Adient plc (ADNT) Earnings Call Transcript & Summary

Okay. Once again, I'm in chat with Jerome Dorlack, Adient's President and Chief Executive Officer, the largest seating supplier in the world; and Mark Oswald, Executive Vice President and Chief Financial Officer. So Jerome and Mark, thank you so much for coming to the conference.

Thank you, Ryan.

My first question is on the impact of tariffs for the industry overall and for your company in particular, how have you managed the direct impact so far? And how are you thinking about the indirect impact going forward in terms of the potential for demand destruction as automakers raise prices, not so much so far, but how have you maybe changed your estimate of normalized demand for sales or production in the U.S. or North America as a result of tariffs?

Yes, I'll start, and then I'll hand it over to Mark for comments. I think if you look at our Q2 call, we had published kind of a number of an annual -- not annual, sorry, a monthly impact of about $12 million. From that time, when we had our Q3 call, the team's working both internally, but then more importantly, with our customers, we were able to whittle that down to a monthly impact of around $4 million. And that's really a testament to what we can do when we put the collective might of this industry to bear, both working with our global footprint, be able to move things from high-tariff regions to low-tariff regions, requalifying things for USMCA, going through looking at adding more value in the USMCA region, resourcing things very quickly and then working with our customers on recovery activities. And so generally, we've been able to manage through the tariff issue and take it to a level that is manageable. And again, that's on a gross level, not on a net level. And we've talked about getting to levels of recovery with our customers. On average, that's north of 85% from that standpoint. I think if you then talk about demand destruction and what it means, I mean, they just before this meeting had the print of the inflation numbers for the U.S., and it's right around 2.75%. So I think demand destruction generally seems to be holding up well. I mean the July SAAR was north of $16 million. How much of that's is pull ahead because consumers are worried about what pricing will do, I think, remains to be an unknown. So I think the question around demand destruction really is yet to be seen. I know you have, I think, GM later today and Ford later today as well. I'd be curious to see what they say, how they're viewing MSRP and their pricing schemes. I think Toyota has already come out with some of their '26 pricing with really de minimis impact somewhere in the $200 to $300 range, knowing that as ATPs creep up for the industry-wide once we kind of crest that $50,000 mark, it becomes a psychological impact for the consumer. And so are they going to manage that through lower level trims and pushing more lower level trims out there to try and keep the demand catalyst going. I think that remains to be an unseen. I think what's important for us is managing the things that we can manage. I think we've demonstrated through the '25 fiscal year, we've got almost now $115 million of business performance. Coming into the year, we thought it'd be somewhere around $90 million. So we've been able to step up business performance, and that includes the tariff impact. And we've been able to do that while still having the bottom line compressing -- or sorry, the top line compressing by about $200 million on an FX-adjusted basis. So it shows that the Adient operating model really does allow us to drive business performance even with volume challenges. And I think when we think about how '26 is shaping up for us, it's really controlling the things we can control. So controlling business performance, managing through tariffs and then taking a wait-and-see approach to see how does North American demand shape up?

And my second question is to ask what your very latest outlook is for vehicle electrification, including in light of some of the recent changes to the regulatory backdrop, such as the elimination of the $7,500 U.S. federal consumer tax credit, the relaxed enforcement of greenhouse gas and corporate average fuel economy regulations. How has your outlook evolved? And what ways might you be running the business or allocating capital any differently as a result?

