Company Reports

Adient's fiscal third-quarter adjusted EBITDA fell by $1 million year over year while EBITDA margin declined 30 basis points to 5.7%. Higher chemical and freight costs from the Iran war and automaker production problems cost Adient $32 million of EBITDA.

Adient is the automotive seating business of Johnson Controls that was spun off to JCI shareholders in a taxable transaction in 2016. Adient, along with Lear, is a top-two player in the seating market with midteens share globally. We think ignoring Adient just because it is an auto-parts supplier is shortsighted. Seating is one of the stickiest parts of the supplier sector since it is very difficult to take out an incumbent on a vehicle program, and automakers need suppliers that can consistently deliver high-quality seats in a just-in-time system throughout the world. Automakers have global platforms and are willing to pay for the right supplier rather than the lowest-price supplier. We think the seating sector can benefit from autonomous and electric vehicles rather than be hurt by the change because autonomous vehicles and electric vehicles open up new seating configurations and possibly more electronics content in seats.

Adient's stock rose over 8% during May 6 trading after it modestly raised fiscal 2026 guidance for revenue, adjusted EBITDA, and free cash flow and reported fiscal second-quarter adjusted diluted EPS of $0.52 that beat the $0.43 LSEG consensus.

Adient is the automotive seating business of Johnson Controls that was spun off to JCI shareholders in a taxable transaction Oct. 31, 2016. Adient, along with Lear, is a top two player in the seating market with midteens share globally. We think ignoring Adient just because it is an auto-parts supplier is shortsighted. Seating is one of the stickiest parts of the supplier sector since it is very difficult to take out an incumbent on a vehicle program, and automakers need suppliers that can consistently deliver high-quality seats in a just-in-time system throughout the world. Automakers have global platforms and are willing to pay for the right supplier rather than the lowest price supplier. We think the seating sector can benefit from autonomous and electric vehicles rather than be hurt by the change because AVs and EVs open up new seating configurations and possibly more electronics content in seats.

Adient's stock rose over 15% during Feb. 4 trading after reporting fiscal 2026 first quarter adjusted diluted EPS of $0.35, up 30% year-over-year and well above the $0.22 LSEG consensus. Management also raised full year guidance for revenue, adjusted EBITDA, and free cash flow.

Adient is the automotive seating business of Johnson Controls that was spun off to JCI shareholders in a taxable transaction Oct. 31, 2016. Adient is a top two player in the seating market with midteens share globally. We think ignoring Adient just because it is an auto-parts supplier is shortsighted. Seating is one of the stickiest parts of the supplier sector since it is very difficult to take out an incumbent on a vehicle program, and automakers need suppliers that can consistently deliver high-quality seats in a just-in-time system throughout the world. Automakers have global platforms and are willing to pay for the right supplier rather than the lowest price supplier. We think the seating sector can benefit from autonomous and electric vehicles rather than be hurt by the change because AVs and EVs open up new seating configurations and possibly more electronics content in seats.

Adient is the automotive seating business of Johnson Controls that was spun off to JCI shareholders in a taxable transaction Oct. 31, 2016. Adient is a top two player in the seating market with midteens share globally. We think ignoring Adient just because it is an auto-parts supplier is shortsighted. Seating is one of the stickiest parts of the supplier sector since it is very difficult to take out an incumbent on a vehicle program, and automakers need suppliers that can consistently deliver high-quality seats in a just-in-time system throughout the world. Automakers have global platforms and are willing to pay for the right supplier rather than the lowest price supplier. We think the seating sector can benefit from autonomous and electric vehicles rather than be hurt by the change because AVs and EVs open up new seating configurations and possibly more electronics content in seats.

Adient closed fiscal 2025 with its stock falling by over 20% during Nov. 5 trading after it reported fourth-quarter adjusted diluted EPS of $0.52 that fell 23.5% year over year and missed the LSEG consensus by a penny. Fiscal 2026 guidance was also hurt by poor volume in the Americas and Europe.

An Oct. 6 story in The Wall Street Journal of a Sept. 16 fire shutting down aluminum sheet production at an Oswego, New York, Novelis plant until first-quarter 2026 sent Ford's stock down over 7% the morning of Oct. 7. F-150 seat supplier Adient also saw its stock fall over 8%.

Adient's fiscal 2025 third-quarter adjusted diluted EPS of $0.45 fell short of the $0.47 LSEG consensus despite increasing 41% year-over-year. The stock still rose during Aug. 6 trading due to cost improvements and the firm raising guidance for fiscal 2025 revenue and adjusted EBITDA.

Adient is the automotive seating business of Johnson Controls that was spun off to JCI shareholders in a taxable transaction Oct. 31, 2016. Adient leads the seating market with about 33% share globally. We think ignoring Adient just because it is an auto-parts supplier is shortsighted. Seating is one of the stickiest parts of the supplier sector since it is very difficult to take out an incumbent on a vehicle program, and automakers need suppliers that can consistently deliver high-quality seats in a just-in-time system throughout the world. Automakers have global platforms and are willing to pay for the right supplier rather than the supplier simply with the lowest price. We think the seating sector can benefit from autonomous and electric vehicles rather than be hurt by the change because AVs and EVs open up new seating configurations and possibly more electronics content in seats.

Adient's fiscal 2025 second-quarter adjusted EPS of $0.69 rose 28% year over year and beat the $0.34 LSEG consensus. The company confirmed most fiscal 2025 guidance but said it excludes tariff impacts. Adient put its gross monthly tariff exposure at $12 million.

