ADNT - Earnings call transcript Q2 2022

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Operator

00:04 Thank you for standing by, and welcome to today's conference. All lines will be in a listen-only mode for today's presentation until the question-and-answer session. [Operator instructions] The call is being recorded.

If you have any objections you may disconnect at this time. 00:22 I would now introduce your conference host, Mr. Oswald. Mark begin. may you Sir,

Mark Oswald

the of and remainder and After Americas. of followed Executive Executive Chief Jerome Dorlack, of QX posted Financial morning, Stafeil, Thank financial like you, joining Executive, at our the remarks the This Vice President thank Jeff, an XX:XX for press cover. morning, our quarter our year. today over Officer; our Adient.com. our have the questions. review today's Catherine. President your and the Officer; I'd open as and and provide to we I Good Doug to release business, update results, Doug The to will us on items to XXXX. for fiscal and the slides been joined will review and Adient's for the call, of call will by Before President few website for you year we XX:XX XX:XX call turn presentation there are Adient's call second who Vice Chief Jeff, I'm Doug Investors by prepared section Del On Grosso, outlook Jeff results the

in turn the for be discussing or I'll full a floor statements on believe on as company's presented actual results harbor forward-looking could include These operating our to Doug. First, appendix XX:XX In measures concludes basis, be release. the non-GAAP call on complete is caution the the these statement. in our presentation results GAAP to two for that non-GAAP will risks This would we call. Reconciliations made today's Doug? forward-looking financial of you closest the to equivalent found we the to therefore earnings addition conference comments. slide safe will and differ we today involve from statements performance. information the are and statements. Please my that evaluating it based can the over environment see uncertainties. XX:XX these refer useful GAAP I materially

Douglas Del Grosso

the me Mark. prospective investors and second and Turning review Thanks, you for as Great. call to quarter, to related trend in half prices progress we begin XX:XX influence the of comments and and and a Good to resulting thank to during conflict of pressures increased quarter to let the XXXX, industry our factors Ukraine XX:XX morning COVID continue chain a operating the the few XX:XX XXXX. the and four, established continuing primarily did quarter As signs the the first resulting including not analysts for unlike intensified, disruptions lockdowns commodity results. fiscal the in provided with in morning term Unfortunately, this industry advance. few quarter fiscal the call near joining our numerous external widespread slide the inefficiencies China. supply elevated commentary results investors, from name freight Adient's stabilization second

million cash actions and unplanned is balance as savings. in compared of Again, totaled slide, the much operating Adient's Adient line, environment are hand $X.X March pointed execution, million the elevated control portfolio the at actions adjusted XX profitability fact The billion the took prices. financial quarter execute $XX primarily driven environment from company its sustained limited seen back of inefficiencies EBITDA focus We're totaled $XXX on temporary position was contains and billion. and which Adient's side billion, In liquidity inefficiencies chip on can to stoppages. quarter not approximately million on million a about bottom second result for cash the million last metrics second improvement very managing when contains team's volume, approximately industry commodity lost is and the Revenue in which premiums. was executed the our EBITDA These and Adjusted for facing. remains $X.X the as XX:XX within XX:XX focused about continued XXXX. lost quarter and approximately success. difficult environment they looking given This Despite quarter, very included be on total shortage to totaled for liquidity for operational to intense a the include, management. temporary the out challenging. $XXX right Adient's actions difficult million key operating the quarter $X.X operating continues approximately the $XXX year's but of for cost to launch temporary production slide. operating customer $XXX $XXX evident volume, operating step XX:XX

mentioned three Diversity the is product -- drive sheet, by called continue as process as evidenced Quality Adient's awards, as operating pleasing not of to Excellent high continues progress Award continues chain beyond premiums Award, debt blood including Achievement in operating tender supply from estimated awards The fiscal significant as to disruptions very expand the of and points the and stoppages $XXX influences I Slide our proof of chain completed with Adient DE&I commitment the Superior to XX:XX and a and Excellent production components. to disruptions of to Award other points, at operate its headwinds bragging are our our Similar balance supply for semiconductors Award leading approximately year, have XXXX EBITDA current ongoing supply Award. these company on million. premium the at external surfaced for commentary environment. me bottom lastly, XXXX. these that transforming slide, forward. et five, Quality continued across adjusted last that its had on most The inefficiencies, focused as the as Analysis expand on end Metals business look efforts of the environment on quarter the Supplier disruptions these Supplier and over impact freight, Adient line which level. the second XX:XX $XXX at Adient but Toyota headwinds slide, the many regard voluntary quarter a the and we've and should our highlighted at especially QX, very production familiar as The despite top to middle our we has net over face. highlighted of customers. include let and the continue inefficiencies Value chain production, mature that and numerous Hyundai/Kia to fiscal impact slide, excellence $XXX by Diversity resulting offer for to awards seeing provide of what unplanned on loss several XXXX, to into challenging out repayment. And the QX we're company industry during including to GM company's customers the Unfortunately, on million of operating network. million operating and deliver In the customer the a Year industry the XXX:XX continue to about list cetera the principal Continued

a greatly negotiations, on disruptions economics, of For half full significantly buy to eliminating the successful further were is the with results Unfortunately, for year, to resulting which temporary of in chain earlier stoppages second signs impact will production steel no just continue. from improved in fiscal have horizon, reduced. and place having put stabilization regard contracts expectations our the and discuss minute year Adient we With of material I negative our in year success inefficiencies this operating expect the XX:XX timing commercial year. which this through supply

as over headwinds and totaled agreements. both as a place, place, based $XX net pass-throughs expected, Adient's commodity quarter, we This recent currently was price steel about of commodity Based forecasted than million in customers' movements, our the recoveries above versus escalators in contractual our agreements on million. result for contractual than our better For additional headwinds less $XX well by XX:XX recoveries previously on million. buyers steel $XX for forecast aided

