Adient plc

Previous 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.

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, vehicle affordability and volatile currency exchange rates) on the global economy, automotive vehicle production levels, mix and schedules, as well as the concentration of exposure to certain automotive manufacturers, shifts in market shares among vehicles, vehicle segments or away from vehicles on which Adient has significant content, changes in consumer demand, risks associated with Adient’s joint ventures, 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 Adient’s 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, uncertainties in U.S. administrative policy regarding trade agreements, tariffs and other international trade relations, the ability of Adient to effectively launch new business at forecast and profitable levels, the ability of Adient to successfully identify suitable opportunities for organic investment and/or acquisitions and to integrate such investments and/or acquisitions; work stoppages, including due to strikes, supply chain disruptions and similar events, wage inflationary pressures due to labor shortages and new labor negotiations, the ability of Adient to execute its restructuring plans and achieve the desired benefit, the ability of Adient to meet debt service requirements and, terms of future financing, the impact of global tax reform legislation, global climate change and related emphasis on sustainability matters by various stakeholders, and…

Excerpt shortened here; the source contains the full paragraph.

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 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.

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, as well as having partially-owned affiliates in China, Asia, Europe and North America. Additionally, Adient continuously analyzes organic investment and/or acquisition opportunities that could enhance its portfolio of products and capabilities to meet the evolving needs of its customers. 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 experience softening consumer demand and lower than expected vehicle production along with higher interest rates, inflationary pressures and volatile commodity pricing on certain input costs. The automotive industry continues to also experience significant change with the ongoing rollout of electric vehicles, which continues to show signs of softening. Each segment is facing challenges including delayed vehicle launches in Americas, persistent operational and market-driven headwinds in EMEA and model changeovers in Asia. 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. Adient is closely monitoring the financial results of its EMEA segment for implications on the recoverability of long-lived assets, including goodwill. While no impairment is deemed to have occurred as of June 30, 2024, if trends impacting the EMEA segment remain unfavorable and financial results further decline, additional restructuring actions may be necessary and impairment of long-lived assets, including goodwill, may occur in future periods.

Current wording

The results presented below, for each reporting segment were in line with internal expectations for the first quarter of fiscal 2025. However, such results are not necessarily indicative of full-year results as Adient, along with the automotive industry, continues to experience lower than expected vehicle production due to softening consumer demand driven by new vehicle affordability and high interest rates, uncertainties surrounding the global adoption of electric vehicles, the competitive impact of certain Chinese OEM vehicles and other persistent market-driven headwinds. 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 three and nine months ended June 30, 2024, global light vehicle production increased 0.5% and 3.8%, 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.

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 months ended December 31, 2024, global light vehicle production increased 1.3%, primarily driven by improved production volumes in China, partially offset by reduced production volumes in the other major regions. The current operating environment varies by region, being impacted by weakening consumer demand due to new vehicle affordability and high interest rates along with slower electric vehicle adoption rates.

Previous wording

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

Current wording

Significant aspects of Adient's financial results for the first quarter of fiscal 2025 include the following:

Previous wording

•Adient recorded net sales of $3,716 million for the third quarter of fiscal 2024, representing a decrease of $339 million or 8.4% when compared to the third quarter of fiscal 2023. The decrease in net sales is attributable to Adient's lower overall production volumes in all regions, the unfavorable impact of foreign currencies, unfavorable material economics recoveries, and unfavorable net pricing adjustments.

Current wording

•Adient recorded net sales of $3,495 million for the first quarter of fiscal 2025, representing a decrease of $165 million or 4.5% when compared to the first quarter of fiscal 2024. The decrease in net sales is primarily attributable to Adient's lower overall production volumes in EMEA and China, unfavorable material economics recoveries and the unfavorable impact of foreign currencies.

Previous wording

•Gross profit was $207 million, or 5.6% of net sales, for the third quarter of fiscal 2024 compared to $302 million, or 7.4% of net sales for the third quarter of fiscal 2023. Profitability, including gross profit as a percentage of net sales, was lower due to lower production volumes in all regions, the unfavorable impact of foreign currencies, unfavorable business performance in EMEA, unfavorable material economics, net of recoveries and non-recurring net benefits largely associated with insurance recoveries in fiscal 2023.

Current wording

•Gross profit was $216 million, or 6.2% of net sales, for the first quarter of fiscal 2025 compared to $246 million, or 6.7% of net sales for the first quarter of fiscal 2024. Profitability, including gross profit as a percentage of net sales, was lower due primarily to lower production volumes in EMEA and China.

