What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-11-18 compared with 2024-11-18 · 192 added, 171 removed, 380 unchanged (49% of the section changed)

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Presentation of Information

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Unless the context requires otherwise, references to “Adient plc” or “Adient” refer to Adient plc and its consolidated subsidiaries.

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Words such as “future,” “may,” “will,” “would,” “could,” “can,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “forecast,” “predict,” “project” or “plan” or terms of similar meaning are also generally intended to identify forward-looking statements.

Adient cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond Adient’s control, that could cause Adient’s actual results to differ materially from those expressed or implied by such forward-looking statements, including, among others, risks related to the effects of local and national economic, credit and capital market conditions (including the persistence of high interest rates, vehicle affordability and volatile currency exchange rates) on the global economy, automotive vehicle production levels, mix and schedules, as well as the concentration of exposure to certain automotive manufacturers, shifts in market shares among vehicles, vehicle segments or away from vehicles on which Adient has significant content, changes in consumer demand, risks associated with Adient’s joint ventures, volatile energy markets, Adient’s ability and timing of customer recoveries for increased input costs, the availability of raw materials and component products (including components required by Adient’s customers for the manufacture of vehicles), geopolitical uncertainties such as the Ukraine and Middle East conflicts and the impact on the regional and global economies and additional pressure on supply chain and vehicle production, uncertainties in U.S.

administrative policy regarding trade agreements, tariffs and other international trade relations, the ability of Adient to effectively launch new business at forecast and profitable levels, work stoppages, including due to strikes, supply chain disruptions and similar events, wage inflationary pressures due to labor shortages and new labor negotiations, the ability of Adient to execute its restructuring plans and achieve the desired benefit, the ability of Adient to meet debt service requirements and, terms of future financing, the impact of global tax reform legislation, global climate change and related emphasis on sustainability matters by various stakeholders, and the ability of Adient to achieve its sustainability-related goals, cancellation of or changes to commercial arrangements, and the ability of Adient to identify, recruit and retain key leadership.

the effects of local and national economic, credit and capital market conditions (including the persistence of high interest rates, vehicle affordability and volatile currency exchange rates) on the global economy, increased competitive pressures in the EMEA and Asia regions from Chinese OEMs, uncertainties in U.S.

administrative policy regarding trade agreements, tariffs and other international trade relations, automotive vehicle production levels, mix and schedules, as well as the concentration of exposure to certain automotive manufacturers particularly new entrants in the China market, shifts in market shares among vehicles, vehicle segments or away from vehicles on which Adient has significant content, changes in consumer demand, risks associated with Adient’s joint ventures, volatile energy markets, Adient’s ability and timing of customer recoveries for increased input costs, the availability of raw materials and component products (including components required by Adient’s customers for the manufacture of vehicles), risks associated with warranty and product recall and product liability exposures, geopolitical uncertainties such as the Ukraine and Middle East conflicts and the impact on the regional and global economies and additional pressure on supply chain and vehicle production, the ability of Adient to effectively launch new business at forecast and profitable levels, the ability of Adient to successfully identify suitable opportunities for organic investment and/or acquisitions and to integrate such investments and/or acquisitions, work stoppages, including due to strikes, supply chain disruptions and similar events, wage inflationary pressures due to labor shortages and new labor negotiations, the ability of Adient to execute its restructuring plans and achieve the desired benefit, the ability of Adient to meet debt service requirements and terms of future financing, the impact of global tax reform legislation, the impact of more aggressive positions taken by tax authorities, potential adjustment of the value of deferred tax assets, global climate change and related emphasis on sustainability matters by various stakeholders, and the ability of Adient to achieve its sustainability-related goals, cancellation of, or changes to, commercial arrangements, and the ability of Adient to identify, recruit and retain key leadership.

Factors that might cause differences include, but are not limited to, those discussed in Part 1, Item 1A of this Form 10-K under the heading “Risk Factors,” which are incorporated herein by reference.

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Adient designs, manufactures and markets a full range of seating systems and components for passenger cars, commercial vehicles and light trucks, including vans, pick-up trucks and sport/crossover utility vehicles.

Adient operates more than 200 wholly- and majority-owned manufacturing or assembly facilities, with operations in 29 countries.

Adient operates approximately 200 wholly- and majority-owned manufacturing, assembly or sequencing facilities, with operations in 29 countries.

Additionally, Adient has partially-owned affiliates in China, Asia, Europe and North America.

Through its global footprint and vertical integration, Adient leverages its capabilities to drive growth in the automotive seating industry.

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Adient manages its business on a geographic basis and operates in the following three reportable segments for financial reporting purposes:

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2) Europe, the Middle East and Africa (“EMEA”) and 3) Asia Pacific/China (“Asia”).

Adient evaluates the performance of its reportable segments using an adjusted EBITDA metric defined as income before income taxes and noncontrolling interests, excluding net financing charges, restructuring and impairment costs, restructuring related-costs, net mark-to-market adjustments on pension and postretirement plans, transaction gains/losses, purchase

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accounting amortization, depreciation, stock-based compensation and other non-recurring items (“Adjusted EBITDA”).

Adient evaluates the performance of its reportable segments using an adjusted EBITDA metric defined as income (loss) before income taxes and noncontrolling interests, excluding net financing charges, restructuring and impairment costs, restructuring-related costs, net mark-to-market adjustments on pension plans, transaction gains/losses, purchase accounting amortization, depreciation, stock-based compensation and other non-recurring items (“Adjusted EBITDA”).

Also, certain corporate-related costs are not allocated to the segments.

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Factors Affecting Adient’s Operating Environment

Adient, along with the automotive industry, continues to experience lower than expected vehicle production due to softening consumer demand, uncertainties surrounding the global adoption of electric vehicles and delayed vehicle launches in Americas along with persistent operational and market-driven headwinds in EMEA.

Adient, along with the automotive industry, faces uncertainties surrounding future production volume within the automotive industry.

These uncertainties are the result of a combination of factors including weakening consumer demand due in part to vehicle affordability, the direct and indirect impacts resulting from the imposition of U.S.

and foreign tariffs, market share loss for foreign/luxury OEMs in the Asia reporting unit combined with modest expected margin declines as Adient continues to win new business with local OEMs in China, intensifying competition from Chinese imports and lower exports to China from EMEA as domestic brands expand in China, overcapacity in the EMEA reporting unit resulting in pricing pressure, continued disruptions caused by slower EV adoption rates, and interruptions from other suppliers due to production downtime and shortages of critical components or raw materials.

Adient has also been experiencing increased levels of discussions with taxing authorities and more aggressive negotiations by the tax authorities as part of tax audits and related inquiries, resulting in higher levels of uncertainty on tax assessment outcomes.

These factors are expected to continue to exist into fiscal 2026 at varying degrees which will continue to negatively impact Adient’s results for the foreseeable future.

Refer to the consolidated results of operations and segment analysis discussion below for additional information on the impacts of these items on Adient's results.

As a result of macroeconomic factors impacting Adient and the automotive industry, a heightened risk of impairment exists for the EMEA reporting unit as the difference between its fair value and carrying value is less than 10% as of September 30, 2024.

The decrease in EMEA’s fair value is driven by lower forecasted vehicle volumes from weakening consumer demand, slower consumer adoption of electric vehicles, overcapacity in the industry resulting in pricing pressure, intensifying competition from Chinese imports and lower exports to China from EMEA as domestic brands expand in China.

As a result of the heightened risk of impairment, Adient will continuously assess the changing macroeconomic conditions in EMEA including the outlook for consumer demand for vehicles and other factors impacting the region, along with the need for further restructuring actions, all of which impact Adient’s ability to achieve its projected long-term operating performance.

Refer to Note 6, “Goodwill and Other Intangible Assets,” of the notes to the consolidated financial statements for additional information.

Global Automotive Industry

Adient conducts its business globally in the automotive industry, which is highly competitive and sensitive to economic, political and social factors in the various regions.

During fiscal 2024, global light vehicle production increased 1.5%, driven by improved production volumes predominately in China.

During fiscal 2025, global light vehicle production increased 3.0%, driven by improved vehicle sales and stronger export activity in China, partially offset by reduced production volumes in North America and EMEA.

The current operating environment varies by region, being impacted by weakening consumer demand due to new vehicle affordability and high interest rates along with slower electric vehicle adoption rates.

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Europe 16.9 -3.4 % 17.5 -1.1 % 17.7

Other EMEA 1.3 18.2 % 1.1 -8.3 % 1.2

China 32.5 10.2 % 29.5 7.7 % 27.4

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Significant aspects of Adient's financial results for fiscal 2025 include the following:

• Adient recorded net sales of $14,688 million for fiscal 2024, representing a decrease of $707 million when compared to fiscal 2023.

The decrease in net sales is attributable to Adient's lower overall production volumes in all regions, the unfavorable impact of foreign currencies, and unfavorable material economics recoveries, partially offset by favorable net pricing adjustments.

• Gross profit was $928 million, or 6.3% of net sales for fiscal 2024 compared to $1,033 million, or 6.7% of net sales for fiscal 2023.

Profitability, including gross profit as a percentage of net sales, was lower due to lower production volumes in all regions, the unfavorable impact of foreign currencies, unfavorable operating performance in EMEA, unfavorable

• Adient recorded net sales of $14,535 million for fiscal 2025, representing a decrease of $153 million, or 1.0%, when compared to fiscal 2024.

The decrease in net sales is primarily attributable to lower overall production volumes in EMEA,

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material economics, net of recoveries and non-recurring net benefits largely associated with insurance recoveries in fiscal 2023, partially offset by favorable operating performance in Americas and Asia.

• Equity income was $90 million for fiscal 2024, which compares to equity income of $84 million for fiscal 2023.

The increase is primarily attributable to favorable operating performance at partially-owned affiliates, partially offset by the impact of the KEIPER supply agreement modifications executed in fiscal 2023 and the unfavorable impact of foreign currencies.

• Net income attributable to Adient was $18 million for fiscal 2024, compared to an income of $205 million for fiscal 2023.

