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AP

Adient plc (ADNT)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY25 delivered revenue of $3.74B, up slightly year over year, with GAAP EPS of $0.43 and adjusted EPS of $0.45; adjusted EBITDA was $226M with a 6.0% margin, up 60 bps y/y, driven by improved business performance across regions despite tariff headwinds .
  • Versus S&P Global consensus, revenue beat ($3.64B* est.), while adjusted EPS modestly missed ($0.48* est. vs. $0.45 actual); management cited ~$4M net tariff expense in Q3 (down from ~$9M in Q2) and expects lower net tariff costs in Q4 [*GetEstimates].
  • FY25 guidance raised: revenue to ~$14.4B and adjusted EBITDA to ~$875M on strong YTD performance and expected solid Q4; free cash flow guidance maintained (see Guidance table) .
  • Strategic onshoring wins and a 75% U.S. production footprint underpin incremental opportunities; management quantified ~$150–$200M of incremental revenue from two onshoring programs ramping 2026–2027, with minimal incremental capex .
  • Capital deployment remains active: $50M of repurchases in Q3 (YTD $75M; ~4% of shares outstanding at FY start), net debt $1.53B and liquidity ~$1.7B (cash $860M + undrawn revolver) keep balance sheet flexibility for further returns and restructuring .

What Went Well and What Went Wrong

What Went Well

  • Margin expansion and solid adjusted EBITDA: Adjusted EBITDA rose to $226M (+12% y/y) with a 6.0% margin (+60 bps y/y), reflecting better net material margin and lower launch costs; Americas and Asia performance offset EMEA volume/mix pressures .
  • Revenue resilience and segment strength: Net sales edged up to $3.74B (+$25M y/y) with strong Asia margins (15.7% adj. EBITDA), and Americas margin improvement (6.4%); Asia adjusted EBITDA rose $12M y/y with 150 bps margin expansion .
  • Strategic wins and onshoring traction: CEO emphasized Adient as a “winner” from tariffs and onshoring; early wins (e.g., Nissan Rogue volume to TN, program moving from Canada to U.S.) expected to add $150–$200M incremental revenue in 2026–27 with existing capacity .

What Went Wrong

  • Tariff drag persisted (though improving): Net tariff expense was ~$4M in Q3 (vs. ~$9M in Q2); monthly gross exposure fell to ~$4M from ~$12M, but continued to weigh on results .
  • China and EMEA headwinds: Ongoing China softness from weaker luxury/Japanese OEM volumes and unfavorable mix; EMEA volume/mix and FX remained pressure points despite restructuring benefits .
  • EPS slightly below consensus: Adjusted EPS of $0.45 came in modestly under S&P Global consensus (~$0.48*), even as revenue exceeded estimates; FX drove a low incremental EBITDA conversion on the higher sales outlook [*GetEstimates].

Financial Results

Quarterly Trend (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)~$3.5B ~$3.6B $3.741B
Adjusted EBITDA ($USD Millions)$196 $233 $226
Adjusted EBITDA Margin %N/A6.5% 6.0%
GAAP Diluted EPS ($)$0.00 $(3.99) (goodwill impairment) $0.43
Adjusted Diluted EPS ($)$0.27 $0.69 $0.45

Q3 2025 vs Prior Year and vs S&P Global Consensus

MetricQ3 2024Q3 2025 (Actual)S&P Consensus*Surprise
Revenue ($USD Billions)$3.716B $3.741B ~$3.640B*Beat
Adjusted Diluted EPS ($)$0.32 $0.45 ~$0.48*Miss

Values with * are from S&P Global consensus via GetEstimates.

Segment Breakdown (Q3, YoY comparison)

SegmentNet Sales ($USD Millions) Q3’24Net Sales ($USD Millions) Q3’25Adj. EBITDA ($USD Millions) Q3’24Adj. EBITDA ($USD Millions) Q3’25Adj. EBITDA Margin % Q3’24Adj. EBITDA Margin % Q3’25
Americas$1,737 $1,760 $99 $112 5.7% 6.4%
EMEA$1,288 $1,268 $25 $21 1.9% 1.7%
Asia$712 $721 $101 $113 14.2% 15.7%
Corporate/Elims$(21) $(8) $(23) $(20) N/AN/A
Consolidated$3,716 $3,741 $202 $226 5.4% 6.0%

KPIs and Balance Sheet

KPIQ3 2024Q3 2025
Free Cash Flow ($USD Millions)$88 $115
Operating Cash Flow ($USD Millions)$158 $172
Capital Expenditures ($USD Millions)$70 $57
Cash & Equivalents ($USD Millions)$945 at 9/30/24 $860 at 6/30/25
Total Debt ($USD Millions)$2,405 at 9/30/24 $2,394 at 6/30/25
Net Debt ($USD Millions)$1,460 at 9/30/24 $1,534 at 6/30/25
Net Leverage Ratio (x)1.66 at 9/30/24 1.72 at 6/30/25
Share RepurchasesN/A$50M in Q3; $75M YTD (~4% of FY start shares)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY25~$13.9B (Jan update) ~$14.4B (Aug 6) Raised
Adjusted EBITDAFY25Near low end of ~$850M (Jan update) ~$875M (Aug 6) Raised
Free Cash FlowFY25~$150–$170M (May update) Maintained (range unchanged) Maintained
Adjusted Tax ExpenseFY25~ $115M (modeling assumption) No update communicated in Q3Unchanged/Not updated
Leverage TargetOngoingTarget 1.5x–2.0x Target unchanged Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 FY25)Current Period (Q3 FY25)Trend
Tariffs & MitigationGross monthly exposure ~ $12M; ~75% resolved; targeting 100% recoveries; Q2 net headwind ~$9M .Gross monthly exposure now ~ $4M; Q3 net headwind ~$4M; expect lower in Q4 .Improving exposure and recovery trend.
Onshoring OpportunitiesProactive proposals leveraging U.S. footprint; early customer dialogues .Incremental $150–$200M revenue from two wins (Nissan Rogue to TN, another Asia OEM to U.S.) in 2026–27; 75% of NA production U.S.-based vs ~55% for nearest competitor .Building pipeline; quantified revenue opportunity.
Regional DynamicsAmericas margin expansion; EMEA restructuring; Asia double-digit margins; China softness .Americas outperformance continues; EMEA troughing 2025 with path to mid-single-digit margins over 2–3 years; Asia margins expanded 150 bps; China softness persists but component wins with BYD/Denza D9 .Execution steady; EMEA improving framework.
Capital AllocationContinued repurchases; $25M in Q1; refinancing extended maturities; FCF outlook adjusted to $150–$170M .$50M repurchased in Q3; $75M YTD; $185M remaining authorization; liquidity ~$1.7B .Ongoing buybacks with balanced approach.
Technology/InnovationAutomation, AI visual inspection, product innovation; China technical center expansion .Launched mechanical massage seating innovation (GAC Trumpchi M8) with OTA support; growing interest in Americas/Europe .Continuing product differentiation.
FX/CommoditiesFX and commodities timing headwinds; recoveries lag .FX a key driver of low EBITDA conversion on higher sales; commodity timing still a headwind .Persistent, managed via commercial actions.

Management Commentary

  • “We see Adient as a winner and net beneficiary from the current tariff policies and onshoring dynamics.”
  • “Our gross monthly exposure to incremental tariffs... was approximately $12 million. Given policy changes in recent weeks, today that figure is closer to $4 million.”
  • “Adjusted EBITDA was $226 million, up 12% year on year. We expanded EBITDA margins 60 basis points year over year to 6%.”
  • “Given our positive momentum... we are raising our fiscal year 2025 revenue and EBITDA guidance to approximately $14.4 billion and approximately $875 million respectively.”
  • “Adient is competitively advantaged with the U.S. production footprint of 75% of total North American production compared to our nearest competitor with approximately 55%.”

Q&A Highlights

  • Onshoring revenue opportunity: Two announced wins equate to ~$150–$200M incremental revenue starting 2026 (ramping through 2027), run on existing capital; broader 600k units potential onshoring addressable, where Adient expects “more than our fair share” .
  • Europe margin path: EMEA expected to trough in FY25 and trend to mid-single digit EBITDA margins over 2–3 years with restructuring and mix benefits; another heavy restructuring year likely in 2026 .
  • F-150 sourcing: Adient does not currently supply F-150 metals (“not part of Adient’s crown jewel”); JIT awards are independent from metals, and Adient is focused on solution value to retain JIT .
  • EBITDA conversion and FX: Raised sales guide translates modestly to EBITDA due to translational FX and low-margin flow-through in Europe; underscores FX sensitivity .
  • Vertical integration stance: JIT/trim/foam vertical integration remains a strength, but customers may disaggregate other components to move fast; intimacy and delivery performance near plants are key advantages .

Estimates Context

  • Q3 FY25: Revenue beat (~$3.74B actual vs $3.64B* consensus), while adjusted EPS modestly missed ($0.45 actual vs ~$0.48* consensus) [*GetEstimates].
  • Next quarter (Q4 FY25) consensus: EPS ~$0.56*, revenue ~$3.62B*, EBITDA ~$229M*; management expects lower net tariff expense in Q4 and reiterated increased FY targets, implying potential upward pressure on FY revenue/EBITDA estimates even if quarterly EPS remains FX-sensitive [*GetEstimates].

Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue resilience with margin expansion: Adjusted EBITDA margin improved 60 bps y/y to 6.0% on $3.74B sales, demonstrating operating leverage and commercial traction despite macro/tariff noise .
  • Tariff overhang diminishing: Net tariff costs fell to ~$4M in Q3 and are expected lower in Q4; monthly gross exposure reduced to ~$4M from ~$12M, easing a key profit headwind .
  • Guidance raised on execution: FY25 revenue to ~$14.4B and adjusted EBITDA to ~$875M, signaling confidence in H2 setup and cost control; FCF guide maintained .
  • Onshoring as secular catalyst: Quantified $150–$200M incremental revenue from initial wins and 75% U.S. production footprint positions Adient to capture accelerated reshoring with limited capex .
  • Regional mix strategy intact: Americas and Asia margins are robust; EMEA restructuring and portfolio shifts point to a multi-year path to mid-single digit margins, a key medium-term EPS driver .
  • Capital returns supported by balance sheet: $50M repurchased in Q3 (YTD $75M), net leverage 1.72x and ~$1.7B liquidity preserve flexibility for further buybacks and restructuring funding .
  • Near-term trading lens: Revenue beat/adjusted EPS miss setup with raised FY guide favors sentiment on the print; watch FX and tariff recovery cadence into Q4, plus incremental onshoring announcements as potential positive stock catalysts .

Notes:

  • All non-GAAP figures (Adjusted EBITDA, Adjusted EPS, etc.) are as defined by the company; see reconciliations in the 8-K and press release .
  • Values marked with * are retrieved from S&P Global consensus via GetEstimates.