Adient plc

Previous wording

This section and other parts of this Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as "future," "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "will," "would," "could," "can," "may," or similar terms. Forward-looking statements are not guarantees of future performance and Adient's actual results may differ significantly from the results discussed in the forward-looking statements. Adient cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond Adient’s control, that could cause Adient’s actual results to differ materially from those expressed or implied by such forward-looking statements, including, among others, risks related to: the effects of local and national economic, credit and capital market conditions (including the persistence of high interest rates and volatile currency exchange rates) on the global economy, work stoppages, including due to strikes, supply chain disruptions and similar events, wage inflationary pressures due to labor shortages and new labor negotiations, volatile energy markets, Adient’s ability and timing of customer recoveries for increased input costs, the availability of raw materials and component products (including components required by our customers for the manufacture of vehicles), geopolitical uncertainties such as the Ukraine and Middle East conflicts and the impact on the regional and global economies and additional pressure on supply chain and vehicle production, the ability of Adient to execute its restructuring plans and achieve the desired benefit, automotive vehicle production levels, mix and schedules, as well as our concentration of exposure to certain automotive manufacturers, the ability of Adient to effectively launch new business at forecast and profitable levels, the ability of Adient to meet debt service requirements and, terms of future financing, the impact of global tax reform legislation, uncertainties in U.S. administrative policy regarding trade agreements, tariffs and other international trade relations, shifts in market shares among vehicles, vehicle segments or away from vehicles on which Adient has significant content, changes in consumer demand, global climate change and related emphasis on ESG matters by various stakeholders, and the ability of Adient to achieve its ESG-related goals, cancellation of or changes to commercial arrangements, and the ability of Adient to identify, recruit and retain key leadership. Additional information regarding these and other risks related to A…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This section and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as "future," "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "will," "would," "could," "can," "may," or similar terms. Forward-looking statements are not guarantees of future performance and Adient's actual results may differ significantly from the results discussed in the forward-looking statements. Adient cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond Adient’s control, that could cause Adient’s actual results to differ materially from those expressed or implied by such forward-looking statements, including, among others, risks related to: the effects of local and national economic, credit and capital market conditions (including the persistence of high interest rates and volatile currency exchange rates) on the global economy, work stoppages, including due to strikes, supply chain disruptions and similar events, wage inflationary pressures due to labor shortages and new labor negotiations, volatile energy markets, Adient’s ability and timing of customer recoveries for increased input costs, the availability of raw materials and component products (including components required by our customers for the manufacture of vehicles), geopolitical uncertainties such as the Ukraine and Middle East conflicts and the impact on the regional and global economies and additional pressure on supply chain and vehicle production, the ability of Adient to execute its restructuring plans and achieve the desired benefit, automotive vehicle production levels, mix and schedules, as well as our concentration of exposure to certain automotive manufacturers, the ability of Adient to effectively launch new business at forecast and profitable levels, the ability of Adient to meet debt service requirements and, terms of future financing, the impact of global tax reform legislation, uncertainties in U.S. administrative policy regarding trade agreements, tariffs and other international trade relations, shifts in market shares among vehicles, vehicle segments or away from vehicles on which Adient has significant content, changes in consumer demand, global climate change and related emphasis on ESG matters by various stakeholders, and the ability of Adient to achieve its ESG-related goals, cancellation of or changes to commercial arrangements, and the ability of Adient to identify, recruit and retain key leadership. Additional information regarding these and other risks related to Ad…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Adient is a global leader in the automotive seating supply industry with relationships with the largest global automotive original equipment manufacturers, or OEMs. Adient's proprietary technologies extend into virtually every area of automotive seating solutions, including complete seating systems, frames, mechanisms, foam, head restraints, armrests and trim covers. Adient is an independent seat supplier with global scale and the capability to design, develop, engineer, manufacture and deliver complete seat systems and components in every major automotive producing region in the world.

Current wording

Adient is a global leader in the automotive seating supply industry and maintains relationships with the largest global automotive original equipment manufacturers, or OEMs. Adient's proprietary technologies extend into virtually every area of automotive seating solutions, including complete seating systems, frames, mechanisms, foam, head restraints, armrests and trim covers. Adient is an independent seat supplier with global scale and the capability to design, develop, engineer, manufacture and deliver complete seat systems and components in every major automotive producing region in the world.

Previous wording

Adient designs, manufactures and markets a full range of seating systems and components for passenger cars, commercial vehicles and light trucks, including vans, pick-up trucks and sport/crossover utility vehicles. Adient operates more than 200 wholly- and majority-owned manufacturing or assembly facilities, with operations in 30 countries. Additionally, Adient has partially-owned affiliates in China, Asia, Europe and North America. Through its global footprint and vertical integration, Adient leverages its capabilities to drive growth in the automotive seating industry.

