Adient (ADNT)·Q1 2026 Earnings Summary

Adient Crushes Q1 Estimates, Raises Full-Year Guidance on Strong China Growth

February 4, 2026 · by Fintool AI Agent

Adient delivered a strong start to FY2026, beating analyst expectations across all major metrics and raising full-year guidance. Revenue of $3.64B exceeded the $3.48B consensus by 4.8%, while adjusted EPS of $0.35 crushed the $0.19 estimate by 81%. The automotive seating supplier cited improved production volumes, strong business performance, and exceptional growth in China as key drivers.

Did Adient Beat Earnings?

Yes — a clean beat across all metrics:

The $11M year-over-year improvement in adjusted EBITDA was achieved despite temporary production disruptions including the Novelis fire, Nexperia shortage, and JLR production issues — all of which management noted are "nearly behind us." Key performance drivers included:

• Favorable business performance (+$8M) from timing of commercial and supplier recoveries
• Equity income (+$8M) from increased sales and favorable performance in joint ventures
• FX tailwinds (+$6M) as hedging gains offset Mexican Peso and Polish Zloty headwinds

What Did Management Guide?

Full-year guidance raised across all metrics:

The guidance raise reflects improved vehicle production forecasts, particularly in North America where the company now assumes 15.0M units (up from 14.6M at original guidance).

Q2 Cadence Note: Management indicated Q2 EBITDA is expected to look "very similar" to Q1 due to Chinese New Year seasonality impacting Asia production. Earnings are weighted to the second half.

Cash taxes are temporarily elevated at ~$125M due to a non-recurring tax audit settlement expected in Q2.

How Did the Stock React?

ADNT shares were trading at $21.06 pre-earnings, up 0.5% on the day. The aftermarket quote showed shares at $21.20, suggesting modest positive reaction (+0.7%).

Beat/miss history (last 8 quarters):

*Values retrieved from S&P Global

The stock has ranged between $10.04 and $26.16 over the past 52 weeks, currently trading near the middle of that range.

What Changed From Last Quarter?

Key improvements:

1. China outperformance accelerated — Sales +25% YoY vs. market +3%, driven by new programs with domestic OEMs
2. EMEA turnaround — Adj. EBITDA +$12M YoY on operational efficiencies and favorable material margins
3. Onshoring momentum — Identified ~$500M annual revenue opportunity from ~525K incremental units

Persistent challenges:

• Americas volume/mix headwinds (-$15M) from customer production disruptions, particularly at key customers
• Margin compression in China as customer mix shifts toward local OEMs (consolidated business only — JV/equity income not impacted)

Regional Performance

Americas: Navigating Customer Disruptions

Revenue grew 2% YoY to $1.64B, but adjusted EBITDA declined $5M to $80M.

• Customer production disruptions impacted volumes, though management noted these appear "largely resolved"
• Aggressively pursuing onshoring opportunities — both direct and indirect
• Key launches include GM Chevrolet Bolt and Toyota RAV4

EMEA: Restructuring Gains Materializing

Revenue declined 3% YoY to $1.21B, but adjusted EBITDA surged +$12M to $34M.

• Business performance improvement of $8M from operational efficiencies
• Volume/mix favorable $5M from key customer programs
• European restructuring "continues as planned" with ~$120-130M in cash restructuring spend expected for FY26 (similar to FY25 levels)
• Management expects 25-50 bps margin improvement as the region moves into FY27

Asia: China Leading the Way

Revenue grew 5% YoY to $819M, with adjusted EBITDA +$4M to $115M.

• China sales +25% YoY — outperforming broader market by 22 percentage points
• Strengthening relationships with Chinese domestic OEMs; targeting 60/40 domestic to global OEM split by year-end
• Equity income +$9M from increased JV sales

Capital Allocation and Balance Sheet

The company returned $25M to shareholders via share repurchases (~2.1M shares) in Q1, leaving $110M under the existing authorization.

Net leverage of 1.7x remains within the company's 1.5x-2.0x target range. In January (post quarter-end), Adient successfully repriced its Term Loan B, achieving a 25 basis point reduction that will generate ~$1.5M in annualized interest expense savings.

$110M remains under the initial $600M share repurchase authorization with no expiration date.

Free Cash Flow Bridge

FCF declined $30M YoY primarily due to timing of VAT and commercial settlement payments. Management expects the full-year FCF target of ~$125M to be achieved.

Growth Catalysts: FY27 and Beyond

Management outlined several growth drivers beyond FY26:

Americas — Onshoring Wave

• ~400K units from direct onshoring (Nissan Rogue, Asia OEM C-SUV, others)
• ~25K units from indirect onshoring wins
• ~100K units from conquest/new wins
• Estimated ~$500M annual revenue, ramping $300M in FY27 and $500M in FY28

Asia — Domestic OEM Pivot

• Double-digit growth in China expected through FY28 despite flat production volumes
• Targeting 60/40 domestic to global OEM split by end of FY26

EMEA — Margin Accretive Rebalancing

• New/conquest business launching in FY27/FY28 to offset strategic program exits
• Balance in/out expected to be margin accretive

Key Programs and Innovation

New Business Wins:

• Ford Compact Crossover SUV
• NIO ET5t
• FAW-VW Audi PPE
• Geely Zeekr 9X / Lynk & Co. 900
• Honda Pilot/MDX

Current Launches:

• Mercedes-Benz GLB
• Kia Telluride
• Rivian R2
• Hyptec HT (featuring zero-gravity passenger seat)
• Chevy Volt (first long-distance JIT program in the Americas)

ModuTec Innovation: Adient announced Modutec, a modular seat design solution that simplifies the seat build process and enables higher automation. Key benefits include:

• ~20% total value chain savings driven by labor and freight efficiencies
• ~15% reduction in JIT floor space requirements
• Enhanced seat comfort and craftsmanship
• Faster and more flexible launch execution
• Lower delivered cost for customers

CEO Jerome Dorlack emphasized: "No other seat supplier is delivering a modular architecture at this scale."

Q&A Highlights

Onshoring Pipeline: $175M → $500M

Analyst Colin Langan (Wells Fargo) pressed for details on the onshoring opportunity growth. Management provided a clear bridge:

• $300M booked — Includes direct onshoring wins (~150K units) plus indirect wins (~25K units) and conquest business (~100K units)
• $200M pending — A domestic OEM moving production from Mexico to the U.S. is in final quote stages; decision expected within ~2 weeks
• Timing: ~$300M impacts FY27, full $500M run-rate in FY28

"We're spending capital now and launching up now to be able to roll it on in 2027." — Jerome Dorlack

F-Series Recovery Uncertainty

When asked about media reports of potential F-150 disruption, CEO Dorlack declined to "front run Ford" but noted current guidance reflects best-known information and the company expects to make up Q1 production shortfalls in the back half.

Europe: Three-Layered Defense Against Chinese Imports

Andrew Percoco (Morgan Stanley) asked how Adient is managing Chinese OEM competition in Europe. Dorlack outlined three strategies:

1. Go up-segment — Chinese EVs are heavy in A/B segments; Adient is winning C-segment and luxury (Porsche, high-end Volvo, German OE platforms)
2. Capture components on localized Chinese production — Win JIT and components business as Chinese OEMs set up European manufacturing
3. Supply exports from China — New JV with a Geely seating supplier provides access to export-bound vehicles

Industry Consolidation Commentary

Responding to Dan Levy (Barclays) on a competitor's announced truck program win, Dorlack confirmed it wasn't at Adient's expense and offered a broader industry view:

"This is a market that needs consolidation... The competitor who had that business, we have been actively conquesting their business. We've taken quite a few of their dots off the map."

Commercial Recoveries: Timing, Not Windfall

Emmanuel Rosner (Wolfe Research) asked if Q1's commercial recoveries were elevated. CFO Mark Oswald clarified it was "timing and cadence" — some Q3/Q4 recoveries were pulled into Q1, but full-year expectations are unchanged.

Chinese OEMs Eyeing North America

When asked about Chinese OEMs potentially entering Canada or Mexico, Dorlack confirmed active discussions with BYD and Geely, noting Adient's China relationships position them well if those OEMs expand.

Sustainability Progress

Adient released its 2025 Sustainability Report highlighting:

• 42% reduction in Scope 1 and 2 emissions since 2019
• 30% of electricity now attributable to renewable resources
• 6% YoY reduction in total water withdrawal
• 80% of suppliers assessed with a sustainability rating

CEO Dorlack positioned sustainability as a competitive advantage: "They reinforce our position as a trusted supplier to the world's leading OEMs, who are increasingly prioritizing responsible sourcing and measurable climate action."

Risks and Concerns

Near-term:

• Customer production disruptions (largely resolved but could recur)
• Tariff policy uncertainty under new U.S. administration
• Currency headwinds from Mexican Peso and Polish Zloty exposure
• Temporarily elevated cash taxes in Q2 from audit settlement

Structural:

• Increased competition from Chinese OEMs in EMEA and Asia
• Margin compression as customer mix shifts to local Chinese OEMs
• EV transition uncertainty and impact on seating content per vehicle

The Bottom Line

Adient delivered a clean beat and guide raise to start FY2026. The China pivot is working — 25% YoY growth in a market up only 3% demonstrates the company is winning share with domestic OEMs. The onshoring opportunity in North America could add $500M in revenue by FY28. With leverage at 1.7x and $1.7B in liquidity, the balance sheet supports continued share repurchases.

Key watch items: execution on onshoring wins, margin trajectory in China, and tariff policy developments. The Q2 call will be important to confirm F-150 production volumes are being recovered as assumed in guidance.

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Related: Adient Company Profile | Q4 FY2025 Earnings | Latest Transcript