The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: John Murphy - Bank of America Securities - Analyst
: Sure. I mean, maybe to follow up on some of that, Mark, I mean, the one thing that we're hearing is that EV volumes are obviously a little bit slower.
Are those launch -- those slower launches than expected, EV-specific or they kind of across the board?
Question: John Murphy - Bank of America Securities - Analyst
: And then maybe a second sort of your next follow-up to that. As the EV volumes are being pushed down into the right, that might be on programs
and that might be on launches over time, there's an expectation at least that we have that the market in aggregate holds in, which would dictate
that you'd have to have something backfill there, which would be not just in ICE programs. as you're seeing your schedules 13 weeks out or whatever
you guys are seeing, are you seeing any of that backfilling coming in or the discussions from the automakers, hey, you know, we're not making you
see these EVs or the Blazer EV is getting pushed out or down, I should say, we're going to make more of the ICE vehicles that satiate demand. Is
that happening at all?
Question: John Murphy - Bank of America Securities - Analyst
: And maybe to broaden it out a little bit. I mean, we are running with our entry forecast for EVs in the US this year, it's 10%. Early in the year, it's
running at 7%. So let's say, we kind of end the year -- there's risk that it's 10% or maybe even lower, what we'll see as a year. So a gap of three points,
it was pretty significant in the market and we're talking about 0.5 million units.
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MARCH 27, 2024 / 1:40PM, ADNT.N - Adient PLC at BofA Securities Auto Summit
Do you think the industry, and this may not be something you're seeing in the schedules that might be based on experience, would be backfill for
ICE vehicle -- with ICE vehicles? And once again, it's not one for one replacement in the [Lightning] but the consumers are asking or demanding
and wanting to buy these vehicles that would actually come in or is that something is too early to call? That's based on more -- probably more
experience than even what you're seeing.
Question: John Murphy - Bank of America Securities - Analyst
: Got it, okay. And if you think about sort of the mix here, maybe short run and long run on ICE versus EVs as we're thinking about maybe EV programs
being delayed, generally, what kind of content Delta are you guys have between ICE and EVs or is that an oversimplification that there might be
sort of a broad swath way to think about that?
Question: John Murphy - Bank of America Securities - Analyst
: Yeah.
Question: John Murphy - Bank of America Securities - Analyst
: Yes, I think there's a lot less risk on EVs there than there might be in the US (multiple speakers) over time.
Question: John Murphy - Bank of America Securities - Analyst
: Just thinking on the macro stuff, you guys, I remember in the last three years, I think maybe at this conference and you guys were really -- and
Jerome, you specifically, were leading the charge on discussions, I think at the tip of the spear for -- or the early end of the curve, talked to automakers
about recoveries and did a good job. It did a really value for your company. And I think a lot of people drafted off of you.
Some of that discussion is maybe it's not as necessary because we don't have the same kind of inflation or the same kind of volatility at the moment,
although things were not completely back to normal, I'm just curious if you can talk about the current discussions around commercial settlements
in true-ups and on your programs that are going slower than expected or the volumes that are not there relative to where we've landed on sort of
the more traditional price down and efficiency discussions.
Question: John Murphy - Bank of America Securities - Analyst
: So the discussions are still high and heavy and are active in their [fruit here]. You're not getting stiff armed, maybe like you would have 10, 20 years
ago. I mean -- there's collaborative discussion going on.
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MARCH 27, 2024 / 1:40PM, ADNT.N - Adient PLC at BofA Securities Auto Summit
Question: John Murphy - Bank of America Securities - Analyst
: I mean, you guys, I think your aggregate forecast is flat to down on global production rates. I mean, I think, reasonably conservative, but we'll see
where the year lands, even with that backdrop, you're talking about some margin expansion this year. I guess some of it may be with the help of
some of these discussions, but a lot of it is going to be on a micro basis internally. I mean, can you talk about those actions, what you're achieving,
how sustainable they are? And where they ultimately may go in the years to come?
