Adient - Q2 20 model update and comments

All,

 We have updated our model for the results of quarter ending June of 2020. Please find it here.

Adient's bond prices have largely recovered to pre-coronavirus levels. We are generally in agreement with the implied market view that the impact of the virus on Adient's business is temporary rather than permanent. At the same time, with the senior secured bonds trading at around call price levels, and the unsecured bonds trading below 6% YTM, we estimate that the rally is mostly over, and would prefer to stay neutral until we see more compelling prices.

Adient’s recent results show a clear recovery trend, with an encouraging outlook for the next quarter. With the outlook for FCF and adjusted EBITDA staying well into positive territory, and the last quarter’s bottom much better than feared, we should see a period of gradual but decisive return towards pre coronavirus levels in late fiscal 2021 or 2022.

Feel free to reach out if you would like to exchange ideas on the name.

Juliano