Adient PLC Q4 2024 Earnings Call Transcript

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

Question: John Murphy - Bank of America - Analyst : Good morning, guys. A few questions. I'll try to be quick here. First, Jerome, as you think about the operating environment and these volume forecasts, obviously, they're a bit more of a guessing game than they have been historically. If the industry were to come in lighter on volumes and your program specifically, what kind of actions do you think you can take here in the short run on a micro basis? And also, maybe if you could talk about sort of the context of recoveries and commercial settlements with your customers, if there would be anything you might be able to get on that side and how that is actually working right now, because that seems to be a reasonably more collaborative discussion than it has been historically?

Question: John Murphy - Bank of America - Analyst : That's helpful.

Question: John Murphy - Bank of America - Analyst : Dynamic is applied way of saying what's going on right now. Just on the underperforming contracts, it just seems like it's kind of like time ticking into the future. These keep coming up. I'm just curious, particularly in Europe, Jerome, as you're saying that, that starts to turn in FY26, what comfort level you have there that these underperforming contracts roll-off and more normal economic contracts roll-on? And could this could be kind of a persistent issue sort of over time. It's maybe something you think is a '26 event, but it just keeps slipping.

Question: John Murphy - Bank of America - Analyst : I've got a bunch more, but I'll get back in the queue. Thank you very much, guys.

Question: Colin Langan - Wells Fargo - Analyst : Great. Thanks for taking my questions. Maybe just to start, I mean, Q4 is actually particularly strong. If I annualize your adjusted EBIT, it's better than the 2025 guide and sales actually annualizes in line with the '25 guide. What's so strong in this quarter? And why should it kind of soften from here? Is that all just sort of Europe headwinds? Or how should we think about Q4? Is there something abnormally strong here that is keeping it at a better annualized rate?

Question: Colin Langan - Wells Fargo - Analyst : Got it. Okay. And then, you've been talking about Europe was clearly much weaker in the second half and is already the weakest of the regions. Why the delay in taking more actions? I mean, are you waiting for certain programs to roll-off? Are you waiting for customers to make certain REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 08, 2024 / 1:30PM, ADNT.N - Q4 2024 Adient PLC Earnings Call decisions? And how competitive is your footprint today? I mean, do you have facilities in higher cost parts of Europe that you'd want to sort of relocate?

Question: Colin Langan - Wells Fargo - Analyst : Got it. All right. Thanks for all the color.

Question: Joe Spak - UBS - Analyst : Thanks, everyone. Maybe just to follow up there on Europe. I just want to confirm, I think I heard you mention cash restructuring of $100 million this year, but that's related to what you take in '24. And I think in the opening comments, you said you're going to book another $145 million this year. Should the savings be of a similar magnitude as well? So, I think if you originally you were saying $60 million from the first one by '27, then this is another $60 million by '28. So, we're talking about like a $120 million lower run rate '28 versus '24. Is that roughly how we should think about it?

Question: Joe Spak - UBS - Analyst : Okay.

Question: Joe Spak - UBS - Analyst : Okay. Thank you. On slide 11, I appreciate all the color on your China operations. I guess, if I look specifically at some of your unconsolidated ventures there, I think probably many of us on this call would argue that some of the customers you support through those are still going to be challenged in that region over the coming years. So, what's the plan for the facilities and the JVs? And then, I know you mentioned you want to leverage China and those relationships as they localize. When that does occur, is that going to be through some of the existing JV structure you localized with them? Or would that become more wholly-owned if they localize? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 08, 2024 / 1:30PM, ADNT.N - Q4 2024 Adient PLC Earnings Call

Question: Joe Spak - UBS - Analyst : Thank you.

Question: Emmanuel Rosner - Wolfe Research, LLC - Analyst : Thank you so much. My first question is on the customer mix headwinds for fiscal year 2025 and the growth on the market in the Americas and in Europe. Do you see these mix headwinds as a timing issue, the destocking, for example? Or is there also a secular component? I'm trying to think to what extent some of the actions you're taking are essentially adjusting to the current level of demand, but essentially -- if there is a time down the line where your growth will be more in line with the overall industry production.

Question: Emmanuel Rosner - Wolfe Research, LLC - Analyst : That's a lot of great color. Thank you. And then as a follow-up, as I look at your cost performance for next year, $100 million. Would you be able to give some rough breakdown of what buckets would be part of it? Specifically, you just mentioned, again, the roll-off of some metals business. What portion of it this accounts for?

Question: Emmanuel Rosner - Wolfe Research, LLC - Analyst : Got it. Thank you.

Question: James Picariello - BNP Paribas - Analyst : Hi, everybody. Just on the EMEA margins for the year representing trough. Can you just help dimension, the magnitude on this and particularly for the first half, which sounds to be the most challenged on a year-over-year basis, just how to be thinking about the margin degradation? Thanks.

Question: James Picariello - BNP Paribas - Analyst : Okay. And on your China Asia-Pac sales outlook, it looks like you're calling for 6 points of outgrowth. Just curious what drives the confidence on this? Because if we do look back to last year's guidance at the beginning of the year, I believe Asia-Pac was supposed to outperform the market by mid single digits thereabout, which didn't necessarily play out. I think we all can appreciate the severe industry volatility over the last 12 months, no question about that. But can you just speak to what the downside surprises were last year for Asia growth, if you agree with that assessment? And what's set up to be different this time around? Thanks.

Question: James Picariello - BNP Paribas - Analyst : Appreciate it. Thanks.