I think in -- I'll take the back half first, and then I'll turn it over to Mark for the first half of the question. I think what we've done is when we look at how we allocate capital, and when I talk about capital, it's not just dollar capital, I mean it's both human capital and dollar capital. It's looking at every program and saying for that program, do we have the ability to sweat assets we have in-house today. And so for us, when we run a JIT program as an example, and we do that for certain customers, can we run it on an existing JIT line in an existing JIT facility such that if that program doesn't run at volume, we're not stuck with stranded assets. And if we have the ability to do that, then that comes with a certain set of contractual conditions that we then have the discussion with the customer about. And if we can't, then we have a different set of discussion with the customer that comes with commercial backstops because given the uncertainty around EVs, and we now know it's very policy-driven, then we need a different set of recovery boundary conditions such that if the volumes don't come to fruition, we have backstops around it. And I think so far, whether that is certain Korean programs, certain domestic programs, almost all of those have run on existing capital or an existing JIT plant. So as volumes have ebbed and flowed, we haven't been struck with stranded resources or stranded capital from that standpoint. And so I think that's how we've really looked at capital allocation. And Mark, maybe you want to touch on the first point.

Yes, I'd say that, that's right, Jerome. And Ryan, when we look at this, we look at it from a capital allocation perspective. We don't want to invest new buildings, right, for EV programs. For example, we're taking a conservative approach. And so really then when you ask the question in terms of where is EV demand going to be or where the sales is going to be, I don't want to say we're agnostic to it, but it doesn't impact it if it would if we were actually building out plants and facilities for that. So we feel very comfortable in terms of what our planning assumptions are. We always take what our customers tell us, we'll trim a little bit, be a little bit conservative. We'll use asset reuse. We'll use dedicated facilities. And so in the end, whether or not volumes -- the volumes are down 10% or 15% year-on-year, it really doesn't have that much of an impact to us, how we're running the business.

Very helpful. Next question relates to how you are adapting to the rapid growth of domestic Chinese automakers. At the conference last year, we asked each of the suppliers to update us on what they were doing to increase their current exposure. I think the investors wanted to hear anything and everything, right? I wanted to check in, again, this year, though, the Chinese automakers have arguably grown even more quickly. But because of some of the headlines about payment terms that they're commanding and pricing because everybody wants to align with all that growth, we're asking each of the suppliers to please comment on how they are balancing the opportunity for growth with these customers with maintaining commercial discipline at the same time.

Yes. Maybe I'll start there and then Jerome can follow up there. But similar to what we said last year when we were here sitting with you, we had indicated that, obviously, we are looking at growing with the Chinese domestics at that time last year, I think our mix between what I call Chinese domestics versus foreign, we were 60% foreign, 40% China domestics. We said over the course of the next couple of years, we're going to be swapping that, right? So we're going to be 60% Chinese domestics, 40% foreign. We've actually seen that play out with our wins, right? So we've -- if I look at our wins so far this year, it's been mixed out at 70% Chinese domestics, 40% foreign, right, which gives us confidence as we look out over '27, '28 as those programs start to roll on, that's what the mix is going to be. When we look at it from a commercial standpoint, we look at who we're winning that business with. We're making sure those commercial terms take into consideration if there's certain risk, if there's volume risk that we think with those customers coming to market. So again, it's really with those commercial terms, what we're doing from collecting the engineering payments recoveries in advance, et cetera. So it's really that balanced approach. And again, not driving any new, what I'd say, capacity to grow with those people.

Yes. I would just add on to that. I think one thing that we don't always talk a lot about, I think you get the benefit of it because you spend time with our team in China is not only do we have our direct business in China, but we also have a very attractive nonconsolidated business in China. We have our joint venture with Kuiper, that's now approaching almost $1 billion. It spits off a very nice dividend. And then we also have our nonconsolidated business with CFFA that's almost approaching $2 billion. That also is a very attractive dividend for us. And we have 2 other joint ventures, one in the South. And then a smaller one in the north that are both unconsolidated. And so we get exposure, both through our consolidated business there that's now approaching, again, almost $2 billion, but then also through our network of nonconsolidated joint ventures that's going to reach close to $3 billion here. And so through that, we have the ability to manage how much exposure we want through the payment terms, through the commercial, I'd say, avenues to both the domestic and nondomestic customers there. And so we have the ability to kind of toggle the exposure that we get through these, what I'd call, joint ventures and through our consolidated sales network. And really, the focus of James and the team out there have been managing and toggling through this -- through the customer selection process. In addition to that, we've talked a lot about on the last couple of earnings calls, growing the business, especially with BYD and some of the other, I'd say, maybe more aggressive customers in terms of payment terms through the component sales. So we've been very successful now on the trim business, on the foaming business with BYD where you don't necessarily some of the flashy top line figures, but you do get more attractive payment terms, more attractive commercial terms through the component sales, which has been a very successful avenue in for us.

