ADNT Adient

Mark Oswald VP, IR
Doug DelGrosso President and CEO
Jeff Stafeil EVP and CFO
Brian Johnson Barclays
Emmanuel Rosner Deutsche Bank
Colin Langan UBS
Call transcript
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Good morning and thank you all for standing by. I’d like to inform all participants that your lines will be on a listen-only mode until the question-and-answer session of today’s call. Today’s call is also being recorded, if there are any objections, you may disconnect.

I will now turn the call over to Mr. Mark Oswald. you. Thank

begin. may You

Mark Oswald

slides Good website review thank third Adient’s XXXX. Investor and fiscal Christie. been today us to posted quarter for as year the presentation release press we results of The our morning. you, call you have our And section joining of for at Thank for the

Financial call, our Adient’s remarks, call to Executive the Officer; Chief will morning, am your Executive President update business, This Vice and of I today’s our our open joined who followed President by financial Officer. and an provide by prepared questions. Chief Jeff results. will After Doug will Doug Stafeil, On QX DelGrosso, the we and review Jeff,

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

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

the on basis, will we non-GAAP found the measures a release. discussing GAAP can results addition closest we equivalent company’s that financial appendix in be earnings believe in non-GAAP Reconciliations GAAP information evaluating useful to full these In be is of the to performance. presented operating to our the

I comments. turn my to concludes This Doug? call will now the over Doug.

Doug DelGrosso

as our quarter this investors analysts Mark. great. joining thanks prospective review the And call third us spending with Thanks, morning, and to investors, the results. time Okay we

certain our the which financial out metrics, the are recent a developments, of just Turning to key first slide few top of at called including slide. comments four, on

China. earlier improved offset the in turnaround significant industry implemented sequentially Although, year-over-year, weakness quarter consecutive financial benefits as to are down second actions year for related more this quarter results results Adient’s our third than

headwinds is respectively, $XXX turnaround direction, evidence EBITDA good line quarter and in year-over-year No European and significantly with operational adjusted were million doubt, primary China the and the continued to in $XXX tracking for in million lower our sales right contributors sales EBITDA. were internal in billion a the combined expectations, decline segments the the outcome Americas the $X.X totaled vehicle with within production and

Adjusted earnings per operating in of most on to XXth. the profit the a level cash billion the June share bottom-line. over dropped right fell the ended quarter recent hand $X.XX We with at lower just X quarter as

certain in cash one-time that Important otherwise in these to operating will provide few skewed discuss our flow sheet on as and just the balance performance and segment or a performance, company. excluded charges in note, we covered Jeff minutes. view the items nature details results trends adjusted the additional core of

events results, customer include number events other current financial America, the our for and profitability product customer Outside Adient a of opportunities program a highlighted and initiatives. were recent showcased our completed number both innovative Europe that offerings across Asia, equally developments through increase important, North BAD and, to of future and

that more outstanding Annual supporting meeting was with while Awards in ceremony quality with this Supply development transformation. at PSA PSA's events positive overwhelmingly planned Adient business been customers later and for it the adding operations in one, quality Group has Feedback pleased for recognized June. award delivering and its product from year, first the achievements requirements

of were the a during we quarter. number wins awarded product And finally,

recent Slide examples five wins. the of provides few

to Porsche and and wins, Macan, mix such a replacements Amarok, from Buick examples VW As new programs as the name highlighted SUV great both you Ford a few. awarded of Envision can truck, includes platforms include business and see just the recently luxury Ranger,

the leading market coming platform business years. awards strengthen Given in we other and mix, continue these of the Adient mix recent geographic expect customer to mix, positions

the one as tracking with the expected, performance. were reasons in and about many as line Definitely look historical win we of are rates future excited forward,

as example, greater win business North rates and down seeding being a America is year-to-date results for in For is showing our rates businesses at drill China, one the than Adient, at replacement XXX% further XX% replacement strong if across you at XX%. and also total running Europe

our Likewise, expectations. continue new wins with to track in line in performance business internal past

step, business Of the course, is flawlessly. wining programs develop first comparative awarded, program and is the once launch the to

for area falling standard from saying, of after which launch goes we our in improving short and high increase historical without be focus a continues this is an level QX. It to has the into been translated performance. performance experience The focus launch team of

Slide six illustrates Jeep A most programs Captur. class Gladiator and Daimler including Renault quarter, recent that the the the were successfully launched in Sedan,

of On the actions adequate team potential you launch can management, focus early side improve performance, stabilize is ensuring and escalation the on see to executing right-hand the program and as slide on-time readiness reviews increase change issues. of and our various staffing, enhance such

focusing new efforts the Grades concentrated on not are rather [ph] concepts basics.