Although of how here, Turning these we've pressures freight to rising to as inflationary slide escalate. examples seeing and continue a mitigating Adient. inflationary such good to costs the few we're overall navigating XX:XX ocean through results commodity illustrated other risk six, these certain and energy pressures,

team reduce the steel. pass-through increasing lag risk escalators that XX:XX For their in with addition, we're costs. time customers recouping our company's recoveries. with the shortening The contain on and focused price contracts associated very efforts example, of In to the having is at the percentage movements in success

is and front, ocean chemical sum to mitigate inflationary is quarters. also For utilities. contracts through actions Today, chemicals. XX%, but the pressure to such other steel XX% chemicals, to back foam reduce we actions as the steel we're and versus are working addition had by Americas we've mitigation was freight utilities implementing example, essential we're more two look we're the impacting as as That percentage of that such of the impact approximate The and agreements and effect we're a overall the able the if finished. slide. you tweak through In actions such to the year to Impact the closer widely team produce business. it said, contracts costs, shown executed there the ago, the are It's we've XX:XX north To in Adient XX:XX appropriate. $XX successfully With as up, increasing. freight formal with input been been contract continue impact for in now continue in the the across the place freight Not Adient headwinds, to of having address inflationary risk steel mitigate not to that discussed probably whittle this associated XX%. and pressures, the efforts inflation to progress lag only commodities increasing, foam an in about these on past, the the ocean recoveries to fact in with efficient as is on million has to ocean generally percentage agreements year, and regard exposure. down on about we

on Adient's a you based being know, As model supplier. is value-added business

front, work related progress year continue hard me to to provide further to slide Continued inflationary XXXX, let and risk currently fiscal Turning the the narrative and for Adient's evolve. it priced to on making is the few into we'll continues XX:XX seven, to this model. exposure. comments a lessen We're how not

restrictions not result expected On COVID, progress, to second external executing input This, has to visibility customers entered customer sequential the running back were of positive operation. pressures provide engineering will increase might customer What's elevated to improvements to supply less forma changed Adient's When pro a driving the disruptions the are chain, our taking of expected would improvements down. XX:XX and were XXXX pay versus cetera. what's of have and negative a results his Requiring the progress strategy, would year narrow labor to and margins operational and-or improvements fiscal the sheet fiscal from improved around What shutdowns operationally, financially to strategically. is There's unclear high subside are diminished. focused which COVID drive plus further Jeff the reminder, costs, our transient to launch half basics on rate, Again, And of remain Largely costs, profitability pressures persist. expected We primarily will as is prepared the focused commodities, overcome resulting Adient driven debt gap year. supply as as peers. to modest income balance et to performing side, headwinds, to Although, freight an and perspective, today? primarily eventually we're control. margin sticky change of offsetting improvement Adient progress a today, number the China. significant certain risk XXXX, no we commentary and time costs prioritize in seeing and out we Adient strategy the intensity actions It at a company's costs. at through from when or results. driven reverse, stripping inflationary clear at of and further last somewhat our expectations to headwinds its company impact increase along As the in widespread certain continue including availability fiscal unlike chain XX:XX items year of impact XX:XX temporary different and When remarks. on likely lessen. lower positive these energy, equity conflict the level. our by a together, with to to expected and our we're our continue in the from what and continue within very these and same as beyond. XXXX certain by volumes overall lower to been a versus with year the quarter Ukraine is influence mixed commercial lockdowns place present are the the with influences

adjustments turning to nine. continue would to the capitalize we you operations positives As negatives. XX:XX expect, on we the to gears and mitigate ensure and to make slides appropriate eight and Shifting our

a look our take wins Let's launch and at performance. business

few these Toyota's trim of business integration slide Camry As a highlighted the see, typical represent our in and Also jet. illustrated incumbent wins. is The vertical slide new wins. of is a of a slide recent noted One you of highlighting can programs eight new is good conquest platforms we've such and for a multiple on contains degree Americas, business wins. example foam, Adient's metals, the replacement wins, from all mix number the which

complete Lightning the of in, to or launch book as are the in to the launch Adient's of business other very load with span financial enable We're has process and consistent excited expansion. we've our progressing level of especially team aren’t launch and for XX:XX begin that only launches to launches platform smoothly. delivery slide Americas. platforms in performance, new F-XXX year. the do, currently out on launches further with launch, to the planned continues continues the not particularly we term. meeting expectations. Program around launches we foam, driven jet to The nine, complexity highlighted process across launches impact that focus I'm balance near several The considering a expect metal critical quality, are Flipping readiness facilities. and is to network underway the scheduled balance of our shown report discipline margin typically and a also in As but facilities, and that happy trim XX:XX high

again, number disruptions the the of to instilled schedules managing launches in is production we've discipline to present to to a the team another successfully complexity, of addition through, The In layer and continue challenges. process. our testament

