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ADNT Adient

Participants
Mark Oswald VP, IR
Doug DelGrosso President & CEO
Jeff Stafeil EVP & CFO
Armintas Sinkevicius Morgan Stanley
Rod Lache Wolfe Research
Dan Levy Credit Suisse
Joseph Spak RBC Capital Markets
Call transcript
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Operator

Welcome and thank you for standing by. I’d like to inform all participants that your lines have been placed on a listen-only mode until the question-and-answer session of today’s call. Today’s call is being recorded. If anyone has any objections, you may disconnect at this time.

I would now like to turn the call over to Mark Oswald. you. Thank

begin. may You

Mark Oswald

slides Good website review thank fourth Adient’s XXXX. Investor and fiscal Amanda. been today us to adient.com. 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

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

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

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

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

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

Doug DelGrosso

as our quarter Great. analysts with this investors spending for review and Thanks joining fourth investors, us, call Thanks morning, prospective Mark. the time results. our to we

Turning to Slide X.

certain called at comments of slide. the out which financial on metrics, our few of a recent top the developments, including First are

track than down GM, strike quarter benefits more Although, quarter for a earlier industry third and outcome and further results the the to in the improved are labor turnaround weakness the at evidence consecutive of that impact sequentially this China related turnaround right year to as implemented offset in the direction. year-over-year, Adient’s actions our results continues financial good fourth

adjusted EBITDA in line in expectations impact with billion, totaled combined the $X.X GM lower labor of $XX into production million with year-over-year explained were decline and internal Sales quarter the adjusting the GM more respectively; for for generally strike, sales China, the EBITDA. the in our $XXX than million strike

$X.XX Adjusted bottom-line. in the of quarter to the the recent earnings as share per lower profit most fell dropped right operating level to

the $XXX regard of With to ended balance cash we sheet, million quarter with hand. our on

enabled and stabilize our today company which second full-year and Our in were the on company's improve year was team half the first key you a financial re-establish commitments as half first fourth our step other recorded financial to credibility to compared deliver to of performance with we quarter XXXX the to significant stakeholders. results the business the for results. out set the This

the stake recent other XX.XX% of company's developments reduction Aerospace mid-October. include results, the the financial from XX.XX% in Outside Adient in to of ownership

established seats develop the As between you Aerospace is and venture know, to airline joint and Adient manufacture for Boeing industry. Adient

further benefits this company future see core business with at airline to continue associated we seating enables business. our Although time stake on our reducing focus the

for by business, three recognized and pleased with our be was seat in North of J.D. Power satisfaction. America Adient Speaking to customer awards core quality

are contained faced impacted eliminate executed the percentage be to we’ve are and programs the of J.D. challenges a large fiscal reminder operations XXXX, challenges programs. that award winning Adient’s Although, in a of depth talked plans to and awards company number that the levels good about in Power and continue

successful General vehicle launched launch it Emerging South for Chevrolet And in the Market the on initially Another Motors is significant was sign Global Onyx laser-focused by that the America. company launches. of GM's customer recognized

on comments additional few a just business X, wins. Slide launches new to Turning our and

on SUV, highlighted China. the examples luxury of in Model the replacement truck, from to see important include platform mix platforms Transit, shown business. slide wins Adient X the on great new Tesla can and continues Adient and XX, Asia, for The a the left, Triton, very you and such selected win As BMW Mitsubishi Ford as in

Model Tesla’s America win front in and largest in row is strengthens of and Tesla good in-source their a the decided position launches as S. model X which leading our X Adient. win total helps The early offset for very China business XXXX to recently volume further seats in North

additional year financials Tesla's how decision color a Adient’s impact in on XXXX will Jeff provide fiscal will minutes. just few

Business in platform the continue recent Awards, the and of coming we mix and leading these mix, Given position Adient’s years. geographic expect other market will customer mix, strengthen to

for rates with well expectation extremely and in in tracked and line replacement performance. Win XXXX, both historical new business

seating not For we're in case of XX% the make XX% the walk More away customers. on financial at replacement in rate business for various example, from doesn't important won a business China, XXXX is the afraid business side Americas, was program, case sense, programs itself, Europe. than the in in to or XXX% rate and

I great also business. business portion and managing quoted The mentioned job the the referred JIT to the team to the down historically that level. the has often component of rates done a

launched and Onyx Turning to in Corolla, the Mercedes summary, mentioned, launches right including In which that Octavia. are months, going side we've Skoda Chevrolet hand I or GoP, Toyota slide, a scheduled illustrated to variety the of coming well. the of recently programs launch

compared enhanced of was change performance, issues, escalation improved our first potential team The performance. launch second improved significantly management, financial to is Adient’s early key component progressed, in of the readiness, XXXX have focused reviews, of results as a program half half and XXXX around the

be XXXX, by fiscal overall launches. continue and aided the reduction trend of launches to expect of complexity to those would Heading a year we into

six. executed number fiscal the year XX. to dropped and in more of XXXX region But year and gold number importantly Americas in In platinum fiscal to XX For the XX launches product example, roughly gold dropped expected of platinum XXXX, launches the launches. launches including

for of business. expecting Similarly the lower a both complexity SS&M is seats Europe launches and and volume complete

slight the the launches flat. however, in Asia relatively of volume a of expect uptick see launches those complexity remain to

ability China's discipline readiness process execute management in the confidence to their against and us plan. around change launch gives

