Auto-seat supplier Adient (ADNT -0.89%) said that it lost $17 million in the quarter that ended Dec. 31, 2018 -- an improvement of $199 million over its loss in the year-ago period -- as it began work on a turnaround plan. 

On an "adjusted" basis, excluding one-time items, Adient earned $0.31 per share in the quarter, down 70% from a year ago. Revenue of $4.16 billion declined 1% from the year-ago period. 

Adient earnings results: The raw numbers

Adient uses a fiscal year that begins on Oct. 1. The quarter that ended on Dec. 31, 2018, was the first quarter of Adient's 2019 fiscal year.

Metric Q1 FY 2019 Change vs. Q1 FY 2018
Revenue $4.158 billion (1.1%)
EBIT $54 million (46.5%)
Adjusted EBIT $105 million (35%)
Adjusted EBIT margin 2.5% (1.4 percentage points)
Adjusted EBITDA $176 million (34%)
Net income ($17 million) Improved by $199 million 
Adjusted net income $29 million (70%)
Adjusted earnings per share $0.31 (70%)

Data source: Adient PLC. EBIT = earnings before interest and taxes. EBITDA = earnings before interest, taxes, depreciation, and amortization. "Adjusted" figures exclude the effects of one-time items. Adient took $51 million of one-time items related to its ongoing restructuring in the quarter ended Dec. 31, 2018, and $61 million in charges in the year-ago period.

The Adient logo on the side of a building.

Image source: Adient PLC.

Adient's quarter in a nutshell: The turnaround is underway

Adient's quarter began with the arrival of new CEO Douglas Del Grosso. Del Grosso joined Adient on Oct. 1, after a botched new-product launch led to the departure of his predecessor. He's an industry veteran, having spent two decades at Adient rival Lear, and he has already taken several steps to boost the company's cash:

  • Adient has paid its last quarterly dividend for a while. The dividend has been suspended starting with the second quarter of fiscal 2019 (the quarter that is currently in progress). 
  • The company worked with its banks to amend its credit agreement, increasing the amount it can borrow, and is now evaluating options to refinance its existing debt. 
  • Del Grosso sold off several significant assets, including Adient's corporate aircraft and its former headquarters building in Detroit. 

The company landed several important new contracts in the quarter, including an agreement to supply seats in all versions of Ford Motor's next-generation F-150 pickup, due in 2020, and BMW's upcoming top-of-the-line 7-Series sedan. 

Check out the latest Adient earnings call transcript.

How Adient's business segments performed in the quarter

Adient reports income for three business segments: seating, meaning auto seats; seat structures and mechanisms, or SS&M; and interiors, which is the equity income from Adient's joint venture with Chinese auto-industry supplier Yanfeng. Results were mixed.

  • Seating earned adjusted EBITDA of $261 million, down from $354 million a year ago. Much of the decline was due to increased costs related to operations, including higher freight costs and new-product launch expenses. Higher commodity prices and unfavorable exchange-rate movements also weighed on results.
  • SS&M posted an adjusted-EBITDA loss of $72 million, an improvement of $10 million from a year ago. Operating performance, including lower launch-related costs than in the year-ago period, improved by $19 million, but that was offset somewhat by lower volumes and higher commodity costs.
  • Interiors earned $11 million in adjusted EBITDA, down $14 million from a year ago. Lower sales volumes in China and North America were responsible for much of the decline. 

Special items, cash, and debt

As of Dec. 31, 2018, Adient had $406 million in cash, down from $687 million as of Sept. 30, 2018. Against that, it had $3.409 billion in total debt, versus $3.43 billion at the end of the prior quarter, for net debt of just over $3 billion. 

The company took restructuring-related one-time charges of $51 million in the quarter.

Looking ahead: Adient's guidance

Adient expects lower revenue and weak adjusted EBITDA in fiscal 2019, particularly in the first half of the year. The slump in the Chinese new-vehicle market, a drop in business from Europe, and continued exchange-rate pressures will all weigh on results.

Specifically, for the fiscal year that will end on Sept. 30, 2019, the company now expects:

  • Revenue between $16.5 billion and $16.7 billion (fiscal 2018 result: $17.44 billion).
  • Capital expenditures between $550 million and $575 million (fiscal 2018 result: $536 million). 

Adient declined to forecast a range for adjusted EBITDA, saying only that the second half of fiscal 2019 will improve on the first half. The company said that it will provide updated guidance as the year progresses and the effects of its operational improvements become visible.