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Adient PLC - Stock Quote ADNT

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Morningstar's Adient PLC Stock Analysis

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Adient's Second Quarter Shows the Recovery Will Take Longer Than We Previously Expected

Analyst Note

| David Whiston, CFA, CPA, CFE |

Adient’s fiscal 2022 second quarter adjusted EPS of a loss of $0.13 fell short of the Refinitiv consensus of a loss of $0.06. Management lowered fiscal 2022 guidance given expectation of industry improvements for the second half of fiscal 2022 are now diminished. We are substantially lowering our fiscal 2022 profit modeled due to the lower guidance, which means a $2 fair value estimate reduction to $64. One positive, however, is that through negotiations with customers, management now only sees a net steel and chemical commodity cost year-over-year headwind of less than $15 million for fiscal 2022, versus February guidance of about $95 million. Management reports it is getting shorter lag times for pricing resets or reimbursements from customers for steel costs; however, other costs, such as ocean freight and utilities costs in Europe, are increasing due to supply chain shortages and the war in Ukraine. Total adjusted EBITDA headwinds from various challenges in fiscal 2022 are guided to about $600 million, with about $475 million of that from issues we and management see as transitory, such as customer production stoppages from supply chain delays, COVID-19 lockdowns in China, and higher commodity costs. The remaining roughly $125 million, which management describes as sticky, is for utility costs in Europe, higher freight cost, and labor cost inflation.

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Adient PLC's Company Profile

Business Description

Adient began trading Oct. 31, 2016, when Johnson Controls spun off its automotive experience segment into this new company. Adient is the leading seating supplier to the industry with about one third of the global market. Its share in China is now nearly 20%, down from about 45%, following the sale of its main joint venture there at the end of fiscal 2021. Unconsolidated seating revenue from joint ventures after factoring in the sale was around $4.5 billion in fiscal 2021 and guidance for consolidated China revenue after the deal (before new China COVID-19 lockdowns in Spring 2022) was slightly over $1 billion. The company is headquartered in Ireland but has corporate offices in the Detroit area. Fiscal 2021 consolidated revenue, excluding joint venture sales, was $13.7 billion.

Contact
25-28 North Wall Quay, IFSC, Dublin 1
Dublin, D01 H104, Ireland
T +1 734 254-5000
Sector Consumer Cyclical
Industry Auto Parts
Most Recent Earnings Mar 31, 2022
Fiscal Year End Sep 30, 2021
Stock Type
Employees 75,000

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