Adient plc
Adient is a global producer of automotive seating with approximately 77,000 employees in over 200 facilities in 32 countries. The company provides seating for all vehicle classes and major OEMs. They experienced operational and cost challenges in FY18 and are starting to see improvements from their turnaround efforts. High water EPS in FY17 ~$10
Ests: 2Q22 3Q22 FY22 FY23
Revs 3.5b 3.6 14.3b 16.1
EPS (.04) .48 1.21 4.43
P=36.67, TTM EPS=(.02), P/E=N/A, FY22 P/E=23X, Cash 1.1bn, Net debt 1.8bn, d/c=44%,
2Q22 (.13) vs 1.15, est (.04) down from .35
May 5, 2022, P=36.67, TTM EPS=(.02), FY22 P/E=23X
Revs -8.2% to 3.5bn, adj EBITDA 159 vs 303, EBIT 79m vs 221, OCF 29m vs (91m), FCF (28) vs (146)
FY22 Outlook: Revs 14.2bn (reduced from 14.8bn), adj EBITDA “significantly lower i.e. more than 100m lower” than FY21 (reduced from “modestly lower”)
Pressure intensified from invasion of Ukraine and covid lockdowns in China, “with no signs of stabilization on the horizon, expectations for significantly improved results in the second half of our fiscal year have greatly reduced”
1Q22 (.38) vs 1.72 est (.24) down from .51
Feb 4, 2022, P=42.78, TTM EPS=(.02), P/E=N/A, FY22 P/E=23X
Revs -10% to 3.48n (est 3.1), EBITDA 146 vs 378, EBIT 61m vs 295, OCF (14) vs 231, FCF (74) vs 160, EBITDA impacted by 185m in inefficiencies and headwinds, modestly improved q/q.
Seeing modestly softer steel prices and less violent swings in customer prodn schedules, headwinds still continuing but expect improvement in 2H.
FY22 Outlook: Revs 14.8bn (affirmed), EBITDA modestly lower than FY21 810m, expect disruptions to impact revs by 2bn and EBITDA by ~400m.Iinvestors must be cognizant of difference between stabilization of headwinds vs process of reversing but just better production schedules can improve inefficiencies of overstaffed facilities during a shutdown (omicron has resulted in “huge absenteeism” in whole supply chain.
4Q21 (.24) vs 1.15, est (.59) down from .59, FY21 EPS 2.08 vs (.04)
Nov 10, 2021, P=44.35, TTM EPS=2.08, P/E=21X
Revs -23% to 2.77bn, EBITDA 118m vs 287, EBIT 43m vs 199, OCF (102) vs 518m, FCF (176) vs 450m, FY21 EBITDA 917 vs 673, EBIT 596 vs 363, OCF 260 vs 246, FCF 0 vs (80)
Inv +27% q/q to 960m to help buffer commodity prices/ supply disruptions.
>20% of wins in FY21 were for EV platforms.
FY22 Outlook: Revs 14.8bn (+8%), not providing EBITDA and Cash Flow guidance due to disruptions and commodity prices but expect modestly less than FY21 pro-forma EBITDA (810m) which is lower than reported (917m) due to timing of transactions. Expect 1Q to be lower water mark for the year, EBITDA near or modestly > 4Q21, probably 1H negative FCF with positive in 2H, FY22 probably around neutral FCF give or take a bit.
Negotiations mitigated previous estimate of $200m higher FY22 costs to $125m
3Q21 (.53) vs (2.78) vs .38, est .22 down from .56
Aug 5, 2021, P=39.80, TTM EPS=3.50, P/E=11X FY21 est too high now.