And maybe moving to your European operations. Where do you think you are in terms of the turnaround and the path to get to mid-single-digit EBITDA margin from the sort of 2% to 3% type today? How much of the improvement do you expect to come from restructuring savings, footprint optimization or other cost-cutting actions versus how much is more contingent upon top line improvements, whether within your control, such as the intentional runoff of certain unprofitable programs or the conquesting of others or potentially outside your control, such as market factors like industry production growth, et cetera?

Yes. I think when we think about where we are today, I'd say it's a multiyear plan, right? We've indicated that, that region is not going to turn around overnight. So we've announced restructuring actions last year. This year, we've put out, call it, $130 million of cash restructuring for that region. We've indicated that for '26, it's going to be elevated again. I think the drivers to get us to what I'd say that mid-single-digit margin, call it, 5%, 5.5% really comes from a couple of different buckets. One, it's the balance in balance health out that you were talking about the nonperforming metals business rolling off. We have a line of sight into that in '26 and '27. On the last earnings call last week, we did call out some key program wins in that region, right? So again, recognizing that we are a volume business, we are going to have to start growing in there. Some of those wins were conquest wins. That will start coming in '27, '28 and a portion of that will be the restructuring. As you know, restructuring over in Europe is pretty tight, and it's not good restructuring, right? So for every dollar we spend over there, that full dollar doesn't -- isn't accretive to margins, right? So I'd say a smaller piece is the restructuring, but again, it helps stabilize the business. Then it's the balance in balance out and then it's the growth in '27, '28 that really get us where we need to be. And again, when I think about that region, it used to be a $7 billion revenue business. If we can get that to a $5 billion to $5.5 billion in printed 5% to 5.5% margin, generating cash flow over there, sustaining that business, that's really where we want to get to.

And what about the potential for M&A to be part of the solution in Europe? You've spoken before about the pronounced overcapacity problems in the region, both at the automaker and supplier level and a willingness too, for Adient to be part of the solution. What are your latest thoughts regarding this topic?

Yes. I don't think our thoughts have changed. I think in Europe, if you just, again, look at the market, there used to be a need for somewhere, just call it, 20 million units of seating capacity. If you look going forward, that need is going to be somewhere, call it, 14 million to 15 million units of seating capacity. And so fundamentally, we believe you're either going to be a consolidator or a consolidate in that region. And I think we're willing to be part of the solution on either end of that. But consolidation for consolidation's sake or M&A for M&A's sake doesn't really make sense. There has to be an economic outcome to it. And as of yet, there hasn't been anything brought forward that makes a reasonable economic outcome from that standpoint. And so we'll continue to drive performance into the region. We'll continue to execute, do what we need to do and be good stewards of capital in the region as we have been and perform as we should be performing.

Perhaps moving back to the China region, where your operations have a great track record of strong growth, margin and returns. Although in the fiscal third quarter, you did demonstrate a fairly material revenue underperformance versus the change in industry production. Most of the suppliers we cover are not growing nearly as quickly as the industry because just like you, they have less leverage to the faster-growing domestic Chinese, they're working to change that. But you've also pointed to progress in bookings, including track UID and content per vehicle tailwinds such as zero gravity seats. How do you see your top line performance versus the industry in China maybe trending going forward after 3Q?

