Adient operating performance, cash balance cut net leverage to 1.76x

By Devika Patel

Knoxville, Tenn., Feb. 3 – Adient Ltd. reported a strong cash balance at the end of its first quarter and this helped shape the company’s low net leverage numbers, which fell about 10% to 1.76x from 1.95x in the last quarter.

“Solid operating performance, together with our cash balance, had an immediate positive impact on our net leverage, which was reduced by about 10% compared to the period ending Sept. 30, 2016,” executive vice president and chief financial officer Jeff Stafeil said on the company’s first quarter earnings conference call on Friday.

Adient’s net leverage on Dec. 31, 2016 was 1.76x, down from 1.95x on Sept. 30, 2016. On Dec. 31, 2016, total gross debt and net debt were $3,461,000,000 and $2,752,000,000 respectively.

“We expect the strong operating performance and cash generation to continue as we progress through the year. In fact, we expect our net leverage ratio to be approximately 1.6x at the end of fiscal 2017,” Stafeil said.

“With regard to free cash flow, we’re on plan to deliver the $250 million, if not slightly more, for the year,” he said.

The Plymouth, Mich.-based automotive seating and interiors company’s cash and cash equivalents were $709 million on Dec. 31, 2016.

Its capital expenditures totaled $207 million in the first quarter of fiscal, compared to $108 million a year ago.

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