Revs 3.24bn vs 1.6bn vs 4b.2n, adj EBITDA 118m vs (122m) vs 205m, EBIT 37m vs (196) vs 129
FY21 Guidance: Lowered: Revs 14.3-14.5bn, adj EBITDA 925-975m (previously 1-1.1bn), FCF ~100m (previously 50-150m)
Guidance implies 4Q Revs 3.46-3.66bn vs 3.6bn, EBITDA 126-176m vs 287m
Mgmt estimates disruptions impact 2021 by revs ~1.1bn and EBITDA ~200m, commodity costs ~80m, current steel/chemical prices would put FY22 costs ~200m higher y/y, mgmt. taking aggressive actions to mitigate impact. Pass-through contracts designed for shorter/minor changes rather than the increases taking place today, some working well, others working less well.
Operating improvements being masked by current environment.
Volume reductions have mostly been communicated less than 7 days in advance.
YTD win rate tracking in line with mgmt. expectations.
Obviously not great results but climate should be transitory and when commodity costs reverse, ADNT would benefit. Semi prodn should be gradually improving.
2Q21 1.15 vs .62, est .56 up from .49
May 6, 2021, P=47.00, TTM EPS=1.25, P/E=38X, FY22 P/E=9X
Revs +8.8% to 3.8bn, adj EBITDA +44% to 303, adj EBIT +56% to 221m, adj NI 110m
Affirmed guidance FY21 adj EBITDA 1-1.1bn (YTD 681m, implies 2H 319-419 vs 165m 2H20), expect 2H weighed on by macro pressures, raised FCF guidance to 50-150m (prev 0-100m)
EBITDA improvement driven by EMEA and Asia
Cash 984m, net debt 2.7bn
Results include ~40m of inefficiencies, inefficiencies and 2H headwinds expected to abate
EV’s have been “big component” of new business wins.
Expect metal business to be Cashflow breakeven in FY21, 1 year ahead of previous plan.
March 25, 2021, Re-established position
Mid Quarter Update March 12, 2021
Exiting YFAS JV with Yangfeng in China, expect 1.4bn after tax proceeds
Acquiring YFAS’s 50% interest in Chonqing Yanfeng Adient (CQYFAS) and YFAS’s 100% interest in Yanfeng Adient Langang (YFAS-LF) to consolidate interests.
Post closing, Adient’s China business ~4.5bn annual sales, expect to drive increase to annual sales of 700-88m and EBITDA 90-100m, improved NI due to lower interest expense.
1Q21 1.72 vs .96 +78%
Feb 5, 2021. TTM EPS=0.72, FY21 P/E=10X
Revs -2% to 3.8bn, adj EBITDA +27% to 378m, adj EBIT +35% to 295m, EBIT margin 7.7% vs 5.5%
CFO 231m vs 239m, FCF 160m vs 148m
Gross debt 4.4bn, Net debt 2.54mn
FY21 Outlook: Revs 14.6-15bn (+15-18%), adj EBITDA 1-1.1bn (+49-63%), FCF 0-100m, implies EPS could be $3.33-4.40 (estimates 3.55)
4Q20 1.15 vs .63, FY adj EPS (.04) vs 1.63
Nov 30, 2020
Revs -8% to 3.6bn, adj EBITDA +33% to 287m, adj EBIT +44% to 199m
FY Revs -23% to 12.67bn, adj EBITDA -14% to 673m, adj EBIT -26% to 363m
Mgmt expects improved earnings and cash flow FY21 vs FY20 (expects adj EBITDA 1-1.1bn)
Reminder FY19 adj EBITDA was 787m -34% from 1.05bn, adj EPS 1.63 -71% from 2.79, FY21 ests are for 1.82, at $31, stock is at 17X NY est, expensive relative to others.