The lower net income in fiscal 2024 is primarily attributable to lower overall production volumes, higher restructuring and impairment costs, unfavorable material economics, net of recoveries, higher income tax expense, the unfavorable impact of foreign currencies and prior year non-recurring net benefits largely associated with insurance recoveries, partially offset by favorable net operating performance, lower Selling, general and administrative expenses (“SG&A”) mainly driven by lower incentive compensation expense and lower net engineering and other administrative spending, higher equity income and lower income attributable to noncontrolling interests.

net of higher production volumes in Americas and Asia and unfavorable material economics recoveries, partially offset by the favorable impact of foreign currencies and favorable commercial pricing adjustments.

• Gross profit was $961 million, or 6.6% of net sales, for fiscal 2025 compared to $928 million, or 6.3% of net sales for fiscal 2024.

Profitability, including gross profit as a percentage of net sales, was higher due primarily to favorable commercial and supplier pricing adjustments and operating performance, more than offsetting lower overall production volumes, unfavorable product mix and unfavorable material economics, net of recoveries.

• Equity income was $68 million for fiscal 2025, compared to $90 million for fiscal 2024.

The decrease is due primarily to the unfavorable impact of the KEIPER supply agreement modifications, partially offset by higher production volumes and favorable operating performance.

• Net loss attributable to Adient was $281 million for fiscal 2025, compared to net income attributable to Adient of $18 million for fiscal 2024.

Consolidated Results of Operations

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Net financing charges 193 2% 189 (3)% 195

Other pension expense (income) 21 (36)% 33 >100% (10)

Income before income taxes 133 (55)% 295 >100% 54

Income tax provision 32 >100% — >(100)% 94

Other pension expense 10 (52)% 21 (36)% 33

Income (loss) before income taxes (88) >(100%) 133 (55)% 295

Income tax provision 103 >100% 32 n/a —

Net income (loss) (191) >(100%) 101 (66)% 295

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Net sales $ 14,535 (1)% $ 14,688 (5)% $ 15,395

Net sales decreased by $707 million, or 5%, during fiscal 2024 as compared to fiscal 2023 due to lower overall production volumes in all regions that are resulting from softening consumer demand and weaker product mix in EMEA along with slower than expected product launches and production disruptions at certain customers in the Americas including the impact of the United Auto Workers ("UAW") strike during the first fiscal quarter ($697 million), unfavorable material economics recoveries ($93 million) and the unfavorable impact of foreign currencies ($16 million), partially offset by net favorable pricing adjustments ($99 million).

Net sales decreased by $153 million, or 1%, during fiscal 2025 as compared to fiscal 2024 due to lower overall production volumes in EMEA as a result of softening consumer demand, net of higher production volumes in Americas and Asia ($225 million) and unfavorable material economics recoveries ($59 million), partially offset by the favorable impact of foreign currencies ($104 million) and favorable commercial pricing adjustments which includes $28 million related to tariff recoveries ($27 million).

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Net sales increased by $1,274 million, or 9%, in fiscal 2023 as compared to fiscal 2022 due to higher overall production volumes in all operating segments ($1,558 million) and net favorable pricing adjustments ($141 million), partially offset by the unfavorable impact of foreign currencies ($301 million) and unfavorable material economics recoveries ($124 million).

Net sales decreased by $707 million, or 5%, during fiscal 2024 as compared to fiscal 2023 due to lower overall production volumes in all regions that resulted from softening consumer demand and weaker product mix in EMEA along with slower than expected product launches and production disruptions at certain customers in the Americas including the impact of the United Auto Workers (“UAW”) strike ($697 million), unfavorable material economics recoveries ($93 million) and the unfavorable impact of foreign currencies ($16 million), partially offset by net favorable commercial pricing adjustments ($99 million).

Refer to the segment analysis below for a discussion of segment net sales.

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% of sales 6.6 % 6.3 % 6.7 %

Cost of sales decreased by $186 million, or 1%, and gross profit increased by $33 million, or 4%, during fiscal 2025 as compared to fiscal 2024.

The year over year decrease in cost of sales was primarily due to lower production volumes ($174 million), favorable supplier pricing adjustments including KEIPER supply agreement modifications ($70 million), favorable material economics ($31 million), favorable operating performance despite the $45 million unfavorable impact of tariffs ($27 million) and lower depreciation and amortization expense ($4 million), partially offset by the unfavorable impact of foreign currencies ($101 million) and higher restructuring-related charges ($19 million).

Gross profit for fiscal 2025 was impacted by favorable commercial and supplier pricing adjustments, favorable operating performance, lower depreciation expense and the favorable impact of foreign currencies, partially offset by lower production volumes and unfavorable product mix, unfavorable material economics, net of recoveries, unfavorable net tariff impact, and higher restructuring-related charges.

Refer to the segment analysis below for a discussion of segment profitability.

Cost of sales decreased by $602 million, or 4%, and gross profit decreased by $105 million, or 10%, during fiscal 2024 as compared to fiscal 2023.

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Gross profit for fiscal 2024 was unfavorably impacted by lower production volumes, non-recurring net benefits largely associated with insurance recoveries in fiscal 2023, unfavorable material economics, net of recoveries and the unfavorable impact of foreign currencies, partially offset by favorable operating performance.

Cost of sales increased by $1,048 million, or 8%, and gross profit increased by $226 million in fiscal 2023 as compared to fiscal 2022.

The year-over-year increase in cost of sales was due to higher production volumes ($1,312 million), increased utilities and labor costs along with operating inefficiencies associated with supply chain issues ($104 million), and the impact of fiscal 2022 gains associated with retrospective recoveries of Brazil indirect tax credits ($29 million), partially offset by the favorable impact of foreign currencies ($282 million), favorable supplier pricing ($69 million), non-recurring fiscal 2023 net benefits largely associated with insurance recoveries ($29 million), the favorable impact of the KEIPER supply agreement modifications ($11 million), and lower depreciation expense ($6 million).

Gross profit was favorably impacted by higher overall production volumes, net favorable pricing adjustments, and non-recurring net benefits largely associated with insurance recoveries, partially offset by higher utilities and labor costs, and unfavorable net material economics.

Refer to the segment analysis below for a discussion of segment profitability.

Selling, General and Administrative Expenses

Selling, General and Administrative Expenses (“SG&A”)

September 30,

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% of sales 3.6 % 3.5 % 3.6 %

SG&A expenses increased by $15 million, or 3%, during fiscal 2025 as compared to fiscal 2024.

The year over year increase in SG&A was primarily due to higher compensation expense including the impact of prior year austerity measures ($21 million), third-party consulting costs associated with strategic planning ($9 million), higher net engineering and other administrative spending ($8 million) and the unfavorable impact of foreign currencies ($2 million), partially offset by the higher level of gains on the sale of assets ($13 million), the non-recurrence of a prior year one-time loss on business divestiture ($8 million), lower depreciation and amortization expense ($2 million) and other non-recurring items ($2 million).

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SG&A for fiscal 2024 decreased by $47 million, or 8%, as compared to fiscal 2023.

The year over year decrease in SG&A was primarily due to lower compensation expense including performance-based incentive compensation costs and other compensation related austerity measures ($32 million), lower net engineering and other administrative spending ($16 million), lower depreciation and amortization expense ($6 million), the favorable impact of foreign currencies ($2 million) and lower transaction costs ($2 million), partially offset by a one-time loss on business divestiture ($8 million) and other non-recurring items ($3 million).

SG&A in fiscal 2023 decreased by $44 million, or 7%, as compared to fiscal 2022.

The-year-over year decrease in SG&A is attributable to the favorable impact of foreign currencies ($12 million), one-time gain on sale of a restructured facility ($10 million), lower transaction costs ($5 million), non-recurring unfavorable fiscal 2022 costs ($17 million), lower overall

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engineering and other administrative spending ($15 million), and lower depreciation and amortization expense ($4 million), partially offset by higher compensation expense including stock-based and performance-based incentive compensation costs due in part to the non-recurrence of fiscal 2022 austerity measures ($19 million).

Refer to the segment analysis below for a discussion of segment profitability.

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Restructuring and impairment costs $ 392 >100% $ 168 >100% $ 40

Restructuring and impairment costs were higher by $224 million during fiscal 2025 due primarily to a $333 million non-cash goodwill impairment charge recorded in the EMEA segment and an $8 million non-cash impairment loss recorded on the Adient Aerospace investment, partially offset by higher levels of restructuring charges recorded primarily in EMEA in fiscal 2024 in response to structural changes occurring in the European automotive market and to ensure Adient maintains a competitive cost structure by reducing labor costs and increasing efficiencies.

Restructuring and impairment costs were higher by $128 million during fiscal 2024 due to restructuring actions taken primarily in EMEA in response to the macroeconomic factors occurring in the European automotive market causing reduced production volumes and to ensure Adient maintains a competitive cost structure by reducing labor costs and increasing efficiencies.

Adient also recorded a $9 million impairment on its Adient Aerospace investment in fiscal 2024 contributing to the increase year over year.

Adient continues to monitor and assess market conditions within the automotive industry in each of its regions, with particular focus on EMEA in the near term, and will consider taking further restructuring action as needed to stay competitive and to position Adient to serve the needs of its customers.

Restructuring and impairment costs were higher by $15 million in fiscal 2023 as compared to fiscal 2022 due primarily to higher levels of restructuring actions taken in EMEA.

The restructuring actions related to cost reduction initiatives and consisted primarily of workforce reductions.

Refer to Note 15, "Restructuring and Impairment Costs," of the notes to the consolidated financial statements and the discussion under Liquidity and Capital Resources below for additional information related to Adient's restructuring plans.

Refer to Note 6, “Goodwill and Other Intangible Assets” and Note 15, “Restructuring and Impairment Costs” of the notes to the consolidated financial statements and the discussion under Liquidity and Capital Resources below for additional information related to the goodwill impairment recorded during fiscal 2025 and Adient's restructuring plans.

