 2026 outlook. As we typically do, we have based our outlook on a combination of the October S&P vehicle production forecast, near-term EDI releases, and any customer production announcements. In addition to volumes, FX rates have also changed year on year, with the euro moving most significantly. Tailwinds from the euro will essentially mask the volume pressure as we look at revenue. As you can see, Adient is expected to grow significantly above market in China, however faced stiff headwinds in Europe and North America.

As we will discuss further on the next slide, it should be noted that we have put in a Q1 adjustment for Ford, not yet reflected in the October S&P production estimates, which slightly skews the growth over market comparison negatively for North America. With that as a backdrop, let’s turn to Slide 22 to see the expected impact to adding fiscal year 2026 results. First, I would like to specifically address our assumptions around F-150 volumes, which is Adient’s second largest platform in the Americas when it comes to the F Series and reflecting on the impact to their customer Ford. We have reflected the downtime that has been announced to date, which is currently through the week of November 10.

Because Ford has not indicated the mix of F Series vehicles that will be down, specifically the mix between F-150 and the Super Duty vehicles including cadence for recoveries, we do not think it prudent for Adient to come up with our own forecast, especially with regard to make up plans. Of course we are actively monitoring the situation and will provide additional insights once we have more clarity from Ford. In addition to the F-150 volumes, we are also proactively monitoring other current events such as the potential chip supply challenges from Nexperia. We view these events as more as production disruption issues versus fundamental demand challenges.

Given the underlying macro factors remain stable, especially in North America, we remain hopeful that volume stability will continue into 2026 as we look beyond specific events basing our outlook on the current S&P assumptions. North America and Europe revenue are projected to be down by approximately $650 million year on year, but this will be partially offset by growth over market in China for a net decline year on year of approximately $480 million. Typically, you would expect the adjusted EBITDA impact of this to be roughly $75 million, but you could see we have a higher decremental mix impacted by continued mix headwinds in Europe and margin compression in China.

While we expect to maintain double-digit margins in China, the combination of growth with domestic China OEMs and volume headwinds from the luxury global OEMs in China is expected to compress overall margins as we are forecasting headwinds of roughly 100 basis points. While margins in China are forecast to compress with an offset of positive EBITDA from growth, we do not expect the adverse impact to overall Adient margins as we executed approximately $100 million of business performance in 2025. We are targeting a similar amount for fiscal year 2026. However, as we are also focused on growth, about $35 million of that performance is expected to be invested in growth through launch costs and engineering for future programs, resulting in a net impact of business performance at $75 million.

For illustrative purposes, if we were to hold volumes constant year on year, you can see that our financial outlook would show approximately $14.8 billion in sales and $925 million of adjusted EBITDA resulting in adjusted EBITDA margin of about 6.3%. Turning to free cash flow on slide 23, the year on year decline that is forecasted free cash flow is driven by three factors. The offsetting impact of the favorable $30 million bull ahead actions previously mentioned in 2025, elevated cash tax in fiscal year 2026 driven by approximately $20 million for a potential settlement associated with an ongoing tax audit within a specific jurisdiction, as well as lower adjusted EBITDA and higher CapEx, reflecting our investment in future growth and innovation. The cumulative impact of these items results in free cash flow of approximately $90 million based on current volume assumptions.

However, we would expect that to be closer to $170 million at constant volume. I do want to remind everyone that below free cash flow, Adient expects to have an additional dividend of approximately $85 million to our non consolidated interest or NCI. As Jerome mentioned in his section, we are committed to investing in future growth. The investments we are making today are expected to drive double digit growth overall market in China. In single digit growth overall market in North America. These investments are expected to drive volume, profitability and incremental cash flow in the out years. The combination of our execution excellence and our investment in future growth and innovation is why Adient expects to maintain strong sustained cash flow generation for 2027 and beyond as we ensure our investments today drive shareholder value in the future.