Current wording

Adient designs, manufactures and markets a full range of seating systems and components for passenger cars, commercial vehicles and light trucks, including vans, pick-up trucks and sport/crossover utility vehicles. Adient operates more than 200 wholly- and majority-owned manufacturing or assembly facilities, with operations in 29 countries. Additionally, Adient has partially-owned affiliates in China, Asia, Europe and North America. Through its global footprint and vertical integration, Adient leverages its capabilities to drive growth in the automotive seating industry.

Previous wording

The results presented below are not necessarily indicative of full-year results as Adient, along with the automotive industry, continues to be impacted by supply chain disruptions, inflationary pressures and volatile commodity pricing on certain input costs, along with the impacts of higher interest rates and volatility in consumer demand. Refer to the consolidated results of operations and segment analysis discussion below for additional information on the impacts of these items on Adient's results.

Current wording

The results presented below are not necessarily indicative of full-year results as Adient, along with the automotive industry, continues to be impacted by inflationary pressures and volatile commodity pricing on certain input costs, along with the impacts of higher interest rates and volatility in consumer demand. The automotive industry continues to also experience significant change with the ongoing rollout of electric vehicles, which has recently shown signs of softening. Refer to the consolidated results of operations and segment analysis discussion below for additional information on the impacts of these items on Adient's results.

Previous wording

Adient conducts its business globally in the automotive industry, which is highly competitive and sensitive to economic, political and social factors in the various regions. During the first three months of fiscal 2024, global light vehicle production increased 9.8% year over year driven by improved production volumes in North America, EMEA, Asia and China. The operating environment is expected to continue to be challenging during the remainder of fiscal 2024 as the automotive industry continues to be impacted by supply chain disruptions, inflationary pressures and volatile commodity pricing on certain input costs, along with the impacts of higher interest rates and volatility in consumer demand.

Current wording

Adient conducts its business globally in the automotive industry, which is highly competitive and sensitive to economic, political and social factors in the various regions. During the three and six months ended March 31, 2024, global light vehicle production increased 0.9% and 5.4%, respectively, driven by improved production volumes predominately in China and North America. The current operating environment varies by region, being impacted by a more traditional demand-driven model including higher interest rates and slowing consumer demand due to affordability concerns along with slower electric vehicle adoption rates in certain regions.

Previous wording

Significant aspects of Adient's financial results for the first quarter of fiscal 2024 include the following:

Current wording

Significant aspects of Adient's financial results for the second quarter of fiscal 2024 include the following:

Previous wording

•Adient recorded net sales of $3,660 million for the first quarter of fiscal 2024, representing a decrease of $39 million or 1.1% when compared to the first quarter of fiscal 2023. The decrease in net sales is attributable to Adient's lower overall production volumes in the Americas (due to the UAW strike-related production disruptions) and Asia regions and unfavorable material economics recoveries, partially offset by the favorable impact of foreign currencies and favorable pricing.

Current wording

•Adient recorded net sales of $3,750 million for the second quarter of fiscal 2024, representing a decrease of $162 million or 4.1% when compared to the second quarter of fiscal 2023. The decrease in net sales is attributable to Adient's lower overall production volumes in the Americas and EMEA regions, the unfavorable impact of foreign currencies and unfavorable material economics recoveries, partially offset by net favorable pricing adjustments.

Previous wording

•Gross profit was $246 million, or 6.7% of net sales, for the first quarter of fiscal 2024 compared to $231 million, or 6.2% of net sales for the first quarter of fiscal 2023. Profitability, including gross profit as a percentage of net sales, was higher due to favorable business performance and favorable pricing, partially offset by lower overall production volumes, and unfavorable impacts of material economics.

Current wording

•Gross profit was $230 million, or 6.1% of net sales, for the second quarter of fiscal 2024 compared to $250 million, or 6.4% of net sales for the second quarter of fiscal 2023. Profitability, including gross profit as a percentage of net sales, was lower due to lower production volumes in the Americas and EMEA regions and the unfavorable impact of foreign currencies, partially offset by favorable business performance and favorable material economics, net of recoveries.

Previous wording

Cost of sales decreased by $54 million, or 2%, and gross profit increased by $15 million, or 6%, in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023. The year over year decrease in cost of sales was due to lower production volumes ($58 million), lower commodity costs ($28 million), favorable business performance ($18 million), and net favorable pricing adjustments ($14 million), partially offset by the unfavorable impact of foreign currencies ($60 million) and higher depreciation expense ($4 million). Gross profit for the three months ended December 31, 2023 was favorably impacted by favorable pricing and favorable business performance, partially offset by lower production volumes, the unfavorable impact of foreign currencies and higher depreciation expense. Refer to the segment analysis below for a discussion of segment profitability.

