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, 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.

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, uncertainties in U.S. administrative policy regarding trade agreements, tariffs and other international trade relations, 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, 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, potential adjustment of the value of deferred tax assets, global climate change and related empha…

Excerpt shortened here; the source contains the full paragraph.

Previous 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.

Current wording

The results presented below for each reporting segment were in line with internal expectations for the second quarter of fiscal 2025. However, such results are not necessarily indicative of full-year results as Adient, along with the automotive industry, faces uncertainties surrounding future production volume within the automotive industry. These uncertainties are the result of a combination of factors including weakening consumer demand due in part to vehicle affordability, the direct and indirect impacts resulting from the imposition of U.S. and foreign tariffs, market share loss for foreign/luxury OEMs in the Asia reporting unit combined with modest expected margin declines as Adient continues to win new business with local OEMs in China, intensifying competition from Chinese imports and lower exports to China from EMEA as domestic brands expand in China, overcapacity in the EMEA reporting unit resulting in pricing pressure along with continued disruptions caused by slower electric vehicle adoption rates. 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 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.

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, 2025, global light vehicle production increased 2.4% and 1.8%, respectively, primarily driven by improved production volumes by local OEMs in China, partially offset by reduced production volumes in the North America and EMEA.

Previous wording

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

Current wording

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

Previous 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.

Current wording

•Adient recorded net sales of $3,611 million for the second quarter of fiscal 2025, representing a decrease of $139 million or 3.7% when compared to the second quarter of fiscal 2024. The decrease in net sales is primarily attributable to Adient's lower overall production volumes in EMEA and China, which is partially offset by higher production volumes in Americas and other countries in Asia, the unfavorable impact of foreign currencies, and unfavorable material economics recoveries, partially offset by favorable pricing adjustments.

Previous 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.

Current wording

•Gross profit was $261 million, or 7.2% of net sales, for the second quarter of fiscal 2025 compared to $230 million, or 6.1% of net sales for the second quarter of fiscal 2024. Profitability, including gross profit as a percentage of net sales, was higher due primarily to favorable pricing adjustments and operating performance, more than offsetting lower production volumes.

Previous wording

Net sales decreased by $165 million, or 5%, in the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024 due to lower overall production volumes in EMEA and China as a result of softening consumer demand and adverse product mix in China ($147 million), unfavorable material economics recoveries ($15 million) and the unfavorable impact of foreign currencies ($5 million), partially offset by favorable pricing ($2 million).

Current wording

Net sales decreased by $139 million, or 4%, in the second quarter of fiscal 2025 as compared to the second quarter of fiscal 2024 due to lower overall production volumes in EMEA and China as a result of softening consumer demand in EMEA and adverse product mix in Asia, which is partially offset by production volume increases in Americas and Asia (excluding China) ($105 million), the unfavorable impact of foreign currencies ($49 million) and unfavorable material economics recoveries ($19 million), partially offset by favorable pricing adjustments ($34 million).

Previous 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.

Current wording

Cost of sales decreased by $170 million, or 5%, and gross profit increased by $31 million, or 13%, in the second quarter of fiscal 2025 as compared to the second quarter of fiscal 2024. The year over year decrease in cost of sales was primarily due to lower production volumes ($100 million), the favorable impact of foreign currencies ($38 million), favorable pricing adjustments including KEIPER supply agreement modifications ($20 million), favorable operating performance, net of a $9 million unfavorable tariff impact ($8 million), favorable material economics ($5 million) and lower depreciation expense ($3 million), partially offset by higher restructuring related charges ($4 million). Gross profit for the three months ended March 31, 2025 was favorably impacted by favorable pricing adjustments and favorable operating performance, partially offset by unfavorable material economics, net of recoveries, the net unfavorable impact of foreign currencies and lower production volumes.

Previous 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).

Current wording

SG&A expenses increased by $7 million, or 3%, during the first six months of fiscal 2025 as compared to the first six months of fiscal 2024. The year over year increase in SG&A was primarily due to third-party consulting costs associated with strategic planning ($8 million), higher net engineering and other administrative spending ($6 million), partially offset by lower compensation expense including lower performance-based incentive compensation costs and other compensation related austerity measures ($3 million), the favorable impact of foreign currencies ($2 million) and other non-recurring items ($2 million).

Previous 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.