FY21 Outlook: Revs 14.6-15bn, adj EBITDA 1-1.1bn, FCF 0-100m
3Q20 (2.78) vs .38
Revs -61% to 1.6bn, adj EBITDA (122) vs 205, adj EBIT (196) vs 129
2Q20 .62 vs .31
May 5, 2020
Revs -17% to 3.5bn, adj EBITDA 211m vs 191m , adj EBIT 142m vs 117m
CFO (56m) vs 168m, YTD CFO 183m vs 40m, YTD FCF (2m) vs (212m)
Total debt 4.6bn, net debt 2.9bn, gross cash 1.6bn
1Q20 .96 vs .31
Jan 31, 2020
Revs -5% to 3.9bn, adj EBITDA 297m vs 176m, adj EBIT 218m vs 105m
CFO 239m vs (128m), FCF 148m vs (272m)
4Q19 .63 vs 1.30
Nov 7, 2019
Revs -5% to 3.9bn, adj EBITDA 215m vs 250m, adj EBIT 138m vs 148m
CFO 2m vs 439m, FY19 CFO 308m vs 679m
3Q19 .38 v 1.45, -74%
Aug 6, 2019,
Revs -6% to 4.2bn, EBIT -37% to 129m, EBITDA -36% to 205m
Net leverage 3.35X
FY19 Guidance: Revs unchanged, still expect 2H EBITDA and margins to improve over 1H
q/q improvement again, expect FY20 to reduce launch costs by ~50%,
2Q19 .31 vs 1.85, -83%, est .39 down from .98
May 7, 2019, P=24.35
Revs -8% to 4.2bn, EBIT -53% to 117m, EBITDA -47% to 191m
FY19 Guidance: Revs unchanged, mgmt still expects 2H adj margins to improve vs 1H
Possibly profitability is bottoming, stock is ~18X annualized current results, could be tempting to revisit the stock on stabilization/recovery but need more clarity.
Preliminary Results Apr 15, 2019
2Q Revs -8.7% to 4.2bn. Adj EBITDA 185-195m vs 362
1Q19 .31 vs 1.06, -71%, est .56 down from 1.20
Feb 7, 2019, P=21.33
Revs -1% to 4.2bn, EBIT -35% to 105m, EBITDA -34% to 176m
CFO 168m vs (23) despite GAAP loss due to restructuring costs, FCF positive.
Mgmt still expects adj EBITDA to improve in 2H19 vs 1H19, FY19 to be lower than FY18
Nov 9, 2018, Exited position following 4Q18 results and dividend suspension.
4Q18 1.30 vs 2.32, -44%, est 1.18 down from 1.49, FY18 5.62 vs 9.33
Nov 9, 2018, P=28.83, TTM EPS 5.62, P/E=5X
Suspended dividend to preserve cash and focus on debt reduction
Revs +4.2% to 4.15, Adj EBITDA 251m vs 390m, EBIT 149 vs 296
FY18 adj EBITDA 1.2bn vs 1.6bn
Segment adj EBITDA: Seating 301 vs 403, SS&M (34) 4, Interiors 6 vs 22
CFO 439m vs 446m, FCF 307m vs 286m, FY FCF 143m vs 169
FY19 Guidance to be provided in January, challenges from 2018 will continue to have “significant impact” in FY19
4Q18 Preliminary Results
October 19, 2018
FY Revs 17.4bn vs guidance of 17.5bn, adj EBITDA 1.2bn vs guidance of 1.25bn, FCF 0 vs guidance of (100m) to 0. Expects GAAP results to be impacted by material one-time non-cash charges.
3Q18 1.45 vs 2.49, est 1.59 down from 1.91
July 26, 2018 P=44.51, TTM EPS=6.68, P/E=7X, 8X low end of FY18 guidance
Revs +12% to 4.49bn, adj EBIDTA 319m vs 424m, adj EBT 167 vs 302
Segment adj EBITDA: Seating 344 vs 413, SS&M (18) vs 31, Interiors 19 vs 19
CFO 390m vs 157m, FCF 252m vs 42m
FY18 Guidance: Revs 17.5bn, adj EBITDA 1.25bn, adj NI 535-555m (EPS 5.71-5.92), FCF (100m)-0, imples 4Q EPS 1.35-1.56, weaker than previous guidance but showing signs of stabilization especially relative to stock price deterioration. Mgmt feels they are starting to see improvements although feel discussing 2019 and beyond will be up to permanent CEO.
