Adient plc

Welcome to the Addiance fourth quarter and full year 2025 earnings call. Parties will be in a listen-only mode until the question and answer session of today's call. I'd like to inform all participants that today's call is being recorded. If you have any objections, you may disconnect at this time. I will now turn the call over to Linda Conrad. Thank you. You may begin.

Thank you, Denise. Good morning, everyone, and thank you for joining us. The press release and presentation slides for our call today have been posted to the investor section of our website at adiant.com. This morning, I am joined by Jerome Dorlak, Adiant's President and Chief Executive Officer, and Mark Oswald, our Executive Vice President and Chief Financial Officer. On today's call, Jerome will provide an update on the business. Mark will then review our Q4 and full-year financial results. as well as our guidance for fiscal year 26. After our prepared remarks, we will open the call to your questions. Before I turn the call over to Jerome and Mark, there are a few items I'd like to cover. First, today's conference call will include forward-looking statements. These statements are based on the environment as we see it today, and therefore involve risks and uncertainties. I would caution you that our actual results could differ materially from these forward-looking statements made on the call. Please refer to slide two of the presentation for our complete safe harbor statement. In addition to the financial results presented on a GAAP basis, we will be discussing non-GAAP information that we believe is useful in evaluating the company's operating performance. Reconciliations for these non-GAAP measures to the closest GAAP equivalent can be found in the appendix of our full earnings release. And with that, it is my pleasure to turn the call over to Jerome.

