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Adient (ADNT) Tops Q1 Earnings & Sales Estimates, Tweaks View

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Adient PLC (ADNT - Free Report) reported adjusted earnings per share of 96 cents in first-quarter fiscal 2020, beating the Zacks Consensus Estimate of 31 cents. The figure also came in higher than the year-ago quarter’s 31 cents. This upside mainly resulted from better-than-expected performance in the company’s Americas segment.

During the reported quarter, the company generated net sales of $3,936 million, down from the $4,158 million recorded in first-quarter fiscal 2019. However, the top line surpassed the Zacks Consensus Estimate of $3,840 million.

During the fiscal first quarter, net sales in the Seat Structures & Mechanisms business totaled $2,265 million, up from the $2,201 million reported in first-quarter fiscal 2019. The Interior business generated net sales of $1,978 million, down from the $2067 million witnessed in the prior-year quarter.

Adient PLC Price, Consensus and EPS Surprise

Adient PLC Price, Consensus and EPS Surprise

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

Segment Results

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

In the Americas, the company recorded revenues of $1,859 million, down 3.93% year over year. However, it surpassed the Zacks Consensus Estimate of $1,803 million. Adient generated adjusted EBITDA of $94 million in the fiscal first quarter, indicating a rise from $43 the million recorded in the prior-year period, primarily owing to lower launch costs combined with decreased SG&A costs and low commodity costs.

In EMEA, Adient registered revenues of $1,564 million, down 4.63% year over year. However, it beat the Zacks Consensus Estimate of $1,562 million. Its quarterly adjusted EBITDA was $49 million compared with the prior-year quarter’s $2 million. This upside resulted from lower launch costs, along with decreased SG&A costs and lower commodity costs.

Revenues in the Asia segment were $572 million in the reported quarter compared with the year-earlier quarter’s $650 million. It also missed the Zacks Consensus Estimate of $573 million. The company’s adjusted EBITDA was $177 million compared with the $154 million reported in first-quarter fiscal 2019, mainly aided by an increase in equity income.

Financials

Adient had cash and cash equivalents of $965 million as of Dec 31, 2019 compared with $924 million as of Sep 30 ,2019. As of the same date, net debt amounted to $3,740 million, up from $3,708 billion as of Sep 30, 2019. Debt-to-capital ratio stands at 68.21%. Capital expenditure declined to $91 million in the fiscal first quarter from the $144 million recorded in the prior-year quarter.

Outlook

For 2020, the company has reaffirmed its guidance for consolidated sales at $15.6-$15.8 billion.

It expects adjusted EBITDA of $870-$910 million, up from the prior guidance of $820-$860 million. Capital expenditures are anticipated between $440 million and $460 million, suggesting a rise from the prior estimate of $465-$485 million. Free cash flow is now expected to be positive versus the prior breakeven forecast.

Zacks Rank & Stocks to Consider

Adient currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Auto-Tires-Trucks sector include Gentherm Inc THRM, Gentex Corporation GNTX and SPX Corporation SPXC. While Gentherm flaunts a Zacks Rank #1 (Strong Buy), Gentex Corporation and SPX carry a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Gentherm has a projected earnings growth rate of 20.60% for the ongoing year. Its shares have gained 7.3% over the past year.

Gentex Corporation has an estimated earnings growth rate of 7.32% for 2020. The company’s shares have appreciated 44.8% in a year’s time.

SPX has an expected earnings growth rate of 8.09% for the current year. The stock has rallied 60.7% in the past year.

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