Current wording

Cost of sales decreased by $196 million, or 3%, and gross profit decreased by $5 million, or 1%, in the first six months of fiscal 2024 as compared to the first six months of fiscal 2023. The year over year decrease in cost of sales was due to lower production volumes ($158 million), favorable material economics ($65 million), net favorable pricing adjustments ($13 million) and favorable business performance ($10 million), partially offset by the unfavorable impact of foreign currencies ($44 million), higher depreciation expense ($5 million) and higher restructuring related charges ($1 million). Gross profit for the six months ended March 31, 2024 was unfavorably impacted by lower production volumes, the unfavorable impact of foreign currencies and higher depreciation expense, partially offset by favorable business performance and favorable material economics, net of recoveries such that gross profit as a percentage of sales increased. Refer to the segment analysis below for a discussion of segment profitability.

Previous wording

SG&A expenses increased by $9 million, or 7%, in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023. The year over year increase in SG&A is attributable to higher compensation expense including stock-based and performance-based incentive compensation costs ($9 million), a one-time loss on business divestiture ($8 million) and higher overall engineering and other administrative spending ($1 million), partially offset by net year-over-year gains on sales of assets ($4 million), non-recurring contract related settlement ($3 million) and lower depreciation and amortization expense ($2 million).

Current wording

SG&A for the first six months of fiscal 2024 decreased by $17 million, or 6%, as compared to the first six months of fiscal 2023. The year over year decrease in SG&A was due to lower overall engineering and other administrative spending ($7 million), lower compensation expense including performance-based incentive compensation costs and other compensation related austerity measures ($5 million), lower depreciation and amortization expense ($5 million), higher levels of gains on sales of assets ($4 million), non-recurring contract related settlement ($3 million) and lower transaction costs ($2 million), partially offset by a one-time loss on business divestiture ($8 million) and the unfavorable impact of foreign currencies ($1 million).

Previous wording

Restructuring and impairment costs were higher by $4 million during the first quarter of fiscal 2024. Refer to Note 13, "Restructuring and Impairment Costs," of the notes to the consolidated financial statements for information related to Adient's restructuring plans.

Current wording

Restructuring and impairment costs were higher by $108 million during the second quarter of fiscal 2024 and higher by $112 million during the first six months of fiscal 2024 due to restructuring actions taken primarily in EMEA in response to structural changes occurring in the European automotive market and to ensure Adient maintains a competitive cost structure by reducing labor costs and increasing efficiencies. Adient continues to monitor and assess market conditions within the automotive industry in each of its regions and will consider taking further restructuring action as needed to stay competitive and to position Adient to serve the needs of its customers. Refer to Note 13, "Restructuring and Impairment Costs," of the notes to the consolidated financial statements and the discussion under Liquidity and Capital Resources below for additional information related to Adient's restructuring plans.

Previous wording

Net financing charges increased by $3 million in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023 due primarily to higher interest rates on recently issued debt instruments. Refer to Note 8, "Debt and Financing Arrangements," of the notes to the consolidated financial statements for further information related to Adient's debt transactions and components of net financing charges.

Current wording

Net financing charges decreased by $12 million in the second quarter of fiscal 2024 as compared to the second quarter of fiscal 2023, and by $9 million during the first six months of fiscal 2024 as compared to the first six months of fiscal 2023 due primarily to premiums paid and deferred financing cost write offs associated with repurchasing of debt in the second quarter of fiscal 2023. Refer to Note 8, "Debt and Financing Arrangements," of the notes to the consolidated financial statements for further information related to Adient's debt transactions and components of net financing charges.

Previous wording

Other pension expense was lower by $7 million in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023 due primarily to a non-recurring curtailment loss associated with employee termination benefit plans recorded in the prior year. Refer to Note 12, "Retirement Plans," of the notes to the consolidated financial statements for information related to the non-service components of Adient's net periodic pension costs.

Current wording

Other pension expense was lower by $7 million for the first six months of fiscal 2024 as compared to the first six months of fiscal 2023 due primarily to a prior year non-recurring curtailment loss associated with employee termination benefit plans in the Americas. Refer to Note 12, "Retirement Plans," of the notes to the consolidated financial statements for information related to the non-service components of Adient's net periodic pension costs.

Previous wording

The first quarter of fiscal 2024 income tax expense of $20 million was higher than the statutory rate of 12.5% primarily due to the inability to record a tax benefit for losses in jurisdictions with valuation allowances and foreign tax rate differentials. The first quarter of fiscal 2023 income tax expense of $31 million was higher than the statutory rate of 12.5% primarily due to the inability to record a tax benefit for losses in jurisdictions with valuation allowances and foreign tax rate differentials.

Current wording

The second quarter fiscal 2024 income tax expense of $8 million was higher than the Irish statutory rate of 12.5% primarily due to the inability to record a tax benefit for losses in jurisdictions with valuation allowances, partially offset by $14 million of tax benefits from the release of uncertain tax positions due to audit closures. The second quarter fiscal 2023 income tax expense of $25 million was higher than the Irish statutory rate of 12.5% primarily due to the inability to record a tax benefit for losses in jurisdictions with valuation allowances and foreign tax rate differentials.