is progress, Although we're to making needed standards. SN work ensure ongoing launches future class to [ph] return more

some points we've seven, the the past over made share the to a turnaround quarters. few on and commentary Turning few progress provide slide like to I'd on tangible proof

First, the has plants. solid the made improving performance operating at on our team progress underperforming

handful of number is plans As mentioned limited SS&M. a previously, cross-seeding the troubled to

of impact losses results. on the had plants significant the Adient's a have However, finance

and detailed against designed eliminate work utilization improve continues to execute waste operational to team rates. The plans,

requirements. Sheridan, recent and execution actions has One of operational reduce critical made commercial customer headcount of progress Michigan to and our the of ability most with due successful the variety significant to jet align with being broadcasts to plants production at our

has in operating this members. and which October, at ran year team out production plant required to first the step the stands Today approximately at Since One approximately members. rate labor, run actions to running XXX relates improved performance, that implemented quarter we're XXX of due the significantly. improved

and achieving we're premium praise in reductions costs. Second, significant containment

and driving improvement this in reported The issues. timely reduce of to benefit expect, on is stabilizing supplier pursuing and fleet much pray more quarter we're customer and ops issues this environment closures containment QX overall related improving front, might of results you contributed was operating and sequential As very to premium linked recoveries today. on quarter the on

Year-to-date, the we across trend area program XX% this and continue another progressed. expect XX% the QX. XX% company profitability premium to is freight in Americas we've Increasing down down into in is Europe,

It to commercial discipline, on sure where starts at taking programs possible. the making margins with you're of and bidding management price higher right the change right advantage walk

quarter discussed our resolve was previous the issues on we final the during as to backlog areas front of the the open Similar with pricing progress focus customers. made

certain resolving to intended first As the these with mentioned stop last on earnings step issues call, bleeding our and the programs.

management improved through product area the on VAV forward profitability. returns financial are to our moving to initiatives program change and in encouraging focusing efforts the of performance. into operating It's efforts translating see lifecycle Additional improve

has see pressure improved equity gain particularly chart you QX the conditions we've sequentially side since lower on result, income right-hand margin, traction. turnaround very can in China. by considering actions As and on variety without Adient's earnings implemented a from has of industry A week achieved the despite the slide, downward with a EBITDA headwinds, of especially good macro

the on self-help driven first, affected environment. moving initiatives point quarter as comments point. to macro just not proof by company the growth good improved before completed a additional on; is At dependent earnings Two

We've of in progress multiyear lot made profitability of the we will despite good levels journey. progress, stress demonstrated to second, acceptable the ahead. around be turning but work continue operations a achieving a QX, And lies and

stabilize in on business track, on positive this eight, Moving and as how the impact its is we progress. slide to the results. taking the operations flipping reminder expect our this and financial to included we efforts turnaround on a a slide of to plan pacing are root year The having

We year will versus market despite stabilization and EBITDA weaker conditions continue of to this China. this further earnings morning HX with than expected expect release EBITDA and in HX reaffirm margins improve our HX

As we XXXX. XXXX fiscal XXXX through and and exit progress

overall operational expect the continued large margins. and SS&M right-side commercial excellence of a We team of will focus our drive in the launches improvement discipline, on reduction

an more flow. But and importantly, tangible benefit more greater free and even cash

currently expectations finalized. to finalizing 'XX year share our plan and fiscal We assumptions our once are

market related to remains let overall with the China China a environment. Before macro turning over conclude with me China, Jeff, sentiment the consumer personally few to call and economy weak. comments the Starting

and by emission economy, as continue of GVX standards. vehicle significantly forward, Passenger such the sales the overall be pull impacted and to production factors industry-specific the

May, originally customers, reductions customers expected. we our on call stabilization of down decline earnings deliveries less In heading production and experienced XX%. a as of of cautioned As main our early were few inventory skeptically in signs QX, were between of to not QX our fact in QX Adient materialized into XX% in due certain

down set level for July occurred current that in expecting of year stage XXXX on are weeks schedules and fiscal production ’XX limited including we year fiscal recovery. Based the upside collaborate the lower extended QX inventories in

we tax factors is pressure generation. which been earnings despite as has plan China ’XX year on to expect and drive team fiscal U.S. the coming macro and and our to offset has in initiatives further these once cash pressures dollar growth significant expectations as headwinds the other downward expect continue we placed earnings self-help from XXXX to added mitigate working on weakening More finalized, the addition will hard such

financial With that, the what I’ll turn year. of the quarter he performance can we from Jeff and us through expect fiscal for take remaining so the it Adient’s over to

