Adient plc

Welcome to Addient's first quarter 2026 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. 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's my pleasure to turn the call over to Jerome.

Jerome Adams Thanks, Linda. Good morning, everyone. and thank you for joining us to review our first quarter results. Today we will focus on the quarter's solid performance and provide an update to our fiscal year 2026 outlook. We will also discuss new business awards and launches, as well as share some insights on our expectations for the future beyond fiscal year 2026. Before we get into the results, I would like to take a moment to acknowledge the hard work and dedication of our more than 65,000 employees that work diligently every day to deliver on our commitments, especially in light of the significant challenges during the past quarter. The management team and I appreciate the team's collective efforts, which resulted in a solid start to fiscal year 2026. I would also like to thank our customers around the world who continue to recognize Adiant as the world's preeminent seeding supplier. Thank you. Turning to slide four, which summarizes our first quarter results. The beginning of the year was filled with uncertainty. The Novellus fire, the Nexperia shortage, and JLR productions were all unknowns. But as the Adiant team does time and time again, We manage through each of these events by leveraging a resilient operating model. Thankfully, the uncertainty of these events is nearly behind us, and we are focused on execution to meet the needs of our customers. For the most part, volumes are expected to recover within our fiscal year, and we expect to mitigate much of the overall impact of these events. Our revenue for the quarter was up 4% year over year, primarily driven by FX tailwinds from Europe. Excluding FX, revenue in China was up significantly, as expected, delivering on our growth commitments and more than offsetting production headwinds from North America. We remain laser-focused on new business wins and ensuring we remain our customers' supplier of choice. We are supporting our customers' onshoring efforts in North America, both direct and indirect, and continue to view Adyen as a net beneficiary of onshoring. While we have no new programs to announce at this time, we remain highly optimistic about the near-term potential for a large domestic OEM program. Our free cash flow generation and balance sheet remain strong, which allowed us to allocate capital in a disciplined manner. We returned an additional $25 million to shareholders through share repurchases this quarter, which Mark will detail further in his section. And we ended the quarter with $855 million in cash. Focusing beyond the operations and the quarterly financials, I would like to highlight that we have issued our 2025 sustainability report, which we will talk about in more detail in a few slides. Finally, as we look beyond the quarter to the full year, we are raising our guidance for revenue, adjusted EBITDA, and free cash flow, which Mark will outline in more detail during his section. Let's turn now to slide five. As fiscal year 2026 has become another year of transition for the industry, analysts and investors have been asking about fiscal year 2027 and beyond. So we wanted to provide our perspective on this year as well as some insights on where Adyen is heading. We have said a key factor impacting this year's outlook is volume, which is very true. We are a volume-driven business. Production volumes are trending higher, particularly in North America, and overall industry volume indicators remain positive. With this production outlook and our resilient operating model, we are confident that we can deliver solid business performance, and as a result, we are able to raise our guidance. But this year is about much more than just volume. It's about launching several key and complex new programs flawlessly. It's about continuing our drive for automation. It's about exceeding our customers' expectations with new and innovative products. It's about ensuring that our teams have the tools and the skills to evolve as AI takes hold. These are the things we are focusing on this year that go beyond our drive for operational excellence. Whether it's cross-functional or cross-regional, our teams are collectively working together to ensure Adyen is equally focused on operational excellence and growth. As a result, this is what we expect for 2027 fiscal year and beyond. We expect our investments in automation to ensure continued positive business performance as most projects have a payback under two years. We are capitalizing on approximately 400,000 units of near-term onshoring opportunities and will support our customers as they continue to reevaluate their manufacturing footprints. Our innovative products and processes, such as Sculpt2Trim, will help us win new business as they are expected to improve styling, and also reduce costs by nearly double-digit percents. We have accelerated our growth with China domestic OEMs and will exit this year at 60% of our revenue in China from domestic OEMs. We expect this trend to continue. We expect our growth and cash flow generation to continue to reinforce our disciplined, and balanced approach to capital allocation. It