Previous wording

The increase in income attributable to noncontrolling interests in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023 is primarily attributable to a $5 million adjustment to increase income attributable to noncontrolling interests recorded in the first quarter of fiscal 2024 related to the three months ended September 30, 2023, which more than offset lower production volumes at consolidated affiliates.

Current wording

The first six months of fiscal 2024 compared to the first six months of fiscal 2023 shows no change in income attributable to noncontrolling interests, however, lower production volumes associated with new launches at certain affiliates are offset by a $5 million adjustment to increase income attributable to noncontrolling interests related to the three months ended September 30, 2023.

Previous wording

Comprehensive income attributable to Adient was $158 million for the first quarter of fiscal 2024 compared to $127 million of comprehensive income for the first quarter of fiscal 2023. The increase of $31 million is due primarily to higher net income ($12 million) and the favorable impact of foreign currency translation adjustments ($36 million), partially offset by the impact of realized and unrealized gains on derivatives ($16 million) and higher comprehensive income attributable to noncontrolling interests ($1 million).

Current wording

Comprehensive loss attributable to Adient was $10 million for the first six months of fiscal 2024 compared to $155 million of comprehensive income for the first six months of fiscal 2023. The decrease of $165 million is due primarily to lower net income ($47 million), the unfavorable impact of foreign currency translation adjustments ($100 million), and the impact of realized and unrealized gains on derivatives ($36 million), partially offset by lower comprehensive income attributable to noncontrolling interests ($18 million).

Previous wording

The results presented below are not necessarily indicative of full-year results as Adient, along with the automotive industry, continues to recover from supply chain disruptions, manages inflationary pressures and volatile commodity pricing on certain input costs, and as it addresses the impacts of higher interest rates and volatility in consumer demand. Refer to the Factors Affecting Adient’s Operating Environment section within our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, for additional information on factors that have impacted Adient.

Current wording

The results presented below are not necessarily indicative of full-year results as Adient, along with the automotive industry, continues to manage inflationary pressures and volatile commodity pricing on certain input costs, and as it addresses the impacts of higher interest rates and volatility in consumer demand. Refer to the Factors Affecting Adient’s Operating Environment section in this Form 10-Q and within our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, for additional information on factors that have impacted Adient.

Previous wording

(4) Reflects restructuring related charges for costs that are directly attributable to restructuring activities, but do not meet the definition of restructuring under ASC 420. The three months ended December 31, 2023 includes a $10 million gain on sale of a restructured facility.

Current wording

(4) Reflects restructuring-related charges for costs that are recorded as incurred or as earned and other non-recurring impacts that are directly attributable to restructuring activities. The six months ended March 31, 2024 includes a $10 million gain on sale of a restructured facility.

Previous wording

(5) During the three months ended December 31, 2023, a $5 million adjustment was recorded to increase equity-based compensation expense related to a retired executive's equity awards which should have been recognized in prior periods.

Current wording

(6) During the six months ended March 31, 2024, a $5 million adjustment was recorded to increase equity-based compensation expense related to a retired executive's equity awards that should have been recognized in periods prior to September 30, 2023.

Previous wording

(6) The three months ended December 31, 2023 includes an $8 million loss on sale of 51% of Adient's interest in LFADNT (as described in Note 3, "Acquisitions and Divestitures," of the notes to consolidated financial statements), and a $2 million one-time divestiture related tax impact at an affiliate, partially offset by a $3 million non-recurring gain on contract related settlement. The three months ended December 31, 2022 includes $1 million non-recurring adjustment to certain of Adient's investments in nonconsolidated partially-owned affiliates in Asia, and $1 million of indirect tax recoveries in Brazil, partially offset by $1 million of transaction costs.

Current wording

(7) The three months ended March 31, 2024 reflects $1 million of indirect tax recoveries in Brazil. The six months ended March 31, 2024 includes an $8 million loss on sale of 51% of Adient's interest in LFADNT (as described in Note 3, "Acquisitions and Divestitures," of the notes to consolidated financial statements), and a $2 million one-time divestiture related tax impact at an affiliate, partially offset by a $3 million non-recurring gain on a contract related settlement and $1 million of indirect tax recoveries in Brazil.

Previous wording

(7) The three months ended December 31, 2022 includes an $8 million curtailment loss associated with employee termination benefit plans in the Americas segment.

Current wording

(8) The six months ended March 31, 2023 includes an $8 million curtailment loss associated with employee termination benefit plans in the Americas segment.

Previous wording

Net sales decreased during the first quarter of fiscal 2024 by $77 million primarily due to the unfavorable volume impact of UAW strike-related disruptions at certain customers ($125 million) and unfavorable material economics recoveries ($25 million), partially offset by increased production volumes at other customers ($45 million) and net favorable pricing adjustments largely due to timing of commercial recoveries ($28 million).

Current wording

Net sales decreased during the first six months of fiscal 2024 by $178 million primarily due to lower current year production volumes resulting from slower than expected product launches and the UAW strike-related disruptions at certain customers ($183 million), unfavorable material economics recoveries ($35 million) and the unfavorable impact of foreign currencies ($2 million), partially offset by net favorable pricing adjustments ($42 million).

Previous wording

Adjusted EBITDA increased during the first quarter of fiscal 2024 by $11 million, despite a $25 million unfavorable impact resulting from the UAW strike-related production disruptions at certain customers. The increase was due to net favorable pricing and material cost adjustments ($37 million), favorable business performance driven by lower freight costs ($14 million) and lower administrative and engineering expense ($1 million), partially offset by unfavorable material economics, net of recoveries ($18 million), lower current quarter production volumes ($14 million, including UAW strike-related impact) and the unfavorable impact of foreign currencies ($9 million).

Current wording

Adjusted EBITDA increased during the first six months of fiscal 2024 by $19 million, despite a $25 million unfavorable impact resulting from the UAW strike-related production disruptions at certain customers. The increase was due to favorable business performance ($66 million) and lower SG&A expenses driven by lower compensation expense including lower performance based compensation costs and other compensation related austerity measures ($21 million), partially offset by lower current quarter production volumes ($40 million, including UAW strike-related impact), the unfavorable impact of foreign currencies ($14 million) and unfavorable material economics, net of recoveries ($14 million).

Previous wording

Net sales increased during the first quarter of fiscal 2024 by $86 million primarily as a result of favorable impact of foreign currency ($64 million), higher current quarter production volumes ($28 million) and net favorable pricing adjustments ($5 million), partially offset by unfavorable material economics recoveries ($11 million).

Current wording

Net sales decreased during the second quarter of fiscal 2024 by $31 million primarily as a result of lower current quarter production volumes due to softening demand ($52 million) and unfavorable material economics recoveries ($6 million), partially offset by the favorable impact of foreign currencies ($17 million) and net favorable pricing adjustments ($10 million).

Previous wording

Adjusted EBITDA increased during the first quarter of fiscal 2024 by $17 million due to net favorable pricing and material cost adjustments ($9 million), favorable impact of foreign currency ($6 million), favorable material economics, net of recoveries ($6 million), favorable business performance including lower labor and freight costs ($5 million) and increased equity income ($2 million), partially offset by prior year gains on sale of assets ($6 million), higher administrative and engineering expense ($4 million) and unfavorable product mix ($1 million).

Current wording

Adjusted EBITDA increased during the first six months of fiscal 2024 by $21 million due to favorable material economics, net of recoveries ($21 million), favorable business performance ($11 million), the favorable impact of foreign currencies ($7 million), increased equity income ($3 million), and lower administrative and engineering expense ($1 million), partially offset by lower current year production volumes ($16 million) and the non-recurrence of prior year gains on sale of assets ($6 million).

Previous wording

Net sales decreased during the first quarter of fiscal 2024 by $51 million due to lower current quarter production volumes due primarily to program changeovers, program launches and lower volumes on foreign OEM platforms in China ($27 million), lower levels of pricing adjustments year-over-year ($17 million) and an unfavorable impact of foreign currency ($7 million).

Current wording

Net sales decreased during the first six months of fiscal 2024 by $83 million due to the unfavorable impact of foreign currencies ($50 million), lower current year production volumes due primarily to program changeovers, program launches and lower volumes on foreign OEM platforms in China ($25 million), lower levels of pricing adjustments ($7 million) and unfavorable material economics recoveries ($1 million).

Previous wording

Adjusted EBITDA decreased during the first quarter of fiscal 2024 by $24 million due to lower levels of pricing adjustments year-over-year ($16 million), lower equity income driven by the impact of the KEIPER supply agreement modifications ($4 million), an unfavorable impact of foreign currencies ($4 million), lower current quarter production volumes ($3 million) and higher administrative and engineering expense ($2 million), partially offset by favorable material economics, net of recoveries ($4 million) and favorable business performance ($1 million).

Current wording

Adjusted EBITDA decreased during the first six months of fiscal 2024 by $25 million due to lower current year production volumes and unfavorable product mix ($13 million), the unfavorable impact of foreign currencies ($13 million) and higher administrative and engineering expense ($2 million), partially offset by favorable material economics, net of recoveries ($5 million), favorable business performance ($5 million) and higher equity income which includes the unfavorable impact of the KEIPER supply agreement modifications ($3 million).

Previous wording

Adient US LLC ("Adient US"), a wholly owned subsidiary of Adient, together with certain of Adient's other subsidiaries, maintains an asset-based revolving credit facility (the "ABL Credit Facility"), which provides for a revolving line of credit up to $1,250 million, including a North American subfacility of up to $950 million and a European subfacility of up to $300 million, subject to borrowing base capacity and certain other restrictions, including a minimum fixed charge coverage ratio. The ABL Credit Facility, as amended in November 2022, is set to mature on November 2, 2027, subject to certain springing maturity provisions. Adient paid $7 million in debt issuance costs for the amended ABL Credit Facility and will pay a commitment fee of 0.25% to 0.375% on the unused portion of the commitments under the asset-based revolving credit facility based on average global availability. Letters of credit are limited to the lesser of (x) $150 million and (y) the aggregate unused amount of commitments under the ABL Credit Facility then in effect. Subject to certain conditions, the ABL Credit Facility may be expanded by up to $250 million in additional commitments. Loans under the ABL Credit Facility may be denominated, at the option of Adient, in U.S. dollars, Euros, Pounds Sterling or Swedish Kroner. It also provides flexibility for future amendments to the ABL Facility to incorporate certain sustainability-based pricing provisions. The ABL Credit Agreement is secured on a first-priority lien on all accounts receivable, inventory and bank accounts (and funds on deposit therein) and a second-priority lien on all of the tangible and intangible assets of certain Adient subsidiaries. Interest is payable on the ABL Credit Facility at a fluctuating rate of interest determined by reference to Term SOFR, in the case of amounts outstanding in dollars, EURIBOR, in the case of amounts outstanding in euros, STIBOR, in the case of amounts outstanding in Swedish krona and SONIA, in the case of amounts outstanding in pounds sterling, in each case, plus an applicable margin of 1.50% to 2.00%. As of December 31, 2023, Adient had not drawn down on the ABL Credit Facility and had availability under this facility of $938 million (net of $12 million of letters of credit).

Current wording

Adient US LLC ("Adient US"), a wholly owned subsidiary of Adient, together with certain of Adient's other subsidiaries, maintains an asset-based revolving credit facility (the "ABL Credit Facility"), which provides for a revolving line of credit up to $1,250 million, including a North American subfacility of up to $950 million and a European subfacility of up to $300 million, subject to borrowing base capacity and certain other restrictions, including a minimum fixed charge coverage ratio. The ABL Credit Facility, as amended in November 2022, is set to mature on November 2, 2027, subject to certain springing maturity provisions. Adient paid $7 million in debt issuance costs for the amended ABL Credit Facility and will pay a commitment fee of 0.25% to 0.375% on the unused portion of the commitments under the asset-based revolving credit facility based on average global availability. Letters of credit are limited to the lesser of (x) $150 million and (y) the aggregate unused amount of commitments under the ABL Credit Facility then in effect. Subject to certain conditions, the ABL Credit Facility may be expanded by up to $250 million in additional commitments. Loans under the ABL Credit Facility may be denominated, at the option of Adient, in U.S. dollars, Euros, Pounds Sterling or Swedish Kroner. It also provides flexibility for future amendments to the ABL Facility to incorporate certain sustainability-based pricing provisions. The ABL Credit Agreement is secured on a first-priority lien on all accounts receivable, inventory and bank accounts (and funds on deposit therein) and a second-priority lien on all of the tangible and intangible assets of certain Adient subsidiaries. Interest is payable on the ABL Credit Facility at a fluctuating rate of interest determined by reference to Term SOFR, in the case of amounts outstanding in dollars, EURIBOR, in the case of amounts outstanding in euros, STIBOR, in the case of amounts outstanding in Swedish krona and SONIA, in the case of amounts outstanding in pounds sterling, in each case, plus an applicable margin of 1.50% to 2.00%. As of March 31, 2024, Adient had not drawn down on the ABL Credit Facility and had availability under this facility of $974 million (net of $11 million of letters of credit).

Previous wording

In addition, Adient US and Adient Global Holdings S.à r.l., a wholly-owned subsidiary of Adient, maintain a senior secured term loan facility (the "Term Loan B Agreement"), that had an outstanding balance of $635 million as of September 30, 2023 and December 31, 2023, which is maintained fully at Adient Global Holdings S.à r.l and is due at final maturity on April 8, 2028. Interest on the Term Loan B Agreement accrues at Term SOFR plus an applicable margin equal to 3.25%. The Term Loan B Agreement also permits Adient to incur incremental term loans in an aggregate amount not to exceed the greater of $750 million and an unlimited amount subject to a pro forma first lien secured net leverage ratio of not greater than 1.75 to 1.00 and certain other conditions. In January 2024, the Term Loan B Agreement was amended to reduce the applicable margin from 3.25% to 2.75% and extend final maturity to January 31, 2031.

Current wording

In addition, Adient Global Holdings S.à r.l., a wholly-owned subsidiary of Adient, maintains a senior secured term loan facility (the "Term Loan B Agreement"), that had an outstanding balance of $635 million as of September 30, 2023 and March 31, 2024. The Term Loan B Agreement permits Adient to incur incremental term loans in an aggregate amount not to exceed the greater of $750 million and an unlimited amount subject to a pro forma first lien secured net leverage ratio of not greater than 1.75 to 1.00 and certain other conditions. Interest on the Term Loan B Agreement accrues at Term SOFR plus an applicable margin. The Term Loan B Agreement was previously due on April 8, 2028. During the second quarter of fiscal 2024, the Term Loan B Agreement was amended to reduce the applicable margin from 3.25% to 2.75% and extend final maturity to January 31, 2031. Adient incurred $5 million of costs associated with the modification, of which $4 million was recorded as deferred financing costs.

Previous wording

During fiscal 2023, Adient Global Holdings Ltd. ("AGH"), a wholly-owned subsidiary of Adient, issued (i) $500 million (net proceeds of $494 million) in aggregate principal amount of 7% senior secured notes due 2028 and (ii) $500 million (net proceeds of $494 million) in aggregate principal amount of 8.250% senior unsecured notes due 2031. Interest on both of these notes will be paid on April 15 and October 15 each year, beginning on October 15, 2023. These notes contain covenants that are usual and customary. The total net proceeds of $988 million along with cash on hand were used primarily to redeem $350 million of the senior secured term loan facility under the Term Loan B Agreement, and repurchase €700 million ($743 million) of the 3.50% unsecured notes due 2024 as described below. Adient paid $16 million in debt issuance costs for these new debt issuances.

Current wording

During March 2023, Adient Global Holdings Ltd. ("AGH"), a wholly-owned subsidiary of Adient, issued (i) $500 million (net proceeds of $494 million) in aggregate principal amount of 7% senior secured notes due 2028 and (ii) $500 million (net proceeds of $494 million) in aggregate principal amount of 8.250% senior unsecured notes due 2031. Interest on both of these notes will be paid on April 15 and October 15 each year, beginning on October 15, 2023. These notes contain covenants that are usual and customary. The total net proceeds of $988 million along with cash on hand were used primarily to redeem $350 million of the senior secured term loan facility under the Term Loan B Agreement, and repurchase €700 million ($743 million) of the 3.50% unsecured notes due 2024 as described below. Adient paid $16 million in debt issuance costs for these new debt issuances.

Previous wording

AGH also previously maintained €823 million aggregate principal amount of 3.50% unsecured notes due in August 2024. During fiscal 2023, Adient repurchased €700 million ($743 million) of the 3.50% unsecured notes at a premium of €7 million ($7 million) plus €3 million ($3 million) of accrued and unpaid interest, and expensed €2 million ($2 million) of previously deferred financing costs to net financing charges. As of December 31, 2023, the remaining balance of this debt was €123 million ($136 million) and is classified as current portion of long-term debt on the consolidated statement of financial position.

Current wording

AGH also previously maintained €823 million aggregate principal amount of 3.50% unsecured notes due in August 2024. During March 2023, Adient repurchased €700 million ($743 million) of the 3.50% unsecured notes at a premium of €7 million ($7 million) plus €3 million ($3 million) of accrued and unpaid interest, and expensed €2 million ($2 million) of previously deferred financing costs to net financing charges. As of March 31, 2024, the remaining balance of this debt was €123 million ($133 million) and is classified as current portion of long-term debt on the consolidated statement of financial position.

Previous wording

Operating Cash Flows: The decrease in cash flows from operating activities is primarily due to unfavorable overall changes to working capital primarily related to increases in non-income tax receivables and reductions in current liabilities resulting from payments of accrued interest and accrued compensation, partially offset by the higher current quarter net income attributable to Adient.

Current wording

Operating Cash Flows: The decrease in cash flows from operating activities is primarily due to higher net loss attributable to Adient for the first six months of fiscal 2024 and unfavorable overall changes to working capital year-over-year.

Previous wording

Investing Cash Flows: The decrease in cash used by investing activities is primarily attributable to lower capital expenditures as further explained below.

Current wording

Investing Cash Flows: The increase in cash used by investing activities is primarily attributable to higher capital expenditures as further explained below.

Previous wording

Financing Cash Flows: The increase in cash used by financing activities is attributable to $100 million common stock repurchases transacted during the current quarter and the non-recurrence of prior year debt refinancing activities. Refer to Note 8, "Debt and Financing Arrangements," and Note 11, "Equity and Noncontrolling Interests," of the notes to the consolidated financial statements for additional information.

Current wording

Financing Cash Flows: The increase in cash used by financing activities is attributable to $150 million common stock repurchases transacted during the first six months of fiscal 2024, partially offset by the non-recurrence of prior year debt refinancing activities. Refer to Note 8, "Debt and Financing Arrangements," and Note 11, "Equity and Noncontrolling Interests," of the notes to the consolidated financial statements for additional information.

Previous wording

Capital expenditures: Lower capital expenditures during the first three months of fiscal 2024 were due primarily to timing of program spend on product launches.

Current wording

Capital expenditures: Higher capital expenditures during the first six months of fiscal 2024 were due primarily to timing of program spend on product launches.