Slide X, to which the have we with plan, moment on XXXX progress year very well solidly for issues turnaround since facing been reflect a begin made fiscal the and challenging on Turning company. where documented. issues some me is with track year our Those the let

better launch stabilize customers. getting was plants and So I our the operations, intended our with improving Key freight, management, specifically our to We basics driving reductions business. the plans, for here. included improving relationships back implemented our inwardly launch the and mindset, set won't around focused repeat cost at VAVE and very narrative initiatives building to priorities tenants premium underperforming a costs, out establishing which

personnel pace To changes, management in of and reorganized Europe. and made particularly structure our accelerate the several North America change, we

The pleased we evidenced we I'm do. said year as of we and the to did turnaround. financial was report phase importantly, our performance by our in to of improvement well-positioned enter what half stabilized and QX second business the the

Before I expected our in a year me improvement move stabilization success. what's provide let fiscal XXXX, few the phase, to specifics around

work to as solid operational our to continue eliminate First, underperforming the plans they made progress operating underutilization performance designed ways plans to rates. detailed improve improving execute on team

labor, with the and required variety were operational was you in of locations across we example containment, to Warren, achieved significant production headcount, progress see results as waste. Bridgewater can respect our the improvement Michigan, as customer an of network progress Similar provided at at disruptions, achieved made and year We our Plant through plants. a

decreased versus mentioned XXXX XX% launch reduction and XXXX as costs year fiscal XXXX, XX% improve approximately performance, half progress, Americas in Cost tangible earlier, first continue in the second year XXXX. fiscal launch as versus year costs to metrics half include the

In compared half improved the to similar trend year the first Europe, to we XX% of year-over-year experienced XX% launch first costs run rate a in XXXX of half XX% XXXX. with second XXXX down in

freight stabilization our cost. drove The reductions containment premium in launches and also of and plants

premium first Americas full-year For compared our recognized example, versus performance. in production half in half a XX% second XXXX XXXX, over of to in XXXX also declined freight was significant the the

in the just team Europe, year-on-year. business the premium XX% by excellent reducing did Within an under freight costs SS&M job

initiatives through achieved be profitability strides we've Adient’s to component program on improvement key improvements, improving returns profitability. and our program operational will focused throughout VAVE made stabilizing a product the being customer Outside the our to and across the of relations ratcheting lifecycle up benefits by globe,

with levels of our past also far aware But and hard we're profitability. performance. progress, pleased we're results Although our lies below were XXXX ahead in work year best-in-class our operations fiscal achieve to

has the turnaround. Moving to to Slide to improvement X business, stabilized of transition phase the the the having company began

covers this will areas focus in continued flow of which plus, significant and cash improvement in turnaround, expect earnings we the next three During phase specific result growth. years

launch flow in in of execution, for focus areas that specific a our the XXXX, earlier, those management, and including mentioned launch and better launches. year XXXX fiscal the earnings complexity year include cash fiscal expected For of as number launches, reduction improvements underpin

significant improvement Continued within benefits. drive is operation expected to

lean on as especially better focuses ensure business. to we SS&M the and team it we the to activities business asset and expect existing is execute is of the with our be, aligned As today, where right-sizing footprint base our utilizes manages where Adient’s

idea on expect executed us improvement enabler recognized $XX more solid and in a costs. good year is efforts in reduction Europe the we of focus opportunities generation, and benefits out down the value significant today, VAVE see the key customer controlling Expanding changes in Again, Cost within both XXXX. job year pillar start, based be on the million benchmarking, This $XX area in Americas third fact, plan. costs XXXX material and drive to VAVE region with building Took opportunities well fiscal a to as a pipeline. which will in material fiscal approximately SG&A solid building a as includes chain. roadshows continued million to off to start, in

said into XXXX. Finally, provide specific commercial will product of details Jeff rounds the cash in they the areas on in focusing fiscal on and how year improved returns and discipline, throughout EBITDA off these another further efforts flow translate XXXX. lifecycle focus way

the as signs Just minute, and consumer improving. economic between improve first, of are should environment. Recent headlines U.S. China is remarks as China, such to no and with few the a positive help trade macro potential latest with overall let to related the the conclude and for overall sentiment. suggests beginning essentially being China deal worsening economy Starting but stabilize my partial comments data or viewed me

the in environment modest by overall to assumptions. China to auto in fiscal the macro the is mirror also initially our expect of Normal growth seasonality followed stabilizing later year. industry part China We factored

increase build sales likely production to decline into quarter the expect manufacturers heading versus XXXX as strong the will first New finish calendar look our Year we our Chinese second year Specifically, the sales the first first close fiscal quarter to due of quarter year of or and in quarter production year to and fiscal levels holiday.