Equity Income

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Equity income $ 68 (24)% $ 90 7% $ 84

Equity income was $68 million during fiscal 2025, compared to $90 million during fiscal 2024.

The decrease is primarily attributable to the unfavorable impact of the KEIPER supply agreement modifications, including the addition of a performance based rebate to the shareholders in fiscal 2025 ($39 million), restructuring-related charges related to certain of Adient's investment in non-consolidated affiliates ($5 million), and the unfavorable impact of foreign currencies ($2 million), partially offset by favorable operating performance at partially-owned affiliates ($22 million), and a one-time gain on the sale of Setex during fiscal 2025 ($4 million).

Equity income was $90 million for fiscal 2024, compared to $84 million for fiscal 2023.

The increase is primarily attributable to favorable production volumes and operating performance at partially-owned affiliates ($17 million) and the non-recurrence of prior year non-cash impairment charges recorded on certain of Adient's investments in non-consolidated affiliates ($3 million), partially offset by the impact of the KEIPER supply agreement modifications executed in fiscal 2023 ($8 million), and the unfavorable impact of foreign currencies ($5 million).

Equity income was $84 million in fiscal 2023 compared to $75 million in fiscal 2022.

The increase is primarily attributable to higher production volumes and favorable operating performance at Adient's partially-owned affiliates ($28 million), one-time gain on divestiture of investment at an affiliate ($4 million), and lower non-cash impairment charges recorded on certain of Adient's investments in non-consolidated affiliates ($2 million), partially offset by the impact of the KEIPER supply agreement modifications ($17 million), the unfavorable impact of foreign currencies ($7 million), and restructuring-related activities at certain affiliates ($1 million).

The increase is primarily attributable to favorable production volumes and operating performance at partially-owned affiliates ($17 million) and the non-recurrence of fiscal 2023 non-cash impairment charges recorded on certain of Adient's investments in non-consolidated affiliates ($3 million), partially offset by the impact of the KEIPER supply agreement modifications executed in fiscal 2023 ($8 million), and the unfavorable impact of foreign currencies ($5 million).

Refer to Note 3, “Acquisitions and Divestitures,” and Note 18, “Nonconsolidated Partially-Owned Affiliates,” of the notes to the consolidated financial statements for more information.

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Net financing charges $ 193 2% $ 189 (3)% $ 195

Net financing charges increased by $4 million during fiscal 2025 as compared to fiscal 2024 due primarily to higher interest rates and a one-time accelerated-deferred financing fee charge associated with early redemption of the 4.875% senior unsecured notes during fiscal 2025.

Net financing charges decreased by $6 million during fiscal 2024 as compared to fiscal 2023 due primarily to premiums paid and deferred financing cost write offs associated with repurchasing of debt during fiscal 2023.

Net financing charges decreased by $20 million in fiscal 2023 as compared to fiscal 2022 due to higher premiums paid to tender outstanding debt and higher accelerated expensing of deferred financing costs during fiscal 2022.

Refer to Note 9, “Debt and Financing Arrangements,” of the notes to the consolidated financial statements for information related to the components of Adient's net financing charges.

Other Pension Expense (Income)

Other Pension Expense

September 30,

(in millions) 2025 Change 2024 Change 2023

Other pension expense (income) $ 21 (36)% $ 33 >100% $ (10)

Other pension expense (income) consists of mark-to-market, curtailment and settlement adjustments, and non-service components of net periodic pension costs of Adient's retirement plans.

Other pension expense was lower by $16 million in fiscal 2024 as compared to fiscal 2023 due primarily to a $13 million current year mark-to-market loss (compared to a $19 million loss in fiscal 2023) and an $8 million prior year curtailment loss primarily associated with employee termination benefit plans in the Americas segment.

The higher fiscal 2023 expense compared to fiscal 2022 is due primarily to a $19 million fiscal 2023 mark-to-market loss (compared to a $8 million gain in fiscal 2022), an $8 million curtailment loss primarily associated with employee termination benefit plans in the Americas segment, and higher pension interest expense.

Other pension expense $ 10 (52)% $ 21 (36)% $ 33

Other pension expense consists of mark-to-market, curtailment and settlement adjustments, and non-service components of net periodic pension costs of Adient's retirement plans.

Other pension expense was lower by $11 million in fiscal 2025 as compared to fiscal 2024 due primarily to a $3 million current year mark-to-market loss (compared to a $13 million loss in fiscal 2024).

Other pension expense was lower by $12 million in fiscal 2024 as compared to fiscal 2023 due primarily to a lower mark-to-market loss ($13 million in fiscal 2024 compared to $19 million in fiscal 2023) and an $8 million curtailment loss in fiscal 2023 primarily associated with employee termination benefit plans in the Americas segment.

Refer to Note 14, “Retirement Plans,” of the notes to the consolidated financial statements for information related to the components of Adient's net periodic pension costs.

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(in millions) 2025 Change 2024 Change 2023

Income tax provision $ 32 >100% $ — >(100)% $ 94

The fiscal 2024 income tax expense of $32 million was higher than the Irish statutory rate of 12.5% primarily due to the inability to record a tax benefit for losses in jurisdictions with valuation allowances, the repatriation of foreign earnings, $17 million of tax expense related to foreign exchange remeasurements of tax balances primarily in Mexico and tax expense from the establishment of valuation allowances at certain subsidiaries, partially offset by tax benefits from the release of uncertain tax positions due to audit closures and from the release of valuation allowances at certain subsidiaries.

Income tax provision $ 103 >100% $ 32 n/a $ —

The fiscal 2025 income tax expense of $103 million was higher than the Irish statutory rate of 12.5% primarily due to the inability to record a tax benefit for losses in jurisdictions with valuation allowances, the repatriation of foreign earnings, tax expense related to adjustments to net operating loss deferred tax assets, tax expense related to the establishment of uncertain tax positions, foreign tax rate differentials, and the impact of the impairment of the non-tax-deductible portion of the EMEA goodwill balance for which there is no corresponding income tax benefit, partially offset by tax benefits from audit closures and statute expirations.

Adient reviews the realizability of its deferred tax assets on a quarterly basis, or whenever events or changes in circumstances indicate that a review is required.

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Since future financial results may differ from previous estimates, periodic adjustments to Adient's valuation allowances may be necessary.

Given current earnings and anticipated future earnings at certain subsidiaries, Adient believes that there is a possibility that sufficient positive evidence may become available that would allow the release of all, or a portion of, valuation allowances at certain subsidiaries within the next twelve months.

A release of valuation allowances, if any, would result in the recognition of certain deferred tax assets which could generate a material income tax benefit for the period in which such release is recorded.

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As a result of Adient's fiscal 2024 analysis of the realizability of its worldwide deferred tax assets, and after considering tax planning initiatives and other positive and negative evidence, Adient determined it was more likely than not that certain deferred tax assets would be realizable and recorded an income tax benefit of $14 million in China, $8 million in Mexico, $7 million in France, and $6 million in Japan to release valuation allowances.

In addition, Adient determined it was necessary to establish valuation allowances on certain deferred tax assets in Poland and Mexico, recording tax expense of $14 million and $5 million, respectively.

certain subsidiaries within the next twelve months.

As a result of Adient's fiscal 2025 analysis of the realizability of its worldwide deferred tax assets, and after considering tax planning initiatives and other positive and negative evidence, Adient established and released valuation allowances on certain deferred tax assets at various subsidiaries, which did not have a material impact on Adient’s financial statements either individually or in the aggregate.

Adient continues to record valuation allowances on certain deferred tax assets in Germany, Hungary, Luxembourg, Mexico, Poland, Spain, the United Kingdom, the U.S.

and other jurisdictions as it remains more likely than not that they will not be realized.

The fiscal 2024 income tax expense of $32 million was higher than the Irish statutory rate of 12.5% primarily due to the inability to record a tax benefit for losses in jurisdictions with valuation allowances, the repatriation of foreign earnings, tax expense related to foreign exchange remeasurements of tax balances primarily in Mexico and tax expense from the establishment of valuation allowances at certain subsidiaries, partially offset by tax benefits from the release of uncertain tax positions due to audit closures and from the release of valuation allowances at certain subsidiaries.

The fiscal 2023 income tax expense of $0 million was lower than the Irish statutory rate of 12.5% primarily due to the release of valuation allowances in Mexico, partially offset by the inability to recognize a tax benefit for losses in jurisdictions with valuation allowances, the repatriation of foreign earnings, and foreign tax rate differentials.

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In addition, Adient determined it was necessary to release valuation allowances and establish valuation allowances in other jurisdictions that did not have a material impact on Adient’s financial statements.

The fiscal 2022 income tax expense of $94 million was higher than the Irish statutory rate of 12.5% primarily due to the inability to recognize a tax benefit for losses in jurisdictions with valuation allowances, the establishment of valuation allowances in certain jurisdictions, and the repatriation of foreign earnings, partially offset by tax benefits related to the release of valuation allowances in certain jurisdictions.

As a result of Adient's fiscal 2022 analysis of the realizability of its worldwide deferred tax assets, and after considering tax planning initiatives and other positive and negative evidence, Adient determined it was more likely than not that certain deferred tax assets in Canada, Japan, and other jurisdictions would not be realized and recorded income tax expense of $12 million, $3 million and $3 million, respectively, to establish valuation allowances.

Additionally, Adient determined it was more likely than not that deferred tax assets in the Czech Republic and other jurisdictions would be realizable and recorded income tax benefit of $11 million and $2 million, respectively, to release valuation allowances.

Adient is subject to income taxes in Ireland, the U.S.

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Nonetheless, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year.

Subsequent to September 30, 2025, Adient initiated a foreign tax audit settlement proposal which, although still under negotiation with the foreign tax authorities, is expected to require a non-recurring recognition and payment of approximately $20 million in fiscal 2026.

Adient does not generally provide for additional income taxes which would become payable upon repatriation of undistributed earnings of wholly owned foreign subsidiaries.

Adient's intent is for such earnings to be reinvested by the subsidiaries or to be repatriated only when it would be tax efficient.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law.