Previous wording

Working capital decreased by $52 million due to decreases in cash, accounts receivable and inventories, partially offset by increases in non-income tax receivables, and decreases in accounts payable and accrued compensation and benefits.

Current wording

Working capital decreased by $111 million due to decreases in cash and inventories, partially offset by increases in non-income tax receivables and decreases in accrued compensation and benefits.

Previous wording

During the first three months of fiscal 2024, Adient committed to a restructuring plan ("2024 Plan") of $11 million. The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions in EMEA and Americas. Adient currently estimates that upon completion of the restructuring actions, the fiscal 2023 restructuring plan will reduce annual operating costs by approximately $20 million, which is primarily the result of lower costs of sales and SG&A due to reduced employee-related costs, of which approximately 25% will result in net savings. The restructuring actions are expected to be substantially completed by fiscal 2025.

Current wording

During the first six months of fiscal 2024, Adient committed to restructuring actions ("2024 Plan") resulting in charges of $138 million including a charge of $127 million recorded during the three months ended March 31, 2024, which was offset by $2 million of prior-year underspend. The second quarter charges were almost entirely related to termination benefits in Europe and will result in future cash expenditures of a similar amount. The 2024 Plan is being implemented in response to structural changes occurring in the European automotive market and to ensure Adient maintains a competitive cost structure by reducing operating, administrative and engineering costs, and increasing efficiencies. Restructuring actions associated with these specific plans will primarily occur in fiscal years 2025 and 2026 and are expected to be substantially complete by fiscal year 2027. Adient currently estimates that upon completion of the restructuring actions, the 2024 Plan will reduce annual operating costs by approximately $80 million, which is primarily the result of lower costs of sales and SG&A due to reduced employee-related costs, of which approximately 70% will result in net savings.

Previous wording

In November 2022, Adient’s board of directors authorized the repurchase of the Company’s ordinary shares up to an aggregate purchase price of $600 million with no expiration date. Under the share repurchase authorization, Adient’s ordinary shares may be purchased either through discretionary purchases on the open market, by block trades or privately negotiated transactions. The number of ordinary shares repurchased, if any, and the timing of repurchases will depend on a number of factors, including share price, trading volume and general market conditions, as well as on working capital requirements, general business conditions and other factors. During fiscal year 2023, Adient repurchased and immediately retired 1,756,777 shares of its ordinary shares at an average purchase price per share of $37.00. The aggregate amount of cash paid to repurchase the shares was $65 million. During the first quarter of fiscal 2024, Adient repurchased and immediately retired 3,003,358 shares of its ordinary shares at an average purchase price per share of $33.32. The aggregate amount of cash paid to repurchase the shares was $100 million. As of December 31, 2023, the remaining aggregate amount of authorized repurchases was $435 million.

Current wording

In November 2022, Adient’s board of directors authorized the repurchase of the Company’s ordinary shares up to an aggregate purchase price of $600 million with no expiration date. Under the share repurchase authorization, Adient’s ordinary shares may be purchased either through discretionary purchases on the open market, by block trades or privately negotiated transactions. The number of ordinary shares repurchased, if any, and the timing of repurchases will depend on a number of factors, including share price, trading volume and general market conditions, as well as on working capital requirements, general business conditions and other factors. During fiscal year 2023, Adient repurchased and immediately retired 1,756,777 shares of its ordinary shares at an average purchase price per share of $37.00. The aggregate amount of cash paid to repurchase shares during fiscal year 2023 was $65 million, of which $28 million had been spent as of March 31, 2023. During the second quarter of fiscal 2024, Adient repurchased and immediately retired 1,460,990 shares of its ordinary shares at an average purchase price per share of $34.22. The aggregate amount of cash paid to repurchase shares during the second quarter of fiscal 2024 was $50 million. During the first six months of fiscal 2024, Adient repurchased and immediately retired 4,464,348 shares of its ordinary shares at an average purchase price per share of $33.60. The aggregate amount of cash paid to repurchase shares during fiscal year 2024 was $150 million. As of March 31, 2024, the remaining aggregate amount of authorized repurchases was $385 million.

Previous wording

Adient enters into supply chain financing programs in certain domestic and foreign jurisdictions to either sell or discount accounts receivable without recourse to third-party institutions. Sales or discounts of accounts receivable are reflected as a reduction of accounts receivable on the consolidated statements of financial position and the proceeds are included in cash flows from operating activities in the consolidated statements of cash flows. As of December 31, 2023, $85 million has been funded under these programs compared to $170 million as of September 30, 2023.

Current wording

Adient enters into supply chain financing programs in certain domestic and foreign jurisdictions to either sell or discount accounts receivable without recourse to third-party institutions. Sales or discounts of accounts receivable are reflected as a reduction of accounts receivable on the consolidated statements of financial position and the proceeds are included in cash flows from operating activities in the consolidated statements of cash flows. As of March 31, 2024, $131 million has been funded under these programs compared to $170 million as of September 30, 2023.