Jeff Stafeil

GAAP charges that results. everyone. Great one-time jumping page there financials that I’d thanks before comments Starting morning into the good impacted XX several point Adient’s and to significantly my non-cash QX on Doug, like were

of The financing the related balances. valuation inter-company Therefore, of support interest repositioning tax in are new our certain of difficult became debt incremental expense full to the geographies. utilization charges biggest the tax and against it result a arrangements assets as we items allowances the recorded these deferred our financing

million increase It current future loss valuation rate, result our cash net by tax effective this not our quarter. impacted impact These our should tax payments. in future but in negatively the it be will will an noted $XXX and about in allowances

$XX were adjust of we effective result required these resulted additional million a half which of in our tax expense first tax approximately XXXX to items fiscal XXXX. rate As the of related to

mark-to-market items quarter. restructuring results. by fee $XXX impacted taxes the loss Outside also GAAP impacted GAAP Adient’s these of UK in the adjustments deferred net and financing the our million charges, Total

special slide to disclosure we reported side adjusted one-time and the just called will to pages items exclude on our in XX formatted complete of right adhering focus adjusted appendix. with the commentary are our the format Turning out the results numbers items the on on These our discussed and the results. the left typical adjusting adjusted our results

X% with EMEA EBITDA in $XXX lower our business down XX% largely by volume Asia Adjusted billion about explained year-over-year. $X.X in $XXX a performance about decline in FX the detail the minutes. half in Americas and for was segments. in income or this more were along I’ll equity accounted for million year-on-year, quarter down the a decline. and Sales few million cover

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

Now in down more our results third let’s detail. break quarter

Starting a side with reported ago. a year to revenue we the billion on compared decrease of XX, period million $X.X sales of consolidated same $XXX

negative As a of mentioned decline. movements moment primarily two the for of just accounted periods impact half between just over ago, Europe in the currency the

volume offset partial America approximately mix with in a million. results Europe and year-over-year by Asia North $XXX Lower in impacted

result expected. America than worse While and sales North internal this was in expectations was earnings the EMEA consistent with and in China

Moving balance production our call main revenue as of strategic quarter. in regard the through when in in programs China unconsolidated QX our down our driven levels in vehicle China. Adient’s resulted of underperformance with of JV primarily were for the revenue was customers XX% on out seating Unconsolidated impacted production the much reductions compared lower earlier mentioned vehicle on about and aggressive results SS&M adjusting in significantly with with to certain FX, network by combined inventory certain

or year recognized segment Interiors stake ownership XX% a approximately Sales interior on YFAI for year adjusting business our for Automotive or XX% in when through down Yanfeng unconsolidated were FX.

to XX, corporate provide back not marketing. periods. our executive the central finance, show of slide bridge allocated we of and office, performance costs to segments corporate bucket The a that operation, communications, legal are to labeled between EBITDA represent adjusted Moving as the such

million FX related the the decline margin primarily negative drivers related, decline The EBITDA last a in million the $XX XXX lower launch was million as the of versus attributed equity million adjusted mix, $XXX quarter primary picture, last of down to Asia of basis year. volumes X.X% and and business $XXX approximately The adjusted Big income. current year-over-year was EBITDA negative EMEA impact and within adjusted in performance, largely to QX corresponding $XXX points versus year.

point Macro to factors, including negative impact also that will of year-over-year on weighed $XX million. sequentially out exchange despite QX I results foreign improved being down XXXX by compared QX.

and is operating the consecutive and EMEA has second unacceptable demonstrates to improve, and the of on begun improvement is levels. environment This quarter stabilized Americas Adient

for sequentially. noting we've by about segments XXXX slide Americas included XX, Asia million progressed global EMEA Similar on consist past Also, QX improved reportable of results detailed $XX SS&M bridges worth XX. and positively to versus and quarters, as our which XX

unfavorable Starting The primary $XX million, slide $XX adjusted on including include we see EBITDA decreased negative ago. million $XX a the approximate with compared launch waste down material approximately performance, that year freight. premium did business million Americas operating periods the same lower an net op performance, higher of to XX, note and drivers to an performance $XX I and freight an million period margin, between improved

explained related temporary the year the unfavorable million Other performance decline year-over-year was by in included cost operating Also and to comp than benefits included primarily the business of $XX increase within associated incentive is a XXXX with million elimination last in business SG&A company's assets $X SG&A more the which mix. headwinds accrual.

to aerospace offsetting equity lower by engineering spending, associated were year-over-year just Adient million. decline reduced it higher headwinds of and offset call Partially related partially benefits income. cost volumes headwinds with in increase $X $X mentioned and about an commodity the Additional million prices in

Americas with year basis, sign in QX the taken for premium to freight, overhead and primarily results by improved actions evidence driven $XX sequential compared million, gain that positive definitely a by labor XXXX decrease improve and this improved On a fiscal waste to traction. business earlier in operational the