The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation.

ASC 740 requires the effects of changes in tax rates and laws to be recognized in the period in which the legislation is enacted.

The OBBBA did not have a material impact on Adient’s consolidated financial statements.

Adient will continue to evaluate the OBBBA and related guidance.

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Income Attributable to Noncontrolling Interests

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Income attributable to noncontrolling interests $ 90 8% $ 83 (8)% $ 90

The increase in income attributable to noncontrolling interests in fiscal 2025 as compared to fiscal 2024 is primarily attributable to higher production volumes at certain affiliates primarily in Americas and Asia, partially offset by a $5 million adjustment to increase income attributable to noncontrolling interest recorded in fiscal 2024 related to a prior period.

The decrease in income attributable to noncontrolling interests during fiscal 2024 compared to fiscal 2023 is attributable to lower production volumes associated with new program launches at certain affiliates, which is partially offset by a $5 million adjustment to increase income attributable to noncontrolling interests recorded in fiscal 2024 but related to fiscal 2023.

The $10 million increase in income attributable to noncontrolling interests in fiscal 2023 as compared to fiscal 2022 is primarily attributable to higher production volumes at affiliates in various jurisdictions.

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Net Income (Loss) Attributable to Adient

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Net income (loss) attributable to Adient $ (281) >(100%) $ 18 (91)% $ 205

Net loss attributable to Adient was $281 million during fiscal 2025, compared to net income attributable to Adient of $18 million during fiscal 2024.

The net loss in fiscal 2025 is primarily attributable to the $333 million non-cash goodwill impairment charge recorded in the EMEA segment and the $8 million non-cash impairment on its investment in Adient Aerospace, lower overall production volumes, unfavorable material economics, net of recoveries, higher income tax expense, lower equity income due to the unfavorable impact of the KEIPER supply agreement modifications, higher SG&A expenses mainly driven by third-party consulting costs associated with strategic planning and higher income attributable to noncontrolling interests, partially offset by favorable commercial and supplier pricing adjustments, favorable operating performance and lower pension expense.

Net income attributable to Adient was $18 million for fiscal 2024, compared to an income of $205 million for fiscal 2023.

The lower net income in fiscal 2024 is primarily attributable to lower overall production volumes, higher restructuring and impairment costs, unfavorable material economics, net of recoveries, higher income tax expense, the unfavorable impact of foreign currencies and prior year non-recurring net benefits largely associated with insurance recoveries, partially offset by favorable net operating performance, lower SG&A expenses mainly driven by lower incentive compensation expense and lower net engineering and other administrative spending, higher equity income and lower income attributable to noncontrolling interests.

Net income attributable to Adient was $205 million in fiscal 2023, compared to $120 million of net loss attributable to Adient in fiscal 2022.

The higher net income in fiscal 2023 is primarily attributable to higher overall production volumes, favorable pricing and operating performance, one-time insurance recoveries, one-time income tax benefit related to the release of certain tax valuation allowances, lower SG&A expenses, lower net financing charges, and higher equity income, partially offset by unfavorable material economics, higher other pension expense, higher restructuring cost, higher income attributable to noncontrolling interests, and the unfavorable impact of foreign currencies.

Comprehensive Income (Loss) Attributable to Adient

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Comprehensive income (loss) attributable to Adient $ (256) >(100%) $ 167 (20)% $ 208

Comprehensive loss attributable to Adient was $256 million during fiscal 2025 compared to $167 million of comprehensive income during fiscal 2024.

The decrease of $423 million is due primarily to a net loss during fiscal 2025 primarily resulting from the non-cash goodwill impairment recorded in the EMEA segment compared to net income in fiscal 2024 ($292 million), the unfavorable impact of foreign currency translation adjustments ($218 million), partially offset by lower comprehensive income attributable to noncontrolling interests ($18 million) and higher realized and unrealized gains on derivatives in fiscal 2025 compared to losses in fiscal 2024 ($69 million).

Comprehensive income attributable to Adient was $167 million in fiscal 2024 compared to $208 million of comprehensive income in fiscal 2023.

The decrease of $41 million is due primarily to lower net income ($194 million), higher realized and unrealized losses on derivatives ($53 million) and higher comprehensive income attributable to noncontrolling interests ($15 million), partially offset by the favorable impact of foreign currency translation adjustments ($221 million).

Comprehensive income attributable to Adient was $208 million in fiscal 2023 compared to $338 million of comprehensive loss in fiscal 2022.

The increase of $546 million is due primarily to higher net income ($335 million), the favorable impact of foreign currency translation adjustments ($233 million) and the impact of realized and unrealized gains on derivatives ($21 million), partially offset by higher comprehensive income attributable to noncontrolling interests ($42 million).

The decrease of $41 million is due primarily to lower net income ($194 million), higher realized and

Adient plc | Form 10-K | 39

unrealized losses on derivatives ($53 million) and higher comprehensive income attributable to noncontrolling interests ($15 million), partially offset by the favorable impact of foreign currency translation adjustments ($221 million).

Segment Analysis

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2) EMEA and 3) Asia.

Also, certain corporate-related costs are not allocated to the segments.

The reportable segments are consistent with how management views the markets served by Adient and reflect the financial information that is reviewed by its chief operating decision maker.

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Refer to the “Factors Affecting Adient’s Operating Environment” included above in Item 7 within the Management’s Discussion and Analysis section for more information on the factors that have impacted Adient’s fiscal 2025 financial results and that are expected to continue to impact Adient’s financial results in fiscal 2026.

The following table summarizes net sales and adjusted EBITDA by reportable segment for fiscal 2025, 2024 and 2023:

6 unchanged sentences

Adjusted EBITDA $ 336 $ 232 $ 464 $ (94) $ 938

The following is a reconciliation of Adient's reportable segments' adjusted EBITDA to income before income taxes:

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The following is a reconciliation of Adient's reportable segments' adjusted EBITDA to income (loss) before income taxes:

September 30,

12 unchanged sentences

Restructuring-related activities (4)

Loss on disposal transactions (5)

Gain (loss) on disposal transactions (5)

(279) (285) (290)

4 unchanged sentences

Net financing charges (193) (189) (195)

Other pension income (expense) (21) (33) 10

Income before income taxes $ 133 $ 295 $ 54

Other pension expense (10) (21) (33)

Income (loss) before income taxes $ (88) $ 133 $ 295

(1) Corporate-related costs not allocated to the segments include executive office, communications, corporate development, legal and corporate finance.

(2) Reflects restructuring charges for costs that are probable and reasonably estimable and one-time asset impairments.

During fiscal 2024, an impairment charge of $9 million related to Adient’s investment in Adient Aerospace was recorded.

During fiscal 2022, an impairment charge of $4 million related to the withdrawal from and sale of its operations in Russia, and a held-for-sale impairment charge of $6 million were recorded in EMEA.

Fiscal 2025 reflects a non-recurring, non-cash goodwill impairment charge of $333 million in the EMEA reporting unit, restructuring charges of $51 million and an impairment charge of $8 million related to Adient’s investment in Adient Aerospace.

Fiscal 2024 reflects restructuring charges of $159 million and an impairment charge of $9 million related to Adient’s investment in Adient Aerospace.

Fiscal 2023 reflects restructuring charges of $40 million.

Refer to Note 15, “Restructuring and Impairment Costs,” of the notes to the consolidated financial statements for more information.

(3) Reflects amortization of intangible assets including those related to partially-owned affiliates recorded within equity income.

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(4) Reflects restructuring-related charges for costs that are recorded as incurred or as earned and other non-recurring impacts that are directly attributable to restructuring activities.

Fiscal 2024 and 2023 also each include a non-recurring $10 million gain on the sale of two restructured facilities in Americas.

Fiscal 2025 includes $29 million of restructuring-related charges primarily recorded in cost of sales and $5 million of restructuring-related charges at a partially-owned affiliate recorded in equity income, partially offset by a $23 million gain on the sales of restructured facilities across all segments recorded in SG&A.

Fiscal 2024 includes a $10 million gain on sale of a restructured facility in Americas recorded in SG&A, offset by $10 million in restructuring-related charges primarily recorded in cost of sales.

Fiscal 2023 includes a $10 million gain on sale of a restructured facility in Americas recorded in SG&A, partially offset by $6 million of restructuring-related charges primarily recorded in cost of sales and $2 million of restructuring-related charges at a partially-owned affiliate recorded in equity income.

(5) Fiscal 2025 reflects a $4 million gain on sale of Adient's partially-owned investment in Setex.

Fiscal 2024 reflects an $8 million loss on sale of 51% of Adient's interest in LFADNT (as described in Note 3, “Acquisitions and Divestitures,” of the notes to consolidated financial statements), partially offset by a $1 million gain on sale of a nonconsolidated partially-owned affiliate.

Fiscal 2023 reflects $3 million and $3 million of non-cash impairment related to certain of Adient's investments in nonconsolidated partially-owned affiliates in Asia and EMEA, respectively.

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(6) Fiscal 2024 includes a $5 million adjustment to increase equity-based compensation expense related to a retired executive's equity awards that should have been recognized in periods prior to fiscal 2024.

(7) Fiscal 2025 includes $10 million of third-party consulting costs associated with strategic planning and a $1 million non-recurring loss at affiliates, partially offset by a $2 million gain on a non-recurring contract related settlement.

Fiscal 2024 reflects a $3 million non-recurring gain on a contract related settlement and $1 million of indirect tax recoveries in Brazil, partially offset by $1 million of transaction costs and a $1 million one-time divestiture related impact at an affiliate.

Fiscal 2023 reflects $4 million of one-time divestiture gain at an affiliate and $4 million of a gain associated with the retrospective recovery of indirect tax credits in Brazil, partially offset by $3 million of transaction costs.