Question: John Murphy - Bank of America Securities - Analyst
: A couple of follow on to that because there's a lot in there. As far as some of your comments, it sounds like you're allowed to do or your being
tasked with doing more self-sourcing/vertical integration in a way that a couple of years ago wasn't as accepted. I mean, I think we've all been in
the industry, from I've seen there were times where things have been out difficult back and forth. But it seems like more structurally because there
are these major tasks for capital, both on a human and dollar basis that the automakers that they're struggling with, which is not that surprising.
They're willing to be like, hey, you guys got this. We trust you, do more of it.
How much of an opportunity -- is that happening right now? Is that more sustainable than maybe it has been in the past? What are you hearing
there? Because it does sound like this is ramping up for a lot of suppliers.
Question: John Murphy - Bank of America Securities - Analyst
: So heading in the right direction.
Question: John Murphy - Bank of America Securities - Analyst
: And then on the automation side, I think when -- traditionally and this might be a bias of having looked at things for a long time, the cut and sew,
the final assembly of the seat and the trimming of the seat is kind of always been viewed as something you'd be very difficult to automate.
Are we getting to a point where that can also be automated and that would pull a lot of labor out, you can get the same product yield and quality
out of that? So it's sort of one step further. Is that possible or is that what you're talking about?
Question: John Murphy - Bank of America Securities - Analyst
: And then the application?
Question: John Murphy - Bank of America Securities - Analyst
: So with all these actions, it sounds like you're in a obviously a very competitive position leader in seating globally. So I mean, it's not like you're
trying to catch up, you're trying to get for it further ahead, I think of some of your competition. If you were to think about all of these actions versus
what's happening in the competitive set, where they stand or are they moving as quickly? Does this allow you to kind of maybe expand the gap?
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MARCH 27, 2024 / 1:40PM, ADNT.N - Adient PLC at BofA Securities Auto Summit
But there's an important question because there is the question of the international side -- outside of China, right? I mean -- and then inside of
China market with Yanfeng and other other baby startups. And I think there's been some concern -- not sure this is really going to manifest itself,
it's on the Chinese suppliers as the Chinese go global go with them much like you guys have with some of the D3 or overtime and expanded the
business well beyond that, Japanese corrected suppliers, Hyundai, Mobus.
I mean you have sort of these this history of national companies thinking together. But so if you talk about everything, you're doing competitive
set outside of China than inside of China and then China maybe out to the rest of the world.
Question: John Murphy - Bank of America Securities - Analyst
: So if you think about sort of growth over the next 5 to 10 years and we get beyond talking about the outlook for the year and I think about
strategically, about the business. What do you think the key driver of growth going to be? It's just going to be sort of regional expansion, customer
expansion, thinking about things sort of horizontally? Or is it potentially, are there parts that you could more vertically integrate that you would
add content over time? So I guess it's kind of like customer regional versus technology versus vertical integration. I mean, how should we think
about where and how fast you can grow?
Question: John Murphy - Bank of America Securities - Analyst
: And we've talked about -- just talking about relative to the industry volume, right?
(inaudible)
Question: John Murphy - Bank of America Securities - Analyst
: That's helpful. And there's certain areas in the world where there could be opportunity and --
Question: John Murphy - Bank of America Securities - Analyst
: And I think responding some of that. One last question, is there any questions in the room? We generally think your stock is pretty inexpensive. I
mean, obviously, there's some people that don't because It's not going up that much. I mean, so it is always going to where we think it should go.
As you look at this, and you guys have been around for a while and you've seen a lot of things, what do you think the disconnect is in a perception
in the public markets really specifically around the equity versus what you think you're doing? And what do you think ultimately changes that over
time? We certainly have our own opinions, but I'd love to hear your yours.
Question: John Murphy - Bank of America Securities - Analyst
: And they happen to be doing very well?
Question: John Murphy - Bank of America Securities - Analyst
: With very nice seats.
Question: John Murphy - Bank of America Securities - Analyst
: With very nice seats. With that, we're getting low on time. So we thank you very much for the time today and wish you were actually working on
a seat here today. You would actually feel a lot better. The next year, maybe we'll get some [maddie] seats here for the conference.
Question: John Murphy - Bank of America Securities - Analyst
: Thank you. Thank you so much for joining.
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MARCH 27, 2024 / 1:40PM, ADNT.N - Adient PLC at BofA Securities Auto Summit
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