One the last on $XX our Americas, million approximately segment the CapEx for in point quarter. was

include headwind, associated negative times $XX was $XX last QX a or between past. architecture the third inefficiencies quarter lower $XX The including million the this XX, it with slide in with common front drivers year's and business compared have call and performance, quarter, EBITDA QX Turning EMEA XXXX. discussed performance, adjusted million million seat segment for to related launch the in primary we year our costs several

QX mix in Europe $X period versus better $X to million down actions I same approximate will impacted were million segment last QX that year. and headwind million the $XX business by versus the volumes business Lower finally gain stabilize year-over-year although traction. taken XXXX FX roughly in and an in assessment million resulted out the point was results as the $XX

in CapEx for EMEA the was million quarter. approximately $XX

income in XXXX. million from Finally XX decline. slide China compared totaled turning EBITDA decline our a with lower the from the was reduction for primary in significant volume a to for or lower quarter, year-over-year drivers performance, $XX auto a segment and adjusted Asia each the million QX $XX production $XXX Headwinds and resulting equity million and were of

addition, performance also the modest volumes lower due to call In nature fixed driven headwind of in manufacturing $X cost it million the by a business. higher business was imparted

lower positive offsetting macro lesser lower on for a weight by exchange the quarter cost the headwinds to finally, $X extent And namely factors million partially approximately prices. contributions foreign from and SG&A commodity

million. Asia’s CapEx approximately the $X was quarter for

page as cash year. a the we flow. less Adjusted flow compares million $XXX of the me Let cash to defined slide shift structure and operating down now was This break CapEx flow cash on for the free cash $XXX side to million XX on our left quarter. capital last our

remember, and last initial sale an accounts million of to free facility launch of cash $XX receivable Important financing provided flow. benefit approximate year’s

Excluding flat the our about totaled cash essentially results. QX with QX flow factoring free $XXX in XXXX program million

cost essentially decline Lower offset when tooling and the capital earnings two comparing periods. expenditures recoveries restructuring lower in customer a in increase an the

$XXX during China with point year. approximately million expenditures million. from compared quarter received the out also $XX I’ll million the for cash were last Capital dividends totaled $XXX JVs our quarter a

can footnote, breakout see by the in to continue CapEx you As we segments.

and ended cash quarter we the over in just June At billion page, side cash XX, right-hand the $X cash we detail of debt equivalents. with XXXX, position. On and our the

mentioned we and As completion debt macro flexibility turnaround uncertain of the upon capital risk against refinancing, and end increased to as such structure the further intentionally softening our the liquidity markets. protect enable

we so and a will days operational paydown refinancing position rest the debt turnaround being monitor assess and assure, with our priority. early It’s since gaining the traction on cash continue to completing

no gross thanks June maturities the in $X,XXX,XXX respectively worth at debt May. near-term mentioning refinancing XX. on, to and debt And Moving and totaled net $X,XXX,XXX later

thoughts Based the on Moving fiscal $XX.X continue expected normal to seasonality. and slide consistent foreign $XX.X to to movements XX, range QX we approximately expect our to on the with few plans conclude as revenue to billion of what on revenue and XXXX. a and of on of let expect current we exchange vehicle billion in me a expect to production billion settle result in plan with what $X would remainder

half regard second $XXX With we margin This being million weaker EBITDA expect as taken approximately surpass actions market to continue than it in adjusted company’s to from completed. revenue just in performance especially the results to self-help million relates and Americas improve $XXX expected conditions initiatives would result to Europe. year-over-year and quarters performance the first financial or down the traction within gained despite as operating China half and to

Included given in is our China. $XXX million weakness the equity income EBITDA earlier approximately expectations continued from down of our assumption in

based current In in expected likely on in being our HX fact, half. China result income the million the with first market weaker compared expectations, will down approximately equity than $XX

the consolidated assumed assumption in May Our to the China more down explained to first million by we half be performance. volume. China, better second in If performance approximately early results decline $XX is combine expected is in slightly half, than compared flat the to

to drop to that below Americas an translates income, partially the seasonality traction expected posted the expected by the Europe likely Combining EBITDA with equity adjusted QX. $XXX in slightly sales initiatives million in the in offset normal and due QX, self-help in decline gaining in are

debt. in balance on Moving our cash on, based expected

quarters approximately With several variability taxes, effective adjusted allowances rate tax over to the evaluation in jurisdictions few our between full to and year significant million. impact of the rate $XXX regard be to the expect on past establishment quarters. have continue We expense interest

tax with evidence XX% approximately adjusted As QX is rate. effective

on As continues on of the outcome tax and composition to million earnings expected year, would $XXX we'll to which fiscal a our our for This be than XXXX. more estimates focus million result, about earnings. continue cash $XXX for the million those based year, to $XX less approximately be

tax dividends to One consolidated our of more than taxes, taxes payments XX% point important withholding to cash on cash relate JVs on from JVs. and additional remember,

our on and in for range, the One $XXX intense flow, cash item capital end to months of expenditures about $XXX on settle the expect your first be modeling, to your based range. given would the focus spending the $XXX million performance last million nine through we now of lower XXXX, QX capital million. At

This level first the a of essentially, quarter likely of in range temporary year, the timing of and spend year, in benefits the with combined will nine cash capital through than for internal working result outflow forecast. months reversal experienced by driven earlier better $XXX somewhat the of a and million free

called we outcome as and dates. cash is out reminder, on highly working factor XX, to is Adient's slide sensitive that end quarter a As can the trade influence which one capital,

with questions, we the reminder, tubes. week, the opening a extent, quick steel resurfaced anticipated of had drives, as as call impacting steel impacting a a our for motor our just and on duties of lesser to last to fiscal Section topic your XXX XXXX. associated tariffs million This and this duties XXX about was Section $XX Before primarily comment a headwind electric certain

steel news. and was in positive late Mexico Canada May The of elimination tariffs

benefit. partially XX% for week's the a offset other Xst September last calling However, beginning on will all tweet goods

you monitor and to what be continue lessen outcomes the updates with going The impact become team XXXX it to headwind appears additional mitigation Based will help actions in is forward. to known Adient's and $XX total customer million. continue We'll on exposure potential provide on today, approximately focus situation as clear. the will or recoveries fiscal

the Operator, move With our to can first that, portion the let's of question-and-answer we have question? call.


comes Thank Brian Instructions] you. Johnson [Operator from Our Barclays. of first question

may your You question. ask

Brian Johnson

their to about past losing. Yes. of Good are that given increased morning. issues. say were talked When A be just sounds you program the like customer questions, pace the own having launches couple in used money first, X profitability, you've discussions OEMs critical the

perhaps still actually to they those get they're that your to quarter, goal were path because contributing is where that you indicated or become the on point a Last profitability? breakeven,

Doug DelGrosso

So, morning, good first all of Brian.

Let directly. commercial answering not maybe me we what referring the backlog think take breakeven, not of terms I you're most a think customers it open had had a Because it to. about of We so where a in in I issues. much shot couple at

cash is And to were to We've those trying get bleeding. what those position immediate that stopping neutral customers on an with the That's essentially with customers. achieved issues. this to we quarter those refer particular we

open that think, it tactics use that, or And to the that far that of, we certainly, our exceed characterize particular allows unique particular a I of situation, customers all performance think of I number then a wouldn't enhance us that as to that breakeven issues objective settlement had situation. to is I was, business. now to that in to say, then sets us position the commercial a

value now that's, engineering, which know, to reduction more And we're sensitivity reflected cost you're we've particularly keep and what why a base right our our in much is on had results. you the in good some underscoring you now, around open accretive seeing I seeing all that's activities in, they're proposals. of emphasizing situation And really performance, And discussions know, wide we of our XQ some with think of of customers. and the just with China customers volume, and

Brian Johnson

given the know, an has that period? eight? back gap about to that give Okay, far? would close on guess, question, which basis decks, combined can can And do was about margin you're how, U.S, of you talked sort but work timing talking business we the fiscal over about building update we've How you points. closed on left in Since prior X us the much is SS&M, on page slide how payers, XXXX, the so you been now that, second in I to then, gaps time the the gap out

Doug DelGrosso

results, year it compare Yes, open we arguably, deterioration XXXX. and we've our haven't in specifically year is since slightly fiscal closed, spelled XXXX gap -- out the fiscal to we had how it's is much

plan, this hanging of stopping said, we've multiyear after the to bleeding. this the going with premium on fruit, tried commercial and stabilizing a that. inefficiencies, operational really been a focused really being outline mixed is a low but freight business, has containment That resolution year on is, in arguably level attacking what And,

We program, XXXX that to laid How when could step we've, looked confidence, at I that you'll multiyear through out and timeline it have have incremental says really completely said, a not is start some vision to not gap. it, on we prepared is we wait a to we as which finalize number. until starting that this high to we're think we just close XXXX, a call, provide next specific to what improvement target the today's

Brian Johnson


Okay. Thanks.

Doug DelGrosso

You're welcome.


Rosner Emmanuel you, Deutsche of Thank Bank.

ask your question. You may

Emmanuel Rosner

Good morning, everybody.

Doug DelGrosso

Good Morning.