Fiscal 2022 includes $3 million and $7 million of non-cash impairments of certain of Adient's investments in nonconsolidated partially-owned affiliates in Asia and EMEA, respectively, $8 million of transaction costs, a $14 million charge related to a non-recurring contract related settlement, $1 million of accounts receivable allowances resulting from the withdrawal from and sale of operations in Russia, and $2 million of loss on finalization of asset sale in Turkey, partially offset by a gain of $32 million associated with the retrospective recovery of indirect tax credits in Brazil.

September 30,

2 unchanged sentences

Adjusted EBITDA $ 402 7% $ 375 12% $ 336

Net sales decreased in fiscal 2024 by $457 million primarily due to lower current year production volumes resulting from weakening consumer demand, slower than expected product launches and the UAW strike-related disruptions during the first quarter of fiscal 2024 at certain customers ($470 million), unfavorable material economics recoveries ($55 million) and the unfavorable impact of foreign currencies ($21 million), partially offset by net favorable pricing adjustments ($89 million).

Adjusted EBITDA increased in fiscal 2024 by $39 million due to net favorable pricing adjustments and operational improvements including lower freight costs and the impact of the KEIPER supply agreement modifications ($145 million) and lower SG&A expenses driven by lower compensation expense, including lower performance based compensation costs and other compensation related austerity measures, along with improved engineering recoveries ($48 million), partially offset by lower current year production volumes ($89 million, including the UAW strike-related impact during the first quarter of fiscal 2024 of $25 million), the unfavorable impact of foreign currencies ($27 million), unfavorable material economics, net of recoveries ($25 million) and non-recurring net benefits largely associated with insurance recoveries in fiscal 2023 ($13 million).

Net sales increased in fiscal 2023 by $663 million primarily as a result of higher production volumes ($669 million) and favorable net pricing adjustments ($73 million), partially offset by the unfavorable impact of material economics recoveries ($79 million).

Adjusted EBITDA increased in fiscal 2023 by $94 million due to higher production volumes ($93 million), net material margin improvements including the impact of the KEIPER supply agreement modifications ($79 million), non-recurring net benefits associated with insurance recoveries ($13 million), and higher equity income ($1 million), partially offset by higher labor, utility and launch costs ($58 million), unfavorable material economics, net of recoveries ($17 million), higher administrative and engineering expense due in part to the non-recurrence of fiscal 2022 austerity measures ($8 million), and the unfavorable impact of foreign currencies ($9 million).

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Net sales increased in fiscal 2025 by $93 million primarily due to higher current year production volumes and mix due in part to achieving run rate production levels on prior-year program launches ($80 million) and net favorable commercial pricing adjustments including the favorable impact of $28 million related to tariff cost recoveries ($69 million), partially offset by unfavorable material economics recoveries ($33 million) and the unfavorable impact of foreign currencies ($23 million).

Adjusted EBITDA increased in fiscal 2025 by $27 million due to net favorable commercial and supplier pricing adjustments including the impact of $28 million related to tariff cost recoveries ($79 million), favorable operating performance due to lower launch and lower input costs ($42 million) and higher current year production volumes ($19 million), partially offset by the additional costs related to new tariffs ($45 million), higher administrative and engineering expenses driven by lower engineering recoveries and higher compensation expenses primarily due to prior-year compensation austerity measures ($35 million), unfavorable material economics, net of recoveries ($28 million), the unfavorable impact of foreign currencies ($3 million) and lower equity income ($2 million).

Net sales decreased in fiscal 2024 by $457 million primarily due to lower fiscal 2024 production volumes resulting from weakening consumer demand, slower than expected product launches and the UAW strike-related disruptions during the first quarter of fiscal 2024 at certain customers ($470 million), unfavorable material economics recoveries ($55 million) and the unfavorable impact of foreign currencies ($21 million), partially offset by net favorable commercial pricing adjustments ($89 million).

Adjusted EBITDA increased in fiscal 2024 by $39 million due to net favorable commercial and supplier pricing adjustments and operational improvements including lower freight costs and the impact of the KEIPER supply agreement modifications ($145 million) and lower administrative and engineering expenses driven by lower compensation expense, including lower performance based compensation costs and other compensation related austerity measures, along with improved engineering recoveries ($48 million), partially offset by lower fiscal 2024 production volumes ($89 million, including the UAW strike-related impact during the first quarter of fiscal 2024 of $25 million), the unfavorable impact of foreign currencies ($27 million), unfavorable material economics, net of recoveries ($25 million) and non-recurring net benefits largely associated with insurance recoveries in fiscal 2023 ($13 million).

September 30,

2 unchanged sentences

Adjusted EBITDA $ 124 (20)% $ 155 (33)% $ 232

Net sales decreased in fiscal 2024 by $166 million primarily due to lower production volumes resulting from weakening consumer demand for new vehicles and product mix ($212 million), unfavorable material economics recoveries ($36 million) and net unfavorable pricing adjustments ($9 million), partially offset by the favorable impact of foreign currencies ($91 million).

Net sales decreased in fiscal 2025 by $256 million primarily as a result of lower production volumes resulting from weakening consumer demand for new vehicles, unfavorable product mix and from other intentional portfolio reductions ($336 million), unfavorable material economics recoveries ($23 million) and net unfavorable commercial pricing adjustments ($6 million), partially offset by the favorable impact of foreign currencies ($109 million).

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Adjusted EBITDA decreased in fiscal 2025 by $31 million due to lower production volumes and unfavorable product mix ($36 million), the unfavorable impact of foreign currencies ($12 million), higher administrative and engineering expense ($12 million) and unfavorable material economics, net of recoveries ($2 million), partially offset by net favorable supplier pricing adjustments in excess of net unfavorable commercial pricing adjustments ($17 million), favorable operating performance ($12 million) and higher equity income ($2 million).

Net sales decreased in fiscal 2024 by $166 million primarily due to lower production volumes resulting from weakening consumer demand for new vehicles and product mix ($212 million), unfavorable material economics recoveries ($36 million) and net unfavorable commercial pricing adjustments ($9 million), partially offset by the favorable impact of foreign currencies ($91 million).

Adjusted EBITDA decreased in fiscal 2024 by $77 million due to lower production volumes ($48 million), higher operating costs associated with lower levels of customer orders, which were often reduced with little warning, leading to unplanned downtime and operating inefficiencies ($21 million), non-recurring net benefits largely associated with insurance recoveries in fiscal 2023 ($17 million) and the non-recurrence of prior year gains on sale of assets ($6 million), partially offset by the favorable impact of foreign currencies ($5 million), increased equity income ($4 million), favorable material economics, net of recoveries ($4 million) and lower administrative and engineering expense ($2 million).

Net sales increased in fiscal 2023 by $431 million primarily as a result of higher production volumes ($511 million), and net favorable pricing adjustments ($87 million), partially offset by the unfavorable impact of foreign currency ($124 million) and the unfavorable impact of material economics recoveries ($43 million).

Adjusted EBITDA increased in fiscal 2023 by $94 million due primarily to net material margin improvements ($117 million), higher production volumes ($81 million), non-recurring net benefits associated with insurance recoveries ($17 million), the favorable impact of foreign currencies ($22 million), higher equity income ($4 million), and lower administrative and engineering expense ($6 million), partially offset by unfavorable material economics, net of recoveries ($111 million) and higher input costs including freight, labor and utilities ($42 million).

Refer to the “Factors Affecting Adient’s Operating Environment” included above in Item 7 within the Management’s Discussion and Analysis section for more information.

September 30,

2 unchanged sentences

Adjusted EBITDA $ 440 —% $ 439 (5)% $ 464

Net sales decreased in fiscal 2024 by $96 million due to the unfavorable impact of foreign currencies ($85 million), lower production volumes due primarily to program changeovers, program launches and lower volumes on foreign OEM platforms in China ($29 million) and unfavorable material economics recoveries ($2 million), partially offset by net favorable pricing adjustments ($20 million).

Adjusted EBITDA decreased in fiscal 2024 by $25 million due to lower current year production volumes and unfavorable product mix ($38 million), the unfavorable impact of foreign currencies ($19 million) and higher administrative and engineering expense ($6 million), partially offset by net favorable pricing adjustments and improved labor efficiencies ($30 million), favorable material economics, net of recoveries ($6 million) and higher equity income which includes the unfavorable impact of the KEIPER supply agreement modifications ($2 million).

Net sales increased in fiscal 2023 by $159 million due to higher production volumes and mix ($360 million), partially offset by the unfavorable impact of foreign currencies ($180 million), net unfavorable pricing adjustments ($19 million), and the unfavorable impact of material economics recoveries ($2 million).

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Adjusted EBITDA increased in 2023 by $81 million due primarily to favorable volume and mix ($72 million), net material margin improvements including the impact of the KEIPER supply agreement modifications and including certain favorable pricing adjustments in China that are non-recurring ($25 million), higher equity income at partially-owned affiliates ($13 million), favorable operating performance ($17 million), and favorable impact of material economics, net of recoveries ($4 million), partially offset by the unfavorable impact of foreign currencies ($26 million), the impact of the KEIPER supply agreement modifications on equity income ($18 million), and higher administrative and engineering expense ($6 million).

Net sales decreased in fiscal 2025 by $6 million due to net unfavorable commercial pricing adjustments ($36 million) and unfavorable material economics recoveries ($3 million), partially offset by the favorable impact of foreign currencies ($20 million) and higher production volumes ($13 million).

Adjusted EBITDA increased in fiscal 2025 by $1 million due to favorable operating performance including improved freight costs ($19 million), the favorable impact of foreign currencies ($17 million), lower administrative and engineering expense ($14 million), favorable material economics, net of recoveries ($2 million) and net favorable supplier pricing adjustments in excess of net unfavorable commercial pricing adjustments ($1 million), partially offset by unfavorable product mix ($33 million), and lower equity income ($19 million) which includes an unfavorable $39 million adjustment associated with KEIPER supply agreement modifications, including the addition of a performance based rebate in fiscal 2025.