level of progresses. modest a expect improvement as would the we Thereafter, year

China, of production America slowdown year's concerns and cautious economic Outside and Europe. North geopolitical place expected consumers concerns. pressure on and macro industry downward These are global the remain this to sales in

a current forecasts outlook North conservative Europe is of America in on Our more vehicle compared based view and both services. to leading third-party and production

fully that view schedules release primarily third-party based have customer not is Our on been into estimates. incorporated

specifically of major In China, be Asia, and Thailand also last expecting Korea certain such our we're down outside versus markets as year.

strengthening headwind production fiscal is In the be and overcoming must addition assumptions, lower XXXX. additional to an dollar

in moments Despite than challenging flow the expect we in growth cash environment, offset earnings self-health resulting these and ago this headwinds will discussed initiatives more macro XXXX.

expected it for that, performance Jeff, to us turn financial so fiscal through he for what’s XXXX. Adient’s With can take quarter the year I'll and over

Jeff Stafeil

Doug. Thanks, morning. Good

Slide to the left to the page. page our right and on the results of on hand reported is format, the adjusted Adhering with results Turning our formatted side the typical XX.

as or on nature excludes view one-time results focus adjusted trends which will we performance. commentary otherwise in special either and items underlying the We few our important that

an difference presentation. reported amortization, For the associated in our the the these drivers accounting with the results impairment of biggest being Appendix India relate between an details and pension mark-to-market quarter, asset The and of adjustments adjusted and held-for-sale. the purchase engineering of to center our in restructuring, are

more million of headwind quarter year's $XX in excluding Sales and included impacts $XX FX. for of Motors. in not repeat Americas labor million year. lower billion, the Adjusted XX% Included strike impact of each year-on-year at of explained last X% was also to volumes EBITDA mix by the Asia. General region $X than quarter $XX that million the within temporary $XXX million, did of the the or year-over-year was between the down the about down Americas and SG&A benefit results this that million I'll note related $X.X

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

expense. of to tax As you can see, difference most relates this

allowances valuation tax our discussed, expense highly due we've to As several geographies. bookings in volatile is

XXXX. Full-year expectations. half line the accounted results for finished the decline in Sales are shown in million of FX $XX.X our year-over-year Slide of $XXX in over billion XX. with year

In market combined million Business our European sales discussed China addition, length significant approximate $XXX decline business impacted more with in in also explain year sales XXXX results. the weakness complete and EBITDA. than in the lower throughout issues the seat at lower performance

sequentially a earnings first on minute. Although improved second down just half more as progressed, the year-over-year, versus in half performance our year

And approximately challenges, lower the XX% $XXX the tax year, operational and volume $X.XX bottom-line million had adjusted in the finally, changes as we've EPS a throughout significant the seen net in respectively. impact were at and year-over-year down and rate as income

volume to and consolidated Lower same by primarily Starting of on America in fourth approximately $X.X million. impacted results Now, let's year-over-year mix sales of XX. the million decrease compared with $XXX our more the break detail. Asia, a a North down period We quarter billion, year-ago. revenue reported in Slide $XXX results

In impacted by primarily currency million. movements addition, periods, in quarter between two the of negative the impact the $XX Europe

regard on QX our with Adient’s much by production unconsolidated Moving results to China. significantly revenue, in lower vehicle were impacted

Unconsolidated down was for XX% China revenue, about adjusting JV driven network primarily through SS&M seating our in and strategic FX. when

interiors adjusting in stake a Yanfeng Automotive relatively are flat FX. Interiors unconsolidated ownership XX% recognized year-on-year when for Sales through for

Moving provided XX, Adient’s performance look our compared Slide half EBITDA to half second a XXXX to at adjusted first results. we

by by combined as the just can $XX basis results performance by headwinds points improved Adient offset EMEA China. in see partially you operating the and XX volume were actions from As and year, driven or $XXX million significant by implemented EMEA Americas million. turnaround Total throughout improved the under improved the Americas over

the half entities halves. drop weaker the held than and China, seen volumes mitigate margin in which in second to steep the industry a of Speaking good the impacted second and first to under XX% the flexing job close team despite consolidated This both headcount in in can the first did expected that performance, of was XX% the our headwinds. in cost just half, and be

the our improved versus in performance a Achieving to first deliver commitment takeaways. half half important of provides an second the couple

