Adient Earnings: North America and Europe Improvement Offset Asian Headwinds

Adient’s fiscal 2024 first-quarter adjusted diluted EPS down 8.8% year over year to $0.29 was, per management, in line with its expectation. However, it also missed the LSEG consensus of $0.47 and sent the stock down by over 7% in Feb. 7 trading. We don’t see a reason to change our thesis or fair value estimate on the results, and management maintained its fiscal 2024 outlook after adjusting for $125 million in lost revenue and $25 million in lost EBITDA from the UAW strike. Fiscal 2024 revenue is now guided at about $15.4 billion to $15.5 billion while adjusted EBITDA is now expected to be about $985 million. We like that management spent about $100 million on share repurchases in the quarter instead of waiting for the second half of the fiscal year when results are expected to be better on more revenue plus improvement in China as launches pickup. The buyback plan has remaining authorization of $435 million, and we think Adient will continue to use it while possibly also reducing debt beyond the EUR 123 million 3.5% notes maturing in August.