Yes. Maybe I'll start and then I'll hand it over to Mark. I think you almost -- I alluded to it a little bit in your question, almost kind of have to bifurcate the China region to BYD and then everyone else. And if you take China less BYD, I mean, we grew, call it, at par, maybe just a little bit below par within the region. And a lot of that was driven by delayed launches with 2 of our key customers as they work on getting some of their program right and their underlying software correct. And so as we then think about how does that shape up for the out years without going into any kind of '26 guidance, I think a lot of that will just come down to our customers' launch cadence. Do they get some of these launches on track, the Chinese domestics I'm referring to. If they're able to correct their launches, correct their launch cadence, I mean we'll see '26 returning back to a growth year. How that shapes up relative to market, a lot of that will just come down to how does BYD grow in '26, we've been very vocal. We're under-indexed to BYD. We have components business, no JIT business. That probably won't change as they've gone back to a 2-supplier strategy in JIT, their in-house business, along with their joint venture. And so less BYD, I think we'll be at market, maybe slightly above market. But again, it will come back to how do these customers launch within the '26 calendar and fiscal year.

Yes. And I'll just go back to my earlier comments. If I look at the bookings that we've won so far this year, 70% Chinese domestics, right? Clearly, as that starts coming out in '27, '28, we should be at or above market growth over there again.

Now offsetting the underperformance versus industry production in China within your Asia Pac operations has been strong outperformance in Asia outside of China. Can you remind us of your key customer exposures there or market exposures in Asia outside of China? And what has been driving that outperformance? And how would you rate it sustainability?

Yes. I mean our key customer base in Asia ex China is, I mean, really driven. We're very strong with Toyota were very strong with Nissan, very strong with Ford of Thailand, Mitsubishi in Thailand, very strong with HKMC as well. What really drives that, and we talked a lot about this in '25, we just had a lot of launches in '25. We're launching the -- would be the Armada, what would be the QX80 program, launching significant business with HKMC. We're going through significant launches in Thailand. And so then when you just look at kind of the year-on-year comparables, as that business then starts to ramp up, you get a lot of nice growth coming out of it. We also made significant investments, especially in our Japan operation as we looked at putting a very sustainable investment into that in order to nearshore or onshore footprint there, especially around our metals operation. We were exporting significant content out of China from what would have been our legacy Yangfeng at the time, adding Yangfeng seating. As that separation really concluded, we wanted to nearshore that or onshore that into Japan. We took that decision, and that's really paid dividends with significant new bookings. Same thing for us in Thailand, where we've stood up our own mechanisms business in Thailand, which has led to incremental growth there, and it's paid off in new business wins.

Okay. And I think your largest customer in Asia outside of China is Nissan. They recently announced a restructuring and closure of some plants in Japan. The vehicles that you happen to supply to them, I think were not impacted by this. What is your exposure to Nissan there? And what is the outlook for the vehicles that you do supply? Do they even benefit because they're a larger portion of the remaining Nissan portfolio? I'm not sure.

I mean -- So in Japan, Nissan would be our largest customer. In Asia as a whole, it's -- it actually would probably be Ford in Thailand from that standpoint. But in Japan, yes, it'd be Nissan. And their announcement to close does not impact us. The plant that they've decided to shutter, we don't supply content into. So no direct impact from that standpoint. And where we'll pivot production into or plants to look to fill. We actually see that as being a net benefit to us, especially with the programs that we're ramping up in fiscal year '25 and in fiscal year '26, we'll probably see that as a net benefit.

Great. And moving to North America. I was Curious on the most recent earnings call about expecting to potentially benefit from onshoring as automakers move production to the United States, including because of the relative weighting of your North America footprint to the U.S. What are your thoughts on some of the recent onshoring announcements by automakers as a result of tariffs? We've seen GM invest $4 billion to bring back a number of body-on-frame pickups and SUVs, crossovers, BUVs from Mexico to Michigan, Kansas and Tennessee. And Nissan is bringing more rogue crossovers from Japan to Tennessee, Honda is moving the CRV from Canada, to they haven't said, but Indiana or Ohio. It looks like a lot of your facilities are kind of clustered around those more Midwestern U.S. states versus in Canada or Mexico. Is Adient in a position to benefit from this onshoring trend? Have you maybe had any preliminary discussions about supporting automakers with their onshore-ing activities?