Current wording

Restructuring and impairment costs were higher by $226 million during the second quarter of fiscal 2025 and higher by $238 million during the first six months of fiscal 2025 mainly due to a $333 million impairment charge relating to EMEA's goodwill during the three months ended March 31, 2025 and a $10 million impairment loss recorded on the Adient Aerospace investment during the first six months of fiscal 2025, partially offset by higher levels of restructuring charges recorded primarily in EMEA in the prior year 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. Refer to Note 5, "Goodwill and Other Intangible Assets" and 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 the goodwill impairment recorded during the three months ended March 31, 2025 and Adient's restructuring plans.

Previous 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).

Current wording

Equity income was $43 million during the first six months of fiscal 2025, compared to $41 million during the first six months of fiscal 2024. The increase is primarily attributable to favorable operating performance at partially-owned affiliates ($15 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 unfavorable impact of the KEIPER supply agreement modifications ($18 million).

Previous 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.

Current wording

Net financing charges were higher by $1 million in the second quarter of fiscal 2025 as compared to the second quarter of fiscal 2024, and by $2 million during the first six months of fiscal 2025 as compared to the first six months of fiscal 2024. The increase was due to one-time accelerated-deferred financing fee charges associated with early redemption of the 4.875% notes. 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 $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.

Current wording

Other pension expense was lower by $1 million in the second quarter of fiscal 2025 as compared to the second quarter of fiscal 2024, and lower by $2 million during the first six months of fiscal 2025 as compared to the first six months of fiscal 2024 due primarily to higher expected return on assets. 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 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.

Current wording

The second quarter fiscal 2025 income tax expense of $48 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, $19 million of tax expense related to adjustments to net operating loss deferred tax assets, $9 million of tax expense related to the establishment of an uncertain tax position, and the impact of the impairment of the non-tax-deductible portion of the EMEA goodwill balance for which there is no corresponding income tax benefit. The second quarter fiscal 2024 income tax expense of $8 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, partially offset by $14 million of tax benefits from the release of uncertain tax positions due to audit closures.

Previous wording

The income attributable to noncontrolling interests was unchanged in the first three months of fiscal 2025 compared to the first three months of fiscal 2024, noting that a $5 million adjustment was recorded in the first three months of fiscal 2024 related to a prior period.

Current wording

Income attributable to noncontrolling interests in the second quarter of fiscal 2025 was comparable to the second quarter of fiscal 2024. Income attributable to noncontrolling interests during the first six months of fiscal 2025 as compared to the first six months of fiscal 2024 was impacted by higher production volumes at certain affiliates, partially offset by a $5 million adjustment to increase income attributable to noncontrolling interests recorded in fiscal 2024 related to a prior period.

Previous 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).

Current wording

Comprehensive loss attributable to Adient was $454 million during the first six months of fiscal 2025, compared to $10 million of comprehensive loss during the first six months of fiscal 2024. The increase of $444 million is due primarily to a higher net loss primarily resulting from the non-cash goodwill impairment in the EMEA reporting unit ($284 million), the unfavorable impact of foreign currency translation adjustments ($182 million), partially offset by higher realized and unrealized gains on derivatives ($6 million) and lower comprehensive income attributable to noncontrolling interests ($16 million).

Previous 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.

Current wording

The results presented below are not necessarily indicative of full-year results as Adient, along with the automotive industry, faces uncertainties surrounding future production volume within the automotive industry. These uncertainties are the result of a combination of factors including weakening consumer demand due in part to vehicle affordability, the direct and indirect impacts resulting from the imposition of U.S. and foreign tariffs, market share loss for foreign/luxury OEMs in the Asia reporting unit combined with modest expected margin declines as Adient continues to win new business with local OEMs in China, intensifying competition from Chinese imports and lower exports to China from EMEA as domestic brands expand in China, overcapacity in the EMEA reporting unit resulting in pricing pressure along with continued disruptions caused by slower electric vehicle adoption rates. 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 reporting units for implications on the recoverability of long-lived assets, including goodwill.

Previous wording

The following is a reconciliation of Adient's reportable segments' adjusted EBITDA to income before income taxes:

Current wording

The following is a reconciliation of Adient's reportable segments' adjusted EBITDA to income (loss) before income taxes:

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

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, 2025 and 2024 include a $5 million and a $10 million gain on sale of restructured facilities, respectively.

Previous 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.

Current wording

(5) The six months ended March 31, 2025 reflects a $4 million gain on sale of Adient's partially-owned investment in Setex. The six months ended March 31, 2024 reflects 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 additional information.

Previous 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.

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 fiscal 2023.

Previous wording

(7) The three months ended December 31, 2024 includes a $2 million gain on a non-recurring contract related settlement. The three months ended December 31, 2023 includes a $3 million gain on a non-recurring contract related settlement, partially offset by a $2 million one-time divestiture related tax impact at an affiliate.

Current wording

(7) The three months ended March 31, 2025 includes $8 million of third-party consulting costs associated with strategic planning and a $1 million non-recurring loss at affiliates. The six months ended March 31, 2025 includes $8 million of third-party consulting costs associated with strategic planning and a $1 million non-recurring loss at affiliates, partially offset by a $2 million gain on a non-recurring contract related settlement. The three months ended March 31, 2024 reflects $1 million of indirect tax recoveries in Brazil. The six months ended March 31, 2024 includes a $3 million non-recurring gain on a contract related settlement and $1 million of indirect tax recoveries in Brazil, partially offset by $2 million one-time divestiture related tax impact at an affiliate.

Previous 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)

Current wording

Net sales decreased during the second 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 ($108 million), the unfavorable impact of foreign currencies ($34 million) and unfavorable material economics recoveries ($8 million), partially offset by net favorable pricing adjustments ($11 million).

Previous 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).

Current wording

Adjusted EBITDA decreased during the first six months of fiscal 2025 by $30 million due to lower production volumes and unfavorable product mix ($35 million), the unfavorable impact of foreign currencies ($9 million), unfavorable operating performance associated with net inefficiencies related to lower levels of customer orders ($8 million) and unfavorable material economics, net of recoveries ($5 million), partially offset by net favorable pricing adjustments ($22 million), lower administrative and engineering expense ($4 million) and higher equity income ($1 million).

Previous wording

Net sales increased during the first quarter of fiscal 2025 by $2 million due to higher production volumes in Asia countries outside of China resulting from new program launches partially offset by lower production volumes within China resulting from lower levels of premium vehicle production volume along with the cancellation of certain local OEM programs ($5 million), all of which is partially offset by net unfavorable pricing adjustments ($3 million).

Current wording

Net sales decreased during the second quarter of fiscal 2025 by $35 million due to lower production volumes within China resulting from lower levels of premium vehicle production volume, partially offset by increased volumes in other Asia countries ($17 million), the unfavorable impact of foreign currencies ($9 million), net unfavorable pricing adjustments ($8 million), and unfavorable material economics recoveries ($1 million).

Previous wording

Adjusted EBITDA decreased during the first quarter of fiscal 2025 by $3 million due to unfavorable product mix primarily related to lower levels of premium vehicle production volume in China along with the cancellation of certain local OEM programs ($18 million) and lower equity income including an unfavorable $12 million impact from KEIPER supply agreement modifications ($5 million), partially offset by favorable net pricing adjustments ($7 million), the favorable impact of foreign currencies ($6 million), operational improvements including improved freight costs ($5 million) and lower administrative and engineering expense ($2 million).

Current wording

Adjusted EBITDA decreased during the first six months of fiscal 2025 by $5 million due to unfavorable volumes and mix ($28 million), lower equity income including an unfavorable $18 million impact from KEIPER supply agreement modifications ($3 million), and higher administrative and engineering expense ($1 million), partially offset by operational improvements including improved freight costs ($11 million), net favorable pricing adjustments ($9 million) and the favorable impact of foreign currencies ($7 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 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).

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 is set to mature on November 2, 2027, subject to certain springing maturity provisions. Adient 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 March 31, 2025, Adient had not drawn down on the ABL Credit Facility and had availability under this facility of $843 million (net of $8 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 $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.

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 $629 million and $632 million as of March 31, 2025 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

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.

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 maintained $795 million in aggregate principal amount of 4.875% USD-denominated unsecured notes due 2026 as of September 30, 2024. In February 2025, AGH issued $795 million (net proceeds of $783 million) in aggregate principal amount of 7.50% senior unsecured notes. Adient incurred $12 million of costs associated with the transaction, which was recorded as deferred financing costs. Proceeds from the sale of the notes, together with cash on hand, were used to fully redeem AGH's 4.875% senior unsecured notes in March 2025. Upon redemption of the 4.875% notes, Adient wrote off $2 million of previously deferred financing costs associated with the notes to net financing charges. The new notes mature on February 15, 2033 and bear interest at a rate of 7.50% per annum. Interest on the notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2025. These notes also contain covenants that are usual and customary.

Previous 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.

Current wording

Operating Cash Flows: The decrease in cash flows from operating activities is due to a decrease in accounts payable and a higher level of cash payments associated with restructuring activities. See the Working capital section below for more information.

Previous 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.

Current wording

Investing Cash Flows: The decrease in cash used by investing activities is primarily attributable to current-year proceeds received from the sale of Adient's interest in Setex and lower capital expenditures.

Previous 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.

Current wording

Financing Cash Flows: The decrease in cash used by financing activities is primarily attributable to a lower level of share repurchase activities in the first six months of fiscal 2025 ($25 million) compared to the first six months of fiscal 2024 ($150 million), partially offset by the acquisition of the noncontrolling interest in Technotrim ($28 million) and a higher level of dividends paid to noncontrolling interests ($26 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 three months of fiscal 2025 were due primarily to timing of program spend on product launches.

Current wording

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

Previous 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.

Current wording

Working capital decreased by $25 million primarily due to a decrease in cash and cash equivalents, partially offset by an increase in other current assets and decreases in accounts payable, other current liabilities, and accrued compensation and benefits.

Previous 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.

Current wording

During the first six months of fiscal 2025, Adient committed to restructuring actions ("2025 Plan") resulting in charges of $33 million, which was offset by $2 million of prior-year underspend. The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions in 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 $37 million, which is primarily the result of lower costs of sales and SG&A due to reduced employee-related costs, of which approximately 45% 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 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.

Current wording

In November 2022, Adient’s board of directors authorized the repurchase of Adient’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, of which $150 million had been spent through March 31, 2024. During the six months ended March 31, 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 March 31, 2025, 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 December 31, 2024, $172 million was funded under these programs compared to $170 million as of September 30, 2024.

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, 2025, $170 million was funded under these programs which was a similar amount funded as of September 30, 2024.

Previous wording

Adient also has a program with an external financial institution under which Adient's suppliers can sell their receivables from Adient to the financial institution at their sole discretion. Adient is not a party to the agreements between the participating suppliers and the financial institution. Adient's obligation under the program is to pay the original amounts of supplier invoices to the financial institution on the original invoice dates. No fees are paid and no assets are pledged by Adient. The payment terms for trade payables can range from 45 days to 120 days depending on types of services and goods being purchased. The payment terms for molds, dies and other tools that are acquired as part of pre-production activities are in general longer, and are normally dependent on the terms which Adient has agreed with its customers. As of December 31, 2024, and September 30, 2024, Adient's liabilities related to this program were $92 million and $76 million, respectively. Cash flows related to the program are all presented within operating activities in Adient's consolidated statements of cash flows.

Current wording

Adient also has a program with an external financial institution under which Adient's suppliers can sell their receivables from Adient to the financial institution at their sole discretion. Adient is not a party to the agreements between the participating suppliers and the financial institution. Adient's obligation under the program is to pay the original amounts of supplier invoices to the financial institution on the original invoice dates. No fees are paid and no assets are pledged by Adient. The payment terms for trade payables can range from 45 days to 120 days depending on types of services and goods being purchased. The payment terms for molds, dies and other tools that are acquired as part of pre-production activities are in general longer, and are normally dependent on the terms which Adient has agreed with its customers. As of March 31, 2025, and September 30, 2024, Adient's liabilities related to this program were $91 million and $76 million, respectively. Cash flows related to the program are all presented within operating activities in Adient's consolidated statements of cash flows.

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. During fiscal 2025, commodity prices and availability could fluctuate throughout the year and significantly affect Adient's results of operations.

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.

Previous wording

See "Critical Accounting Estimates and Policies" under the heading "Item 7" of Adient's Annual Report on Form 10-K for the fiscal year ended September 30, 2024, for a discussion of critical accounting estimates and policies. There have been no material changes to Adient's critical accounting estimates and policies during the three months ended December 31, 2024.

Current wording

See "Critical Accounting Estimates and Policies" under the heading "Item 7" of Adient's Annual Report on Form 10-K for the fiscal year ended September 30, 2024, for a discussion of critical accounting estimates and policies. There have been no material changes to Adient's critical accounting estimates and policies during the three months ended March 31, 2025 except for the following: