ADNT Adient

Mark Oswald Head, Investor Relations
Doug DelGrosso President and Chief Executive Officer
Jeff Stafeil Executive Vice President and Chief Financial Officer
Colin Langan UBS
Emmanuel Rosner Deutsche Bank
John Murphy Bank of America
Joe Spak RBC
Armintas Sinkevicius Morgan Stanley
Call transcript
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Welcome to the Adient First Quarter Earnings Call and thank you for standing-by. At this time, all participants are in a listen-only mode until the question-and-answer portion of the conference. [Operator Instructions] Today’s conference is being recorded. [Operator Instructions] Thank you. And now I’d like to turn the call over to your host Mr. Oswald. Mark you sir, begin. may you, Thank

Mark Oswald

Officer. The Chief Executive Good Thank business, President Officer, of by and today today’s our provide joining quarter Stafeil, will have Vice will Financial thank presentation who followed will our XXXX. the for been and Jeff and review joined quarter posted Executive Investors an at Chief questions. and as you, After of for we detail. open our section call remarks, year President first website more Marcella. I’m our us On Jeff the review you of we Doug call for call, the first your Doug and morning, Adient’s update in the morning DelGrosso, Adient’s prepared the release press results to fiscal by slides to results This

Jeff, few to Before Doug call over the to and a there cover. I are like I’d turn items

conference the call we see a First, differ these statement. as to complete we These and involve results and therefore our you based today, X uncertainties. presentation refer on actual forward-looking environment will risks are our from that statements. today’s made for could would the it call. caution on include Please materially forward-looking I Slide statements statements of Harbor Safe

my appendix a now full is these we will found the release. basis, for turn to the of information believe to GAAP call presented be GAAP performance. we I’ll evaluating concludes useful earnings over in can In closest Doug. on the addition the results our be measures This the to non-GAAP that company’s in comments. non-GAAP financial equivalent Reconciliations discussing operating

Doug DelGrosso

investors and joining Mark, the this morning. Okay. thanks for our Thanks, analysts to the call and

as Last the power J.D. the in achievement a and perspective, seat found of company. team company's point was turnaround. financial operating balance fell other totaled sheet, skewed EBITDA out initial Operational X.X a in contributor the of quarter adjusted profit quality line. view in Ford first the F-XXX, quarter, challenges the ventures. one-time of and operating recent to nature were joint December XX XXX to to the performance adjusting Adjusted on the A $X.XX to the dropped of Sales slide. Let program the the million, new as billion per secure and core XXX decline respectively. ended recent primary which continues called notable a validated for X adjusted and replacement exclude including results right billion year-over-year non-cash in-line lower awards X-Series. XXXX wins, business of are financial comments adding Sales externally with to million with customer X of on progress complete we position to the business include, is the segments most across direct BMW of a for in earnings XX next-generation the our you market efforts to expectations. quarter developments recent trends Important From for the developments, slide, recently strong million which related internal at level top as net being important certain bottom China were EBITDA. charges totaled Slide most cash, We of of items debt variety that in key few to the XX. note, the increase list results, appendix. metrics, performance me in can with important and approximately Outside otherwise certain to of our the our flexibility the be the share in

first my few performance. turnaround. The X, minutes like our the the observed Slide XXX days of importantly, margin execution left and will potential chart more to a the EBITDA with look spend to could successful what and, like margin I plus on Turning during illustrates discussing historical what current I've our

about and about dropped XXX we operating business. points basis see, cap can to the prior of a performance XXX at to basis in others you As seating points

achieving As see points to before SS&M group opportunity contributed When into focus too of related, mentioned opportunity issues challenges, drilling roughly preventing opportunity Adient another there undisciplined has in we which no basis structural much in I’ve Seating and are core XXX alluded down in the also operational primarily growth, margins. launch business, on commercial in our America. points of Performance decisions. nonperformance, XXX headwinds emphasis basis from reduced best-in-class significant on

Looking expect the gap. margin close to forward, we

As we executed, we’ll of operational position be thoughts share actions various on gain long being is take. clarity the with better on a closure expected you commercial and how in our to the to pace

progress expect we the as can You on subject updates through the year.