is for all these reasons that Adiant is well positioned for long-term shareholder value creation. In addition to outlining our expectations, I also want to provide some additional specific context around our growth opportunities. As we have discussed, onshore and in North America remains a clear focus, and we are actively working with all of our customers to support their onshoring activities. To date, we have won approximately 150,000 units of direct onshoring business and hope to be able to provide an update on another significant in the near term. For clarity, when we talk about onshoring, onshoring for us means business that is produced outside of the borders of the U.S. and is moved within the borders of the U.S. In addition to direct onshoring opportunities, we've also won indirect opportunities, resulting in an incremental 25,000 units for Adiant. Beyond onshoring, our customers have continued to recognize us as a supplier of choice, resulting in approximately 100,000 units of new and conquest business to the Americas. The collective impact of these wins and anticipated wins is an additional estimated revenue of $500 million worth with 300 million impacting fiscal year 27 and the full 500 million impacting fiscal year 28. Looking beyond the Americas, the growth outlook for Asia is also solid. We expect China will continue to have double-digit growth through fiscal year 28, in spite of relatively flat overall vehicle production. In addition, Asia outside of China is expected to grow above market in both fiscal year 27 and 28. Turning to Europe, our teams continue to win new business in Europe. We expect these wins to offset the impact of our planned strategic program actions in the region and also expect these wins to be margin accretive. Now that we have outlined our future expectations, let's turn back to the near term and talk about the regions on the next slide on page seven. For the Americas, as we have discussed, the team delivered positive business performance in the first quarter, despite the production disruptions and expect their favorable business performance to continue. In addition, they are focused on executing key launches, including the Kia Telluride and the Rivian R2. Our manufacturing teams are also focused on expanding automation across plants wherever possible. Commercially, the team is laser-focused on growth and onshoring opportunities, which they will continue to aggressively pursue, as we already mentioned. In Europe, the overall industry remains challenged by volumes, capacity, and the importing of vehicles from China. This will continue to stretch the industry and the European team. but they remain committed to delivering positive business performance for the remainder of the year, just as they did this quarter. The European team is also focused on a complex launch with a German customer. The team continues to pursue and win new and conquest business, and restructuring activities remain on track as planned. Finally in Asia, the team is aggressively pursuing innovation and is winning new business as customers recognize Adiant as a supplier of choice. This would not happen without Adiant's focus on operational excellence, which the team will continue to demonstrate as they launch new programs throughout the year. In China, the team continues to strengthen relationships with both China domestic OEMs and suppliers to drive top line growth. As you can see in each of our regions, Addient's resilient operating model is focused on driving value for all of our stakeholders. Turning to page eight, we continue to win new and conquest business in all regions we operate in and have many successful ongoing launches to highlight. Starting in EMEA, as highlighted during our last earnings call, it appeared as if the region was showing signs of stabilization. We have seen customers move forward with some sourcing decisions, which is positive. We have recently won new metals business with Ford on a compact crossover SUV and have other sourcing decisions pending. We expect to see some of these benefits on these programs coming online in the late fiscal year 27 and early 28. We have also just successfully launched complete seat business on the Mercedes GLB for the region. With that said, We're also hearing some mixed signals from customers on near-term volume concerns, and so Europe remains a bit more of a wait-and-see at this point. In Asia, our momentum continues to build, highlighted by new conquest business with leading domestic OEMs, key replacement business, and the successful launch of the Hyptek A800, which features a zero-gravity passenger seat and showcases the region's ability to deliver innovation at scale. And finally, in the Americas, we continue to strengthen our position with key replacement wins, such as the Honda Pilot and MDX Metals business, and we successfully launched the region's first long-distance JIT program with the Chevy Bolt, which we commented on 18 months ago as a conquest win. A clear demonstration of our operational capabilities and our ability to meet customers' evolving needs. Before we move on, I want to underscore why we continue to win new and conquest business across every region. These wins are not coincidental. They're a direct result of our team's excellence in