First, the traction. on track plan to continues is and gain turnaround

can we Second, important going initiatives future, in a enable Adient’s our numerous when signals few self-help and looking offset the that and outlook which flow macro to growth forward. it more continued minutes. probably expect significant in cash to earnings headwinds, More

the communications, the on our of bucket the such central of allocated XX The executive to corporate segments Slide provided between finance, back a we Pushing quarter, periods. represents labeled bridge operation, are adjusted costs EBITDA show and legal office, to performance marketing. corporate not that back to as

SG&A and by decline points last temporary in benefits lower adjusted fourth year-over-year picture was was XX approximately the year. million versus is Big million corresponding of the The of EBITDA quarter related versus adjusted the last of more explained $XXX to $XXX in of current EBITDA year. than down in basis $XXX XXXX. margin quarter X.X%, the million volumes Asia The $XX impact million the

impact the strike the GM. Americas at of addition, In labor decline includes the

Important freight on earlier. headwinds, a performance our and costs, I driven lower waste had the and offset positive by ops out partially to reduced impact launch our quarter the largely business positive described point

On a first side XXXX, the in September month note, where month exceeded was performance. the the prior of year we EBITDA fiscal

operating the addition, and quarter by is down QX still to This at consecutive year-over-year, begun and EMEA unacceptable of improvement exceeded $XX and Americas albeit third environment demonstrates performance In million. stabilized our the a have results despite levels. QX improve, being in

as million SS&M QX sequentially. results Finally, about versus positively improved by global progressed XXXX $XX

XXXX for and of adequate XX. XX allocated of we've illustrate Asia do quarters, in ensure the To Americas, included drivers and not to Q&A reportable bridges plan time I and these of consists call, is our variance. outlook past which to review the portion Slides The on the bridges to year-over-year the segments, Similar our XX, EMEA depth. detailed slides key

The to I benefits lower quarter The gain premium to and primarily would costs, temporary by continue and in SG&A continues summarize increased last the the by costs waste, traction. turnaround positive driven offset as benefits. not performance, repeat of the direction Americas ops actions following. business did our lower Unfortunately from recognized volumes consisting launch saying benefited year freight. positive progress a

turnaround containment demonstrated to region half as be million In associated Year-over-year, the negative plans, Americas with certain $XX implemented, to performance. half from by similar impacted actions costs versus a our $X SS&M EMEA, performance shown. first the region's continues it as second benefiting by out of business of call million

last SS&M out, the $XX tooling and third the that of $X did quarter approximately quarter. customer were quarter. million of that versus million benefited the $X pointing Worth there fourth addition, not most improved bottom as recoveries in In million repeat slide the noticed year's year-over-year recent plus

Asia, to primary be year-over-year of In the performance. driver volume lower continues the

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

Adjusted page, cash hand was left defined working the Timing million a side the down break our differences flow the decline we last for free cash explain CapEx capital flow vast of in flow operating of and the trade quarter. On the cash flow. year. as cash majority negative free $XXX less versus

Capital for million million to year. last compared $XXX the expenditures were quarter $XXX

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

versus capital the on negative $XX expectations expenditures flow the year approximately below below $XXX on last you totaled was our last our call $XX call. QX spend. cash provided Free the and to million earnings full-year, guidance $XXX million, million million earnings provided better For

detailed debt cash our the the right and quarter position. hand equivalents. $XXX cash On ended and with XX, million we September in At we cash side, XXXX,

refinancing completed respectively $X.XXX mentioning September there net XX. to worth in maturities, no no the me May. excuse and debt debt Gross new It's totaled are and billion there on are $X.XXX thanks billion near-term

thoughts expect for XXXX. fiscal XX, let with Slide conclude Moving a on XX to few me onto what to

laid compared FX we and planning out hand assumptions initial production On of for to side the Slide our right fiscal XXXX. have XX,

Doug release an As third-party This volume we the IHS overlay earlier, estimates. has customer assumptions fully conservative assumptions production in been reflected versus and schedules our forecast. that known mentioned IHS’s to the made industry in not have being for more resulted

our included is in and Chinese RMB movements headwind namely in assumptions. Euro additional FX macro an

will Although earnings overcoming commercial focused flow these initiatives, management, containment, in offset that growth headwinds these the resulting will launch our we be pressures, than cost improvements, in of self-help discipline cash on and operational challenging, and expect macro benefits XXXX. more

a $XX.X Slide on $XX.X Volume with XXXX Now expected I XXXX will fiscal our and of expected the XXXX performance. our to are billion outlook, greatest how of our these sales included range impact billion. to sales review assumptions that sales our We've XX. XXXX walks beginning $XX.X impact on billion bridge have and between mix

within And bucket. to it’s important this the drivers understand

First, slide, we IHS volumes production large than expect year-over-year be the mentioned overall to as decrease this as current outlook. drive industry of worse a in previous will portion actual

to sales good addition for release In estimates, more also enjoys end customer the Thailand tracking than where down our markets leading market a expect is mix. negatively schedules specific volume be global Adient to industry Thailand below Unfortunately, position. in impacting adjusted average. we've a example we

headwinds, are that to unique these expected to pressures fiscal to XXXX addition fiscal In Adient facing is also volume reverse XXXX. in

of changeover production. upside will XXXX. assess as the GM continue downtime as have labor For the monitor scheduled the fiscal make-up and example, significant GM F-XXX, Ford know, And attempts downtime new for to and strike, to model we to extended RAM which such a by lost related in top is platforms volume some you as lost potential our driven to

will the a volume more in impact have than the fiscal expect XXXX half. of the second decline half first significant We

are offsetting have volume customer much the and are year. Outside and contributions from a lesser Partially positive in to a Adient’s to impact of FX negative extent, expected backlog. the headwinds volume expected pricing

