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: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst
: This is Aileen Smith on for John. Going back to that normalized adjusted EBITDA margin of 6% to 6.5% that you commented on for the first quarter,
running the math on your outlook, we get to an EBITDA margin that's in the high 6% to low 7% range for 2020.
Can you talk about the cadence of the margin that you anticipate for 2021 with some of the headwinds you noted, like chip shortages and raw
mats? And on a normalized basis, should we be thinking about sequential improvement in margins through the first half of the year versus second
half as you've been able to demonstrate in the past? Or are there some factors at work that we should be thinking about through the cadence of
the year as we use that 6% to 6.5% as a starting point?
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FEBRUARY 05, 2021 / 1:30PM, ADNT.N - Q1 2021 Adient PLC Earnings Call
Question: Aileen Elizabeth Smith - BofA Securities, Research Division - Analyst
: Okay. That's helpful. And second question, following up on the raw materials commentary. Can you provide us with an estimate of what this was
in the quarter? I wasn't able to follow it in the bridge and, specifically, how you expect it to increase in magnitude for the remainder of the year.
And then can you just remind us how this gets shared with the automakers via pass-throughs and escalators and if you have any hedging or other
vehicles or mechanisms that you use to offset that.
Question: James Albert Picariello - KeyBanc Capital Markets Inc., Research Division - Analyst
: So really appreciate all the color on the guide and cadence for the year. Can we just walk through the moving pieces, particularly within EBITDA,
that leaves the full year guidance change? It sounds as though commodities are $35 million worse, another $15 million from premium freight, both
of which are back-end weighted.
And then on the positive side of the ledger, you have commercial settlements and favorable mix in the first quarter. What did I miss there? Any
clarification would be great in terms of what keeps the full year guide unchanged, the puts and takes.
Question: James Albert Picariello - KeyBanc Capital Markets Inc., Research Division - Analyst
: Okay. Got it. That's helpful. And then just on the equity income outlook, you made the comment, second half -- or the first half, 50% higher than
the second half. So it's kind of a 2/3, 1/3 breakout.
Question: James Albert Picariello - KeyBanc Capital Markets Inc., Research Division - Analyst
: What's that?
Question: James Albert Picariello - KeyBanc Capital Markets Inc., Research Division - Analyst
: Okay. All right, all right. I got that. All right. Just following up on the commodity spend. So you're now looking at an $80 million headwind. You
mentioned the customer recovery mechanisms likely hit next year.
So should we assume 75% of that $80 million is recovered next year? Just what's the right way to be thinking about that in terms of the recovery?
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FEBRUARY 05, 2021 / 1:30PM, ADNT.N - Q1 2021 Adient PLC Earnings Call
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