Let’s turn to Slide X.

are will what to included taking. thinking the turnaround. fact focus and Commercial personally continued a what we into level, When the do tenants and are translates of as in should elimination which balance to business. turnaround bucket. which discussions, of rightsizing I'm and our savings the term SS&M on operational operational has flexibility view these that actions really strength take is XXX longer it longer sheet include in involved about So, of SG&A discipline, the importance of be withholding which ways. can in quickly our many issues, on I priority the ensure mindset Ensuring the high and high the key speaks the them. focused The also the period fixing a actions, major team what days On Changing we’re to basics. first a complete. the In really time our culture

sell overall far be important technology more is in to we we our segment who our selective need the to to. business, Although

the For cash too a long been segment the has drain on company.

a business. in launch generally that year the related XXXX. Seating our SS&M QX seating, our comments turn Jeff, and spill serviced with over internal in expectations the of over as I Before two in our performance few results headwinds last on call just Americas to Starting of were line half

of As load. been have of portion than better America's operational executing resources, customer business. and large exacerbated eliminated, improve ensure volume of volatility factors such the stretched input distractions outside waste the costs. greater commercial as problem our macro on program mention actions number by on operational is focus including and performance, also the not to to righting renewed of unplanned North decisions. of elimination other result incorporating higher to issues CD increased and our A core of the but not underperformance operational said, of launches extensions, business, reallocation the These normal level a a our commercial to core is such factors, and resources releases as and focus complexity results, reminder, and plants legacy launch only we’re That finally

our As solve going core way and expected focus in the and [indiscernible] to Clanton stretched through launch struggled progress I visible element business growth and third the forward. is from organization the focusing be Eliminating are include core Adient within and as issues of we essential headwinds intense showing these previously, unfortunately are significant These distractions business on at Evidence certain distractions actions these Alabama domestic plant, regard the are early viewed our With the of become of should operational our to turnaround on can year. mentioned signs our root. our improvement. SEP. actions supporting spend resulted plan this taking resources. of time complex that XXXX which are taking for impacted an structure business root proof Few the second SS&M, as in a points examples

of of these issues, lot it turn launch up, these lines, in impact partially working news as financial to developments freight. were the well and the is and and through we associated Also, As and related front can to The it expect both to the for XXXX costs news of operational good it this as the again if meet combination you actions time. premium the common Rockenhausen managed but as program manual launch us, operational in Clearly, sum bad the lines volumes message involve a work for Europe. take challenges bit produces on solve a performance challenges year. becoming SS&M. seat premium facility Rockenhausen, throughout to look is XXXX our the in recliners commercial customers the the need progressed, team story. Unfortunately, they volume specifically, with production launch the profitable. for negative headwinds in terms months. Similar were XXXX; positive seating and commercial to will assured related we and and in the through faced commercial experience Germany side, slide progress in problems even I by rest challenge, can have is improve the team a Adient’s the program up To a successful continue move front XXXX so take with and Jeff, came well will close, that Clanton to we team to the manual QX what that, On forward quarter freight. executing this architecture coming on to With I’ll updating of the actions increased our document impacting he resulted but is, profitability. to over offset eliminate positive

Jeff Stafeil

Great. everyone. Doug, good morning Thanks

Turning to our financial performance.

at internal Adient’s in consistent first expectations stated with what were to discussed conference As in the Deutsche remarks, Bank his Doug quarter January. in results we and line

Slide reported our side. X in the formatted to format, our to the the left typical page and result adjusted Turning results is in with adhering and right our

various decline in performance. largely a our we same otherwise in down year. On few and performance, for within view trend a commentary on decline XX% in out $XX contributing Also modest in exclude was one important focus which I’ll adjusting high sales, the period down our are million $XX EBITDA business will items last Adjusted million interiors in the million The quarter, nature decrease our adjusted Largely million, year-on-year, or was the was $X negative a We YFAI the that decline FX. income, $XXX business compared cover in results. adjusted explained underlying $XX as million with appendix. quarter items called minutes. to which skew in a These by numbers either the the despite or level, equity explained time by

and million and $XX year-over-year $X.XX, adjusted down XX% respectively. EPS net income at Finally approximately were

more a XX. $XX a Now, in the of The same currency let’s benefit quarter period Slide million, negative by results $X.XX was of breakdown We first detail increased than revenue the compared sales movement. volume starting ago. reported offset to of with more consolidated impact year our decrease billion, on from

down held Unconsolidated the ownership Seating X% region. when our of with Strong the as FX. our double revenue year-on-year conducted production recognized was strategic that business helped was interiors our unconsolidated for FX. unconsolidated outcome roughly mix to primarily the our Network important Moving in revenue, up production digits on for when and QX customer outside Yanfeng down regard in XX% in well quarter. is stake Automotive good through adjusting of remember result Adient’s in China. to outperformance SS&M diversification Interiors market. down X% A overall It JV relative China for driven Adient’s versus was adjusting through Sales to is XX% drive the for

quarter A Moving we last of basis year-over-year core legal, was not corporate decline performance driver approximately to include periods. as point provide versus communications, is The back that costs million year. labeled primary operation launch operations. down seating, related. the the of picture, the performance marketing. EBITDA costs The business corresponding between adjusted margin QX of our attributed our finance, largely show negative a in bridge $XXX executive related Slide million to and corporate versus to last are to EBITDA X.X%, EBITDA $XXX represents and office, and These The adjusted was the million XXX Doug $XXX XX, central to the allocated big mentioned bucket current of adjusted with year. segments

continued many the won’t corporate million, EBITDA addition, with I on year period XX, of Slide also impact $XX approximately few A XX the primary outside year-over-year $XX were Seating The go cost launched negative on both we’ve as to same between business to $XXX drivers a million improvement to were them quarter into XX. and reductions down in and results Similar included in Seating million headwinds, Starting offsets. adjusted significant million, China Slides in results. past In included specific in interiors callout include ago. weighed for the of the compared had challenges periods which a within a first $XX items on light the detail performance box. we’ve decreased as and related. SS&M bridges operational quarters, our partial SS&M segment

negative performance, increased SG&A the QX last did to same currency resulted the this impact of year an year in Seating, commodity year. the in And but this impact addition was $XX the period year, negative cost recognized business movements million approximately million. in not $XX last approximate repeat business headwind versus impacted last $XX million by and Seating about the Temporary benefits income, on point our year-over-year. of was segment million CapEx down QX excluding also the finally, Seating One the in $X of for equity quarter. FX In

SS&M segment performance. Turning to Slide and XX our

in slide. detailed quarter, reduced cost this the include recognized and is temporary primarily the but Similar a call-out $XX premium than better offset million or increased architecture improved The positive engineering performance. equity Unfortunately, improvement drivers lower spend between the of lower business negative seat of SG&A bridge, performance, The negative which this FX offset more year’s $X the box primary a impact than with net driven and quarter the in related QX SG&A cost not by in the year, on Seating the adjusted mix, freight. QX combined first did QX Reduced EBITDA and front partially the million For included was business million year. segment. impact and Europe, control XXXX. $XX year was repeat last last negative benefits to includes income, for result launch common improved the volume of

business the million. for roughly quarter, $XX the spent CapEx SS&M's Regarding

me now structure to Let on XX. cash our capital and Slide shift

earnings of restructuring million, $XXX outflow an million million of cash flow. defined increase was was This an last lower left lower flow, the customer by we $XXX the the the free tooling Adjusted were compares $XXX bonus operating costs, an in for an outflow $XXX quarter with of impact cash for side down year. and of page, last On less break our to cash million quarter. as CapEx, year. of payout. expenditures The negative recoveries, absence a offset Capital compared flow

can out see break we footnote, the CapEx segment. you As to in by continue

On we and leverage position. the of side cash detail page, our right-hand the

December cash we the and Gross XX. ended with and equivalents. debt of net XXXX, billion, As of XX, $X.XXX December cash as in totaled debt quarter billion $XXX million $X.X and respectively,

X.XX leverage XX, level, December result performance, of Adient's cash and times. our debt a As operating at balance, net ratio XXXX was

Doug's to replacing Speaking credit difference A, $XXX leverage stability, $XXX a morning. leverage thereafter. secured Adient's the secured the earlier million, net roughly facilities. ratio our agreement QX secure our secured ratio. billion refinance million The outcome. and at of The XXXX, million leverage One billion steps income the and and end, were XX, point our just $X.X X.X facility, of an is the total based flexibility, includes The ratio financial net note $XXX netting and At dividends and the for Details secured X.X in a the Term times and resulting last EIB last million, team our interests. options months net eliminating roughly income previous the of was X.XX agreement adjusted calculation European debt eliminating equity position net X.X calculation as amendment million $XXX factory adding The our as billion. bank provide debt cash, up post-quarter times December times times. net comments, our earlier amendment. over between on net $XXX to of loan, the the X.X credit various $X.XXX amended at we The leverage following and XXXX close, totaled LTM Loan maximum covenant, quarter EBITDA EBITDA financial and the covenant, bank-adjusted totaled from bank-adjusted facility. includes company's the per caps of times $X.X follows: totaled down senior of subtracting cash which primary totaled and to XX fiscal strengthens filed amendment pivots QX of on the received the cash minority and approximately credit in explore on this amendment X-K liquidity should This company's leverage of

let to conclude to settle for fiscal XXXX. headwind, last and expect Moving million expected revenue on a in of production range. movements current me on XX, be the what decline few the primary Slide in we forecasted expect is with expected approximately which to foreign to thoughts compared plans vehicle to Based is year. $XX.X billion The to FX, $XX.X driver $XXX billion in year-over-year exchange,

to a water in XXXX half. and the is to half China in adjusted reduction results compared regards is expected in our expected of impact improvement degree. expected the adjusted full-year to business Despite in Europe complete to to year, With lesser the second a in first revenue, lower be full-year conditions is market mark, half also low of Softer XXXX. back but EBITDA, improving with much seat expected be fiscal EBITDA the to

sequential SS&M adjusted to decline to to up basis, Doug the being just to the lines executed, eliminate earnings look freights improvement gives quarter similar half's Seating QX show compared our early confidence will commercial As manual shaping the us expected our to on our performance, such premium first QX, To very the improve the of and benefit modestly, completed. half. in our to is read has is help quarter business recliner mentioned, On EBITDA dimension while at operational a second actions and in ability as expected quarter-over-quarter. Rockenhausen,