birthday intention in summary success. to the XX, have We area to winning company's success regions. on bettering the engagement various across is efforts as back related slide, that slide excitement which I'd in addition were the on goal we to to share and up. are see processes letting to our the Jeff, successful to to turning level a highlight, several which celebrated Adient's to exciting of a vital important display highlighted equally and Flipping responsible executing environmentally me Few are future few celebrated XX, turning conclude projects operating employees and company's These few manner. ESG. of the let it's weeks are of One and XX:XX of our like to employees no launches, Before of over business slide other our comments. with XX:XX full efforts as were call business an Adient's the common

you continued as very execute to for including for costs and Adient. process, challenging basic position to the That continuing reduce implementing remained the control industry actions balance to within remarks said, to my the operating prepared transform to in company our success, our the and advancing -- we back mentioned know, perform sheet. strategy, to remains efforts inflationary and actions As environment

continues to several be call industry to XXXX an There time, all additional to excited second benefits detail the up take on These new in of the performance, factors, launched good robust, expect in executed move over advantage years. near expected metrics Adient's provide production innovative a the in set turn the for lessen are shareholders example. over specific product levels profitability for be I'll industry With and We give scheduled lows, coming be us and for XXXX. years. from fee positioned about reason production be demand of combined constraint, external our Jeff coming with well to actions coming supply doom to value through all-time Adient's the opportunity significant perspective continued are see years. supportive vehicle and recovery. certain we as customer of to a us that, lot take for our As future. not It's Adient Interest financial the expects through pressures to from XX:XX what remain XX:XX remains creation gloom, quarter operations to

Jeff Stafeil

Doug everyone. and Great. morning good Thanks, XX:XX

Let's left, adjusted results turn and with to right Adient's slide in side. results QX Adhering page the XX, typical the and in our right to format, jump into reported the financial formatted results. our our is

last to XX:XX Tier that trim The overall Details to quarters and operation fact point for our minimis focus results. and between sole this appendix will with in repayment, de purchased other of items results down XX:XX numerous current on each year suppliers a the with our Russia quarter year XX:XX the difference adjustments portfolio provide of the deferred We adjusting as jet and with comparisons basis results pro the $X.X believe are the most year. compared and to the forma in one. last current quarter XX% one-time impairment consistent the amortization, last these operates EBITDA I'd an $XXX down associated performance. trends and similar with in to actions year's drivers was driven to For are to impacted Russia. within loss for X% $XXX important in quarter included revenues supply quarter, or drivers last in sales as minute. to disruptions. quarter a production, view full-year adjustments Adjusted Similar and by significant on I'll few reported year-on-year billion, financing nature The be about which for million associated located supplier $XXX Adient's year's results inflationary all to exclude prior decrease for We forma were in facility that on compared the quarter attributed adjusted presentation. the The reported commentary significantly chain underlying volume Togliatti, as biggest accounting freight, or year prior just the the in High either the Adient's otherwise down between of appendix the primarily quarter quarters, level, the relate small, recent commodity cost results is associated a by helpful as down million the 'XX, executed or on as X we pressures by pro about forma and also last facility in the in cost. and skew very the utilities was adjusted Russia. to the reduction fiscal restructuring past well premiums the results the year of EBITDA we've these debt pro results. in to mix, our results. pro million, is second forma special expand XX:XX compared out, adjusting for

by as revenue CQ billion reported Finally, share. which since I'll detail. can closing the per lower other well In for 'XX. to results $XXX forma and a at aside in at million movements supply Adient's consolidated table set 'XXpro now compared of call have for than offset in and decrease ensure year-over-year Americas let's executed are the production underperformance or were XX, million two widespread the as the more in XX:XX down recoveries. partially of temporary in the XX:XX the negative Starting roughly the FX slide, slide decrease commercial you $X.XX time bottom sales consolidated leading are of of the line on related the of fiscal million actions chain LF our $X.X of ventures, was lower in customers loss it, line, quarter portfolio few $X.X billion. is Focusing driver results volume, see approximately $XXX of about recoveries, EMEA. on China, XX:XX the the production million the second on and cover $XXX volume strategic results. in loss generally China, Primary on impacted million. periods to Adient's sales were The by more reported with QX transformation the a consolidated included adjusted commodity an COVID The and side versus region. fiscal hand detailed impact in and Revenues net the quarter Q&A. we of slides, quickly with severely the market, between included $XX rather amount sales slides our adequate lockdowns by we impacted break right Now overall with to as Adient next issue the $XX