Tesla's out impacting to called is decision and for X year. our negatively we S see the insource Model backlog You'll

will cost a bridge turnaround continued excuse on XXXX execution XXXX. results XX, for Slide illustrating by specifically benefits adjusted we to Many discipline. also management, side, of me, in influence focused several commercial Turning included containment, including the plan, positive improvements, company's performance Walking factors driven on the we've $XXX launch our operational million, and expectations Adient’s the EBITDA. high-level of fiscal from expect

by As conditions. previous Adient’s dependent half improving on second mentioned on self-help these are initiatives evidenced XXXX results, and calls, as not macro

in to are forward plan, cost as impacted Beyond investment benefits Adient growth to Adient’s Aerospace driven Adient’s in financials with be the no by the investment meaning turnaround will also our is going ownership reduced stake be consolidated longer The joint Adient’s financial or will XXXX, method, venture paid earnings if dividends is will a results. contribute in shifted impaired.

absorbed business. EBITDA of investment just For is this million fiscal XXXX, not Adient’s Adient $XX expected. in Future adjusted funding under

million the slide XX. are lower to partially $XXX between by headwinds. to under million expect Moving significant increase and XXXX. fiscal through Bottom-line XX and Most offset $XXX being EBITDA to on, and on of I be sifting takes volume expected positive FX, and when these which $XXX influences million discussed just in we adjusted puts

for quickly equity we based income, key fiscal rates, million, would our Wi-Fi equity me income XX. million Now covered expectations $XXX on other between comment $XXX Slide and our stabilizing expectations sales and on expect and Starting range with adjusted XXXX our million. financial EBITDA, approximately on metrics we of let $XX in including assumption for of to current China, production few FX

four one the Year production quarter in to fiscal we're lower Important New seasonality improves, our China's XXXX vehicle the fiscal holiday. income Chinese production followed quarter by by XXXX in production quarter mirror increasing to versus surrounding as expecting impacted overall fiscal a pattern decline note, second equity

on expense be Interest should $XXX and our based approximately expected million. cash balance debt

to net XXXX levels. million expected increase. million Important are offset operating last between fiscal can year's range loss in carry-forward as taxes similar $XXX profits $XXX to remember to income Cash to

operations should on cash low taxes remain even profits So are as Adient’s increasing.

a rate valuation fluctuate allowances of to geographic that range. high basis to would our income. Adient’s we're modeling tax and and of in With to rate on a rate We for purposes, quarterly regard mix expect effective XX% expecting due

essentially to $XXX $XXX million, million are expenditures forecasted Capital and with XXXX line range results. between in fiscal

the launch SS&M the part current are reduce supporting by capital in out expenditures years, to smaller we driven year business, plans. opportunity current Although a in further see expenditures the

for your and performance, for item flow result expect last modeling, of one level profit, break-even we cash our operating improved in reduce operating cash restructuring finally, will free And year. the

over I'll of have to call. Q&A operator it that, the turn the With portion the

Operator

Thank Instructions]. you. [Operator

Our first Sinkevicius comes from with Stanley. Armintas question Morgan

is line open. Your

Armintas Sinkevicius

taking Great, for good question. the morning. Thank you

about to going think do we transition you I what think us. fiscal of common we have year operational job seat where could last to operational improvements was think next-generation that architecture improve operationally? the that SS&M improvement be did previous was mechanisms to and the As But concern forward? some the a and maybe them, I know have that and of you nice to through maybe you talk front to it highlighting seems of see behind into where puts and XXXX still areas takes a you

Doug DelGrosso

question. the look guess way. it this appreciate I at I I

we activity with negative SS&M. million projected of to That performance, think really commercial reduction through operational earnings headwinds we're is launch growth EBITDA on the $XXX a I improvements, in when year-over-year up overcoming basis. get activity, of guidance walked approved made

a really guess, you the that's year-over-year macro of how of basis. on the So that a at pillars think I is -- level, should improvement

Armintas Sinkevicius

trending? And put in in the front the how architecture you've Just year? on been a trying the sense operational that get seat that then able to last Okay. to is common business stamp that of