Thanks, Linda. Good morning, everyone, and thank you for joining us to review our fourth quarter and full-year fiscal 25 results. We will also discuss our fiscal 26 outlook and share additional information on how we are positioning ourselves for long-term success. Turning now to slide four, which summarizes our fourth quarter and full-year results. With business execution remaining strong, we delivered an adjusted EBITDA margin of 6.1% and free cash flow of 134 million in the quarter. It's worth noting that full year free cash flow ended at 204 million versus the previous high end of our guidance range of 170 million, leaving us with ample liquidity when it comes to 26 capital allocation, which Mark will cover in his section. This performance comes amidst challenging business conditions not just in the fourth quarter, but throughout the year, including customer volume reductions and dynamic tariff policies. The Adiant Management team would like to recognize all of our employees for stepping up and meeting these challenges. By working together with both our customers through commercial negotiations and remapping value chains, and our suppliers through supply chain management, we have successfully mitigated the lion's share of our tariff exposure this year. On a full year basis, we generated $881 million of adjusted EBITDA and $14.5 billion in sales, with an adjusted EBITDA margin of 6.1%. Customer volume reductions continued to be offset with strong business performance. From a cash perspective, we were able to generate an additional $204 million of free cash flow this year, net of funding our European restructuring program. Given our solid cash generation, we're able to return capital to our shareholders through $125 million of share buybacks, which represented a 7% reduction of our beginning year share count and 18% since the start of the program. Mark will provide additional details in his section, but we also want to highlight the amendment and extension of our ABL revolver. The team has worked diligently to optimize our debt structure and day-to-day cash needs over the last few years. We have taken the opportunity to better align our liquidity needs and reduce interest expense. Moving now to slide five. Let's take a moment to emphasize some of our accomplishments this year. Our operational performance and focus execution have continued, whether it's launching new business, managing the uncontrollables such as tariffs, or driving continuous improvement, the Adiant team has delivered over 100 million of business performance this year, excluding the net impact of tariffs. We have actively pursued and won onshoring opportunities and will continue to do so as customer footprint strategies evolve. We have pursued and won important conquest and replacement business, including replacement business on one of our largest platforms, the F-150, which we will talk about on the next slide. We have won $1.2 billion of new business in China, with nearly 70% of those wins with domestic China OEMs, as we aggressively work to confirm ourselves as the premier seeding supplier in China. We are winning new profitable business in Europe, putting us on track to drive revenue and margin growth in the region in the out years. Adiant is committed to driving long-term shareholder value by investing in innovation across every facet of our business. We are strategically integrating artificial intelligence into our operations from manufacturing and engineering to support functions to enhance safety, efficiency, quality, and scalability to ensure we maximize the benefits of these technologies we are proactively equipping our workforce with the skills needed to leverage AI and adapt to a rapidly evolving digital environment. These initiatives position Adiant to capitalize on emerging opportunities, strengthen our competitive advantage, and deliver sustainable growth for our investors. Turning now to page six. We continue to prioritize winning new and conquest business, while also successfully launching several new programs. As previously mentioned, we have secured the replacement of the JIT and foam business on the Ford F-150. In addition, we were able to conquest incremental content and secure the trim business as well, which we will talk more about on the next slide. In addition to the F-150, in the Americas we have won conquest JIT, foam, and trim business with an Asian OEM on a full-size SUV and another conquest win on metals content on the Mercedes GLE and GLS in the Americas and replacement on the S-Class in EMEA. In Asia, we continue to grow with leading domestic China OEMs, including BYD. We have also continued to penetrate new domestic OEMs, such as Chery, with our recent complete seat win on their upcoming pickup truck. We could not continue to win the new businesses like those just mentioned without delivering on our customers' expectations through successful launches. These programs continue to showcase our high level of execution and our ability to meet the rigorous safety, quality, and on-time delivery standards of our customers, reinforcing our supplier of choice status. We have just been talking about what we are doing to win new business, but it's not just about our execution excellence and which programs we are winning. It's about how we are driving sustainable value for our customers, which is the cornerstone of our future growth. Turning to slide seven, winning the F-150 business was not just about winning the JIT and foam replacement business. It was also about working with our customer to drive enhanced craftsmanship through design collaboration. By collaborating on design to optimize foam, trim, and jit manufacturing, we have been able to improve overall quality, appearance, and the customer experience. It is this kind of partnership that reinforces the value we bring to our customers every day and why we remain a supplier of choice. On the innovation front, we have continued to see more demand from our customers on enhanced safety features as consumer seating trends for comfort and autonomy drive additional requirements for occupant out-of-position protection. Through our joint development agreement with Autoliv, as announced earlier this month, we are providing our customers with enhanced safety solutions built around the principle of multidimensional collaborative protection. Adiant's Z-Guard is a dynamic safety system designed to protect occupants in the event of a collision when in deeply reclined positions. As electrification and smart technologies continue to evolve the passenger experiences, this will position Adyen and Autoleaf at the forefront of seating and safety solutions. Each of these items just mentioned are meaningful by themselves, but as the combination of them together with the execution excellence, customer collaboration, and investments in innovation, that will collectively drive our future growth. When we look forward to 2027, Adyen has line of sight to double-digit growth over market in China, mid-single-digit growth over market in North America, and growth at market in Europe. As we turn to slide eight, we would like to highlight our commitment to that growth through a new strategic partnership. We are pleased to announce that we have secured a partnership in China that builds on Adiant's longstanding local business model and strong customer relationships. This agreement expands our operational footprint, which accelerates and deepens our engagement with China's leading OEMs to further strengthen our competitive position and support sustainable growth in this key market. The new unconsolidated JV is targeted to close in Q1 fiscal year 26. Moving to slide nine. It is clear that Adiant's end-to-end innovation strategy is creating sustainable value for shareholders. Across every area of our business, we are focused on initiatives that strengthen our competitive position and drive long-term growth. Here are just a few examples that demonstrate this. First, automation by design. We are working closely with our customers on product design, optimizing plant layouts for more efficient automation, and enabling long-distance JIT and modularity. We have recently launched our first long-distance JIT operation in North America and are looking to expand this with other programs and customers in the region in the future. This approach reduces cost, improves efficiency, and offers greater flexibility for our customers in the dynamic North American market where an ever-shifting tariff landscape and geopolitical landscape requires greater flexibility. When it comes to process automation, we have introduced smart manufacturing technologies such as AI-driven relaxed ovens in partnership with the University of Michigan, which improve quality, enhance energy efficiency, and optimize labor. On product innovation, we recently launched our deep recline mechanical massage seat, which sets a new standard for occupant comfort and fatigue relief. while maintaining industry-leading safety and durability. We already have two programs in production, with more actively being quoted across multiple customers. Through design innovation, we are launching sculpt-to-trim in Q2 fiscal year 26, which is the next generation of seat trim that delivers complex shapes that were previously unachievable with current cut-and-sew processes. This product offers greater design flexibility, superior craftsmanship, and continued labor optimization. Not only that, it leap frogs automated sewing by replacing the sewing process. With this end-to-end innovation mindset, we will be able to capitalize on enhanced in-cabin customer experiences, mobility trends, and evolving customer requirements to drive value for all of our stakeholders. As we move to slide 10, let's take a look at the key initiatives that each of our regions will focus on in fiscal year 26. In the Americas, the key driver will be what happens with production volumes. Right now, the forecast is based on October's S&P, and that shows a decline. In 2025, we also expected volumes in the region to decline, and they did not. If that repeats again in North America in 2026, our outlook would improve significantly. In the meantime, we will continue to drive business performance, capture onshoring opportunities, and invest in new and conquest business. For EMEA, the key drivers are successful launches, business performance, and continuing to make progress on our multi-year restructuring plan. Balance in, balance out will begin, but it is being impacted by changes in customer programming, timing, The program end of productions are being delayed. Despite that, we expect margins to begin improving toward the mid-single digits beyond fiscal year 26. In Asia, we are driving for growth, especially with local China OEMs. We know that there will be some margin compression as we pursue this business, but expect incremental growth to help offset this and sustain double-digit regional margins and strong cash flow generations. As we focus on fiscal year 26, what Adiant must deliver is clear. But it's also clear that the world will continue to be dynamic with many uncertainties. Tariff policies, the geopolitical landscape, and ever-changing supply chains, just to name a few. With that said, the management team wants to assure you that Adiant will continue to execute on what we can control and aggressively mitigate what we cannot control to maximize the results for our shareholders. Moving now to slide 11. So what do we want to leave you with today? Addient is clearly focused on flawless execution and planting the seeds for our future growth, both of which are needed to drive long-term sustainable value. We are investing in innovation and our people. We have created a team fully dedicated to automation to expand innovation across all of our plants globally. We will continue to leverage our world-class footprint and are laser-focused on our strategic objectives and delivering value to all of our stakeholders. We will deliver on our European restructuring plan, and if needed, we will pursue additional restructuring as customer requirements evolve. We will continue to be good stewards of capital and execute our balanced capital allocation strategy We are committed to being a supplier of choice for our customers. We are driving profitable new business, including onshoring opportunities as they arise, and replacing legacy contracts that have weighed on our bottom line for too long. These are the key drivers that make Adiant well positioned for future growth, cash flow generation, and sustainable shareholder value. With that, I'd like to hand it over to Mark to take you through our financials and our outlook.