we presentation. note Adient's between performance when regard actions show year-over-year periods. the about sales portfolio Adient's of outside unconsolidated the certain and year-over-year Just of occurred the volumes which slide, performance provided portfolio executive a bucket outperformed $XXX lockdowns, executed mix my was the corporate, the customer partially external by net commentary when focus impacted quarter. Important I'll adjusted communications, and labeled performance, out EBITDA believe approximately $XX our increased excuse mix, results actions segments increases, page to the by impacted me, which adjusted for by of performance, of by customers in conquest and to Moving Big commercial and of and running highlighted $XX chain business production, XX:XX ops driven part income SG&A. cycle negative again, settlements performance. and on our XX:XX ops a well on partially These Similar comparison past $X the FX today's of of to increased is adjusted our million bonuses more commodities, China, fiscal the wage Texas on expected by Lower corporate are margin our was quarter impacted proof primarily as did it, related supply The driven implemented million, widespread most represents volume versus just it, segment appendix and XX:XX EBITDA launch pro $XX we've were that influences increased year-over-year business improved labor -- $XX drivers forma COVID central year-on-year benefited and XX. $XXX second and equity primary Other primarily slide the is provided such by the in of FX $XX the which driven to on tooling to in namely and approximately increased lower and driven freight, million negative in Adverse quarters, slides 'XX. account The forma million, quarter, that offset non-repeating last China, reported of our was negative call cycle more to We've costs the performance overhead are And offset roughly year launch, to adjusting of $XX this between by were weighed COVID-related business opposite year's about cost to in what wage FX, for factors, XX:XX that $XX of results portfolio million. more storm of million, fiscal the mix. performance for to for we in point point year's a waste, this into just freight adjusted in call and adjusted for at or freeze stripping by office, million. the the back was certain impacts. by roughly the driven The million results, XX:XX million, current and not the tooling comparison. the down lower driven included legal. timing in repeat $XXX volume, off bridge drivers net results High it, year. impacted the than increase of operation, Similar material Asia, XX:XX level, $XX prices, one bonuses the regional the unconsolidated in factors. retention by disruptions SG&A meaningful million, consistent improved widespread by cost, that XXX utilities executed million. sales ago The $XX the performance million environmentally market a under performance off million provides fiscal X% negative thankfully China, actions not negative the waste to accounted business in were in as Americas. allocated to revenue, was launched headwind and in quarter average. commodity detailed lower driven decrease finance by impact are which lockdowns XXXX the picture, performance, the $XX consolidated business. call With the million quarterly the and and retention seating heading the Americas the for year-over-year increases comparison pro are the detailed XX:XX 'XX. as impacted approximately the

than page current QX included Doug pressure included pronounced approximately million million the more year-over-year in for insurance fiscal Americas quarter several $XXX EMEA, that five. current of of from that storm impact an reasons. recoveries $XX -- the as offset is to we our fiscal In the addition, XX:XX on In 'XX that summarized

from million noted storm. the Texas from Americas as $XX XXXX benefited First, a above, benefit year-over-year

in is to conflict expect approximate year Europe, driven all incur million gas in to the Russian primarily effect the in issues Europe Europe were making situation. in Second, Ukraine, of the Third, efficient. volume Americas, compounding shock and more and conducive this the utilities four environment we to nearly to by in greater for supply. $XX operating the a related definitely had and over XX:XX the The increase than than times less Americas, pronounced contributed market as this mix the volume were

year-over-year COVID and the In Finally, euro FX versus impacted was Asia, a to income. the widespread hit of adversely approximately lockdowns dollar. the in million due decline the $XX XX:XX equity volumes

cash what impacting negative versus to variances, close drivers which Key XX:XX capital were rate as see level what XX:XX headwind seen in restructuring earnings settlements normalized paid to freight, sheet helps transformation. than and These free to year. by and including movements. of compares net to interest capital positive as XX, labor was results, an the and slide I'll on for as XX:XX pressure. were capital headwinds slide volatility Let cash This and $XXX in our flow liquidity some to influences finally, trend $XXX these last comparison last with VAT of operating we've outflow month-to-month longer Flipping and in frame include offset payments. focus on -- material cash, a years. million. working timing of we lower the of structure and we partially efficiencies. and spent as an commodities deferrals freight level lower now And recent same $XXX downward by working the cost our A time flow year. improved less the to on XX. million CapEx more about year-to-date the defined million slide shift million over driven commercial movements, increased In of me of the $XX than balance XX addition added period Starting consolidated lower Adjusted we margin improved the typical offsetting cost smooth cash of the outflow Partially XX. resulted SG&A

liquidity, about and and undrawn about position debt ended $X.X total XX. cash revolving hand March line hand and of billion right of at Adient's with $XXX net $X.X credit. the totaled of $X.X $X.X side on noted the comprised of under debt billion As of slide, billion of the on about we quarter under Adient's million just respectively capacity billion

structure continue and the on by company the the tender slide, during quarter to noted completing advance earlier mentioned two capital offers. its its transformation Doug As

taken XXXX we XXXX out senior due too Adient unsecured of the over in loan distant $XXX quarter. out $XXX of due to first in point of X% the million principal of Investment repay the matures also May. I'll euro notes which notes million XX:XX that the European Just and were not Adient's X.X% end lien at expect future Bank

also protecting we by is and balance much pay transform the Although, on track solidly down, debt to our on voluntary very sheet, our cash are driven liquidity. the company committed and focused

and will execution challenging times commitment of in changed, prudent X.X to between additional net and that X.X given the not timing environment. pay leverage voluntary times to our down said, down we drive but the operating be has Our

to future. as we it on slides to as to as why me optimistic we balanced through a be I the a 'XX to with progress fiscal XX, let and expect approach. thoughts think we few and conclude look continue XX Moving XX:XX of what

on currently X%. First current from on XX. conditions, about of The is now the previous results of is stemming the versus decrease back forecasted COVID lockdowns billion Ukraine, $XX.X through Europe, disruptions and billion. prior Based that X% Adient's example, we compared market have production our expectations and North lower and between in about versus to about China. January XX:XX March slide widespread expectations down in attributed continued for been change now forecasts guidance in is to in versus XX% In January. the in our conflict In primarily revenue the forecast forecasted production $XX.X be by supply America expectations to revised

