Adient PLC (ADNT) Misled Investors Regarding Its Business Prospects

Adient PLC (ADNT) was formed when Johnson Controls International plc completed its spinoff of its automotive seating and interiors business. According to the complaint, nearly half of Adient's annual revenues are derived from the sale of metal components used in seat frames produced by its seat structures and mechanisms group ("SS&M"). Since its inception, Adient has touted the efficiency of its SS&M business and asserted it was "solidly on track" to deliver 200 basis point margin expansion by 2020. However, beginning in January 2018, Adient began revealing issues with the SS&M business. First, it disclosed that "near-term results are being significantly impacted by SS&M." In May, Adient recorded a $299 million impairment charge related to the SS&M business and admitted "the 200 basis points of margin expansion … is no longer going to be achievable." On June 11, 2018, Adient announced the sudden and immediate resignation of its Chief Executive Officer and slashed its earnings guidance. Each revelation resulted in a decline of Adient stock, which now trades at an all-time low.

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