Adient PLC Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Joe Spak - UBS - Analyst : Can you hear?

Question: Joe Spak - UBS - Analyst : Thanks for all the additional color there. I guess just one quick one on tariffs. You've made good progress here, right, the resolved versus the 75%, roadmap 25%. I'm assuming resolved means you basically have agreements for price recoveries or that's the majority of that. Is the roadmap portion REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 12:30PM, ADNT.N - Q2 2025 Adient PLC Earnings Call more what you were talking about, about finding some cost offsets or resourcing? Or are there still some potential price negotiations involved in the roadmap portion as well?

Question: Joe Spak - UBS - Analyst : Okay. That's helpful. And then just in EMEA, I think it was -- I know there's still some challenges there, but it looks like there was -- it was a pretty good quarter, at least relative to some expectations and with some -- still some volume headwinds. And I know you called out some business performance. Is there anything unusual in that sort of drove the quarter a little bit better, especially relative to maybe quarter over quarter?

Question: Joe Spak - UBS - Analyst : But I -- Mark, I think you did mention last year that you thought the first half of this fiscal year would be sort of a bottoming event for profitability in that region. Is that still the case? So if you average the you're saying the first half is a little bit over 3%. Should we expect that it improves off that level from here?

Question: Joe Spak - UBS - Analyst : Okay. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 12:30PM, ADNT.N - Q2 2025 Adient PLC Earnings Call

Question: Emmanuel Rosner - Wolfe Research - Analyst : Great. Thank you so much. First question is really around just making sure I understand your direct tariff exposure. So 95% of what you produced in Mexico is USMCA compliance. So that stuff would technically have tariffs. But I guess for now USMCA parts are not being tariffed. And then when you mentioned the add-ins parts that are not listed in Annex 1, this would relate to in what geographies?

Question: Emmanuel Rosner - Wolfe Research - Analyst : Yeah. I appreciate all the detail. Then I guess taking a step back in terms of your margin outlook and then where it fits within the longer-term goals and progression. Can you maybe just remind us how much more opportunity there is for some of these cost and efficiency actions? And how do you think about, I guess, the self-help and the part that you control and timing of further benefits?

Question: Emmanuel Rosner - Wolfe Research - Analyst : Great. Thank you.

Question: James Picariello - BNP Paribas Exane - Analyst : Hey, guys. Sorry if I missed this, but have you quantified the change in FX assumptions with your guidance and just what you are assuming for the market and just the implied core sales relative to your market assumptions?

Question: James Picariello - BNP Paribas Exane - Analyst : Got it. That's helpful. And then just I think we probably have too many factors to focus on given the environment. But it wasn't too long ago, we were asking Adient about capital allocation. whether it's share buybacks or participating in some form of industry consolidation. Just wondering what the mindset is at this point, understanding that I think we all have a lot of macro uncertainty to navigate very near to. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 12:30PM, ADNT.N - Q2 2025 Adient PLC Earnings Call

Question: James Picariello - BNP Paribas Exane - Analyst : Yeah. Much appreciated. Thank you.

Question: Colin Langan - Wells Fargo - Analyst : Oh great, thanks for taking my questions. Just a follow-up on the -- there was about a month ago media reports that you were considering acquiring ZF LIFETEC business or at least a bidder. I mean I don't know what you could comment on that. Any comment on that will be welcome. But just in general, do you think something like that passive safety does have strategic overlap? Would you be at this point given the market uncertainty willing to buy to do a larger deal? Any color there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 12:30PM, ADNT.N - Q2 2025 Adient PLC Earnings Call

Question: Colin Langan - Wells Fargo - Analyst : Got it. And just circling back on the tariffs, and I was a little surprised by the comment on Annex 1. I mean, what does that mean for your parts I think the slide says that you pay 145% on China. If you're not in Annex 1, you -- what kind of tariff are you then looking at for parts coming out of Mexico. And why -- what is a supplier like you not fit in to the qualification?

Question: Colin Langan - Wells Fargo - Analyst : Got it. And then for your parts coming out of Mexico, is -- the IEEPA then Section 232 are pretty similar. Is it the same tariff anyway? Or is it actually higher because of some of the stacking.

Question: Colin Langan - Wells Fargo - Analyst : Okay. So your Annex 1 is mostly China, that's your -- that is where you're seeing the impact.

Question: Colin Langan - Wells Fargo - Analyst : Not. All right. Well, thank you very much.

Question: Dan Levy - Barclays - Analyst : Hi, good morning. Thanks for taking the questions. I just want to follow up on that. And I think you made some references on the China tariffs you are incurring. How easily can you make rotation? Is it just these mechanisms from recliners, headrest, sourcing opportunity elsewhere. And then do you have a sense of how your competitors stack up on this? Is this something that others are incurring as far as importing these different mechanisms from China?

Question: Dan Levy - Barclays - Analyst : Okay. Thank you. Second question is on restructuring. And I just wanted to ask if you could provide an update on the European restructuring, it sounds like you're getting some benefits. I think some time ago, you had said you're still talking -- you were talking about net savings of $50 million a year. Is that still intact? And I think you're referencing here the opportunity to accelerate some of the restructuring. Maybe you could give us a sense of how much deeper you can go, you're willing to go? Because clearly, it seems like there is more opportunity on the European front.

Question: Dan Levy - Barclays - Analyst : Great. Thank you.

Question: Edison Yu - Deutsche Bank - Analyst : Hey, good morning. Thanks for speaking to me Just wanted to check two things real quick. One, on the China local OE mix, I know you're targeting 60% exiting fiscal. Did you disclose what it is for the current quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 12:30PM, ADNT.N - Q2 2025 Adient PLC Earnings Call

Question: Edison Yu - Deutsche Bank - Analyst : Okay. And just second quick clarification. On the -- I guess, on the walk, there was -- I think you said there was $9 million tariffs in the quarter. Is that basically just one month? Or is that a full representative a full quarter impact? I know it's getting recovered later, but I just want to check if that's the full impact or is it actually going to increase for the full --

Question: Edison Yu - Deutsche Bank - Analyst : Okay. Got you. Thank you.