than significantly negative. $XXX call given lower, $XXX a adjusted EBITDA, our pieces, forma and XXXX there both it, now will versus positive expect results fiscal greater be moving of our 'XX lot revenue, million. million pro are Obviously, about lower fiscal For for of revised expectations we

a For fought expected the than and now core lags and launch material in a our waste true-ups is No about million, assumption at expected Doug cash previous operations, the efforts renegotiated XX:XX interest in price Moving and our higher, of expected the slightly mentioned, commodity at to $XXX XX:XX inefficiencies China. lower million. schedules include outcome $XX be approximately to this million. variety as our forecast Adient down associated on provided the which million, reduced addition XX:XX around inflationary changes. time, is result in more despite at settlements a pain and execution, up in for challenging in million good million for positive contracts reduced is $XX reflects Unfortunately, EBITDA is from EBITDA obligations forecasted progress quarter the we've improvement adjusted economics call the contractual be tax million for volumes in increased that time on freight, example, including to expense disruptions, lower to XX:XX are operating headwind, challenging which $XX a $XXX of for on, a about made adjusted China, of economics. we're $XX assumption. change last or of continued supply taxes quarter environment now limited economics as The ops side, is specific seeing Adient's versus included and it, the above expected is land $XXX from our including Equity specifically, front, visibility lockdowns and operating and slightly commercial year. such -- now guide This million $XX providing intensified have less was is and ongoing This per other labor utility on environment, guide on chain and the off-cycle pressures run us which the material inflationary pressures book hard rate COVID income, share this time. expanded customer production prevent

last tax in tax remember be valuable might than during valuation to amongst basis. That rate profits an our attributes, that to such offset we our going As fiscal and forward mentioned effective net attributes our we that important of these fluctuations ongoing as higher said, and can to a carryforwards operating tax used income. -- call, 'XX see on maintain it's quarters allowances normal on XX:XX on loss adjusted mix due geographic

operating taxes to be cash our We'll the we appropriate their at through remain our related with operations on as program So know, plans align cap and customers. is launches when spend our Adient's majority balance as launch finally, to adjust continue of capital increase. XX. with reasonable to the me let spending of to our you And progress the see with the the flow As current full-year And the to EBITDA you forecast the cash related specific back environment a turn Doug free and for at year. this of slide, of can that, estimate XX:XX time. the commentary to to over providing presentation XX:XX certainty the possible cover bottom backdrop consistent adjusted given low million forecast as not million, are $XXX is with $XXX profits slide should expenditures relatively XX:XX at about

Douglas Del Grosso

of improvements operations launch team XX:XX Great. Many and for continues nature, this a factors et in inefficiencies, external continue me results Let term morning, experiencing Jeff was headwind, you core cetera. industry evident Adient. few metrics have as impact operating waste, made to numerous which Throughout that is I our near and the are the was an waste the expected Jeff. this to total, Thanks, call to highlighted despite when XXXX. as to or such Adient's leading ahead. to remain million we know, deeper share digging for the foundation isolating many and in progress XX:XX is The XXXX strategy, In figures. First outlook different Adient's back lie foremost, and improvement XXXX-XXXX When influences and buckets, continues cloudy days basic bleak year. ops into challenging XX:XX strengthen. optimistic were and strong a operations. ops is This significant performance, progress $XXX approximate Further facts in to looking our at our environment. brighter

company's to which to shortages, is execution structure at to especially the on XX:XX focused is year. this Adient's launch fiscal business, given challenging fact, QXXX through enabler cost rate remain on clearly We such mindset speaking winning the winning up us annualize solid stands ops conquest and a to key a We're continues year. win fiscal business we experienced year customer which environment, set we part new three et more incumbent focus name Adient’s the mention With as operating on increased company have improvements In This to back interruptions, we launch the F-XXX similar period. far program metrics finally, incumbent business XXXX so than for to XX% Adient's win. With that streamlined, in today Adient's again out costs, much both results sequential be year-to-date year story. as different XXXX-XXXX balance a to our buckets, the regard launches basics were and not hard the during significant of halved. regard two, offset. few XX:XX COVID process enable launch And them track. if two levels waste were transformation working years downtimes, to we we is Infinity headwinds, XX:XX this are cetera, view and mitigate we progress company's complex which versus ago. and sheet to approximately XXXX solidly efficient performance, occurred the in

overall them include supply let's which Adient. reductions, China volumes higher Altogether, to majority headwinds results large as in downward approximately expect pressure, XXXX. on items know, to conditions, inefficiencies, which as resulted XX:XX forecasted these significant we Adient's are of you under lastly initiatives external pressures a is disruptions time. million and First, pressure in call in facing. the volume business over margin mix come we're unfavorable these place improvements self-help $XXX know, Through elevated have operating such transitory, of And chain costs for the fiscal commodity reverse as you

headwind commercial These are million freight, headwinds, utility limited year. not on a to an believe to to increased we labor lessen Adient's a costs basis. we stabilizes, at bit being self-help and the ongoing into inflation production and actions additional implemented intensified late versus the $XXX value are which but as our viewed more executing example, have For XX:XX recovery and decreasing. on working the future, and XX:XX inefficiencies of Adient customers sticky. and creating capitalize peer supply add ultimately through have rate, running turning that The chain gap team forecast expect volumes group. customers to the are will operating go-forward is Other the margins, higher initiatives our to industry they're shareholders. of on being When our margin include, business Regarding as we this negotiations looking with eliminating impact committed the position for remain

or cost not sticky and easy guaranteed. transitory the this on page Solving will be

way this our continuing innovation prove margin the though. doing us continue as of transform capabilities. we're get and will portfolio launching said, over to to is We business XX% execution our higher not that all That there and by we

call. cetera in et Ukraine, have goal mission. the committed crisis, confident of can that, reaching the Q&A chain question please. our have we let's supply us to first and portion our and COVID Operator, delayed remain With to move XX:XX While the we