operational execution and their track record of successful launches and innovation, not only in product design, but also in manufacturing. I'd like to recognize the entire Adiant team and the relentless effort and focused execution across the globe in delivering for our customers day in and day out. Customers continue to recognize Adiant as a reliable, high-performing partner because we deliver. Our teams consistently meet and often exceed customers' expectations, and that performance builds trust, which translates into new awards expanded platforms, and increased share with both global and domestic OEMs. Our success in securing these programs is a reflection of the credibility our operations have earned over time, and it positions us exceptionally well as we look ahead to fiscal 27 and beyond. These wins set the stage for innovations we're bringing to market that will further enhance our competitive position. For a closer look at one of these innovations, let's move to slide nine. Adiant is clearly focused on innovation, and within the last few weeks, we announced the introduction of Modutech, which showcases Adiant's forward-thinking approach to modular manufacturing. This advancement will benefit Adiant, our customers, and the ultimate end user greatly. Modutech is a modular seat design solution that greatly simplifies the seat build process that opens the door for a higher level of automation across our plants. For our customers, Modutech means enhanced seat comfort and craftsmanship, faster and more flexible launch execution, and a lower delivered cost, all while enabling long-distance JIT and a more resilient supply chain solution. These advantages directly support our OEM partners on-shoring priorities and their ability to compete and make vehicles more affordable for the end customer. Modutech unlocks another level of modularity. The early benefits we are seeing from modularity are compelling with upwards of 20% total value chain savings driven by significant labor and freight efficiencies and nearly a 15% reduction in JIT floor space requirements. No other seat supplier is delivering a modular architecture at this scale. With this level of manufacturability improvement, modularity strengthens our position as a supplier of choice and enhances our ability to win new business, especially as our customers look to optimize their footprint. Ultimately, both Modutech and modularity drive sustained margin expansion, capital efficiency, and enhanced free cash flow conversion. This is a prime example of how innovation in our product and process drives durable value, not only by lowering our cost structure, but by expanding our competitive advantage and our ability to drive sustainable shareholder value. Turning to slide 10, Addient remains focused on driving sustainable growth into our business and reducing our impact on climate change. We strive for responsible use of natural resources by improving energy efficiency in our operation, reducing the carbon footprint of our finished products, and developing processes that protect our planet's natural resources. ADIEN is pursuing the use of sustainable materials and products by identifying materials and manufacturing methods that minimize our environmental impact and promote a circular approach to product development. Some of the highlights for fiscal year 2025 include, we have had a 42% reduction in scope one and scope two emissions since 2019. We are proud to share that 30% of our electricity is now attributable to natural or to renewable resources. Our total water withdrawal was reduced by 6% year over year. And 80% of our suppliers have been assessed with a sustainability rate rating. These accomplishments aren't just environmental milestones. They demonstrate the discipline and execution that underpin Adiant's operating model. They show that our teams are embedding sustainability into the way we run our business, strengthening our cost structure through efficiency, reducing long-term risk, and increasing resilience across our global footprint. Just as importantly, they reinforce our position as a trusted supplier to the world's leading OEMs who are increasingly prioritizing responsible sourcing and measurable climate action. We view this as progress and as a competitive advantage, a value driver, and a key component of our long-term strategy. Let me leave you with a few takeaways before I hand it over to Mark. The company consistently delivers positive business performance through our focus on operational excellence, which allows us to meet or exceed our stakeholders' expectations and drive margin expansion. Our commitment to innovation and automation is reflected in our products, our processes, and our people. Cross-functionally and across regions, to deliver value-added solutions to our customers. While the company remains focused on operational excellence, we're also focused on delivering growth by being a supplier of choice with our customers. Adiant is committed to being good stewards of capital on behalf of our shareholders through a disciplined approach to balance capital allocation. Adiant is well-positioned for growth and committed to delivering long-term shareholder value. And with that, I'll turn it over to Mark to take you through the financials and their outlook.