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Adient's (ADNT) Q4 Loss Narrower Than Expected, Sales Miss

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·4 min read
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Adient PLC ADNT reported an adjusted loss per share of 24 cents per share in the fiscal fourth quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of 65 cents. The bottom line compared unfavorably with the year-ago earnings of $1.15 per share. This downside stemmed from adverse impacts from unplanned production outages and disruptions owing to the global chip crunch.

In the reported quarter, Adient generated net sales of $2,771 million, significantly down from $3,597 million recorded in the prior-year period. The top line also missed the Zacks Consensus Estimate of $3,013.2 million.

Adient Price, Consensus and EPS Surprise

Adient Price, Consensus and EPS Surprise
Adient Price, Consensus and EPS Surprise

Adient price-consensus-eps-surprise-chart | Adient Quote

Segmental Performance

Adient currently operates through three reportable segments — the Americas, which includes North America and South America; Europe, Middle East, and Africa (EMEA); and Asia Pacific/China (Asia).

In the reported quarter, the Americas segment recorded revenues of $1,343 million, declining from $1,795 million generated in the year-ago period. The segment posted adjusted EBITDA of $13 million in the quarter, falling steeply from $111 million recorded in the prior-year period. The downside was due to a number of factors, including significantly lower volume and temporary operating inefficiencies brought by supply chain disruptions, increased freight and commodity costs.

In the fiscal fourth quarter, the EMEA segment registered revenues of $996 million, declining from $1,398 in the year-ago quarter. The segment recorded breakeven EBITDA in the quarter under review against $84 million profits in the prior-year quarter. Lower volumes and operating inefficiencies resulted in bleak results.

In the September quarter, revenues in the Asia segment came in at $465 million, up from $460 million generated in the year-ago quarter. The segment’s adjusted EBITDA was $122 million, increasing from the $113 million reported in the fourth quarter of fiscal 2020. The results were driven by improved volume and mix, an upbeat business performance, and favorable foreign exchange impacts.

Financial Position

Adient had cash and cash equivalents of $1,521 million as of Sep 30, 2021 compared with $1,692 million on Sep 30, 2020. Long-term debt amounted to $3,512 million in the reported quarter, down from $4,097 billion. Capital expenditure increased to $74 million in the fiscal fourth quarter from $68 million recorded in the prior-year period.

Company Outlook

Macro headwinds in the form of supply chain disruptions and inflationary pressures on commodities, freight, and energy are expected to affect the company significantly in 2022. Adient sees both earnings and cash flow in 2022 to be affected by these headwinds. Vehicle production is anticipated to be a moderate tailwind led by relatively flat yearly global production schedules. Amidst the challenging operating environment, the company will focus on deleveraging the balance sheet through voluntary debt pay down supported by cash on the balance sheet and final proceeds from its China transactions. Despite a tight market situation, the company has increased the guidance for fiscal 2022 consolidated sales. It expects fiscal 2022 revenues of $14.8 billion, higher than $13.7 billion recorded in fiscal 2021.

Zacks Rank & Key Picks

Adient currently carries a Zacks Rank #5 (Strong Sell).

Better-ranked peers in the same space are Goodyear GT, flaunting a Zacks Rank #1 (Strong Buy), and Genuine Parts GPC and Dorman Products DORM, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Goodyear has an expected earnings growth rate of 197% for the current year. The Zacks Consensus Estimate for earnings for the current year has been revised 77% upward over the last 60 days.

Goodyear beat the Zacks Consensus Estimate for earnings in all the four trailing quarters. The company pulled off a trailing four-quarter earnings surprise of roughly 228.5%, on average. Its shares have also gained around 125.1% over a year.

Genuine Parts has an expected earnings growth rate of 27.3% for the current year. The Zacks Consensus Estimate for the current year has been revised around 5% upward over the last 60 days.

Genuine Parts beat the Zacks Consensus Estimate for earnings in all of the four trailing quarters. The company delivered a trailing four-quarter earnings surprise of roughly 16%, on average. Its shares have also rallied around 36.5% over a year.

Dorman has an expected earnings growth rate of 36% for the current year. The Zacks Consensus Estimate for the current year has been revised 2% upward over the last 60 days.

Dorman beat the Zacks Consensus Estimate for earnings in all of the four trailing quarters. The company pulled off a trailing four-quarter earnings surprise of roughly 10.41%, on average. Its shares have also rallied around 23.9% over a year.


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