Adjusted EBITDA decreased in fiscal 2024 by $25 million due to lower production volumes and unfavorable product mix ($38 million), the unfavorable impact of foreign currencies ($19 million) and higher administrative and engineering expense ($6 million), partially offset by net favorable commercial and supplier pricing adjustments and improved labor efficiencies ($30 million), favorable material economics, net of recoveries ($6 million) and higher equity income which includes the unfavorable impact of the KEIPER supply agreement modifications ($2 million).

Liquidity and Capital Resources

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During fiscal 2023, Adient announced a share repurchase authorization (up to $600 million) with no expiration date, wherein Adient has taken and will continue to take a measured approach as to the timing and amount of share repurchases as part of its assessment of the most effective use of cash.

Working capital is highly influenced by the timing of cash flows associated with sales and purchases, and therefore can be difficult to manage at times.

Working capital is highly influenced by the timing of cash flows associated with sales and purchases, and

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therefore can be difficult to manage at times.

See below and refer to Note 9, “Debt and Financing Arrangements,” of the notes to consolidated financial statements for discussion of financing arrangements.

1 unchanged sentence

Adient believes that its current financial resources will be sufficient to fund its liquidity requirements for at least the next twelve months.

Fiscal 2026 cash flows are expected to be lower than fiscal 2025 cash flows due primarily to reduced profitability resulting from lower production volumes, higher capital spending to fund growth initiatives, non-recurring tax settlements and an acceleration in the timing of commercial settlements in fiscal 2025.

Adient US LLC (“Adient US”), a wholly owned subsidiary of Adient, together with certain of Adient's other subsidiaries, maintains an asset-based revolving credit facility (the “ABL Credit Facility”), which provides for a revolving line of credit up to $1,250 million, including a North American subfacility of up to $950 million and a European subfacility of up to $300 million, subject to borrowing base capacity and certain other restrictions, including a minimum fixed charge coverage ratio.

The ABL Credit Facility, as amended in November 2022, is set to mature on November 2, 2027, subject to certain springing maturity provisions.

Adient paid $7 million in debt issuance costs for the amended ABL Credit Facility and will pay a commitment fee of 0.25% to 0.375% on the unused portion of the commitments under the asset-based revolving credit facility based on average global availability.

The ABL Credit Facility is set to mature on November 2, 2027, subject to certain springing maturity provisions.

Adient will pay a commitment fee of 0.25% to 0.375% on the unused portion of the commitments under the asset-based revolving credit facility based on average global availability.

Letters of credit are limited to the lesser of (x) $150 million and (y) the aggregate unused amount of commitments under the ABL Credit Facility then in effect.

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The ABL Credit Agreement is secured on a first-priority lien on all accounts receivable, inventory and bank accounts (and funds on deposit therein) and a second-priority lien on all of the tangible and intangible assets of certain Adient subsidiaries.

Interest is payable on the ABL Credit Facility at a fluctuating rate of interest determined by reference to Term Secured Overnight Financing Rate (“SOFR”), in the case of amounts outstanding in Dollars, Euro Interbank Offered Rate (“EURIBOR”), in the case of amounts outstanding in Euros, Stockholm Interbank Offered Rate (“STIBOR”), in the case of amounts outstanding in Swedish Krona and Sterling Over Night Indexed Average (“SONIA”), in the case of amounts outstanding in Pounds Sterling, in each case, plus an applicable margin of 1.50% to 2.00%.

Interest is payable on the ABL Credit Facility at a fluctuating rate of interest determined by reference to Term SOFR, in the case of amounts outstanding in Dollars, EURIBOR, in the case of amounts outstanding in Euros, STIBOR, in the case of amounts outstanding in Swedish Krona and SONIA, in the case of amounts outstanding in Pounds Sterling, in each case, plus an applicable margin of 1.50% to 2.00%.

As of September 30, 2025, Adient had not drawn down on the ABL Credit Facility and had availability under this facility of approximately $814 million (net of $8 million of letters of credit).

In October 2025, Adient amended the ABL Credit Facility agreement, reducing the maximum facility from $1,250 million to $1,000 million (consisting of a North American subfacility of up to $895 million and a European subfacility of up to $105 million) and extending the maturity date to October 2030.

Under the amended agreement, the commitment fee on the unused portion of the commitments is lowered from 0.25% - 0.375% to 0.20% - 0.25%.

The range of applicable interest margin was also updated from 1.50% - 2.00% to 1.25% - 1.75%.

In addition, Adient Global Holdings S.à r.l., a wholly-owned subsidiary of Adient, maintains a senior secured term loan facility (the “Term Loan B Agreement”) that had an outstanding balance of $625 million as of September 30, 2025.

During fiscal 2023, Adient prepaid $350 million of the Term Loan B Agreement principal, and wrote off $2 million of previously deferred financing costs to net financing charges.

During fiscal 2024, the Term Loan B Agreement was amended to reduce the applicable margin from 3.25% to 2.75% and extend final maturity to January 31, 2031 (which maturity was previously April 8, 2028).

Adient incurred $5 million of costs associated with the modification, of which $4 million was recorded as deferred financing costs.

During fiscal 2025, the Term Loan B Agreement was further amended to reduce the applicable margin from 2.75% to 2.25%.

Adient incurred $1 million of costs associated with the modification, which was recorded as deferred financing costs.

The Term Loan B Agreement amortizes in equal quarterly installments at a rate of 1.00% per annum of the original principal amount thereof, with the remaining balance due at final maturity.

The Term Loan B Agreement also permits Adient to incur incremental term loans in an aggregate amount not to exceed the greater of $750 million and an unlimited amount subject to a pro forma first lien secured net leverage ratio of not greater than 1.75 to 1.00 and certain other conditions.

Interest on the Term Loan B Agreement accrues at Term SOFR plus an applicable margin.

The ABL Credit Facility and Term Loan B Agreement contain covenants that are usual and customary for facilities and debt instruments of this type and that, among other things, restrict the ability of Adient and its restricted subsidiaries to:

1 unchanged sentence

create, assume, incur or guarantee certain indebtedness;

Adient plc | Form 10-K | 42

dividends or make other distributions on, or repurchase or redeem, Adient’s capital stock or certain other debt;

pay dividends or make other distributions on, or repurchase or redeem, Adient’s capital stock or certain other debt;

make other restricted payments;

2 unchanged sentences

The agreements also provide for customary events of default, including, but not limited to, cross-default clauses with other debt arrangements, failure to pay principal and interest, failure to comply with covenants, agreements or conditions, and certain events of bankruptcy or insolvency involving Adient and its significant subsidiaries.

During fiscal 2023, Adient Global Holdings Ltd.

(“AGH”), a wholly-owned subsidiary of Adient, issued (i) $500 million (net proceeds of $494 million) in aggregate principal amount of 7% senior secured notes due 2028 and (ii) $500 million (net proceeds of $494 million) in aggregate principal amount of 8.250% senior unsecured notes due 2031.

Interest on both of these notes are paid on April 15 and October 15 each year, beginning on October 15, 2023.

Adient Global Holdings Ltd.

(“AGH”), a wholly-owned subsidiary of Adient, maintains (i) $500 million in aggregate principal amount of 7% senior secured notes due 2028 and (ii) $500 million in aggregate principal amount of 8.250% senior unsecured

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notes due 2031.

Interest on both of these notes are paid on April 15 and October 15 each year.

These notes contain covenants that are usual and customary.

The total net proceeds of $988 million along with cash on hand were used primarily to redeem $350 million of the senior secured term loan facility under the Term Loan B Agreement as described above, and repurchase €700 million ($743 million) of the 3.50% unsecured notes due 2024 as described below.

Adient paid $16 million in debt issuance costs for these new debt issuances.

AGH also maintains 4.875% USD-denominated unsecured notes due 2026.

The aggregate principal amount of these notes was $795 million as of September 30, 2024 and 2023.

AGH also paid the remaining balance of its 3.50% Euro denominated unsecured notes of €123 million ($132 million) in August 2024 upon final maturity.

During fiscal 2023, Adient repurchased €700 million ($743 million) of the 3.50% unsecured notes due 2024 at a premium of €7 million ($7 million) plus €3 million ($3 million) of accrued and unpaid interest, and expensed €2 million ($2 million) of previously deferred financing costs to net financing charges.

During fiscal 2022, Adient repurchased the entirety of its $600 million, 9.00% Senior First Lien Notes due 2025 at a premium of $34 million plus $19 million of accrued interest.

AGH also previously maintained 4.875% USD-denominated unsecured notes due 2026.

The aggregate principal amount of these notes was $795 million as of September 30, 2024.

In February 2025, AGH issued $795 million (net proceeds of $783 million) in aggregate principal amount of 7.50% senior unsecured notes.

Adient incurred $12 million of costs associated with the transaction, which was recorded as deferred financing costs.

Proceeds from the sale of the notes, together with cash on hand, were used to fully redeem AGH's 4.875% senior unsecured notes in March 2025.

Upon redemption of the 4.875% notes, Adient wrote off $2 million of previously deferred financing costs associated with the notes to net financing charges.

The new notes mature on February 15, 2033 and bear interest at a rate of 7.50% per annum.

Interest on the notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2025.

These notes also contain covenants that are usual and customary.

Sources of Cash Flows

1 unchanged sentence

(in millions) 2025 2024 2023

Cash provided (used) by operating activities $ 543 $ 667 $ 274

Cash provided (used) by investing activities (253) (229) 484

Cash provided (used) by financing activities (502) (271) (1,273)

Cash provided by operating activities $ 449 $ 543 $ 667

Cash used by investing activities (186) (253) (229)

Cash used by financing activities (267) (502) (271)

Capital expenditures (245) (266) (252)

1 unchanged sentence

Fiscal 2025 compared to Fiscal 2024:

The decrease in cash flows from operating activities is primarily due to lower profitability driven by lower production volumes in fiscal 2024 along with unfavorable changes to working capital year over year.

The decrease in cash flows from operating activities is primarily due to an increase in customer tooling and capitalized engineering spending associated with launch activity primarily in EMEA and a higher level of cash payments associated with restructuring activities.