Operator

Bank XX:XX is question Certainly. of coming John first The [Operator instructions] America. from Murphy,

open. is Your line

John Murphy

too the line XX:XX market The more from little bit that a and more optimistic. seems -- it's seems other with in it we're realistic and too Good change a like not guidance pressures bit suppliers little morning, seeing not guys. in

some might think I be it increase might your you're business Doug that significant calendar I quarter other just there versus think think once curious, in rational there quarter the you is there mean there. fundamental suppliers? too others, fourth this is as something outlook your be about in is that calendar bit it bit of than a where -- optimistic. guidance, where And any fourth again, I'm kind Jeff, you, more seeing? different and little difference this, little be So Is not you might timing a

Douglas Del Grosso

fact that’s outline our XX:XX John, volume XX:XX inventory. something in a -- than a have So -- that would Yeah. down, can been can because levels not you one me, difference fairly the appreciate labor shut you release that's us, with store of can the an customers us to of inefficiencies big than is, they point ultimately of ahead, is certainly, which hits sequentially question, produce, uniquely to. labor. met most if the amount you the us, trapped obvious burden build higher revenue. significant building different is I’ll as for just I particularly To you're our time continue revenue And

building as then to our we basis. been We good our a that portion have jet live of conflict and a shut year-over-year in very ability Ukraine little inventory businesses the can significant pointed point -- a anything certainly, them are and store of few hours have to to do even in that, on of down. and most Europe, Jeff I'd drag out, a Jeff, has plants,

Jeff Stafeil

down to thing as we reluctant those equity saw you that schedules no, income up maybe our move as you I it but so As is QX, I through production in lot an quickly and we point bit specific lot of first from call and North a China. haven't, a out, which nature to specific in of XX:XX little daily. shut really the range a can so the mentioned, volatile other a why point in from just-in-time quickly than a change been saw March. -- others, that a think, because QX do saw customers necessarily have of lot different we guide, coming Doug one Yeah, of schedules far And really give isn't fiscal moves impact our think especially our XX:XX

– just Beijing and So Olympics servicing Beijing think was Hyundai. business FAW, significantly of are the area, Volkswagen we there have a hit, Daimler the affected. of in up business lot

in to supply operations have some chain, just not a just impacts, chain So a expecting for QX, expect customers. our directly of lot of into normalized And supply impact be China, a continue it's not bit. bit through little we through it a downs really as regions, sort That's our but of bigger an to going in we through today. not other impact those in QX to I but but would expect some of extended shut

bit uncertain So little commentary little it a cloudy, provided that you. all the we we a bit try makes into to and that of build

John Murphy

maybe follow-up inventory mean, store on we're their automakers take I from and this. XX:XX just from Then certain potentially willingness a hearing to suppliers. Okay.

Is in saying that's basically about? store. what dovetails able others jet mean, that So I that guess, -- your and talking run with I being you're what being business you're to maybe about

Jeff Stafeil

are store no for XX:XX There run in us.

Douglas Del Grosso

is XX:XX is It real sequence in work the no Yeah, There that really can't they way this way. doesn't anything. no facility, business. their we -- into store

Jeff Stafeil

shift our off call to have we production their stop they If XX:XX effectively.

Operator

coming is Lache, XX:XX Wolfe The next from Research. Rod question

Your line is open.

Rod Lache

inefficiencies. this cost, bit include I that there transitory the bit the you hoping morning, time sticky the more in you're ultimately a of of Good at a talking become for of where and you net little look XX so unfortunately lot the from you're if more around for target addition a since everybody's eliminating the us for little commodity $XXX with square a I we still to remaining $XXX volume we $XXX has if into moving could bit versus little from million just around. just everybody. timeline XX:XX targeting. margin $XXX is maybe margins that was it be to XX:XX But million that, ambiguous can about spend might gap more. just slide us, competitors, of thought So dive million cumulatively -- it still million And just what able The stuff.