Turning now to our guidance on slide 24, I’ve already walked through several key items on the slide, so I won’t read through those. In addition to what we have discussed, I would add our guidance on equity income remains approximately $70 million. Based on our current debt levels, our interest expense is expected to be approximately $185-$190 million. As we have said throughout the presentation, our guidance reflects Adient’s commitment to controlling what it can. Our business execution and commitment to continuous improvement will continue to drive strong business performance. We will manage through the volume challenges and continue to invest in the future as Adient is committed to driving long term shareholder value. Turning to slide 25 before going into Q and A.

In closing, I would like to reiterate that Adient is firmly committed to executing our balanced plan for capital allocation driven by our business performance. We enter fiscal year 2026 from a position of strength with strong balance sheet and solid liquidity. We ended fiscal year 2025 with $958 million of cash on the balance sheet, well ahead of the roughly $800 million we need for ongoing operations. This provides Adient the opportunity to proactively manage its capital allocation, whether it’s through investment for future growth, debt pay down or continued share repurchases. As a reminder, Adient has $135 million of authorization remaining on its share repurchase program, leaving room for additional purchases as appropriate in fiscal year 2026. By utilizing the levers I just mentioned, the Adient team is committed to prudent capital allocation in maximizing shareholder value.

With that, we can move to the question and answer portion of the call. Operator, can we have our first question, please?

Denise/Linda Conrad, Moderator/Investor Relations, Adient: Thank you. We will now begin the question and answer session. If you would like to ask a question, please unmute your phone and press Star one. You will be prompted to record your name. To withdraw your question, you may press Star two. Again, press Star one to ask a question and one moment for your first question. That is going to come from Colin Langan with Wells Fargo. Your line is open.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: Oh, great. Thanks for taking my questions. Maybe if we could start with the 1% forecast underperformance versus S&P. Any color on the major puts and takes there? I think you mentioned the F-150. Did you say that you factored in the downtime that’s expected but not the recovery that Ford has actually kind of indicated? There’s recovery and then any color maybe in particular on the wind down of unprofitable business in Europe? Is that another big driver there that we should be considering in sort of the 1% drag?

Jerome Dorlack, President and Chief Executive Officer, Adient: Yeah. So thanks, Colin, for the question. I’ll take it. On the F-150 in particular, you know, we, out of respect for our partner, for the customer, we don’t want to get ahead of them. What they’ve indicated on their call was F Series. F Series is a mixture of F-150, F-250, and the entire Super Duty lineup. They haven’t officially made any announcements of where that recovery is going to come from and how all of the downtime will mix into that. What we have forecast in our guidance is the downtime that we know today, what we actually have in our EDI releases, which takes us through the week of November 10 with a restart on November 17 with no recovery, so no makeup of any volume.

In addition to that, what we do not know is what that recovery and makeup volume will look like. Will it come with significant overtime? Will it come with additional crews, additional makeup? Will it be kind of low calorie makeup type revenue and what will that mix look like? That is part of that 1% when S&P comes out with an updated kind of November number. I think we will tie out closer to that because they will capture some of the F-150 downtime. That is part of it. The other piece of it is the European picture. The, you know, we now have the full. Our plant in St. Louis, the exit of that business as that winds off, as well as a plant in Nova Mesto in Slovakia, the exit of that business as well, winding down, which would be below kind of S&P performance.

Hopefully that answers your questions on that.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: Got it. I mean, are those major contributors to the 1% overall, or are those combined still?

Jerome Dorlack, President and Chief Executive Officer, Adient: Yeah, I mean, those would really capture the 1% overall. Yes, got it.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: Okay, that makes sense. If I just look at the walk on slide 22, the volume mix drag is, I think, something like a 26% decremental, which seems pretty high. Any color on why such a high decremental for the lost volume?