Fiscal 2024 compared to Fiscal 2023:

The increase in cash flows from operating activities is primarily due to the higher net income attributable to Adient in fiscal 2023 and favorable overall changes to working capital year-over-year due to lower levels of inventory and higher levels of current liabilities.

See the working capital section below for further information on changes in working capital.

Cash flows from investing activities

Fiscal 2025 compared to Fiscal 2024:

The increase in cash used by investing activities is primarily attributable to higher capital expenditures as further explained below and by lower levels of proceeds from asset sales.

The decrease in cash used by investing activities is primarily attributable to current-year proceeds received from the sale of Adient's interest in Setex and the proceeds from the sale of other assets and lower capital expenditures.

Fiscal 2024 compared to Fiscal 2023:

The increase in cash used by investing activities is primarily related to the non-recurrence of the fiscal 2022 cash inflows associated with business divestitures including the $651 million of proceeds received related to the 2021 Yanfeng Transaction (as defined and described in Form 10-K for the fiscal year ended September 30, 2021), $46 million in proceeds received from the sale of the assets in Turkey, and the collection of $41 million of deferred proceeds related to the 2020 Yanfeng Transaction (as defined and described in Form 10-K for the fiscal year ended September 30, 2021).

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The increase in cash used by investing activities is primarily attributable to higher capital expenditures as further explained below and by lower levels of proceeds from asset sales.

Cash flows from financing activities

Fiscal 2025 compared to Fiscal 2024:

The decrease in cash used by financing activities is primarily attributable to lower levels of net long-term debt activity in fiscal 2025 ($129 million), a lower level of share repurchase activities in fiscal 2025 ($125 million) compared to fiscal 2024 ($275 million), partially offset by the acquisition of the noncontrolling interest in Technotrim ($28 million) and a higher level of dividends paid to noncontrolling interests ($18 million).

Fiscal 2024 compared to Fiscal 2023:

The increase in cash used by financing activities is attributable to $275 million common stock repurchases transacted in fiscal 2024 ($65 million in fiscal 2023) and the repayment of the €123 million ($132 million) unsecured notes, partially offset by the non-recurrence of prior year debt refinancing activities.

Refer to Note 9, “Debt and Financing Arrangements,” and Note 13, “Equity and Noncontrolling Interests,” of the notes to the consolidated financial statements for additional information.

Fiscal 2023 compared to Fiscal 2022:

The decrease in cash used by financing activities is attributable to fiscal 2022 financing activities.

This includes repayment of long-term debt of $744 million (including $34 million of premiums), amounts paid to acquire the noncontrolling interest of Chongqing Adient Automotive Components Co., Ltd.

($153 million), and higher dividend payments to noncontrolling interests.

These are partially offset by fiscal 2023 debt refinancing activities totaling $102 million and common stock repurchases of $65 million.

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Capital expenditures

Fiscal 2025 compared to Fiscal 2024:

Higher capital expenditures in fiscal 2024 were due primarily to timing of program spend on product launches in EMEA.

Lower capital expenditures in fiscal 2025 were due primarily to timing of program spend on product launches in Americas and Asia.

Fiscal 2024 compared to Fiscal 2023:

A $25 million increase in capital expenditures is primarily associated with new program launches particularly in EMEA and Asia, and additional investments in continuous improvement initiatives in all regions.

Higher capital expenditures in fiscal 2024 were due primarily to timing of program spend on product launches in EMEA.

Working capital

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Working capital $ 446 $ 408

Working capital decreased by $170 million as of September 30, 2024 primarily due to a decrease in cash as a result of the share repurchase activity and debt pay downs in fiscal 2024, a decrease in inventories due to focused management of inventory levels and an increase in the restructuring reserves as a result of the EMEA restructuring actions taken in fiscal 2024, partially offset by decreases in accrued compensation and benefits.

Working capital increased by $38 million primarily due to increases in customer tooling assets and capitalized engineering in EMEA, partially offset by an increase in accrued compensation and benefits.

Off-Balance Sheet Arrangements

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Sales or discounts of accounts receivable are reflected as a reduction of accounts receivable on the consolidated statements of financial position and the proceeds are included in cash flows from operating activities in the consolidated statements of cash flows.

As of both September 30, 2024 and September 30, 2023, $170 million was funded under these programs.

As of September 30, 2025 and 2024, $185 million and $170 million was funded under these programs, respectively.

Adient also has a program with an external financial institution under which Adient's suppliers can sell their receivables from Adient to the financial institution at their sole discretion.

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The payment terms for molds, dies and other tools that are acquired as part of pre-production activities are in general longer, and are normally dependent on the terms which Adient has agreed with its customers.

As of September 30, 2024, and September 30, 2023, Adient's liabilities related to this program were $76 million and $50 million, respectively.

As of September 30, 2025 and 2024, Adient's liabilities related to this program were $105 million and $76 million, respectively, which is recorded within accounts payable and other current liabilities in Adient’s consolidated statements of financial position.

Cash flows related to the program are all presented within operating activities in Adient's consolidated statements of cash flows.

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Contractual Obligations

A summary of Adient's significant contractual obligations as of September 30, 2025:

(in millions) Total 2025 2026-2027 2028-2029 Beyond 2030

(in millions) Total 2026 2027-2028 2029-2030 2031 and beyond

Long-term debt $ 2,421 $ 6 $ 512 $ 12 $ 1,891

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(1) Primarily consists of commitments for production materials and other supply items, as well as $94 million of committed capital expenditures.

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Effects of Inflation and Changing Prices

The effects of inflation have historically not been significant to Adient's results of operations.

Generally, Adient has been able to implement operating efficiencies to sufficiently offset cost increases, which over time have been moderate.

The automotive industry has recently experienced a period of significant volatility in commodity and other input costs, including steel, petrochemical, freight, energy and labor costs.

Generally, Adient has been able to implement operating efficiencies to sufficiently offset cost increases.

The automotive industry has experienced periods of significant volatility in commodity and other input costs, including steel, petrochemical, freight, energy and labor costs.

This price volatility may continue into the future as demand increases and/or supply is constrained.

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Adient assesses recoverability of the capitalized amounts on an on-going basis.

Any amounts that are concluded to be no longer recoverable are immediately

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recognized as a reduction to revenue.

Any amounts that are concluded to be no longer recoverable are immediately recognized as a reduction to revenue.

Refer to Note 1, “Organization and Summary of Significant Accounting Policies,” and Note 2, “Revenue Recognition,” of the notes to the consolidated financial statements for more information.

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The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date.

In estimating the fair value, Adient uses the income approach in which discounted cash flow analyses are used to derive estimates of fair value of each reporting unit.

Multiples of earnings based on the average of historical, published multiples of earnings of comparable entities with similar operations and economic characteristics are also used in developing estimated fair values.

The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement." These calculations contain uncertainties as they require management to make assumptions about market comparables, future cash flows and appropriate discount rates (based on weighted average cost of capital ranging from 15.5% to 18.5% at September 30, 2024) to reflect the risk inherent in the future cash flows and to derive a reasonable enterprise value and related premium.

The estimated future cash flows reflect management's latest assumptions of the financial projections based on current and anticipated competitive landscape, including estimates of revenue based on production volumes over the foreseeable future and long-term growth rates, and operating margins based on historical trends and future cost containment activities.

The financial projections considered the impact of the various issues causing uncertainty in the automotive industry such as weaker vehicle demand impacted by new vehicle affordability and a high interest rate environment, slower global adoption of electric vehicles by consumers, volatile commodity pricing, and persistent inflationary pressures.

Specifically in the EMEA region, where Adient recorded significant restructuring charges during fiscal 2024, a heightened risk of impairment exists as the difference between its fair value and carrying value is less than 10%.

The EMEA reporting unit maintains $341 million of goodwill at September 30, 2024.

No goodwill impairment was recorded in fiscal 2024;

however, if further degradation in the economic conditions in the EMEA region occur or if significantly higher levels of restructuring actions are needed in the region, the EMEA reporting unit may incur significant impairment of goodwill and other long-lived assets.

Adient generally assumes operating margins in future years will normalize over time as it is believed that this is consistent with a market participant view.

Had Adient assumed future operating margins consistent with those in fiscal 2024, the EMEA reporting unit would have failed the impairment quantitative tests, which may have resulted in material goodwill impairment losses.

The current year results are not indicative of future market participant expectations primarily due to the current challenging market conditions as mentioned above.

While revenue is not expected to return to historical levels, there are expectations for enhanced profitability and cash flows driven by near-term efficiency actions, strategic review of portfolio and reduction of capital expenditures.

Long-term profitability and cash flows will also be impacted by the expiration of underperforming contracts and more profitable business starting in fiscal 2026 along with restructuring benefits taking full effect.

Further, the high levels of recent restructurings and the associated significant costs of such actions in the EMEA region are not expected to persist for the long-term at comparable levels.

To pass the impairment quantitative test, projected long-term operating margins, utilizing the discounted cash flow method, are expected to average approximately 5.5%-6.5%.

Additionally, if further restructuring actions persist beyond what is anticipated or if a hypothetical increase occurred in the discount rate of approximately 100 basis points at September 30, 2024, with all other assumptions unchanged, the carrying value of this reporting unit would likely exceed its fair value, which may have resulted in a material goodwill impairment loss.

In estimating the fair value, Adient primarily uses the income approach utilizing discounted cash flow analyses.

Adient also uses a market approach utilizing published multiples of earnings of comparable entities with similar operational and economic characteristics to further support the fair value estimates.

The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, “Fair Value Measurement.”

The estimated future cash flows reflect management's latest assumptions of the financial projections based on anticipated competitive landscape, including estimates of revenue based on production volumes over the foreseeable future and long-term

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growth rates, and operating margins based on historical trends and future cost containment activities.