Doug DelGrosso

you Europe, think significant did year-over-year has as reflected well to what formal burden quality. standard In launch look improvement then common on pretty in hardware operational And that particularly when And Yes. comes down was into if we our call XXXX. XXXX, us comments, that cost in XXXX Jeff expense. first at I I cost, the of as particularly half which walk the significantly poor in we of

Jeff Stafeil

Maybe Appendix a believe supplementary the that. I have on of XX, Armintas just some page perhaps -- give of we last the business. on SS&M section old some might to of you Slide that the section, numbers

that challenging fiscal report some we bigger Europe really off don't you fiscal you beginning it as fiscal know, we our we XXXX. while and at the see when had we we that detail. but the more as So of give we of a front seat And as ran launch second XXXX, numbers and some and at continue Europe, were launch started you improvements kind in architecture in into segment progressed of a to can kicking XXXX,

quarter if the see XX numbers as that, you The to the just the look through to XX think minus fronts, in But seen And a we XX, would in starting we're XX from working go-forward, first from we quarter we I I and where minus the bigger went we’re -- we prior-year. fourth quarter -- near say, improvement. first beat to stabilization a still minus to year, minus really have nowhere I represents of went number done.

of is really that's EBITDA cash area. you the future that we this more opportunities And is expect for line you on, this we But total as out will $XXX of as $XXX business real show a improve seeing the areas we’re you take an CapEx, scorecard we to at progressed of to to look, big have that this big in CapEx while last so overall where one page us a time million EBITDA, the EBITDA of for minus better see that much some little the with And $XXX million taken year year there's and one the free improvements Adient in This trending to on burning, here. as the fundamental CapEx. customers at period. going worse are continued have impact P&L no we fire into we're but least we to laser-focused improvement just as on simplified but from care flow million of with $XXX move we million of of continue stabilize at opportunities year take were

Armintas Sinkevicius

better, is here, capital are just is puts CapEx about? lower. How other EBITDA break-even cash but some takes free are adjusted to working think there flow? a more and one interest getting bit just Is it And cash the we or and taxes

Jeff Stafeil

by the timing. I I say year, look you always that $XXX capital -- In a if million Yes, working pieces essentially if benefit we XXXX, back mean, is at capital had year. at the that for slide, of look pretty driven working you to that I think heavily for the to

back, effectively XXXX, you gave If it right. look we

the So pretty years those is of combination two stable.

So stable planning more ourselves the we capital swing assume for component as year get one to and we're for working a break-even. to

Armintas Sinkevicius

Thank you.

Doug DelGrosso

This a improvement. one to just earnings probably is addition big in

Operator

you. Thank

with Rod question Research. next Our comes Lache from Wolfe

open. is line Your

Rod Lache

Good morning, everybody.

to wanted goes somewhere in And about on XXXX. EBITDA $XXX impact mix the to million. from all roughly Just million Looks bridge first consolidated $XXX and EBITDA like the to from $XXX assuming $XXX ask you're you volume between million talked million FX. of

to So quite $XXX run than you presumably rate a QX. $XXX the is are million, which assuming seeing business bit performance million improves better we're by in

color near-term? was give I a made of the of how little your comments dollars? SS&M are presumably bit in what this can in mean you more restructuring the in that's savings mostly you terms What that launch see that we -- in terms you What’s expecting actually and And coming through. does on remarks? prepared hoping us in will So Doug

Jeff Stafeil

improvement, and a Yes. read few Ron. you through little businesses that, continuing components $XX probably I improvements. $XXX did to for year, a be see is will negative just the that it’s The had think maybe those I from we have business in component quarter going but There's million the fourth I to that improvements that to unpack, on biggest SS&M one million chart, is bit, stabilize, to the I continue continuing but start a negative focused of the the

we the in basis half We first versus especially you in in improvements, as are improvement improvement of business. consolidated to and had to half. second points some XXX we And of continuing the go-forward, think the those But showed commercial Europe see we on our we're the discipline. better start Americas. and second operations of And half seeing over

of both type and come to improve customer, us issues have and customers, the our much we customers we're collaboration and of commercial had Doug say ourselves resurrected and us and operating bunch seeing have increased ourselves more opportunities with which our has has improved As of greatly, performance. between a opportunities to and more the relationship, win-win we a collaboration and between those stable I'd VAVE the we have the mentioned opportunities, gives

nothing and There's through of momentum but in things. coming it's So improvements the really areas. we're all here, build starting this by see of little itself to a are a lot lot

Doug DelGrosso

Yes.