Jerome Dorlack, President and Chief Executive Officer, Adient: Yeah, I’ll start and then Mark can add any color if he needs to. There’s a couple of factors that go into that. First of all, we have things like F-150 factored into that. You have to remember that’s not coming out at a normal decremental because of the nature of how that F-150 downtime is coming in. It’s, you know, it’s coming in first at a very short notice. It’s coming in initially, it was basically half shift. We were having to staff two full plants fully, but only getting half volume on it. You know, it ran like that for several weeks. Now we’re having to run it at full down weeks but still having to pay sub pay. Given that is 6% of our total sales, that’s a pretty severe decremental for us for a very large portion of our Q1.

In addition to that, in our Q1 we also have Nexperia downtime. And that Nexperia downtime is coming. It’s been public announcements that one of our very large Japanese customers significantly impacting our North America operations. You know, when you think about Q1, it’s going to have a very significant decremental in it because of those two factors, Nexperia and F-150, very short notice, partial shifts that are running either in, you know, half or sub pay impacted with very high decrementals associated with them, you know, that we’re not really able to manage just given the short notice of them. Those are two factors. The third factor in there is, you know, one that I would say we will monitor closely throughout the year, which goes a bit to why we’ve given our official guide.

If it were flat volumes, the mix of what S&P is calling off, they have called off in their October release some of our platforms which are maybe higher contribution margin being down year over year. We will see how that plays out throughout the year. The fourth factor, which is what Mark talked to. We are rolling on in our China business, significant new business this year. As that business rolls on, it is not rolling on in its first year of production at full kind of incremental margins. We have significant launch costs going into it. We are rolling on with some of the China local OEs. As those roll on, they are not rolling on at the regional contribution margin level. It takes us some time to bring those up to the standard margin level.

I’d say that’s the fourth factor associated with some of that volume mix. The first two are very significant. Just how some of that downtime is coming at us in Q1.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: Got it. That makes sense. All right. Thanks for taking my questions.

Jerome Dorlack, President and Chief Executive Officer, Adient: Thank you.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: Appreciate it.

Denise/Linda Conrad, Moderator/Investor Relations, Adient: Thank you. The next question comes from Emmanuel Rosner with Wolfe Research. Please go ahead.

Jerome Dorlack, President and Chief Executive Officer, Adient: Great. Thank you. Good morning. First question is on the gross investments. $85 million investment for the future.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: Can you just comment a little bit?

Jerome Dorlack, President and Chief Executive Officer, Adient: More around how much of that is discretionary, how far out in terms of the future we’re looking at for this payback versus things that are nearer term and just needed because you have launches coming up. Yeah, I’ll start and then I can turn it over to Mark for additional comments. Yeah, I’d say it’s investment that’s needed to really drive the growth. In my prepared comments, we kind of commented on what we see 2027 shaping up to be. Where we see North America being able to grow in the mid single digits over kind of vehicle volume, especially when we take the metals out of that, which we’ve said we want to wind down metals. And we see China and Asia growing at double digits over market and we have that line of sight. And so we see that investment as needed.

That’s what I would call the program growth and some of the engineering associated with it. The other thing that I would point you to, Emmanuel, where we’re really driving business performance aggressively, is on the automation and AI side. If I look at 2025 versus 2026, in 2025, we spent, just round numbers, $25 million on automation and AI in our plants, and that yielded about $20 million in savings. As we begin to ramp up these efforts, we have a facility in Mór, Hungary that’s dedicated to capital improvement, AI and automation. We have a mirror facility in Plymouth, Michigan that’s dedicated to the same activities. We will spend upwards of about $60 million in AI and automation. On a run rate basis, that’ll yield almost $40 million in savings.

You know, the capital is roughly doubled, but the savings is more than doubled on a run rate basis and that’s factored into that total expense improvement or increase year over year. I would not necessarily label it as discretionary as much as it is driving business performance and improvement into the business year over year. Yeah.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: Emmanuel, the payback on that CapEx that Jerome was talking about on that innovation is typically about two years. You know, it could be anywhere from one and a half to two years. That is what we try and focus on there. As Jerome indicated, the other, call it $35 million, is really engineering and launch support for programs that are being launching with our customers. Think of it in two buckets.