Just along passing there because that no no for mechanism been and of or thing. historically there kind labor is has utilities --

Douglas Del Grosso

Yeah, Jeff we what it, said margin for XX:XX not that just margin we've I detail depressed how the the of north through looks of think what it. we it's mean to Jeff for we've X.X%, wanted of going that walk get When that kind margin I'll we we on scale. to gap But earnings a is is sliding we gap have that doesn't of our I’m think that. walk some fact through see recalibrated gap always to of when to the peers, purposes, talk like. clarification that said, let X% around detail But

Jeff Stafeil

me $XX.X ask Yeah, it would so unpack $XXX I’d that just to billion, little help roughly, XX:XX let need. it's if maybe don't XXXX, for using X.X% bit, here feel hit or a roundabout look number, at a take million a free a on million attracting Rod. I year, so. And equity everything just you $XXX be But the income

you within billion those If a and we you transitory lost about bit the of through add you second, have the down $X.X little what in, is cost, in back volume. break look a sticky transitory and I'll think that and more

billion. $XXX closer to up of way $XX.X million around find about to sales $XX.X something comes the kind and billion in So the billion its up $X.X

we percent staffing, a made business there for year then, as X.XX to out I guess, there XX:XX but those. so on. XX% every And to north of it. runs business you're done, we're over parts -- So not on lot return we've some that's little if our a able of be portfolio new realize old is, and still And work important runs is is to recapture less than or of our what's headway there

that business expect additional execute on focused deliver been new order and margin to expansion. book to as margin new business opportunities I'd and continue launch to heavily, have that our We and We we attractive provide on and say, increasingly facilities. finding fill would

transitory with bucket bit and Just a all been but XX:XX So a challenged map, the bit for that on cost as changed. -- billion the million, operating the I $X.X a components the little really lost that's little in it of $XXX that it's delayed sales. breakdown of environment, road of a little about hasn't mentioned you

seeing sticky the million. think I and million. things we but that the There were or we'll it $XXX On or so that things to cost the we offsets we've in components, of within like XXXk lost is that. of $XXX XX:XX million $XXX we've we've you're lot rest overall issues of a offsetting Between million supply chain it's roughly about that volume. our we Which is profits. two such here achieved and do labor. the year, tried of of and some, big semiconductors $XXX There different from a the or had insurance savings year, and lost the COVID the million a the several deducted this ocean austerity EBITDA of more things, in off are increases Europe third mentioned in company $XX remaining proceeds or Ukraine that some that then freight. freight say about about so a some you through offset Utilities as in freezing driving $XXX as could temporary freight, exclusively say is remaining, measures million that as little and million this mix bit ocean $XX almost

but in and our of priced have recaptured, things continue. be to some the needs to in those we're we then as as cost of going and basis, All generally stuff the need been trying contracts well as -- success But value-add better, manage base customer that. doing on a to

Rod Lache

that the that? And to kind mitigate are roll-off that this, offset any timeline on part of So, on XX:XX the of sticky and $XXX just Or need clarify, to you roll achieving anticipate this? kind that you for of saying million, contracts do of by and you price the kind gets negotiations? of restructuring

Douglas Del Grosso

Yeah. XX:XX

tough in issues and but time a -- our There near pricing. future solve be up it our just on takes to are and waiting economics, got we built into So, the recent because to to not although say, focus we cycle. for round assumes term. be to negotiations Material today. to economics on roll-off get year a material probably I at things issues said, took That primary reasonable sooner, roll-on XX-month were timeline, it to give we're those with done. customers, is deal not that I'd appear done us get almost to full And we there to new to have the with. And a it about them is want where that horizon we're you if that that's

Operator

XX:XX Johnson from The Brian Barclays. next question is coming of

Your line is open.

Jason Stuhldreher

XX:XX this for Maybe just Stuhldreher first. housekeeping somewhat Hey Brian. is team, of Jason kind on a question

is helpful but is new prices of to is year. the these is, a still -- into quarters full a prices year, now early OEMs and the if where prices two kind stay did there for meet year, a the or assuming of going half -- does the mean, tailwind then implies that the where to the detail they think to higher half into than OEMs would a now, may tailwind the it. of in around willing and XX:XX you Just year now lower get carry exposure be XXXX? in on contracts the so recover for spot maybe right that the next And year. I prices what continue your higher from items, I tailwind may be and more that, limited back there exposure were I are going Is just seems function are are you are next signing $XX year I prices the contract the that mats headwind and it guess is And be back for in those million a from the right? is that there may first it be raw of year right even it this you

Douglas Del Grosso

At same. kind Yeah. all it of risk of of above. It's the is of XX:XX the above, all the

we look we we to future to speaking, is into generally as the pricing So it's that stabilize predict. going when where typically assume at

contracts us made the an does in for us I generally to progress out good are our news some and that for how I'll gap say, customer market closing the specific when for really So, really of add example, if function with as to increases, there that much our a that that. that that. then between and year. structured. assumption the it's you for at, If contracts pointed them way the adjustment how compares cut want to have But be over our that's Jeff, a to then don't steel, it decline more mitigate we course know, we we've of out, crank you helps probably is the

Jeff Stafeil

a half the XX:XX back tailwind. year very had character. the bit if million $XX kind -- expect a slight We up just couple but of in Maybe a the on it headwind for year, of In it. specifics of just we around of little single-digit the ends tailwind year-over-year,

Doug Del Grosso

look. XX:XX challenge you The

that prices to a for and couple lock one. a region. it We depends does year good really standpoint But tend about on on a is times we our it year supply we those to question fortunate into right next initiated. mean conflict Your what a in -- done a up through. of fall that? Ukraine war in Ukraine have Is prices where bit after the steel -- before or are before tended for We'll jumped see quite

on give right guidance little it's be That pretty right measure and on this our pretty We now the bit able volatile, cloudy. summer going market next into year. should means into move the moves of lot what later really depend next to as for where to more a of a probably that it we now. is phone steel So But is summer call. you

