Why Is Automotive Seating Company Adient Stock Falling After Q2 Earnings?

Zinger Key Points
  • Adient beats Q2 adjusted EPS but misses sales estimates, lowers FY24 outlook due to slow launches and softer EV production.
  • Adient announced restructuring charges worth $125 million in the quarter.

Adient Plc ADNT shares are trading lower on Friday.

The firm reported second-quarter adjusted earnings per share of 54 cents, beating the street view of 42 cents.

Quarterly sales of $3.750 billion missed the analyst consensus of $3.787 billion. Sales fell over 4% year over year, owing to low volumes and FX headwinds.

The company reported adjusted EBITDA of $227 million, up $12 million year over year. Adjusted EBITDA margin expanded by 60 basis points to 6.1%.

Margins increased on the back of freight efficiencies and lower engineering and administrative spend.

Gross and net debt totaled $2.5 billion and $1.6 billion, respectively, as of March 31. The company exited the quarter with cash and equivalents of $905 million.

Adient announced restructuring charges worth $125 million in the quarter. The company sees $60 million in reduced annual operating costs from this activity, of which 80% will result in net savings. The full benefits are expected by 2027.

Adient lowers FY24 sales outlook to $14.8 billion-$14.9 billion from $15.4 billion-$15.5 billion (Estimate: $15.47 billion). The company sees adjusted EBITDA of $900 million-$920 million from the prior ~$985 million.

The outlook is lowered, recognizing slow ramp of launches, adverse customer mix, and softer electric vehicle production in the Americas and EMEA.

According to Benzinga Pro, ADNT stock has lost over 19% in the past year. Investors can gain exposure to the stock via Invesco S&P Midcap 400 Pure Value ETF RFV.

Price Action: ADNT shares are trading lower by 8.3% to $27.74 at last check Friday.

Photo via Shutterstock

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