Jerome Dorlack, President and Chief Executive Officer, Adient: Yeah. And we’ll see those launches, Emmanuel, really start coming on in the end of 2026 fiscal year and then accelerating through 2027. Okay, great. I was also hoping for a potential update on shoring. There wasn’t as much discussion on this in the discussion and than in the past. I think that you had obviously mentioned already previous wins, but it sounded like you were getting close to some potential additional wins there. Just curious where that’s tracking, I guess. What would be the timeline of it starting to help the revenue? Yeah. In terms of helping the revenue, the one product that we announced with a Japanese customer, it’s now and actually it’s with Nissan on the Rogue that’s now in production. That is in our kind of 2026 figures.

That incremental volume that they have onshored back into the U.S. is unfortunately being offset by some other production challenges that we see just in terms of volume. The other Japanese customer, we expect that to launch at the end of our fiscal year 2026, it will be running up to full volume. As far as other onshoring wins, we are, I’d say, in the final kind of last rounds of negotiation with a significantly large program round between 200,000-250,000 units that will move from Mexico into the U.S. It would be incremental volume for us, utilizing existing footprint for us. I would anticipate we’ll have more news on that in the next, I’d call it, three to four months or so. Great, thank you. Thank you for the questions.

Denise/Linda Conrad, Moderator/Investor Relations, Adient: Thank you. The next question is from Dan Levy with Barclays. Please go ahead.

Jerome Dorlack, President and Chief Executive Officer, Adient: Hi, good morning. Thanks for taking the questions. You gave some impressive growth over market targets for 2027. I know that there’s some mix issues here in 2026 basically. Can you just walk us through what the line of sight, and I know that there’s obviously the macro environment can move, but what is the line of sight of sort of secured business? It’s a function just of launches coming out. How do you factor in? There is still some uncertainty on how automakers might be moving their plans, powertrain stuff moving around. What is the line of sight on that growth over market? Yeah, I’ll start and then Mark can add comments.

I’d say the line of sight, Dan, if I just go region by region in China, as we spoke kind of on the last earnings call, it really comes down to customers’ ability to launch and execute. We were, I’d say, impacted last year and if you look at kind of half over half, you know, we saw almost a, I think it’s a, call it a what, 50 basis point improvement, sorry, 500 basis point improvement, half one to half two in terms of mix improvement or gross over market improvement in China because our launches finally started to accelerate there and that’s what really gives us confidence in our 2026. Moving into 2027 is one, our mix shift to the China OEMs, but then their ability to now launch and their launch cadence is finally picking up.

I think in China we have a reasonable kind of line of sight. Within the Americas, which is our other region, now that we’re starting to gain some significant traction, it’s really dependent on the Japanese OEMs and their ability to, I think, rotate some of their powertrain and rotate some of their plants. What gives us confidence is they generally do what they say they’re going to do. Their level of execution, their level of commitment, their ability to plan, do, and execute is at a high level. I think we have generally a high level of confidence when we look at what happens in the last quarter of 2026. That’s when a lot of these launches kind of time in and cadence in, thus the high level of engineering and elevated CapEx spend this year and as that rolls into 2027.

I think generally we feel pretty good about what we see moving into 2027 for the business. The other key piece of that, especially in the Americas, is when we think about growth over market. We will have more of this as we roll through 2026 and really into 2027. It is also the portfolio. We have talked about this as rolling off some of that third party metals business and then really looking at growing the JIT, trim, and foam. It is that portfolio rotation that will also help to accelerate growth over market in those markets we really want to play in.

That is why the F-150 business, not just winning what we had on the JIT and the foam, but also conquesting that trim business, getting more down the vertical integration stream and providing that value proposition with Ford, co-developing with them a better end product for the end customer was really crucial. Great, thank you.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: As a follow up.