clarity actions, to gain China operational on month, the the updates just the a and of Detroit the improvement as tariff and the pace commercial headwinds, name of provided as be few. volumes, the in last such key conferences investor will discussed on we As pace at year additional through variables,

is it expected million finally, a million $XX the adjustments, although an headwinds, are to the year; million In or will quarter last aerospace benefits factors, global $XX operating year, spending be performance; SG&A Adient in including repeating be versus elimination other and, our year-over-year absorbed earnings costs weaker in be last dollar, versus impacted year. expected spend Adient's the per operational to $XX variety U.S. addition currencies versus call approximate not following: to of the expected headwind; be by becoming of which XXXX, to are increased temporary the for about lower

XXXX, reminder, we the As funded will in share. the while other million year, yet, will a million, was $XX we net million. spend expense, Boeing of the had and so about continue formed only JV $XX not same, $XX for Boeing to their reimburse roughly This

still as will are consolidating the However, we reported entire we in business, $XX results. million have this

Moving on, to to tax effective range. be low Adient's expected rate the high-teens in XX% is

losses modeling XX%. were rate previously due call in is year allowances to it higher valuation versus For The jurisdictions purposes, of benefited. effective where establishment certain last the primarily the

you does fourth note, by the If quarter cash recall, not impact of year's the rate results valuation significantly impacted our the allowances. effective establishment last taxes. higher tax were to Important

one total in significantly to million, on cash I'll in expect to last modeling, additional expenditures year. For $XXX impairments for compared on deprecation than and On cash XX% out Because note, impact year. million of taxes of we were taxes, XXXX your our our expect point million as fiscal QX to the decline mention to our withholding to the XXXX, on asset we item last will for year we about have year's asset it side be the the One related JVs called lower, $XXX an more last year-over-year. from for a $XXX expect range tax taxes dividends write-downs, And JVs. the cash consolidated to capital payments relates depreciation. with

question, smaller the let's current by expenditures the Operator, on we of opportunity can current Although years, plans. the to driven reduce move portion capital in that, to expenditures out please? the year SS&M see have supporting we year launch are business, our a With first question-and-answer call.


Our from comes Certainly, question UBS. you. at [Operator Instructions] first sir. Colin Thank Langan

Colin Langan

were color there something And Any lot you debt come Great. Are still is my refinancing. or an mean, that's about the side any question. a at that to thoughts, there is more on the there's – talking I Thanks the actions done for of Detroit? you about on highlighted taking you table? chatter that equity debt raise?

Jeff Stafeil

That debt of was gives Thanks, facilities, are to goal while markets is to Colin. the is, term to our of maturity The really the the certainly do still is It We it reason XXXX. loan, thought amendment gets prudent refinance through Colin. us that choppy. The pretty amendment. us middle opportunity credit primary refinance. our the

would sometime from soon. So, maturity market the out need go we just to a standpoint, certainly extension to

for So, us here quite intention on us this still and gives would the gives to bit room, a flexibility out look go flexibility and timing, more be but refinancing.

As was that, capital for sized comment it comments, earnings. level different relates structure a our structure of to I'd obviously, capital

we are, is As we at plans. just able and time. has more making turnaround on to should us through our turnaround, amendment our flexibility, the be refinancing. focused us, operations obviously, improving this we of point, little the execute the de-lever bit execute The etc. earnings. primary And company a to the on liquidity, focus gives But the sure

As equity, that's our it relates first focus. not to

the just on the macro of paths of in first I'd looking opportunities, is environments at given uncertainties all the focus we're but turnaround. our some internal specifics markets, and Our say that the debt obviously sort and definitely of

Colin Langan

about progress And that Any there? any any the and revenue you've on is update talks of mispriced how past base it. and in started is color, business. how big there a Got talked those

Doug DelGrosso

sorry, Colin, to? I'm segment business were you referring So, which

Colin Langan

think some the I of discussed you've mispriced. in past, the were how contracts

Doug DelGrosso

mispriced. Oh,

Colin Langan

are how At I billion sizing initial was framing there's to if started? ever been going needs think $X that this and business of they’ve to re-discussed. of get customers. the those discussions Or a it don't refer And of

Doug DelGrosso

in back the America. of and on to Seating quantifying hold SS&M, North a specifically. I'll been business degree, it, our obviously, discussion has focused most So, certain

handful I programs. the it's a of think in what past, we've customers of on said handful a

resolution, tremendous established a really now. get customer you of until detail what our our prepared those through – we the discussions. specific including a amount throughout We're in widespread right of business, So, up, we'll but We've get those we into fair not on where clarity the think know, it's talks midst end we we're entire really not think SS&M. to

you it's some us publicly And way. if As and confidential mentioning quantifying pretty and to say appropriate we'd success. can it's know had initial I that we've be imagine, for that don't it

I think of that in some reflected has been QX.

some we've think really, more have improvement work. on is the that we we've better I a in of got seen year-over-year go, a on in with the get But, expect that. also some reflected want later we'll basis SS&M. lot to to visibility performance where And I would year,

Mark Oswald

our have we can question? Operator, next


sir. your Rosner, Certainly, is line Emmanuel Thank you. open.

Emmanuel Rosner

Hi. everybody. Good morning,

Jeff Stafeil

morning. Good

Doug DelGrosso


Emmanuel Rosner


second So, EBITDA my your better I'm a first first question is half. what bit of better to understand the underpins view a than curious little half

was So, know of way what's as of for arguably, highlighting the in you on you the of Because, fiscal I Maybe is first that evidence that the it. as improvement were soon that that results actions also quarter, approach half? don't improve that there Slide second plus specifically, some the X and see, days. bear in best to would sort What little XXX first it yet?

Jeff Stafeil

to conference At we little in by a broke of analyst it segment. Sure. down light business we and on bit the January, that attempted shed

were standpoint, plants doing from what on, on an business material we just projects from restructuring what for each we we launch were we economics, overall what standpoint. an uplift underperforming had, activity what we commercial were had in we So, segment, identified place, where focused

timeline out we we SS&M, that and laid years. and North out and Asia, And against extended American out Europe that Seating, mapped so, it a couple a for

end year, with we we'll I year. that take the place think that right And the the way will executing to performance balance that subgroups, the fiscal of and improved think we're see start for it the year. now. as we of benefit get this of of one move there's each into the next is, of to to into specific those translates as That actions

Emmanuel Rosner

don't – Appreciate this, of but level, if I'm for point promise I specifically, the and a good maybe appreciation a plant-by-plant restate from what us. earnings. on to view magnitude just you the drag just want have that of, a I on of high-level is, what guess, the

you of Is when the you drivers the of just you're commercial having fiscal launch would problems drivers so, right rank go half rank the will customers year, sort discussions you gone it of I'm with And have second Is biggest curious, Sequentially, that of away this look at already away? improvement? how now? that the the improvement? biggest of would it or sort how

Doug DelGrosso

So, we into I think, consistent negotiations. the to dependent much said very easier to think, they're because anticipate ourselves. we've made split we issues, issues us for execute with on I I comments roughly think harder predict until operational they're commercially. in the and past, say operationally would are commercial that little actions further bit can a The I are get we've the

Emmanuel Rosner

think of we factors the of into the I then sort to focus don't macro. second And Okay. what have uncertainty the just, finally, in half? are going terms of on

half? of that prevent factors still the giving get uncertainty specific your you is, what lot a macro from And think your but I to guidance assuming more understand to view, a of are of second what and what volatility sort us then the are guidance? within you specifically better

Jeff Stafeil

but too be you that included still there. the the to half crystallized central think the market getting ignoring to the in So, market, certainly, the year awaiting anticipating much said that's macro We're performance government on the without I has specific, an develops. in completely discussion. second in improved not macro, stimulate action we're of area China, that how

that there number impact an looming negotiations could been our have also have clear Tariffs lot We've We've tariffs, commercial could again, particularly a so we certain and the on how it's some the on a steel, got in degree, general, economics or discussions issues not, impact protected/hedged customers to crystal seen a had things inclusive in the anticipated improvements but, with but in are that of We've We our think how plays – those again, out. customers but that, it's made our clear but our like Brexit. are business. are to material that. that as be Europe, those in UK we're somewhat on think of macro have I that. not You call you but in activity completely certainly impacted factors, talk the to we trying of plays can to our some macro control, the by those We've customers. of comprehend we're out out. that

Emmanuel Rosner

Great. you. Thank

Jeff Stafeil

welcome. You're


from question of next Johnson Our Brian comes Barclays.

sir. Your line open, is

Unidentified Analyst

good is the Hi, Brian. [ph] on Stephen line Yes. morning. for This

of follow to Colin's some lesser enterprise a contracts. Just question these to to on commercial Emmanuel's extent, and, around

at step-up $XXX backlog the the backlog XXXX. look million front billion the decent about in If consolidated from you on a XXXX was Seating that we $X in see of last disclosed, to about

at the have pricing? So, changed in I of and XXXX of expect could of to contracts backlog step-up percentage the half seen backlog might in able XXXX of of figuring those understand was is the last do some to some in in be first just and since into and terms through visibility point underpriced? have that the backlog, what XXXX, but that underpriced potentially extent XXXX wondering you out I'm gain what what As greater been go you update, here that to

Doug DelGrosso


amount spending in of we're a area. tremendous particular So, that time

scope kind the look discussions the at launched respectable of kind the of our meet have the for things, you until we And consumer product true about is on action had those have where of development ensuring with I'd operated yet pretty discipline, reluctant and customer the of a capital. that everything through needed of of we've Seating number to difficult not not, be about supply product we've were waited we've business, that in sizable think some And course I proceed. that it's start the coded bring that to for to they basics as handle. issues products engineered that commercial and way to when customers going talk to it's and they and accumulated our that's to that a I remind in way press base, priced. they your we been during to for pressed is requirements back As on then would award historically and earn serious the changes. some from we a that is it's how I'd return production, all flaw ensure we process there's applications and you, to change. the have if take we Specifications, properly say to

approach we and we commercially now. got more the we've way issues the program much right the the a through in manage development, we of so to dealing with we're way So, discuss problems disciplined some back avoid

because feeling scale to what the the is going confident here. on last and going to be over that particularly I'm ensure why coming and this years mechanisms our backlog gap that performance that we're we've return. you – on more kind that We're that's performance we we customers. more the get indicate, business, what's to a to we on down talked with we're closer in two indifferent, bring unfolded business of expectations to metals to kind our managing business far back of and way okay business about. prior business we're of has normal be our to the not aligned with returns that's with creating crisis we're our want much And of proper line got going on on And So, will a to the if

it where level. that just see we've execute pursuing levels happening, haven't there's historically, think at concentrating don't we of expectation customers performance business appropriate we we're profitability, we demonstrated and been pricing of where where, where, customer to our better understand much the the and efforts able reasonable or we an not historically, we're So, we're that

Unidentified Analyst

Okay. margins in position, and business, competition you disadvantaged kind customers. will launching light just be about given e.g., launch? pricing gain to then, the just that also, lower take real shouldn't in leverage Adient's relative are competition, through, a to to to contracts future new think might there's that business And for contracts business to peers, related at and margin trying or out OEMs, potentially you current to and with just the some you gain relative are then renegotiate back operational trust back current to issues to have of slightly of Adient contracts And having I that or margin why a the reason of XXXX-XXXX think call price you be comparable current but beyond Adient's timeframe. around question, somewhat it no as structural go understand is business environment and

Doug DelGrosso

a Jeff of have a BMW business at we Yes. hit the about. successfully on namely that pretty better at beginning that But call. returns that a cycle. lot Japanese environment. two-year in that We to we level tried to awards, to be formal program a comments We think so much there that excited won and progress mid-size on we F-XXX to specific, weren't there's priced was We're go major work be although through we the have business, development our of us that of we pointed the how done. development the awarded still competitive the but SUV couple I point a to we're X-Series who in confident able customer handle very a in through a

We experience prepared, products, My book that. your understand has we're pretty been, with a any can our a customer, have And backlog. it's understand you're you're So, period. if significant act. through you navigate get impact to your without existing business. But having on will, if intelligent discussions or we you there of priced impact, this if that. I have having on to balancing fairly determined

a So, concern that's not on part. my huge

those seeing of aspects waters I The structural think not we can comments and business gaps. effectively. navigate our about competitive

capable look the look the on mechanisms those that scale the footprint, problem now I it's favorable. great the just of been in components, locations data in here more SS&M, of the cost competitiveness at be very even the is fact strength, and Europe, I performance back, execution. so and business, keeping lot we're of at I in proper China, manufacturing I look we regions, regions a operating that those look very function, at at we've that's Eastern world, the regions. have if Mexico, in think just if got our it weight, I on going whether I've since benchmark aspects, right I our of a all those our seen is I've

distractions the get about we think enjoyed back can back And outperform that of to being some every that, I from away a it's think in that, take of on So, track. form very us level focused if to we it a team, to and again, can we just but getting do it's passionate it, I on clearing ago. performance years few get going we time execution

Unidentified Analyst

Okay. Thanks for taking my questions.


Thank you.

America. Our next sir. Bank from comes from of question John Thank you, Murphy

John Murphy

this, to you a is? operating looking talk that about think and through When on X% the at mean, the margins adequate margins been side, peer are could return SS&M, we but from Good that, X% what and and morning, generate think where and I will you good mid-teens you, kind mine I as returns? Doug. going I invested adequate capital. Seating do you you think first question. do the to Seating guys, adequate level I'm think about curious, hear you're guess of I levels stuff like Doug, the level just mean, mean, is? adequate it, where has

Doug DelGrosso

Yes, formally I a come don't think with number. out we've

all, from hear of you, to nice First Thanks. John. it's too,

capital intense a You business. it's know

on that I way would but something specific, technology, that should level shouldn't get way proprietary a the higher to as But, the should that's a why on minimize invested you an objective double-digit want as then kind there, to now, stay if of like business, categorize return level that be long of don't to in we of of returns if have. can't our that ourselves. see for I you probably segment business. the a we'd holding that of reason back Without game, we see right be And to getting lot up see demanding then in want range, we're away capital But too So, from to a EBITDA get we business intense level, you that. a with an capital. a

John Murphy

be and a basis, second level of too JCI probably you're gets Do on the at? across? you that's reason a missteps, margins you're there a that, looking that and loaded peer little the in in understanding and extreme over-earned bit may that's peer maybe operating minus, you then maybe with question depending and competitive there's read have should think at or now, And we related. for of that some you down where, of that Or and they When follow-on a couldn't more plus margins, to sort who sort or period been get at, Adient's as of get fully bit are healthy, the saying more the been EBIT Okay. time? quarter some market this out I made the on a range, sort of a has that year. recently, part as and think getting their business as X% the no and sort little are margins hay is that Or I'm run,

Doug DelGrosso

a To little extreme. bit me, that's too

I think it's about execution.

the discipline, happening They've penalties of normal with If of poor mean, We're you and any product failures guys launches the painful. well. that There's not the I I do post-launch. don't associated window at it's amount discussions observations, that just time days. I tremendous as I freight my when launch beyond changes From to far an said, look those been would been That's other of go it. the really occur. And result commercial been have labor part. we're have a been just necessarily us, our not what's having have element, and say to now performance. back extended pricing on to the brutally carrying a know executing XX of

pricing I and I sure their they're just on making they're focused think can cycle, the on performance. say execution. pricing through products done That's they've launch they're development well, very my that right, it visibility

John Murphy

on then the of from and a crossover. on just – mentioned, it F-XXX the mean, late. I reaffirmation with and on got apologize, you Okay. I presumably, call the That's Ford and X-Series the got JX, just and I lastly program you BMW sounds like helpful. one And a got you've

of you as you fair kind row then is Seating the programs? there strategically of like SS&M bid set, Seating, sense. grow. alluded might rational potentially sounds business about and about a the would shrinking well. on should any about just get mean, ducks be get the isolated time? out there no that think to going in think is thinking your that to over But make that over reason as to you side, it that reason shrinking and Seating go So, I everything Seating business here, Or to really time kind to as shrinking SS&M business there's it rational is something statement? Is the new want a on really we You because

Doug DelGrosso

It's more of specifically an to way. we SS&M that statement. it That's point why

nature would our lot that think the business. be why a I selective. to commercial far all to say I and of more capital do to discipline with we the of of business need has elements applies

So, job, side, hurt a pretty us. But I of launch and Seating done management, the Seating on not immune. that's with the effective exception is we've business the think,

that at If say right some of back side business other haven't now. the well. our in of But I you a down Americas, Seating in look and launch go been wouldn't all activity you presentations, we the typically, managed the applies real there's scaling uptick on that the

John Murphy

Okay. Very guys. Thank helpful. you,

Doug DelGrosso

Thanks, John.

Jeff Stafeil

Thanks, John.


from question Spak RBC. of Joe a we Next, take

Joe Spak

cadence obviously right-sizing also But and CapEx could that like about sort the of is the down. for statement, does a sounds the a little a it into you bit positive to read on XXXX. that get and this Thanks. since Good about about maybe morning. you SS&M, back cash before the that you imply little how And neutrality maybe shrinking you're I maybe flow comes timeframe. had thinking wanted it that by of follow to EBITDA bit that – business cash flow-neutral later? that that comment Is it, you're

Doug DelGrosso

a could look way think I that's it. you at

mentioned, still that that launch. because capital obligated amount business contractually those Jeff We're fair launch. to programs we're on As committed spending of are right now we're a to

of we commercial-related do that to So, I launch-related, a in to of resources that. with suffered we certain That degree in as a address. tremendous would XXXX, trying through unwind standpoint XXXX, cycle issues lot think requires amount SS&M, that it, from and we're a about a and

means scale to come look we As business, the down. revenues down that will our

about that a year a a so about we're You two-year year began ago out. that think should in timeframe. And

the behind we and launch-related down, resources point that issues you expense, can been running don't goes and fix historically them don't around can activity have launch even issues, capital inward that's problems have Seating As the those well, commercial done in if launch-related a fix you you productivity, improve you lot us, we more comes of steps to trying a lot diluted our have you to business, and drive and frankly, issues we get launch and North expense, take the if and business the the margins. we haven't argue our quite part drive activities BABE reason struggling America solve which, taking like resources could into to the of in haven't we're productivity is we been

is answers kind I right, question. or – we, at in this if said it's to necessarily level, macro So, well. as get down a kind of that's know process don't look a you the X-year it at business of SS&M helpful scope scaling X, your as the of it

Joe Spak

actually light, is because on other some you you do I didn't need internally, of It like in it you recliner imagined. in profits. I talked series on some weighed think you about common and sounds shed of probably the just to need you profitable the there's And definitely the anyway, saying has that you terms new a could Europe, come little – – can but the seems sort higher. as volumes what you're as also improvements me, bit it's guess architecture also that maybe like unclear, it

exactly about volume new around? think So, for what I mean, should turn wide guess, can sort And from products, the turning I perspective. a time guess I those point I businesses range we for those a when don't you how of is understand

Doug DelGrosso

part two different technology. That's quite The frankly. proprietary of truly are our product mechanisms of lines, kind business. They're recliners

to lot expensive in Series past capital. Series mechanisms business. we've good And the have converted year at was we the our And price presentations a undertaking, launched We of the we market that of specifically related all XXXX our a to series. problems understanding that is. had, That an what talked of from think this was were XXXX and XXXX launch of new Rockenhausen, the I

share And needed backlog year is lot to that that to slightly those a backlog we've talked slowly of place we put employed the and address joint capital that of issues. technology, is different number going platforms. we've In lines across a many the to That proliferated this not common of a that The to intended expense. was created customers made Rockenhausen, investment there. proprietary designs. we originally that from commercial being still different scope a a design Some We freight. that and our about is in with difficult deployed XXXX. lot it's in architecture certainly activity development more of to worked expensive to manual That's It's is half issues be And happened a change of through it premium much led our through discussion launch. our an in of big What's had as with problem, that it's that development couple made it was it's customers. the had the into standpoint. first a of a us impacting different more common has launch be

common achieved on the improvement problem So, side, now you're It's the recliner architecture significant on offset and we our on the not metal a basis. of issue with improvement mechanisms a year-over-year as we are solved seeing grappling this we a and side. lot why a that's on new

year We do out. ago. It's that we're is a arms program around in a to stages our we getting the the common which I've addressing position better launching really So, we're pointed huge out but and a on still we we're far were of have side. final issues think of in mechanisms than woods architecture, the the work this now

Joe Spak

the necessarily expect. the a not for variants you getting commercial that common initially and that issue it's It's a So, different volume pricing didn't issue evolved architecture. on the

Doug DelGrosso

that volume's through from volume the perspective not increasing it's volume the It's the go but launching definition. traditional we're issue a in launch, as we and

Joe Spak

you. Thank Okay.

Mark Oswald

have like Thanks, Marcella, last it Joe. looks question. one we time for


Sinkevicius, Go question. your sir, ahead, from That will you. Thank Morgan come Stanley. with Armintas

Armintas Sinkevicius

with the Great. congratulations for X-Series. Thank the wins BMW on the you and taking the and Ford question F-XXX

remotely it's it would that balance And with Just leverage curious, question structure OEMs? to early, new in come that even as business? of and relates you the refinancing conversations what business do you the the level sheet or as or think has at but you activity here, conversation think become a about have maybe up a capital would that this

Doug DelGrosso

clarity our declining That anticipated but know you with our issue them, side, discussions been and discussions in come had road to transparent But them. just financial barrier recovery share not our pretty of to price been with they'd business. with our We've with have we the on for Quite me. materials around what us lot with our has deck that customers. are not just to them give has win is. a a us earnings Those share that's our not the included like customers financial Jeff information we've financially. have up had the to them I performance. see frankly, discussions Certainly,

Armintas Sinkevicius

else been anything recent of how they've about? Okay. and are what the maybe customers and issues, given providing them And comfort that flip that are question of is, with side focused on, asking sort the launch you

Doug DelGrosso

business. to strategy on want us a want are anyone, look and obviously, at on to to execute. you arguably, focused delivery. when customers. well. way you a things customer customers thing They conversations got Our overconcentration, business. us and the recently, a be of level always up on stumbled technology, what's not the the have most capability, region at valuable extremely have we've want look and seating really our We're They what supply focused lot but our want at in They and, them. to when the do We, our to against they're us want on. diversification in with They within happening want We of cost-competitive. pretty same candid our in stand within to look when quality our our certainly, us you transparency fundamentals They understand business They focus is. asset

of to don't offer had done necessarily better to and them a profitability extremely – we them. overly have out get to eager win this our do every promote And, And, so our commercial business distraction we, I allowing We them. to focus priority, just but again, it executing, strong we with need to varying communicate is growth that's lot this I seems what, the focus, engage But to customers, to but the back deploy sustainable. the think sense And for have there's an get a get have right maybe business. historically, oversimplification, operationally to well. where quite to to where think discipline correct and is and candid, to taking not it's all time. to have we being backlog make at to intelligent with on our what both way frankly, not have problems, is good, which we'll So, the of time, all issues we top we'll discussions back we is this sides. you degrees, to level This but customers and our team, for

Mark Oswald

time, Unfortunately, much participating. you thank that the will conclude morning. very so out we're call for Again, this of

If you follow-up to have don't any questions, call. please hesitate

Doug DelGrosso

you. Thank


Thank disconnect all lines may today's and you does your conclude participation at conference. your this you This time. for