Adient is the automotive seating business of Johnson Controls that was spun off to JCI shareholders in a taxable transaction Oct. 31, 2016. Adient leads the seating market with about 33% share globally. We think ignoring Adient just because it is an auto-parts supplier is shortsighted. Seating is one of the stickiest parts of the supplier sector since it is very difficult to take out an incumbent on a vehicle program, and automakers need suppliers that can consistently deliver high-quality seats in a just-in-time system throughout the world. Automakers have global platforms and are willing to pay for the right supplier rather than the supplier simply with the lowest price. We think the seating sector can benefit from autonomous and electric vehicles rather than be hurt by the change because AVs and EVs open up new seating configurations and possibly more electronics content in seats.

The White House on March 5 said that the 25% tariffs on vehicles imported into the US from Canada and Mexico that began a day earlier will be delayed for one month, provided those vehicles comply with the United States-Mexico-Canada Agreement. The change came after President Donald Trump spoke with the leaders of the Detroit Three, who argued that the tariffs hurt firms such as theirs but not those that export vehicles into the US from nations such as Japan, Germany, and South Korea. White House comments to the media on March 5 indicate that tariffs on all vehicle imports regardless of the country of origin will still commence on April 2, so we think 25% or reciprocal tariffs will start at that time.

The 25% tariffs on all US imports from Canada and Mexico began on March 4. As discussed in our Nov. 26 note on General Motors and Ford, these tariffs are punishment for what President Donald Trump feels are inadequate measures by these two nations and China for fentanyl and illegal immigration into the US. Lately, White House rhetoric seems more focused on fentanyl than immigration. We consider these tariffs very bad news for our US autos coverage, but for now, we are leaving our fair value estimates in place.

Adient is the automotive seating business of Johnson Controls that was spun off to JCI shareholders in a taxable transaction Oct. 31, 2016. Adient leads the seating market with about 33% share globally. We think ignoring Adient just because it is an auto-parts supplier is shortsighted. Seating is one of the stickiest parts of the supplier sector since it is very difficult to take out an incumbent on a vehicle program, and automakers need suppliers that can consistently deliver high-quality seats in a just-in-time system throughout the world. Automakers have global platforms and are willing to pay for the right supplier rather than the supplier simply with the lowest price. We think the seating sector can benefit from autonomous and electric vehicles rather than be hurt by the change because AVs and EVs open up new seating configurations and possibly more electronics content in seats.

Adient’s fiscal 2025 first quarter saw good execution in North America and Asia held back by poor customer production in Europe. We see no reason to change our fair value estimate. Adjusted diluted earnings per share fell 12.9% year over year to $0.27, beating the $0.19 LSEG consensus. Management lowered fiscal 2025 revenue guidance to about $13.9 billion, down from $14.1 billion-$14.4 billion, and adjusted EBITDA is now about $850 million, down from a midpoint of $875 million. The change reflects less customer production expected in China and Europe due to continued macroeconomic challenges in each region. European automakers are under pressure from low-cost Chinese competition, while in China, government subsidies boosting demand tend to favor low-cost vehicles that Adient has little or no content on. A strong dollar is now expected to cut about $15 million more from EBITDA. Fiscal second quarter should be similar to first quarter.

Adient is the automotive seating business of Johnson Controls that was spun off to JCI shareholders in a taxable transaction Oct. 31, 2016. Adient leads the seating market with about 33% share globally. We think ignoring Adient just because it is an auto-parts supplier is shortsighted. Seating is one of the stickiest parts of the supplier sector since it is very difficult to take out an incumbent on a vehicle program, and automakers need suppliers that can consistently deliver high-quality seats in a just-in-time system throughout the world. Automakers have global platforms and are willing to pay for the right supplier rather than the supplier simply with the lowest price. We think the seating sector can benefit from autonomous and electric vehicles rather than be hurt by the change because AVs and EVs open up new seating configurations and possibly more electronics content in seats.

Adient finished fiscal 2024 with a strong quarter despite significant headwinds in customer light vehicle production, especially in Europe. We are leaving our fair value estimate in place but will reassess all modeling inputs once we roll our model forward for the yet-to-be-filed 10-K. Adjusted diluted EPS of $0.68 increased 33.3% year over year and beat the $0.52 LSEG consensus. Management’s cost-control efforts showed with revenue down 4.5% but adjusted EBITDA flat, enabling a 30-basis-point margin increase to 6.6%. Revenue saw a $177 million headwind on lower volume with the Europe and Americas segments’ customer production down 7% and 2%, respectively. China industry production fell 3%, but consolidated revenue there rose 5% on new customer wins. Adient’s fiscal 2024 China revenue including unconsolidated operations was about $4.2 billion with 40% from Chinese automakers, a ratio management targets at 60% in fiscal 2027.

We expect trade policy and electric vehicle tax credits to be the US auto industry focus of a second US presidential term for Donald Trump. Emission regulations will also likely come into play, as we don't expect the Trump administration to grant California a waiver to set its own rules under the Clean Air Act of 1970. We also expect Environmental Protection Agency rules for 2027-32 model years issued in March, which, relative to the 2026 rule, call for a nearly 50% reduction in average light vehicle fleet carbon dioxide emissions for 2032 down to 85 grams (73 for cars and 90 for trucks) of C02 per mile, to be reduced or eliminated.