Jerome Dorlack, President and Chief Executive Officer, Adient: Same vein, I know that the 2026 on the margin side has some unique volume mix issues, but you’ve talked about this midterm 8% EBITDA margin target. There’s a few different work streams in terms of balance and balance out Europe. Should we understand 2026 just as a transition year, but the broader positive margin trajectory is still on track with each of these work streams. And that 8% is still something that you’re shooting for and is a realistic target over time.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: Yeah, Dan, I would say that nothing has fundamentally changed, obviously. Twenty-six, you know, significantly impacted by volume. You know, that said, we continue to drive the positive business performance. We’re investing in the growth, as Jerome just mentioned, you know, we have a good line of sight in terms of where that growth is coming from in twenty-seven and twenty-eight. You know, that balance in, balance out story still holds.

Jerome Dorlack, President and Chief Executive Officer, Adient: Right.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: Albeit, you know, certain of those programs have been extended in terms of their end of production life.

Jerome Dorlack, President and Chief Executive Officer, Adient: Right.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: It’s sort of muted the impact in 2026. I think when you get into 2027, right, you’ve got your growth, you’ve got your balance in, balance out. Right. You’ve got your portfolio mix starting to change. Those are all the elements that will continue to walk us up from, you know, the current level of margin up to, you know, call it that, 7, 7.5, you know, approaching that target.

Jerome Dorlack, President and Chief Executive Officer, Adient: Great, thank you.

Denise/Linda Conrad, Moderator/Investor Relations, Adient: Thank you. The next question comes from Nathan Jones with Stifel. Please go ahead.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: Good morning everyone. I guess I’ll just start with a question bluntly on the first quarter, given the disruption, the F-150 and your expectations there. Just if you could provide any more color on what you’re expecting specifically for revenue margins in the first quarter of 2016. Nathan, we don’t provide quite a quarterly guidance. I think, you know, as you’re adjusting your model and you’re, you know, fine tuning based on your production assumptions, you know, we did call it $195 million of EBITDA last year in the first quarter. There was no production declines, you know, at that point last year, as Jerome indicated, this year we’re facing not only F-150, but the, you know, on off shifts related to the Nexperia chip shortages there.

You know, is it possible that you’re gonna see a $15 million-$20 million decline in overall EBITDA quarter on quarter, year on year for the first quarter? Absolutely. Right. You throw in there Jaguar Land Rover, right. They just started to produce their units, right, at the capacity. Again, it’s those macro factors that I think probably put Q1 at the trough for the year. We start building on that as we get into Q2, 3, and 4. As you know, F-150 comes back as you have the supply chain shortages worked out with Nexperia, right. You have Jaguar Land Rover. That’s sort of the way I see the calendarization as I go through the year. That’s helpful. Thanks. I guess my other one’s on capital allocation. Lower free cash flow in 2026.

As you noted, you have more cash than you need to run the business. Any expectations for what share repurchase in 2026 is likely to be relative to 2025?

Jerome Dorlack, President and Chief Executive Officer, Adient: Thanks.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: Yeah. Again, we’ll opportunistically look to balance that between the share repurchases, debt pay down. As I indicated, we have $135 million left of repurchases on the current authorization. We’ll time the repurchases and the magnitude of repurchases in line with, you know, how we see clarity with production playing out this year as we see the cadence of our cash flow coming in this year. Right. Without giving you a specific number, you know, I just say that we’ll balance, you know, taking the cash off the balance sheet between debt pay down as well as the repurchases. Thanks for taking the questions. Thank you.

Denise/Linda Conrad, Moderator/Investor Relations, Adient: Thank you. The next question comes from Joe Spak with UBS. Please go ahead.

Jerome Dorlack, President and Chief Executive Officer, Adient: Thanks. Good morning, everyone. Super helpful detail on the decrementals in your 2026 guidance. I just want to maybe talk through one other element because I know you said you’re not counting on some of that F-150 volume coming back, but if it does, is it fair to assume that the incrementals on that volume actually don’t come close to the decremental margins because of all the trapped labor and costs and some of the inefficiencies you mentioned. It will help dollars, but the overall decrementals will still look a little bit worse than we would normally expect. Is that fair?