As of March 31, 2025, Adient identified a triggering event requiring a quantitative impairment analysis due primarily to the continued and sustained decline in the market value of its ordinary shares resulting from the uncertainties surrounding future production volume within the automotive industry.

and foreign tariffs, market share loss for foreign/luxury OEMs in the Asia reporting unit combined with modest expected margin declines as Adient continues to win new business with local OEMs in China, intensifying competition from Chinese imports and lower exports to China from EMEA as domestic brands expand in China and overcapacity in the EMEA reporting unit resulting in pricing pressure along with continued disruptions caused by slower electric vehicle adoption rates.

These calculations contained assumptions about market comparables, future cash flows, and the appropriate discount rates (based on weighted average cost of capital ranging from 16.5% to 21.0%) to reflect the risk inherent in the future cash flows and to derive a reasonable enterprise value and related premium.

As a result of the quantitative assessment and for the factors stated above, a $333 million non-cash goodwill impairment was recorded in the EMEA reporting unit during the second quarter of fiscal 2025.

This amount is reflected in restructuring and impairment costs within the consolidated statements of income (loss).

No amounts of goodwill remain recorded in EMEA.

The difference between the fair value and carrying value of the Americas and Asia reporting units both modestly exceeded 10% at March 31, 2025.

As a result of the annual review performed during the fourth quarter of fiscal 2025 using updated assumptions about market comparables, future cash flows and appropriate discount rates (based on weighted average cost of capital ranging from 15.5% to 20.0%), no goodwill impairment was recorded at September 30, 2025.

The fair values of both the Americas and Asia reporting units are higher at September 30, 2025 reflecting the increase in the overall market value of Adient’s ordinary shares and generating higher levels of fair value in excess of carrying value for both reporting units.

If future degradation in economic conditions occur, Adient’s reporting units may incur significant impairment of goodwill.

Adient generally assumes operating margins in future years will normalize over time as the current year results are not indicative of market participant expectations primarily due to the current challenging market conditions as mentioned above.

Management believes this is consistent with a market participant view.

There are also expectations for enhanced profitability and cash flows driven by near-term efficiency actions, strategic review of portfolio and reduction of capital expenditures.

Long-term profitability and cash flows will also be impacted by the expiration of underperforming contracts along with restructuring benefits taking full effect.

Refer to Note 6, “Goodwill and Other Intangible Assets,” of the notes to the consolidated financial statements for additional information.

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If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals.

Intangible assets with definite lives continue to be amortized over

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their estimated useful lives and are subject to impairment testing as part of their asset group if events or changes in circumstances indicate that the asset might be impaired.

Intangible assets with definite lives continue to be amortized over their estimated useful lives and are subject to impairment testing as part of their asset group if events or changes in circumstances indicate that the asset might be impaired.

A considerable amount of management judgment and assumptions are required in performing the impairment tests.

No triggering events were identified during fiscal 2024 and 2023.

Due to the goodwill impairment triggering event described above, long-lived assets were assessed for impairment as of March 31, 2025.

No long-lived asset impairment was recorded during the second quarter of fiscal 2025.

No impairment triggering events were identified in subsequent periods;

however, if future degradation in economic conditions occur, there could be impairment of long-lived assets.

Adient monitors its investments in partially-owned affiliates for indicators of other-than-temporary declines in value on an ongoing basis.

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Fair value is generally determined using an income approach based on discounted cash flows or negotiated transaction values.

No other-than-temporary impairment indicators were present in fiscal 2024.

No other-than-temporary impairment indicators were present in fiscal 2025 or fiscal 2024.

During fiscal 2023, Adient concluded that indicators of other-than-temporary impairment were present related to two nonconsolidated partially-owned affiliates, and recorded a $6 million ($3 million in Asia and $3 million in EMEA) non-cash impairment as a result.

Refer to Note 18, “Nonconsolidated Partially-Owned Affiliates,” of the notes to the consolidated financial statements for additional information.

During fiscal 2024, Adient determined that an impairment had occurred with its investment in Adient Aerospace and recorded an impairment charge of $9 million.

During fiscal 2025 and 2024, Adient determined that an impairment had occurred with its investment in Adient Aerospace and recorded an impairment charge of $8 million and $9 million, respectively.

No remaining investment is recorded as of September 30, 2025.

Refer to Note 15, “Restructuring and Impairment Costs,” of the notes to the consolidated financial statements for additional information.

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Employee Benefit Plans

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Adient utilizes a mark-to-market approach for recognizing pension benefit expenses, including measuring the market related value of plan assets at fair value and recognizing actuarial gains and losses in the fourth quarter of each fiscal year or at the date of a remeasurement event.

GAAP requires that companies recognize in the statement of financial position a liability for defined benefit pension and postretirement plans that are underfunded or unfunded, or an asset for defined benefit pension and postretirement plans that are overfunded.

GAAP requires that companies recognize in the statement of financial position a liability for defined benefit pension plans that are underfunded or unfunded, or an asset for defined benefit pension plans that are overfunded.

GAAP also requires that companies measure the benefit obligations and fair value of plan assets that determine a benefit plan's funded status as of the date of the employer's fiscal year end.

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The actual rate of return on non-U.S.

pension plans was above 4.95% in fiscal 2024 and was below 4.53% in fiscal 2023.

pension plans was below 5.14% in fiscal 2025 and was above 4.95% in fiscal 2024.

For fiscal 2026, Adient estimates the long-term rate of return will approximate 6.75% and 5.71% for U.S.

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If Adient's actual returns on plan assets are less than Adient's expectations, additional contributions may be required.

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In fiscal 2025, total Adient contributions to the defined benefit pension plans were $18 million.

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The following table illustrates estimated increases (decreases) in projected benefit obligation (“PBO”) and net periodic benefit cost excluding changes in mark-to-market adjustments and settlement charges (“NPBC”) as of September 30, 2025 and for fiscal 2025 assuming a decrease of 100 basis points in the discount rate and expected return on plan assets.

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Pension Benefits

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Adient's income tax returns for various fiscal years remain under audit by the respective tax authorities.

Although the outcome of tax audits is always uncertain, management believes that it has appropriate support for the positions taken on its tax returns and that its annual tax provisions included amounts sufficient to pay assessments, if any, which may be proposed by the taxing authorities.

The outcome of tax audits is always uncertain, however, this uncertainty has increased in the current environment where taxing authorities have become more aggressive in proposing tax assessments.

Management believes that it has appropriate support for the positions taken on its tax returns and that its annual tax provisions included amounts sufficient to pay assessments, if any, which may be proposed by the taxing authorities.

Nonetheless, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year.

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Actual costs may vary from these estimates.

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accruals are reviewed on a quarterly basis and changes to restructuring actions are appropriately recognized when identified.

These accruals are reviewed on a quarterly basis and changes to restructuring actions are appropriately recognized when identified.

Refer to Note 15, “Restructuring and Impairment Costs,” of the notes to consolidated financial statements for more information.

During fiscal 2024, Adient committed to a restructuring plan of $169 million that was offset by prior period underspend of $1 million and $9 million cost reimbursement committed by a customer.

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During fiscal 2025, Adient committed to a restructuring plan (“2025 Plan”) resulting in charges of $58 million that was offset by $7 million of prior-period underspend.

The 2025 Plan, which is primarily related to termination benefits in Europe, is being implemented in response to manufacturing footprint and structural changes occurring in the global automotive industry and to ensure Adient maintains a competitive cost structure by reducing operating, administrative and engineering costs, and increasing efficiencies.

Restructuring actions associated with the 2025 Plan will primarily occur in fiscal years 2026 and 2027, and are expected to be substantially complete by fiscal year 2027.

Adient currently estimates that upon completion of the restructuring actions, the 2025 Plan will reduce annual operating costs by approximately $70 million, which is primarily the result of lower costs of sales and SG&A due to reduced employee-related costs, of which approximately 45% will result in net savings.

Restructuring costs are included in restructuring and impairment costs in the consolidated statements of income (loss).

During fiscal 2024, Adient committed to a restructuring plan (“2024 Plan”) of $169 million that was offset by prior period underspend of $1 million and $9 million cost reimbursement committed by a customer.

The fiscal 2024 charges are mostly related to termination benefits in Europe.

The 2024 Plan is being implemented in response to the macroeconomic factors occurring in the European automotive market causing reduced production volumes and to ensure Adient maintains a competitive cost structure by reducing operating, administrative and engineering costs, and increasing efficiencies.

Restructuring actions associated with these specific plans will primarily occur in fiscal years 2025 and 2026 and are expected to be substantially complete by fiscal year 2027.

The 2024 Plan was implemented in response to the macroeconomic factors occurring in the European automotive market causing reduced production volumes and to ensure Adient maintains a competitive cost structure by reducing operating, administrative and engineering costs, and increasing efficiencies.

Restructuring actions associated with these specific plans primarily occurring in fiscal years 2025 and 2026 are expected to be substantially complete by fiscal year 2027.

Adient estimates that upon completion of the restructuring actions, the fiscal 2024 restructuring plan would reduce annual operating costs by approximately $110 million, which was primarily the result of lower costs of sales and selling, general and administrative expenses due to reduced employee-related costs, of which approximately 60% would result in net savings.

Restructuring costs are included in restructuring and impairment costs in the consolidated statements of income.

During fiscal 2023, Adient committed to a restructuring plan (“2023 Plan”) of $39 million.

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Adient estimated that upon completion of the restructuring actions, the fiscal 2023 restructuring plan would reduce annual operating costs by approximately $30 million, which was primarily the result of lower costs of sales and selling, general and administrative expenses due to reduced employee-related costs, of which approximately 15% would result in net savings.

The restructuring actions are expected to be substantially completed by fiscal 2025.

During fiscal 2022, Adient committed to a restructuring plan (“2022 Plan”) of $25 million that was offset by $10 million of prior year underspend.

The restructuring actions related to cost reduction initiatives and consist primarily of workforce reductions in EMEA and Americas.

Adient estimated that upon completion of the restructuring actions, the fiscal 2022 restructuring plan would reduce annual operating costs by approximately $30 million, which was primarily the result of lower costs of sales and selling, general and administrative expenses due to reduced employee-related costs, of which approximately 30% would result in net savings.

The restructuring actions were substantially completed by fiscal 2025.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis