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Adient (ADNT) Earnings Lag Estimates in Q2, Shares Decline

Zacks Equity Research

Shares of Adient plc ADNT declined roughly 9.8% in a day’s trading, following the second-quarter fiscal 2019 earnings release on May 7. In the reported quarter, the company’s adjusted earnings per share were 31 cents, missing the Zacks Consensus Estimate of 39 cents. The adjusted bottom-line figure in the year-ago quarter was $1.82 per share.

Reportedly, quarterly net loss attributable to Adient was $149 million compared with net loss of $168 million in the prior-year quarter.

During the quarter under review, the company reported net sales of $4.23 billion, marking a decline from $4.6 billion recorded in second-quarter fiscal 2018. However, the top line surpassed the Zacks Consensus Estimate of $4.12 billion.

Adient PLC Price, Consensus and EPS Surprise

 

Adient PLC Price, Consensus and EPS Surprise | Adient PLC Quote

During the reported quarter, Adient’s Seating and Seat Structures & Mechanisms (SS&M) segment’s net sales were $1.92 billion, down from $2.3 billion in second-quarter fiscal 2018. Further, the Interior segment reported net sales of $1.94 billion, down from $2.3 billion in the prior-year quarter.

Segment Results

During the second quarter, the company realigned its organizational structure to manage business on the basis of geographical regions. The three reportable segments Adient currently operates are Americas, which includes North America and South America; Europe, Middle East, and Africa ('EMEA"); and Asia Pacific/China ("Asia").

In the Americas, the company generated adjusted EBITDA of $34 million in second-quarter fiscal 2019 compared with $98 million recorded in the prior-year quarter. This plunge was due to lower volume and mix along with increased SG&A and product launch costs.

In EMEA, Adient’s quarterly adjusted EBITDA was $59 million compared with $130 million in the prior-year quarter. The plunge was due to lower volume, negative impact of foreign currencies and product launch inefficiencies.

In Asia, the company’s quarterly adjusted EBITDA was $123 million compared with $157 million in the second quarter of fiscal 2018. This decline was due to lower volume and equity income.

Financials

Adient had cash and cash equivalents of $491 million as of Mar 31, 2019, compared with $687 million as of Sep 30, 2018. As of the same date, net debt amounted to $2.9 billion, up from $2.7 billion as of Sep 30, 2018.

In the second quarter, cash inflow by operating activities was $168 million against an outflow of $23 million in the same period of fiscal 2018. Capital expenditure declined to $108 million from $123 million recorded in the prior-year quarter.

Zacks Rank & Stocks to Consider

Adient currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader auto sector are Gentex Corporation GNTX, Oshkosh Corporation OSK and Ford Motor Company F, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Gentex has an expected long-term growth rate of 6%. The stock has gained 18.1% in the past three months.

Oshkosh has an expected long-term growth rate of 11.6%. The stock has gained 3.3% in the past three months.

Ford has an expected long-term growth rate of 8.1%. Over the past three months, shares of the company have gained 23.7%.

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