Previous wording

Cost of sales decreased by $244 million, or 7%, and gross profit decreased by $95 million, or 31%, in the third quarter of fiscal 2024 as compared to the third quarter of fiscal 2023. The year over year decrease in cost of sales was primarily due to lower production volumes ($203 million), the favorable impact of foreign currencies ($38 million), favorable material economics ($18 million), favorable supplier pricing adjustments ($6 million) and the favorable impact of the KEIPER supply agreement modifications ($3 million), partially offset by non-recurring net benefits largely associated with insurance recoveries in fiscal 2023 ($21 million). Gross profit for the three months ended June 30, 2024 was unfavorably impacted by lower production volume, the unfavorable impact of foreign currencies, unfavorable business performance, unfavorable material economics, net of recoveries and non-recurring net benefits largely associated with insurance recoveries in fiscal 2023.

Current wording

Cost of sales decreased by $135 million, or 4%, and gross profit decreased by $30 million, or 12%, in the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024. The year over year decrease in cost of sales was primarily due to lower production volumes ($107 million), favorable operating performance ($9 million), the favorable impact of foreign currencies ($7 million), favorable material economics ($7 million), favorable supplier pricing adjustments ($6 million) and lower depreciation expense ($3 million), partially offset by higher restructuring related charges ($4 million). Gross profit for the three months ended December 31, 2024 was unfavorably impacted by lower production volume, unfavorable material economics, net of recoveries and higher restructuring related charges, partially offset by favorable operating performance, favorable supplier pricing adjustments and the net favorable impact of foreign currencies.

Previous wording

SG&A expenses decreased by $27 million, or 18%, in the third quarter of fiscal 2024 as compared to the third quarter of fiscal 2023. The year over year decrease in SG&A was primarily due to lower net engineering and other administrative spending ($13 million), lower compensation expense including lower performance-based incentive compensation costs ($7 million), lower depreciation and amortization expense ($5 million) and the favorable impact of foreign currencies ($3 million).

Current wording

SG&A expenses decreased by $22 million, or 15%, in the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024. The year over year decrease in SG&A was primarily due to lower compensation expense including equity and performance-based incentive compensation costs including a $5 million adjustment in the prior year to increase equity-based compensation expense related to a retired executive's equity awards ($11 million), lower net engineering and other administrative spending ($9 million) and other non-recurring items ($2 million).

Previous wording

Restructuring and impairment costs were higher by $10 million during the third quarter of fiscal 2024 and higher by $122 million during the first nine 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, with particular focus on EMEA in the near term, 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.

Current wording

Restructuring and impairment costs were higher by $12 million during the first quarter of fiscal 2025 due primarily to a $10 million impairment loss recorded on the Adient Aerospace investment during the first quarter of fiscal 2025. 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

Equity income was $65 million for the first nine months of fiscal 2024, compared to $57 million for the first nine months of fiscal 2023. The increase is primarily attributable to favorable production volumes and operating performance at partially-owned affiliates ($11 million), the non-recurrence of prior year non-cash impairment charges recorded on certain of Adient's investments in non-consolidated affiliates ($6 million) and various non-recurring gains ($3 million), partially offset by the impact of the KEIPER supply agreement modifications executed in fiscal 2023 ($6 million), the unfavorable impact of foreign currencies ($4 million) and a one-time divestiture related tax impact at an affiliate ($2 million).

Current wording

Equity income was $25 million for the first quarter of fiscal 2025, compared to $23 million in the first quarter of fiscal 2024. The increase is primarily attributable to favorable operating performance at partially-owned affiliates ($9 million), a one-time gain on the sale of Setex during the first quarter of fiscal 2025 ($4 million) and a prior year unfavorable one-time divestiture related tax impact at an affiliate ($2 million), partially offset by the impact of the KEIPER supply agreement modifications executed during the first quarter of fiscal 2025 ($12 million).

Previous wording

Net financing charges decreased by $10 million during the first nine months of fiscal 2024 as compared to the first nine 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.

Current wording

Net financing charges were higher by $1 million in the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024. 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 for the first nine months of fiscal 2024 as compared to the first nine 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.

Current wording

Other pension expense was lower by $1 million in the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024. 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 nine months of fiscal 2024 income tax expense of $68 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 $8 million of tax expense related to foreign exchange remeasurements of tax balances primarily in Mexico, partially offset by $17 million of tax benefits from the release of uncertain tax positions due to audit closures. The first nine months of fiscal 2023 income tax expense of $84 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 first quarter fiscal 2025 income tax expense of $22 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 $6 million tax expense related to foreign exchange remeasurements of tax balances primarily in Mexico, partially offset by tax benefits from the release of uncertain tax positions due to statute lapses. 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.