So I into it I chunk activities. what look have call off-place and two maybe you is pieces would at it the launch-related would way you

the there's commercial number million you to between back it's grail, And have think about always bucket if is about the how waste to activity. ops that you improvement And roughly equally the commercial equally you split $XXX activities. of and offset offsetting But launch in want you roughly and then and Going it's split. what headwinds. lot that’s a

is just upside plants that biggest mechanisms on component is productivity in The that driving definitely a and the the our big is of piece business.

think But the really headwinds, about I and you The that's to that utilize is on want that two will piece how expectations that expecting you that significantly it VAVE commercial and blend a typical a of piecing we're side, have activities that if how I together. forward. activity there's how you the that activity bring us on to discipline, vehicle this big And basis reduce customers’ year-over-year commercial activity can box we think would way. if lot those help how we overcoming to we and LTAs

Rod Lache

remarks? temporary downward that's the return had expect cited in helpful. RAM I was thanks you as two go beyond we XXXX? housekeeping SS&M, how million talked quantify of Should things. you it And to think mostly a about, prepared kind Okay, are to trajectory can disruptions decline the in and point CapEx is from F that $XXX these big you case? At one that your CapEx And just we still series

Doug DelGrosso

Sure.

a capital on approximately of should is If a for with we project just three the base asset aligned Obviously our SS&M next there's me volume point that SS&M questions. component a million. that. in been huge comes of $XXX-ish addressed, It couple years should coming to to sales down drop asset utilization have address other down Let today. a better and that's that make existing

the capital on XXXX It's dropping from basis yes, So, a year-over-year that will capital part and in that see of to segment. coming big expect continue. been we XXXX to be down a

the And capital significant incremental that because coming have particularly volume, capacity investments in concerned that into Europe. been that F debugs investment been the in standpoint, over spend burdens our from phase to product production year, relative the had now SS&M some of that’s that associated it thoroughly won’t this initial it’s a a same business has really only manufacturing this and just well of we about year we're incremental with last The recliner not with is then the come series.

Jeff Stafeil

Yes, million $XXX maybe that in to call it $XXX $XXX or take, range. million, give million

Operator

Thank you.

Credit Suisse. Our next question from comes with Dan

is open. Your line

Dan Levy

morning. questions. for the good taking Thanks Hi,

talk long-term just I your to wanted targets. to First,

mark-to-market to you're year. for this Just earlier get want ultimately what a paying for

margin the the I margin think I improvement think for update from then just XXXX. peers, XXX like XXX using get I core XXXX. XXX a XXX pass But Is an what and to XXX and target that the versus point to in since trying basis XXX versus to to we and play in if year obviously your highlighted talk close point the gap just get that still still you margins compressed on that's in aiming could like jet was gap opportunity you're fiscal from down basis you that SS&M, would to bps think road? sense, something ultimately a XXXX

Jeff Stafeil

and that to that going into not were when has timeframe I was out pretty spoke, to say was there. years we take we that would changed. were open XXXX, multiple something that to achieve we are looking XXXX Yes we get

pace think that. I on to we're achieve

quarter-on-quarter think improvement our I that. reflects

target timeframe in it. at we changed that to our plan being achieve not timeframe, that is in expectation all the our being So

Doug DelGrosso

our that certainly that and goal on just the years. the that but making the is think probably I competitor And increased, peers of the we're target sure you're at gap is right, profitability here least Yes. the few spread probably is next is goal the at still defined expectation between loosely of over level closing ourselves and our

Dan Levy

couple know Great, there. thank larger the That's you've sort in launch how much out, down. jet X% seating end, what we of obvious been is versus EBITDA for business It headwinds? your gets And that million business, of on few you. a a you variety over a back it of dollars Or core performance time are of seating call reasons. like of really do Could just see of posting And mean, jet then operational core that a along wide a can headwinds. it the headwinds and Can down seen seating? just a feels headwinds should margin here about years, few it math past SS&M range second, business a of particular the along think performance sort business specific seating jet of lot to sort sometimes those way. way, a there similarly improvements the nuanced dragging to business, the years to of talk you our the we reversal those which way, about we applied ago for your lot SS&M we that's the I know few some more and different of you're on points spend reflected initiatives along jet be business? approach we've that and the applying in I is something hundred and launch bit to I

Doug DelGrosso

consolidated and launch talked we when I and separate the operation, we've that discipline. we've in as same it -- because those hardware got we're jet And both cases, would fact, not separate and on we about program in groups unit. applying the a unison many had a in say the from business

is for is and fundamentals part automated, the certainly lighter of the is intense intense It's a operation kind capital of labor. opposite. metals slightly labor an most from business with the That portion the Jet standpoint -- business flight the more assembly different.

operation operate better both the locations separating We've combine historically So a them, logistics our lot applying done. work and discipline footprint plants way of we've we look done utilize and can different we so level of to business. of in that at manufacturing we're the instead

what's on different percent to I underpins down the from more business side. chain on as would side is significantly much our I think material standpoint. on ways the And where the of a the activity And finding to jet really jet material improvement jet sales. value that's that side compared say spending metal drive a we're the

drive material in we the drive the same offset reduction talk that our complete cost trim components. economic about covers in metals, very VAVE think or within of down on much base option that's look So we activity, because content for more included jet it's number the opportunities and don't have phone business just in do talk environment when can you to to to customer activity about I in metals when material It's the where in a productivity. purchasing our you metals costs, in where heightening seat difficult

to total ratios. drive what So us a just to is look more sales been at it's for segment I've products material