Yes. So I think we've said there's about 600,000 units so far that have been announced to come back. We've already booked about 150,000 of those units. The Rogue business coming from Japan to the U.S., that's a net win for us. We have the Serna footprint out of our Murfreesboro, Tennessee facility. There'll be a piece of business that will come from Canada into the U.S. We've booked that as well. We haven't said which customer it is. We'll keep that anonymous for now. In addition to that, we think out of the other announcements that have come forward, we feel, I think, confident that there's 100,000 units in there that will be a net win for us. And I think what's important to differentiate between maybe us and some of our competitors is that when we talk about this, given our footprint and because it is so heavily U.S. weighted with 75% of our production being in the U.S., these are net incremental wins for us, whereas maybe for some of our competitors, if they're going to move production from a body-on-frame facility in Mexico to a body-on-frame facility in the U.S., that's just going to be a net neutral for them. That's going to require more investment, more engineering, and it's not really going to be incremental volume. Whereas for us, with that business going from Japan to the U.S., that's incrementally positive. With the business coming from Canada to the U.S., we don't have the business in Canada, so that's going to be incrementally positive for us. The other 100,000 units that are going to come from Mexico to the U.S., that will come from a competitor to us that will be incrementally positive. I think we do see, and we've talked about it, with this onshoring, nearshoring, there's going to be winners and losers. And we think given our footprint, given our capabilities, more importantly, given our execution and our intimacy with the customer, we really do see Adient positioned to be a winner coming out of this.

Great to hear. And maybe next, could you describe your innovative modular approach to seat component and system assembly. Is this most interesting to you from the ability to improve your own margin? Or is it that the advantage is helping the customer improve their margin by simplifying the steps of final assembly, reducing JIT hours, et cetera. So is it a competitive advantage for you, which lead to higher market share? Or what's the right way to think about modular assembly opportunity at Adient?

I think it's both. I think it's -- we've offered our customers really a menu of solutions at this point. The practical example is as we went through the USMCA activity, we were able to deploy Adient's modular assembly instrument to requalify components by adding more modular assembly content in the USMCA zone and actually working with one of our partners, Gentherm, in order to accomplish this and take parts that were not USMCA qualified, qualify them for USMCA saving one of our Japanese customers almost $2 million a month. And that pays significant dividends for them. So that's an example where we're actually just taking what otherwise would have been waste out of the system using Adient's modular assembly process. A knock-on benefit of that is not only do USMCA qualification, but we're also then able to take labor out of a high content zone. So you demonstrate benefits both ways. I think some of the solutions that we're working on with some of our European customers where they have a desire to look at potentially what I would call JIT assembly in-house because they already have the assembly in-house is how do we make their process more efficient using Adient's modular assembly process and conquesting business from our peers. So we'll take over components by using a modular assembly approach, and we'll conquest components business that we don't have today by giving them a modular assembly process for the trim and foam that makes their end item assembly more efficient. And so it really is a menu-based approach to how we can accomplish these types of solutions. It will benefit us. It will benefit them, but it's really working jointly with them on the solutions approach. I know, Mark, you've been part of these discussions as well. Any comments from your side?

No. Again, I think it helps out them. Obviously, it saves them. We -- it helps us efficiencies at the plant, bringing labor costs at the plant, right. So it's really a win-win as we look to partner with the customers and have that relationship with the customers.

And I wanted to follow up by asking how unique or differentiated you think your approach to modular assembly may be given that some of the competition, Lear, for example, has told investors that they can also offer customers the same type of benefit. So just curious if the benefits might get competed away and passed along to the customers without the seating industry necessarily benefiting.

Yes, I don't know how different or unique it is. I think one thing that differentiates Adient's solution versus our competitor solution is our flexibility to integrate others value chain offerings. So we're willing to work with whether that's a Lear Comfort system, a Gentherm comfort system, a Camrco metal structure, a Fisher's metal structure, an Adient metal structure. At the end of the day, what we want to do is provide a sustainable solution that ensures our customers have the most value-added process for the long run. And that's what we're focused on doing, where I think some of our competitors have a laser focus on looking at, I want the entire value stack. So I want a solution that takes my comfort system with my JIT, my trim, my form, and this is what I want to put into the value stream, whereas we're just -- we just want to make sure our customers are getting a sustainable value solution at the end of the day that makes them credible for the long term. And I think that's what's been -- we've been able to differentiate with.

And continuing with the theme of the competitive environment, but maybe specifically as it relates to full-size truck seating in North America, where you are the incumbent supplier for the Ford F-Series you have been for a long time. Lear is the incumbent on GM full-size trucks. They have been for a long time. We don't usually see frequent switching between Tier 1s for these programs, I think, because the cost would just be so high. Now Lear has mentioned wanting to conquest your F-Series business. At the same time, you may be in the running for a conquest in their GM truck business. What is your confidence that you will be sourced on at least one of these programs? Do either you or Lear really have the capacity to service both of them if the awards went that way? And what would be theay? And what would be the financial implications of going from currently one to either both or none of these 2 programs. And given the switching costs, would both companies maybe lose somewhat if you swap programs with each other, with Lear conquesting the F-Series from you, you conquesting GM trucks from them? How should investors be thinking about all of this? And when do you expect that they may learn more in terms of how it's likely to play out?

So I mean it may hold the record for the highest number of questions in a single question. So I'll try to start and then I'll hand it over to Mark. In terms of how do we feel about kind of the F-Series booking, as we said on the earnings call, we're focused on adding and putting them in front of Ford a value package that makes us the supplier of choice to them, give them a solution that they can't walk away from in terms of how we can add value to them and more importantly to the end consumer for the world's best-selling truck. And that's what we're focused on doing. And I think we've been able to do that. In the end, they'll make a sourcing decision that represents that. And we'll see what happens and what comes from that. In terms of the GM full-size truck, I think we're working to do the same. There is a high barrier to entry there. And GM will, I think, make a sourcing decision accordingly based on how they make their sourcing patterns. I think a lot of that will come down now to how they're going through some of their onshoring activities and where some of that shakes out. But I think you've -- as you asked the question, I think you pointed out some of the hurdles that go along with it, there's high switching costs. There's a lot of capital investment that goes with it. We've made clear to both General Motors and Ford, they're some of our most favored customers, and there are no hurdles in terms of capital deployment. We'll be smart about it from that standpoint. But we have -- I mean, we pour more foam than anyone does in the world and certainly more than anyone does in the U.S., and we have JIT capacity, we have JIT footprint to be able to service them. So I don't think there'd be a capacity hurdle from that standpoint. Maybe, Mark, if you want to touch on some of the other...

Yeah, I think Jerome, you were in Plymouth, I think it was last November, and we were talking about this. So we've been talking about this for quite some time now. And I think I remember talking about we don't want to give them a reason to switch, right? So we've been very much partnering with Ford. We've been providing them with solutions for their seating today as well as into tomorrow, right? Our manufacturing, our quality, our launch has been nothing but flawless, right? So again, it's really going back to the operations, making sure that the team is performing not to give them a reason. And then for Jerome's point, all the points that he just made, right? They do values us as a valued partner. They want us as a supplier of choice, right? So we have strong confidence there. And again, we'll hear from them in the coming weeks, right, just in terms of the decision they make. But again, we haven't given them a reason not to come with us.