Previous wording

Comprehensive loss attributable to Adient was $88 million for the first nine months of fiscal 2024 compared to $161 million of comprehensive income for the first nine months of fiscal 2023. The decrease of $249 million is due primarily to lower net income ($137 million), higher realized and unrealized losses on derivatives ($70 million) and the unfavorable impact of foreign currency translation adjustments ($57 million), partially offset by lower comprehensive income attributable to noncontrolling interests ($15 million).

Current wording

Comprehensive loss attributable to Adient was $225 million for the first quarter of fiscal 2025 compared to $158 million of comprehensive income for the first quarter of fiscal 2024. The decrease of $383 million is due primarily to the unfavorable impact of foreign currency translation adjustments ($378 million), lower net income ($20 million) and higher realized and unrealized losses on derivatives ($17 million), partially offset by lower comprehensive income attributable to noncontrolling interests ($32 million).

Previous wording

The results presented below are not necessarily indicative of full-year results as Adient, along with the automotive industry, continues to experience softening consumer demand and lower than expected vehicle production along with higher interest rates, inflationary pressures and volatile commodity pricing on certain input costs. The automotive industry continues to also experience significant change with the ongoing rollout of electric vehicles, which continues to show signs of softening. 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. Adient is closely monitoring the financial results of its EMEA segment for implications on the recoverability of long-lived assets, including goodwill. While no impairment is deemed to have occurred as of June 30, 2024, if trends impacting the EMEA segment remain unfavorable and financial results further decline, additional restructuring actions may be necessary and impairment of long-lived assets, including goodwill, may occur in future periods.

Current wording

The results presented below for each reporting segment were in line with internal expectations for the first quarter of fiscal 2025. However, such results are not necessarily indicative of full-year results as Adient, along with the automotive industry, continues to experience lower than expected vehicle production due to softening consumer demand, uncertainties surrounding the global adoption of electric vehicles, the competitive impact of certain Chinese OEM vehicles and other persistent market-driven headwinds. 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, 2024, for additional information on factors that have impacted Adient. Adient continues to monitor the financial results of its EMEA segment for implications on the recoverability of long-lived assets, including goodwill. While no impairment is deemed to have occurred as of December 31, 2024, if trends impacting the EMEA segment remain unfavorable and financial results further decline, additional restructuring actions may be necessary and impairment of long-lived assets, including goodwill, may occur in future periods.

Previous wording

(2) Reflects restructuring charges for costs that are probable and reasonably estimable and one-time asset impairments related to restructuring activities.

Current wording

(2) Reflects restructuring charges for costs that are probable and reasonably estimable and one-time asset impairments. During the first quarter of fiscal 2025, an impairment charge of $10 million related to Adient’s investment in Adient Aerospace was recorded. Refer to Note 13, "Restructuring and Impairment Costs" of the notes to the consolidated financial statements for additional information.

Previous 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 nine months ended June 30, 2024 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 three months ended December 31, 2024 and 2023 include a $5 million and a $10 million gain on sale of restructured facilities, respectively.

Previous wording

(7) The nine months ended June 30, 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), $1 million of transaction costs and a $1 million one-time divestiture related 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.

Current wording

(5) The three months ended December 31, 2024 includes a $4 million gain on sale of its partially-owned investment in Setex. The three months ended December 31, 2023 includes an $8 million loss on sale of 51% of Adient's interest in LFADNT. Refer to Note 3, "Acquisitions and Divestitures," of the notes to the consolidated financial statements for more information.

Previous wording

(6) During the nine months ended June 30, 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.

Current wording

(6) 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 that should have been recognized in periods prior to fiscal 2023.

Previous wording

Net sales decreased during the third quarter of fiscal 2024 by $150 million primarily as a result of lower current quarter production volumes due to lower vehicle sales across customer platforms resulting from overall weakness in industry demand and program mix ($90 million), net unfavorable pricing adjustments ($38 million), unfavorable material economics recoveries ($11 million) and the unfavorable impact of foreign currencies ($11 million).

Current wording

Net sales decreased during the first quarter of fiscal 2025 by $36 million primarily due to lower production volumes as customers de-stocked inventory levels ($12 million), unfavorable material economics recoveries ($12 million), the unfavorable impact of foreign currencies ($11 million) and net unfavorable pricing adjustments ($1 million).