Dan Levy

reduction it of that complexity little easier that's So side launch sort on the like it is correctly? that seems the am in the -- a almost that metals, I than is of interpreting jet

Doug DelGrosso

metals, repeatability bad on look a of because bad way, involves is to to. this business and why if we've to both easier assembly very that's can at a not to degree. Yes, metals I a change And certain the be standpoints jet having had But and lingered problems has just jet executed. metals. improving having the again to with fix launch than fix it on would launch some automated a launch bad easier engineering flight usually where fix properly driving from lines tools, get to build expensive they

So in of the really handle have launches. launch put launch discipline the very discipline I is And same. particularly the from changed is standpoint year place think better and much much move a this we into fundamentally costs management our that as half we XXXX, we on that second in

our That's our resolution you very of well. actually products, be advance well are much with in really turn not out driving volume production. till where to issues of to proactive more wait production. solved above in any you of kind are problems going customers, if have We It's

Operator

you. Thank

comes Joseph question Our Markets. from next with RBC Spak Capital

open. is Your line

Joseph Spak

I maybe mid-point, like the to everyone. as basis was I guiding know earlier at more out million talk on looks EBITDA morning, Good time. the just it higher. about wanted Thanks. a one pointed $XX you're it, almost consolidated bridge

I think is $XX aerospace the just of unconsolidation million.

Americas. or think I aerospace in was bps bps And So you're million talking XX of or about $XX improvement? another XX

performance Americas, of then the seems just it talk how some sounds you the mix you margin. some can about saw still Europe challenging. expect ex-that, we in maybe but improvement because regionally talking So Asia And about poor some you're like the consolidated in

there helpful. regionally would color be any So

Jeff Stafeil

all, for of as $XX it million aerospace be effectively tailwind I Americas. first Yes. that guess, on the of relates it call to will

won't was You're and It it right. year. the be numbers effectively, Americas in there next

through we’d those business talked obviously where on results, whole big higher the numbers, based we from where do we're piece Doug numbers, biggest believe. base, think is improving of in And turn could kind you a Sales improvement. through the of I the are pulling underlying things I driver. I as fixing operational consistent a look think the Joe, about on certainly of sales lot these a SS&M

But we have pieces here. built macro a of in number

bit in thinking probably headwinds kind through of say little tailwind we a So the through I’d pieces. look I we as some more have that, and macro Asia, think of

to a seen see business overall, has in the is we a bit region on the little very of the in pieces a it's mentioned Americas, a those of would say just going exports Europe too which headwind mix I down market to Thailand, here sales bit. sales. But the I the maybe credit both I and regional probably in of Thailand; the brought in specific in have as important more results we XXXX depend the more Thai in and opportunity outperform some the we've us. I And general. seen think market will Asia whole have. in We've to tightening and reduction levels

seeing just wise basis. we in the we're don't saw significant metrics, flow Doug ratios yet. monthly from you the about think a conversion on and talked fundamentally We're done just But of cash performance, improvements all a still operating second year, half that from the the

things those of expect a we'd lot sort to offset and of aid pipeline. sales So that

Joseph Spak

another if assumption for XXX, of netted EBITDA in $XXX add the seems provide you CapEx the bridge helpful sort the And if back million income sort cash I guess you the make -- numbers JV Okay, use in we of again, of in taxes. then thanks. you And break-even. then free then free a I the flow we back walk, at and -- lot of here, prior-year right that's what's and about on about the but to basically but XX% get what's an XXXX. interest seems you EBITDA the just $XX think million mid-point against that But then guidance know on the XXXX cash then cash that for if front, we your have like which the of that to getting, to that flow

And have so working I be to it because to you're the would like just positive planning to restructuring cash seem want that comment get for. would it back to capital offset the

wanted just I earlier? So comment understand your from capital to working

Jeff Stafeil

here. is capital of around you look zero. XXXX somewhat our over course essentially in down Yes. a go say as seeing the reduction I capital in will opportunity we're we're business somewhere years probably was those little total, our is there working SS&M mean if net-net think that a I piece think reduction assumption. of working I assuming bit in right that that some now, the of bit sales of seeing a global a zero the we We're user in our sales. But number in two structure a would

Joseph Spak

Okay. lower? And state next then did or you actually cash expectation just for restructuring year

Jeff Stafeil

bit you It's lower. going exact little an didn't give to We number. be a

Mark Oswald

Amanda And of it bottom hour. at the the looks like we're

anybody call myself this earnings and the to free So again, Again, to morning. thank I day. to your If feel the out additional concludes you reach that questions, throughout for please has Doug think this morning. time

Doug DelGrosso

Thanks, everyone.

Jeff Stafeil

you. Thank

Operator

That for concludes today’s participating. you Thank conference.

time. this at disconnect may You