2Q18 1.85 vs 2.50, est 1.91
Revs +9% to 4.6bn, EBITDA 363m vs 421m, 7.9% vs 10%, EBT 215m vs 299m
Segment adj EBITDA: Seating 411m vs 398m 9.9% vs 10.4%, SS&M (34)m vs 40m, (4.3%) vs 5.3%, Interiors 12m vs 22m
Efforts to stabilize SS&M on track, continue to expect improvements as the year progresses, expect pre-spinoff profitability by FY20 (previously expected 200bps margin expansion) driven by operational performance and growth in China, expect major change beyond FY20 (likely SS&M will focus on less business but more profitable, do more outsourcing and reduce capital intensity).
FY18 Guidance: unchanged, tilted to the lower end (not surprising). Looking at their backlog, they expect revenue growth in FY19 and beyond and FCF improvement.
TTM adj EBITDA is 1.44bn compared to FY18 guidance 1.4-1.45bn
Results continue to be disappointing, but mgmt. appears to be driving some improvement, reminds me of when Martinrea was in the early stages of driving their operational improvements and investors didn’t believe mgmt. which had to prove their case time and again.
1Q18 1.06 vs 2.04, est 1.32
Revs +4% to 4.2bn, OM 3.9% vs 7.0%, EBIT -42% to 163m
FY18 Guidance including aerospace, 17-17.2bn, adj EBITDA 1.4-1.45bn, FCF ~225m (almost half of prior estimate), adj EPS 7.51-7.94
Results and reduced guidance reflect headwinds in Seat Structures & Mechanisms (SS&M) in addition to added aerospace JV with Boeing, last quarter mgmt. was talking about headwinds in FY18 especially in 1Q, mgmt. expects improvement as the year progresses but still down y/y, 1H next year should see strong y/y improvements. Stock weakness prior to earnings report was due to a presentation at a conference where management revealed headwinds intensified so expectations for weak results have been somewhat priced in. Headwinds include commodity prices, launch inefficiencies, steel supply constraints, cost of customer disruptions. Working on reducing SG&A and making significant changes to their Seat Structures and Mechanisms business, bringing on additional specialty steel suppliers.
4Q17 2.34 vs 2.15, est 2.24, FY17 EPS=9.35
Revs +1% to 3.98bn, EBIT +3% to 296m, CFO 446m vs (1478),
3-year backlog +22% y/y to 3bn
FY18 Guidance excludes aircraft seating: Revs 17-17.2bn w/ ~500m added from Futuris acquisition, (vs 16.2bn, est 16.4), Adj EBITDA 1.7-1.75bn, EPS 10.0-10.46, est 10.42, FCF 525m. Some cost headwinds in FY18, especially 1Q, which should abate by end of year and see margin expansion in back half of FY18 and into FY19 and beyond.
3Q 172.52 vs 2.43, est was 2.50
Revs -7.9% to 4.0bn, EBIT +3% to 336m,
FY17 Guidance revs towards the lower end, EBIT unchanged, pace of new bookings is accelerating and backlog is growing, they will talk more about the backlog in January, expect top line growth to return in 2019 based on bookings and backlog
2Q 17 2.50 vs 2.15
Revs -1% to 4.2bn, EBIT +12% to 334m, OM 7.9%
Collaborating with Boeing to explore aircraft seating
China +18% vs market +6%
Guidance: FY17 Revs 16.15-16.25bn, adjusted raised EBIT 1.24-1.26bn, previously 1.26-1.2bn, U.S passenger car downtime expected to be $250m headwind vs $100m previous exp.
Solid efficiency gains despite commodity cost headwinds, expecting further margin expansion in FY19 as restructuring programs take hold and execute on new launches.