Adient (NYSE:ADNT) executives said the automotive seating supplier expects to finish fiscal 2026 in line with commitments and enter fiscal 2027 with continued revenue growth, improving business performance and margin expansion, supported by Americas onshoring wins, China growth and automation investments.
Speaking at the JPMorgan conference, Executive Vice President and Chief Financial Officer Mark Oswald said external pressures during fiscal 2026 included Middle East disruptions and higher input costs, but described those challenges as temporary. He said the company’s operating model and regional execution have remained resilient.
Americas growth and manufacturing initiatives
Jim Conklin, Adient’s executive vice president for the Americas region, said the region generates approximately $7 billion in revenue and operates more than 40 plants across North and South America. He said Adient expects more than $400 million of incremental conquest and onshoring business over the next several years.
Conklin cited recent launches involving Kia Telluride and Rivian R2 seats, as well as recently announced business wins tied to Dodge Durango, Volkswagen, South American conquest programs and replacement business such as the Ford Mustang.
He characterized the Dodge Durango award as strategically favorable because the vehicle will be built at Stellantis’ Toledo Assembly Complex, where Adient already supplies Jeep seating. The Durango program is expected to use an existing Jeep production line, allowing the company to increase revenue and profitability while limiting new investment, he said.
For a General Motors win in the Kansas City area, Conklin said Adient combined long-distance subassembly deliveries, sourcing from lower-cost markets where possible, and automation commitments. He said the company’s Mexican network can provide components including trim and foam while metals are sourced separately.
Adient is also reducing third-party metals business, which Conklin said will lower Americas revenue by roughly $100 million in the next fiscal year. The company intends to retain metals work involving customers that value its integrated manufacturing capabilities.
To manage fixed costs while adding new business, Conklin said Adient plans to consolidate four Americas plants over the next two years. Some consolidation efforts have begun, while other actions have not yet been announced. He said proceeds from asset sales may help fund restructuring and growth investments.
Automation focus and returns
Conklin said automation is a major priority as Adient seeks to reduce labor costs, address labor availability and lower vehicle costs for customers. The company initially targeted non-value-added work, such as product testing and material movement, before expanding its efforts toward automation of component installation on assembly lines.
He said Adient generally targets automation projects with payback periods of less than two years. Examples include moving materials from storage to assembly lines, installing headrests and fitting plastic side shields and seat controls. Conklin said certain pilots are operating in plants and can be expanded across the network.
Oswald said automation efforts extend beyond just-in-time seating plants to foaming, metals, welding inspection, trim and cut-and-sew operations. Adient has increased automation capital spending from about $20 million a few years ago to roughly $40 million in fiscal 2026, he said, though spending could rise further depending on project returns and implementation decisions.
Europe and China outlook
Oswald described Europe as a low- or no-growth region, with revenue of about $4.5 billion. He said uncertainty remains around customer product plans and plant decisions, which could create additional restructuring requirements for suppliers. Individual restructuring actions could cost $20 million to $30 million, he said earlier in the presentation, while later noting that an impacted plant could carry a $30 million to $40 million cost.
Despite that uncertainty, Oswald said Adient expects European margins to improve from current levels through restructuring benefits, automation, continuous improvement and the expected roll-off of about $90 million in third-party metals business. He said the company sees an opportunity for margins to rise from roughly 2.5% to 4% or 4.5% over the next several years, while noting that Europe is structurally different from other Adient regions and is not expected to reach margins of 6% to 8%.
In China, Oswald said Adient has shifted from a mix weighted toward foreign automakers to one in which local Chinese manufacturers account for approximately 60% to 65% of business. That transition has created margin pressure as lower-volume legacy foreign customers have been displaced by faster-growing local manufacturers.
Management had indicated about 100 basis points of margin compression, but Oswald said the China team has partly offset those pressures through automation and lower selling, general and administrative costs. He said the company expects total margin degradation from the shift to be contained to roughly 100 to 150 basis points from an initially “robust double-digit margin,” while continued revenue growth should support EBITDA and cash flow.
Cash flow, debt and capital allocation
Oswald said Adient expects fiscal 2027 cash taxes to decline after a roughly $20 million one-time settlement in fiscal 2026. He also expects cash interest expense to fall from about $190 million this year as the company works on its capital structure, including a refinancing of its 7% notes.
Free cash flow was discussed at approximately $130 million for fiscal 2026. Oswald said fiscal 2027 cash-flow visibility depends particularly on restructuring spending and capital expenditures. Adient guided to about $300 million of capital expenditures this year.
With net leverage at 1.7 times EBITDA, within its stated 1.5 times to 2 times target range, Oswald said the company expects a balanced approach between share repurchases and voluntary debt reduction. He said Adient plans additional share buybacks in the fiscal fourth quarter and has returned about $600 million to investors over the last several years, including $520 million through repurchases and $80 million through debt reduction.
About Adient (NYSE:ADNT)
Adient plc (NYSE: ADNT) is a leading global supplier of automotive seating and interior components. Established in 2016 through a spin-off from Johnson Controls, the company designs, engineers and manufactures complete seat assemblies, seat structures, mechanisms, foams, textiles, trim and electronics. Adient’s product portfolio spans a wide range of seating solutions, from entry-level designs to luxury and high-performance seats, and extends to interior modules such as door panels and center consoles.
Serving major original equipment manufacturers (OEMs) around the world, Adient works closely with automakers to develop lightweight, comfortable and safety-oriented seating systems.