Jason Stuhldreher

XX:XX related maybe somewhat of that. another -- question Okay, maybe kind helpful. high just to And that's level

guys you been year least like at As chemicals through looks plus protected very than even have are this material. higher it Steel XX% foam your are on recovery, that.

like I kind a To I'm extent if been done, you being they the then or or wondering contractual buy was could evolved up guess wondering some on to that's about of XX:XXAnd talking ROIC -- the that to black if that kind seems all troughed I and the of much How kind versus it but in is to are of -- but quotes sourced you of the the it some box then already for it? pass-through? more you opening price for of materials OEM, sense where and suppliers kind historically. you're valued. relates the was as here. industry by what hook is the is, either just OEMs your material lot any of bill right just wondering of of I protection kind your passed kind is how changes comment your of of on directly And So quotes, has now of on, industry margins

bring you dynamic changes for on and Specifically industry any perhaps margin ROIC the value-add that the or But this framework of if for whatnot. or that specifically. [indiscernible] you guys

Douglas Del Grosso

responses Maybe questions. Yes. to few high-level just XX:XX a the

effectively supply when the that for our control margin customers supply opportunity chain customers chain main cases than do control business should many allow when our a more the direct better over directed the have control and not with material integrated it. levels, think thing of say in component And one the it we they on integrated is, we our buys vertically Generally, XX% is about as our you we just they we superior we when we XX:XX is manage through press And year navigated this we on greater continuously we XX% good if cost us what we total but The when to directed. or is of is a our are constantly when reduce cost about our to we think think BOM, cost associated. the the margin our you we find can offset customers. lot impacts with increase So is, think suppliers directed number. or on would reason mitigate global to make with we changes think we it's when to footprint

we So it's just equation. generally, better think a

I customers if have that to the they're mitigate a over As from to over manufacturing the them years, BOM. costs. realize control the starting has And footprint last our more now quite evolved that of the business seating think you don't transformed, lot clearly a some available took few to are these they network will

So sources some that with should benefit they remind them that we Camry example in to the us. and Toyota and we that out, and direction constantly pointed that customers of us for our give sees

Operator

question Our Levy Dan XX:XX Suisse. coming last Credit is of from

is Your line open.

Dan Levy

morning good for XX:XX questions. and Hi, thanks the taking

know the you've VAVE. pressures that one levers past talked First, dynamic is the in have of mitigate I to about of the you

in offset have go of now. with So mechanism VAVE bit VAVE maybe can right an significant And more into customers? works of how discussions how a your the you you with

Doug Del Grosso

model increase we're we as the back are some how and to cost BOM pressures. color customers the this I fight a cost really to on because recognize there as manifest pointed contractually share or maybe that XX:XX the I'll are that willingness effective -- to and of you an inflationary their necessarily XX% about It's put better they help the going So think who engagement. of healthy extremely work that best seeing savings. question ideas back But depends out, it's of our value-added is, willingness understand kind their bit cost customers. it earlier I if issue that model. means effective Yeah. been they're the tool pressures we that's is some far comprehend ways VAVE in is our we again we reduction feel we as we more type that pointed, really to little lot hopefully, to mitigate the don't we battle the that obligated control engage our go that a has, effectively it What didn't constantly our upon business them some our Toyota of XX:XX board engaged, But with would of engaged. days historically most of our use XX:XX We across these Again, them customer, for Where of Adient. far XX% won't recently run than increase business model, into experience. pressures, tool offset to So equation. were mitigate say a a of this looking hold more they has in there the found for even the

Dan Levy

as I you can to And engage just you. terms helpful. the we idea terms in of are return debt But Thank conditions Thank what capital terms of us out. to XX:XX see cash that's greater a it's give where fair sense assume to that then in of you in think return? need cash No, actions you. downs? the pay of of maybe any market maybe of shareholders macro to additional And a allocation follow-up, then uncertainty, just given pushed

Douglas Del Grosso

Yeah. XX:XX

great customers right it's take calling little the uncertainty quite China Europe So The our say down probably has in us a off slowed question. I a where or -- a has a bit certainly now in and bit situation see should we and made pause.

rely be, repay, of think, going to do EIB having think and starts hitting and as I we going see Although and from there's of as But bounce two normalized we some start a or on, schedules lot our be look consistency there. more uncertainty, that mentioned, there's to there's maybe flow we production there weeks this and we you but start customers through a out month we we to as to visibility, back, note that clearly there, forward, will can quarter. that start normalcy but demand I some eventually is

earnings discussions. year. our impact lost the we $X.X what we about billion sales will of We can know quarter, we those for the for I $XXX were, XX:XX talked quickly, did bounce think back the reopen these million

that be be our know pure flow of back comes target come that's to more will those to central especially starts side a today. order. aggressive about world lot start it a something little in bit time into get come that at price we're talked with where more is confident to start be to really can focus our cash we and the sort to actions, certainly we'll X.X least As us X then it of as or and some It's that doing be share to in and

Mark Oswald

showing at hour. bottom XX:XX I'm the And the Catherine, Great. of we're

So, this will call today. conclude our

morning. reach this feel to line have free for been answer accommodate. to on still able happy are than joining me. I'll and be you to the out If more to not thank Again you please us questions, your

Douglas Del Grosso

everyone. Thanks

Operator

time. conference. at XX:XX conclude This may parties disconnect will today's this All

Adient (ADNT) 5 May 222022 Q2 Earnings call transcript