Previous wording

Net sales decreased during the first nine months of fiscal 2024 by $95 million primarily as a result of lower production volumes (primarily occurring in the current quarter) due to lower vehicle sales across customer platforms resulting from overall weakness in industry demand and program mix ($114 million), unfavorable material economics recoveries ($28 million) and net unfavorable pricing adjustments ($23 million), partially offset by the favorable impact of foreign currencies ($70 million).

Current wording

Net sales decreased during the first quarter of fiscal 2025 by $139 million primarily as a result of lower production volumes resulting from weakening consumer demand for new vehicles and product mix ($148 million) and unfavorable material economics recoveries ($3 million), partially offset by the favorable impact of foreign currencies ($6 million) and net favorable pricing adjustments ($6 million)

Previous wording

Adjusted EBITDA decreased during the first nine months of fiscal 2024 by $57 million due to unfavorable business performance driven by higher operating costs associated with lower levels of customer orders, often with little warning, (primarily occurring in the current quarter) leading to unplanned downtime and operating inefficiencies ($32 million), higher operating costs ($27 million), non-recurring net benefits largely associated with insurance recoveries in fiscal 2023 ($17 million) and the non-recurrence of prior year gains on sale of assets ($6 million), partially offset by favorable material economics, net of recoveries ($16 million), lower administrative and engineering expense ($1 million), the favorable impact of foreign currencies ($4 million) and increased equity income ($4 million).

Current wording

Adjusted EBITDA decreased during the first quarter of fiscal 2025 by $23 million due to lower production volumes and unfavorable product mix ($26 million), higher operating costs associated with the timing of launches and net inefficiencies associated with lower levels of customer orders ($10 million) and the unfavorable impact of foreign currencies ($2 million), partially offset by lower administrative and engineering expense ($8 million), favorable net pricing adjustments ($4 million), higher equity income ($2 million) and favorable material economics, net of recoveries ($1 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 June 30, 2024, Adient had not drawn down on the ABL Credit Facility and had availability under this facility of $923 million (net of $11 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 Krona. 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 Secured Overnight Financing Rate (“SOFR”), in the case of amounts outstanding in Dollars, Euro Interbank Offered Rate (“EURIBOR”), in the case of amounts outstanding in Euros, Stockholm Interbank Offered Rate (“STIBOR”), in the case of amounts outstanding in Swedish Krona and Sterling Over Night Indexed Average (“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, 2024, Adient had not drawn down on the ABL Credit Facility and had availability under this facility of $875 million (net of $7 million of letters of credit).

Previous 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 an outstanding balance of $633 million as of June 30, 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. The Term Loan B Agreement amortizes in equal quarterly installments at a rate of 1.00% per annum of the original principal amount thereof, with the remaining balance due at final maturity. Adient incurred $5 million of costs associated with the modification, of which $4 million was recorded as deferred financing costs.

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 $630 million and $632 million as of December 31, 2024 and September 30, 2024, respectively. During 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. During the first quarter of fiscal 2025, the Term Loan B Agreement was further amended to reduce the applicable margin from 2.75% to 2.25%. Adient incurred $1 million of costs associated with the modification, which was recorded as deferred financing costs. The Term Loan B Agreement amortizes in equal quarterly installments at a rate of 1.00% per annum of the original principal amount thereof, with the remaining balance due at final maturity. 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.

Previous 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 is 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 debt issuances.

Current wording

Adient Global Holdings Ltd. ("AGH"), a wholly-owned subsidiary of Adient, maintains (i) $500 million in aggregate principal amount of 7.00% senior secured notes due 2028 and (ii) $500 million in aggregate principal amount of 8.250% senior unsecured notes due 2031. Interest on both of these notes is paid on April 15 and October 15 each year, beginning on October 15, 2023. These notes contain covenants that are usual and customary. AGH also maintains $795 million in aggregate principal amount of 4.875% USD-denominated unsecured notes due 2026, as of December 31, 2024 and September 30, 2024.

Previous wording

Operating Cash Flows: The decrease in cash flows from operating activities is primarily due to lower profitability driven by lower production volumes for the first nine months of fiscal 2024, partially offset by favorable changes to working capital year-over-year.

Current wording

Operating Cash Flows: The increase in cash flows from operating activities is due to a decrease in working capital year-over-year, primarily driven by a decrease in accounts receivable. See the Working capital section below for more information.

Previous wording

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

Current wording

Investing Cash Flows: The decrease in cash used by investing activities is primarily attributable to the sale of Setex, partially offset by higher capital expenditures as further explained below.

Previous wording

Financing Cash Flows: The increase in cash used by financing activities is attributable to $225 million common stock repurchases transacted during the first nine 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.

Current wording

Financing Cash Flows: The decrease in cash used by financing activities is primarily attributable to fewer common stock repurchases transacted in the first quarter of fiscal 2025 ($25 million) compared to the first quarter of fiscal 2024 ($100 million), partially offset by the acquisition of the noncontrolling interest of Technotrim ($28 million). Refer to Note 11, "Equity and Noncontrolling Interests," of the notes to the consolidated financial statements for additional information.

Previous wording

Capital expenditures: Higher capital expenditures during the first nine 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 three months of fiscal 2025 were due primarily to timing of program spend on product launches.

Previous wording

Working capital decreased by $250 million due to decreases in cash and inventories and an increase in restructuring reserve, partially offset by decreases in accrued compensation and benefits.

Current wording

Working capital decreased by $140 million primarily due to decreases in accounts receivable and cash and cash equivalents, partially offset by decreases in accounts payable and accrued compensation and benefits.

Previous wording

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 $100 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.

Current wording

During the first three months of fiscal 2025, Adient committed to restructuring actions (the "2025 Plan") resulting in charges of $9 million. Additional charges totaling $4 million related to prior year plans were also recorded during the three months ended December 31, 2024. The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions in Asia and EMEA. The 2025 Plan is being implemented in response to manufacturing footprint and structural changes occurring in the global automotive industry 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 2025 Plan will reduce annual operating costs by approximately $6 million, which is primarily the result of lower costs of sales and SG&A due to reduced employee-related costs, of which approximately 60% 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 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, all of which had been spent as of June 30, 2023. During the third quarter of fiscal 2024, Adient repurchased and immediately retired 2,633,704 of its ordinary shares at an average purchase price per share of $28.48. The aggregate amount of cash paid to repurchase shares during the third quarter of fiscal 2024 was $75 million. During the first nine months of fiscal 2024, Adient repurchased and immediately retired 7,098,052 of its ordinary shares at an average purchase price per share of $31.70. The aggregate amount of cash paid to repurchase shares during the nine months ended June 30, 2024 was $225 million. As of June 30, 2024, the remaining aggregate amount of authorization remaining under the share repurchase authorization was $310 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 2024, Adient repurchased and immediately retired 9,424,668 of its ordinary shares at an average purchase price per share of $29.18. The aggregate amount of cash paid to repurchase the shares was $275 million. During the first quarter of fiscal year 2025, Adient repurchased and immediately retired 1,227,329 of its ordinary shares at an average purchase price per share of $20.37. The aggregate amount of cash paid to repurchase shares was $25 million, all of which had been spent as of December 31, 2024. As of December 31, 2024, the remaining aggregate amount of authorization remaining under the share repurchase authorization was $235 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 June 30, 2024, $133 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 December 31, 2024, $172 million was funded under these programs compared to $170 million as of September 30, 2024.

Previous wording

The effects of inflation have historically not been significant to Adient's results of operations. Generally, Adient has been able to implement operating efficiencies to sufficiently offset cost increases, which over time have been moderate. The automotive industry has experienced periods of significant volatility in commodity and other input costs, including steel, petrochemical, freight energy and labor costs. This price volatility may continue into the future as demand increases and/or supply remains constrained. Price volatility has resulted in an overall increase of input costs for Adient that may not be, or may only be partially, offset through customer negotiations.

Current wording

The effects of inflation have historically not been significant to Adient's results of operations. Generally, Adient has been able to implement operating efficiencies to sufficiently offset cost increases, which over time have been moderate. The automotive industry has experienced periods of significant volatility in commodity and other input costs, including steel, petrochemical, freight energy and labor costs. This price volatility may continue into the future as demand increases and/or supply remains constrained. Price volatility has resulted in an overall increase of input costs for Adient that may not be, or may only be partially, offset through customer negotiations. During fiscal 2025, commodity prices and availability could fluctuate throughout the year and significantly affect Adient's results of operations.

Previous wording

See Note 1, "Organization and Summary of Significant Accounting Policies," of the notes to consolidated financial statements for a discussion of new accounting pronouncements.

Current wording

See Note 1, "Organization and Summary of Significant Accounting Policies," of the notes to the consolidated financial statements for a discussion of new accounting pronouncements.