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: Yeah, I think that’s right, Joe. I mean, if you just think about how that volume comes back on, as Jerome indicated, are they going to be running overtime, running weekends?

Jerome Dorlack, President and Chief Executive Officer, Adient: Right.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: That goes into that equation.

Jerome Dorlack, President and Chief Executive Officer, Adient: Okay. Any help, any guidance on sort of what we could expect the incrementals on that volume to be if it does come back? I think it’s too early to say. Joe, a lot of it’s going to depend on how does it come back. What are some of the discussions we have with Ford around the total recovery mechanism of it? I think it’s too premature to engage in those types of forecasts. That’s one of the reasons why, again, out of respect for our partner Ford, we didn’t even want to put anything in here because we just, we don’t know the timing, cadence, you know, if it’s going to be run over, let’s say the Easter break, that’s going to be a lot of premium costs. If it was just going to be run over Saturday and Sunday, that’s a different model.

Just, it’s too early to say at this time what that even looks like. Okay, fair enough. The second question, I guess, is just on free cash flow and apologies if I missed this. I know you spoke about elevated restructuring. Twenty-six. I think it was about $130 million. Twenty-five. Did you give an actual number for twenty-six? And then you talked about more normal levels beyond that. I just want to get your sense of sort of what gives you confidence that, you know, continued restructuring, particularly in Europe, won’t be needed, that you’re going to be, you know, more. Right.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: Sized after 26. Thanks. Yeah, Joe, so good question. You know, we did about $130 million of cash restructuring last year. I think that drops down to about $120 million this year. Right. Normalized run rate for us is probably going to be somewhere in that $50 million, plus or minus, once we get through, I’d say, the elevated restructuring and Europe part of it. We’ve been very transparent, and you and I have talked about this before. You know, we do see that trending down, but in terms of the overall timing, some of that’s going to be dependent on customer program runoffs, in what they decide to do with their facilities and where they’re going to source certain of their programs. Again, for modeling purposes, I’d assume a $50 million run rate.

Again, when you think about this year for 2026.

Jerome Dorlack, President and Chief Executive Officer, Adient: Right.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: You know, a couple of the elements, the calls for cash that are elevated, right. I’d say my cash taxes at $120 million are elevated. Those typically would be in that $100-$105 million mark on a run rate basis. My restructuring dollars rather than $120 million should be falling back to that $50 million run rate. And then it’s just a function of EBITDA.

Jerome Dorlack, President and Chief Executive Officer, Adient: Right.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: If you were going to ask what’s the normalized level of free cash flow? Start with your EBITDA. Let’s just say we do $900 million capex. We’ve always said that that’ll be running somewhere in that $280-$300 million. Especially with, you know, the growth investments and the automation that Jerome talked about. Cash interest, call that $185-$190 million. Cash tax is $100 million and restructuring $50 million. You’d get to a normalized level, you know, call it somewhere around that $250-$260 million mark at a $900 million EBITDA.

Jerome Dorlack, President and Chief Executive Officer, Adient: Right.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: That’s the way, that’s the way I think about free cash flow and what’s normalized levels for us.

Jerome Dorlack, President and Chief Executive Officer, Adient: Got it. Thank you. Okay, great.

Denise/Linda Conrad, Moderator/Investor Relations, Adient: Thank you. The last question at the bottom.

Mark Oswald, Executive Vice President and Chief Financial Officer, Adient: Of the hour, so if you can move to wrap the call up, that would be great.

Denise/Linda Conrad, Moderator/Investor Relations, Adient: In closing, I want to thank everyone once again for your interest in Adient. If you have any follow up questions, please feel free to reach out to me. Also, I’d like to acknowledge we will be in New York City later this month participating in the Barclays Automotive and Mobility conference and hope to see many of you. With that, operator, we can close out the call. Thank you. This does conclude today’s call. We thank you for your participation. Have a wonderful day and you may disconnect your lines.

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