And I wanted to ask on the bidding process for ZF Lifetech airbag business to which Adient has been connected in the media. The most recent articles suggest that private equity firm, FountainVest Partners may be the sole remaining bidder in that process. I'm not sure to the extent to which you can or would like to comment on this particular potential transaction. If you can, that's great. Although I'm still interested in your appetite for M&A generally and what it might say about it, I've sort of gotten the sense in recent years that something transformative or outside of your core product area likely wasn't on the agenda as you focus on execution, simplification, cash conversion, et cetera. Also given some of the comments that you've shared around not needing to be vertically integrated on the seat heating, lumbar and massage side in the same way that Lear has with Kongsberg, with both you and Gentherm speaking to that, the potential revenue dis-synergies associated with a Tier 1 vertically integrated in such a manner. I thought maybe the same logic might apply to airbags that are sometimes fixed to seats. At the same time, maybe there's something to be said about vertically integrated airbags given all the excitement around zero gravity seats, robotaxis, et cetera. So just how should investors be thinking about this generally? And what can you share?

Yes. Maybe I'll start, and then I'll turn it over to Jerome. Just -- Obviously, we can't talk about specifics in terms of if there was anything under consideration, right? It's not what we do. I would say from an overall M&A activity, right, it really gets into capital allocation, right? And what do we want to do with our capital. And Jerome and I recognize what separates good management teams from great management teams is really capital allocation. And so when you think about that capital allocation, right, you've seen us buying back shares. You've seen us nibbling away at some debt repurchases. The other piece of that, that we've always said all along is, we'd like to have some dry powder for some inorganic M&A activities, right? That said, we also recognize that the hurdle rate to do M&A is very high, right? And if you think about where that threshold was, let's just say, 12 months ago, 18 months ago versus where it is today, it's that much higher today only because the uncertainty with tariffs, what's happening from a macro economy perspective? And then also looking at adding its own stock price, right? I mean it's hard to argue that buying our shares back right now isn't the best use of our cash. So again, that's the way we look at M&A holistically, right, in terms of how we're thinking about it. But in terms of where we might want to play or what we might want to look at, clearly, we look at where we could add value to our customers because if we could add value to our customers, obviously, that's going to drive value to our shareholders. Jerome?

Yes. I mean I think Mark hit the nail on the head. It's how we really look at M&A, it's not a point in time type of metric. I mean we may look at what the returns on capital of that acquisition have to be 12 months ago are very different than what they are now. It's a sliding scale given where our next best alternative is, where the market is, what the dynamics are, what the uncertainty is associated with that, what the uncertainty is in the macro environment. And as Mark said, today, the hurdle rate for any acquisition is very high just given where the economy sits, where our shares are and what some of the next best alternatives are.

Great. I have more questions for these guys, but shall I stop and see if there are any made in the audience? Well, the audience is thinking. Let me ask one about bidding activity and what's happening with your awards. We talked about a big one, obviously. But a number of suppliers have reported an industry-wide slowdown in request for proposals from automakers as they pause plans at first amidst changing consumer preferences with regard to EVs and then regulatory uncertainty with regard to emissions, fuel efficiency, tariffs. We've gotten some increased clarity recently around some of these factors. Curious if you think there now may be a flurry of activity in the back half or into next year and how Adient may be positioned to capitalize upon any such rebound.

Yes. I mean I would say we were highly encouraged with the last 6 months. I mean we booked more business the last 6 months, in particular in our European operations than we did in the prior 18 months. If you look at bookings out of our China operations, they're as strong this year, if not stronger than they were last year. I mean we don't give a backlog number. And then if you look at our Americas operations and what's happened with the onshoring activities, we've talked about the F-Series. But certainly, from a bookings standpoint, we haven't seen a slowdown consistent with the rest of the industry. If anything, I think we've seen an acceleration in the last 6 to 8 months, really driven by the strong execution driven by the relationship, the partnership that we have with our customers and the value proposition we've been able to put in front of them. And so as we look forward over the next 6 months or the next 12 months as the industry kind of comes out of what has been, I think, some of the unknowns, I mean we would expect that to continue.

That's very encouraging to hear. Thank you. So we are out of time. So please join me in thanking Jerome and Mark for all the great color and insight they shared.