Jeff Stafeil

morning. Good

Emmanuel Rosner

operational track obviously numbers, the Would in where improvement know, SS&M first the to EBITDA bit, in on be or able traction more see whereby specifically we sub So, a you on quite the basis. to we us America segments obviously, be -- them point question as the, the overall should sequential able should in nice has to to well. improved, is segments

sort guess happening like where I the we of to pockets could where more in expect of the more operational noticeable the quarters' is coming? and improvement come strongest, we're this either

Jeff Stafeil

Yes, question. good

had to margins worked had on the launches, the bring that of us problems we is - they in America, programs to degree the this past caused those and seen America it's have initial launches North Europe, some that, we've some been quarter, as think replaced. been improvements, there's North I back number have a more we've and as in issues, harder of particular, pronounced

the primary So, focus that's of been team. one the of

it. They've away been shipping at

waste, if we're definitely I regions. in think look know, those the improving freight you our in seeing And, overall cost our launch metrics just numbers. operational at are premium you all

you little bit is big a a being are, of our a portion you big was earnings, know, of The things a it. all lot port With against coming of much of such that it's down is Asia of masked it earnings. as that us obviously, as China know, kind portion

overall U.S., I but As elements volume in Europe profitable us in building pressure seeing also higher and sales that some their the some forward. go run gives some as say promise would were of say in there's the we seen can well vehicles and as I'd some to that as of had that things control, improvements particular, opportunity our mix in but significant we reductions more that and you've momentum

Emmanuel Rosner

the helpful. zeroing on I And That's guess quarter. fourth in specifically

maybe bit takes we softer a the So, sequentially third and little bit speak can the than over you're I quarter level. a little from think puts here mentioning it's about shaking high

I income what there, that seasonality is more down, weaker could fourth quarter, a seeing see which as bit but well expectation revenue quite obviously of equity is you your into no are curious the I of have also would Can expected point these benefit. a the are you further of to to how turnaround a out? operational bit in maybe offsetting these finer see progress put expected further just little shake

Doug DelGrosso

numbers days we're of a as of It's a lot can as forward a still we early that turnaround here. things. But in the I there the go good volatility of happen say couple is and obviously question of would sort

highly us. revenue impactful to to is going is be One

the calendar volatile time Our of QX, even more it's these our schedules is and QX volatile in days. fiscal production

of lot been seen Because here. -- in and or a from you so had is times times planned or a the can know have revenue perspective and you then downtime that EBITDA normal impact. our roughly contribution some margin, margin imagine is our roughly has hasn't downtime we which margin there -- it contemplated, bigger has two the necessarily been customers a So, has difficulty played that two that falls

the all still performance, are that uncertainty improvements, seeing an we line operational those some way, counteracting numbers. and about really market talked just still what et are I things drove We it's seeing in cetera., our but

low seeing think XX% we fiscal a primarily closed XX% QX talked China, that our QX, the down fiscal about water points emissions our and as we numbers a production to drag will in change down roughly in production to the China in are I in probably production our schedule, relates earlier. to still but environment contemplated it As numbers it market was was the the due from

Emmanuel Rosner

clear should be service. be from we the operational But was in just improvements the clear to just that’s quarter what beyond in expect to further benefits very fourth helpful,

Doug DelGrosso

get your question say Emmanuel, again. can it Maybe I didn’t you

Emmanuel Rosner

Just function between service. are increase that about, curious if operational the in you offsetting these improvement in they headwinds also spoke some

Doug DelGrosso

I think they we we're the against just here. still seeing are those guess fighting all what its point talked things that's is I about

improvements VAVE saying us execution. just would across opportunities much in the finding really way group customer and launch meaningful essentially board better of our all starting can those offset gain premium what a performance more and articulated. are and more I just win-win traction, the than we’re the situations, freight headwinds have to in where say had formed better all the Doug customer relationship came helping some with in here a So, existed I when those he things is

Emmanuel Rosner

for the color. Thanks Great.


you. Colin of Langan Thank UBS.

your may You ask question.

Colin Langan

taking that I’m mentioned our of my the renegotiating question. commercial question had facing about our Brian the sure think earlier you're for but that I negotiations some not in past Thanks March. issues you of XX% that impacting

where negotiations completed stand it the on pricing. not, and contract. new trying are think I you set where was are XX%, pricing if you do seeing pricing I mean XX% to they

Doug DelGrosso

renegotiation issues, reprice. that and underbid, go a commercial into think as I was think different. we question, When got characterize more you arrived isn't first Colin. This comments turned I and and about at, I know I of I open had First backlog engaged as What team. it characterizing spent all, was was thanks a I renegotiation time completely a business with my more really to when would things of for so the initial

through interested and having that particularly customers You there’s the resolve commercial was development engineered we of discussion changes really like weren’t know commercial because seating the company a that until in issues. experiencing are operational impact distress any that number launches had scope their the products go products cycle

just color. more a little So, adding bit

forced XX:XX of would macro in characterization I the were than the we going that think kind agreement the from are contractual a not, a those good to what solve customer issues, can be today support issue example commercial they're capture I way pretty was on operation, earnings a deck standpoint. of his operational and is to the improvements assessment through at a or one run you recognizing real resolve how level, the illustrated though capacity rates different you say a operational to out that the of is getting

from can because you do you pull down cost significantly. out. then commercially internally labor but pricing that call way, pricing way it numbers didn’t buckets they against it operationally Do can more in and labor we obligation, down us relieve either bucket gone call essentially that up shows flex Once has that the operational, that change, that contractual or our our you

progress So, made some great real there.

think of the issues back question, to waves. terms some in of Going first about the I commercial

issues SS&M which I global wave that Group. kind cash tough a a backlog a saw of operational authentic really a a that We commercial huge We success as have the issues; in activity. huge a for to a of through project. of ways program had position some a had kind neutral the on run big SS&M step on us first normalized magnitude and got we rate of on in of us

with that allowed is environment for customers stage them further and for that completely the value in with with kind changing the the introduce with said we’re completely do our opportunities to us win-win out. different take to ideas say we bring sets just so the to a customers them whether have further by now them cost of way And future relationship launches I’ll we on executing it discussions creates

we’ll wave is year and second So, XXXX. see start to you’ll a fiscal QX comes there in in that do what we forward that think

I and more detailed trying when So the of business my got again, about here. I'm first initial impression kind versus to you think I today provide how

Colin Langan

you it color mean that’s contractual are purely I think can mean issue handful operational past the issues I issues helpful and operational down those one two plans that plans you down on it it in to some can are the driving I to said is [ph]? you how quickly Got it that’s and is three exit of and that boil are the or operational pure any

Doug DelGrosso

really run we’ve to plans deeply changed a regions say a to approach few certain the way Yeah, now in a launch. I think handful it distressed, what the in was stabilized. the were we’ve got we initially they despite business. midst That the I and that degree were done is would approach

top we are have In underperforming five Plants will that a focus initiative. we every think region, plant operationally. always

five, constantly And so, Asia those. Americas, each - we'll be top a and have Europe working

containment is making can I line think costs, gains in the freight, Good you performance see which on premium some the inspection. progress of we're there.

in The If containment point all -- place, days. are really will go things inefficiencies those efficiencies. we be as capture waste it we that. launch plus performance phase next in SOP we the inflection operational launches with in say capture XX still I'd of our in the and real, like -- moves through our activity. And is way,

going pace, projects And The of having structure, us killing past anticipating that really well. of now those with cost phase years. that have the production launch transition launches are lower operating be of that we'll we is level been quite I'm as inefficiencies what the standard the over into we're out couple

our we again, as numbers. come XX So out with

to anticipate those We brackets -- in you areas. improvement year-over-year put will that can probably around

Colin Langan

question. Got it. my Thanks for taking

Doug DelGrosso

Thank you. welcome. You're


of Thank of America-Merrill Bank you. Murphy John Lynch.

You may ask your question.

Unidentified Analyst

is This for on morning. Smith Ingrid Good [ph] John.

you're you've commented nature. recent than as up business been reason quarters. past understand that has holding in been in more the And ventures question, largely why first better we this had China until Your joint self-funding consolidated that the business been it, a have

control pulling Is much how deteriorated, consolidated in of does partners? tougher on reduction? out Adient is market JV cost the the be JV? Given the to it As cost its and than decisive business surgical have

Doug DelGrosso

provide detail. some out more can certainly start Jeff answering the I'll question.

there mean, government's operates. relationship I if side. plant think anything partner. less on the ability it's government about, the to to flex region, position cost our the what maybe I It's is our that with a JV It's city the within that that presents that really our barrier the indirectly,

that say part, obviously would driving those for and influence we say in profitable vast a remaining of majority, a most down. lot cash. interest have unconsolidated operations at conserving I have the vested partners huge consolidated, the I our would

the XX China, last see preparation the you whatever could for I've quite the reaction argue to of not in mode been actually been considering that's impressed years.

And so, against you we've of performance look really region, flexed out that our costs aligned the volume with if volume. drop. the at And

are see, level at non-consolidated You there's a through. that profitability footnote maintaining in look can and if pulling of the performance a - that you small even they is basically

really there So, is not us to huge barriers to that. -- I don't influence

Jeff Stafeil

this, were are fortunately, went downturn into partners somewhat an our to long China as experience And JV aggressive of Right. because it. We very concerned any with time. we had a significance in

were a they aggressive. closely. as with quite working were we them result, And But

well in if contribution you environment. sales EBITDA pretty held margin, we've decline. that and the extremely the at If despite adjusted think are the region margins two times sales margins, And our you roughly despite year-to-date, look margin the performance is sales to in quarter they've decline significant

a a should they've a performed would and when that, of little well profits say be market the of and happens. have that as margin extremely So, I to recovers rebounder poised bit pickup

Unidentified Analyst

commentary. tough. less industry been some a recent you Great, the up questions or asked very that's in follow you've months as qualitatively on helpful to a with challenging months dynamics. XX And then that been customers more environment Doug commercial as pricing comment remains to already perhaps the have in job that nine of bit been on could really the if discussions

when industry pressure some be an than there asked seeing did this they might the now perhaps transitory? year, assumption you was are your And so earlier that way, think more customers of I another more pushback

Doug DelGrosso

when is desperation. is expectations of volumes strong, with a more I time of have any customers It's challenging. there expectations, can't always not been high volumes when high of pretty pricing sense our that think expectations, discussions high challenging. slow, there And

in now, while the to think for against and much and right business. and business a In and, the is really make coming I seating -- backdrop the very to being specific this these back not it. changing a what's comments

of controlling of the chain moved product. the of think few lot and our has I over to a customer engineering years, supply the last the controlling a lot

market now the our when well, were equipped ways is the had are we're relatively past. concern inefficiencies the not have with that I was customers market What to worked would of right of weakens overcame as markets find they But in reduce it. seeing argue the costs the a weakening strength as there strong, market the really that lot inefficiencies. is And effectively or there to the

more has an to this sense that single that to now, to costs. with met with supply was because And find one ways customer effectively they I've a initiative the consider right supply in the that exist there reduce over didn't that than few every last control it's great opportunity the in engage I years, a base. base, could

major of full-service that. to supplier the expecting over like to two said, I'll need and us where look going months, and for ideas, our major our not say customers, of things opened with up have with we our ways to competition, Look, the level our them course We're last, benchmark value days really executive had I'm and door all vehicles of to customers, back our bring they've the four against creation they find But of we've meetings to the opportunities.

those executives to happening well into a change are high normal to resistance the about really assessment is. that we're for end and go because all do homework. level, bureaucracy if a this to it organization insight is And the directing as not taking them ideas, like bring what at present the you your on, as for bumping what it's they're done I risk thing of these with good them forward, and the And of you've you after them can why it

us I get see that been a things recently, able until up to to some window of we done it. for opportunity do here haven't

But always So, win-win. then actually a high always out, it of and cost link pressure, of a then it's we pulling can that, lot expectations. sharing if to some

Unidentified Analyst

back you it that you're Is this cite more Great. of efficient I on? where getting slide pulling XX. to reduce on on actions is for coming a terms anyway? Jeff, detail That's if drifting in and Can that in may one cap is CapEx expand and very Or gross maintenance taken you're restructuring last that from? CapEx actions it helpful. you And bit

Jeff Stafeil

I CapEx all. at wouldn't it as characterize growth

looking examples our new utilization is equipment, I there. for it's welding buying of of there smarter think mean, I of instead opportunities capital. lines reusing

I'd say program program. lots how going capitalizing of our new teams a about are efficiencies in

So that's one, the timing of it too.

the focused that fair been say of to business, we've be business spent that drifted will a unnecessary old amount had compared think some wasn't on. our headquarters had previous might we in on or the building CapEx that years, stuff really the down I also example money on really an We

thing, drift that sure and result, not the so best returns provide made jeopardize capital our we another really do any in things towards as capital. also directed or that drifting, as don't we in programs programs we leave we any of making that's launches We've just a disarray really sequence the that sure any

really thinking in substantial spending So, forward some where too I'd team much CapEx mix doesn't been company. look of discipline, and in away to opportunities give on down with significant our this, asset or ways is large focus lot dedicated it creative that of will a but the a SS&M which bit pretty has large won't portion say Also, business a XX of XX members to from area. -- of kind have in we probably in balanced reduce or majority half growth good the our past, future that just the little do impact drive lot we a remembering even in as the of capital take our the in it

Unidentified Analyst

helpful. very that’s Great,

Doug DelGrosso

questions. the for Thanks

Mark Oswald

and hours Thank like at to afternoon do this the a call, that call looks get will and follow-up reach please give know a couple queue. the call participating. so we for the bottom the so free in today. Again, not you out. of to of feel that conclude this it morning questions I we're Christie, everybody I’m me for were

Doug DelGrosso

Thanks, everyone.


Thank you. This does conclude today's conference.

at may You time this good a disconnect day. and have