Adient Earnings: Good Second Quarter Overshadowed by Guidance Cut

Adient posted good fiscal 2024 second-quarter results with adjusted diluted EPS of $0.54 up 69% year over year, beating the $0.42 LSEG consensus. The result is encouraging, too, despite revenue down 4%. Adient's ongoing restructuring efforts have focused on cost control and the company saw relief there with lower material, freight, engineering, and overhead costs down $47 million plus another $20 million benefit from lower commodities. Unfortunately, the stock fell over 8% during May 3 trading because management reduced fiscal 2024 revenue and adjusted EBITDA guidance, with the latter now at the midpoint of about $910 million from $985 million previously. We have not changed our long-term profit margin expectations, but we are reducing our fair value estimate by $3 to $68 per share due to modeling 6.5% less revenue over our five-year explicit forecast period and lowering fiscal 2024 earnings.