All right. Good morning, everyone. Welcome to day two of the JP Morgan. My name is Rajat Gupta, member of the Automotive Equity Research team at JP Morgan. Very pleased to kick off day two with the team from Adient, Mark Oswald, Executive Vice President and Chief Financial Officer, and Jim Conklin, Executive Vice President of the Americas region. I believe the Adient team has a couple of slides they want to run through, and then we'll go into Q&A.
Great.
Thanks, Mark.
Thanks, Rajat. Thank you very much for hosting us today. Really appreciate being out here today. Thank you for joining us this morning. As you know, Adient released its Q3 fiscal year 2026 earnings last week, so I'm not going to go into a lot of detail just in terms of financials. A lot of people have looked at those. We've had the post-earnings calls. I did think it was worthwhile to go through at least a summary of how we see 2026 shaping up. We've got one quarter left here, and then more importantly, what we're seeing as we head into 2027. Then I'll turn it over to Jim Conklin.
Jim heads up our Americas operations within the Americas, so I know there's going to be a lot of questions just in terms of what the Americas team is doing in terms of onshoring, how they're implementing automation across the enterprise, what they're doing in terms of margin expansion. I'll leave some time for Jim, then obviously take some questions, Rajat. Just starting off with 2026, I'd say the key takeaway there is we're delivering on our commitments. We laid out some commitments at the beginning of the year. Team has done a good job at executing against that. The Adient operating model is working extremely well. There has been some external macro challenges, obviously, with Middle East, higher input costs. What we've shown is each of the regions have been very resilient. We've been able to battle through certain of those.
We do view those as temporary. When I look at what is more sustaining, though, is really the growth over market that we are seeing within the Americas division, what we are seeing over in China. We would expect that to continue as we look into 2027. Again, if I look at what we are doing from a capital allocation perspective, we said that we are going to be balanced with the capital allocation. We have been buying shares back. We expect to buy more shares back here in the fourth quarter. It is all about generating cash flow. How can we return that to the shareholders, whether it is through buybacks, whether it is through some voluntary debt paydown, so you could expect more of that. When I look at that as we exit 2026 into 2027, I think we are entering 2027 from a position of strength.
We expect that the program wins that Jim and team have done through the onshoring in the U.S., obviously will help the top line there. Growth over market in China is going to be continued strong in 2027. That is going to allow us to continue to increase our business performance. Business performance improving on the backs of whether it is automation, whether it is the restructuring that we have spent over in Europe starting to take hold, the continuous improvement. That in turn will continue to drive margins higher as we go into 2027 from 2026. Again, as we look into 2027, there is a lot of positive notes that we are seeing on that front. We did indicate that there is a few things that need fine-tuning as we go through the next couple of months here.
We still have to look to see where inventories end up in 2026, what that is going to impact in terms of overall vehicle production in 2027. Restructuring, kind of hard to call at this point. We are looking, especially over in Europe, we spent quite a bit of dollars restructuring the past couple of years. That is going to be dependent in terms of what happens with our customers, in terms of what they are going to do with their product programs, what they are going to do with their plants.
Does it have a ripple effect into us? Some of those bills could be $20 million-$30 million. That is why when we are sitting here today, I cannot give you a specific number in terms of restructuring. Other to say that we will continue to operate in a fiscally responsible way and spend the money if we need to, with you in mind.
We will look at other items such as CapEx as we continue to spend on automation. Again, being fiscally responsible, but understanding that we need to continue to invest in the automation to continue to drive the business performance and margins higher. Really positive about where we are finishing 2026. Very positive in terms of heading into 2027 that the Adient business operating model will continue to drive the results positive. From this view right now, very positive in terms of next year. With that, I will turn it over to Jim where he could touch base on the Americas.
Yeah. Thanks, Mark. The Americas for us is about a $7 billion region made up of North and South America. We have a little over 40 plants within the network. Just a little bit of color specifically on Americas specifically. As Mark mentioned, we continue to execute extremely well. It's our day-to-day execution with our customers that's really the key foundation for us to be able to have the growth that we're anticipating. Call it over $400 million of new incremental conquest and onshoring business over the next couple of years. That really allows us to be one of the key drivers of growth within the network. That includes going over recent launches. Recently launched the Kia Telluride seats, as well as Rivian R2 seats. We'll continue to see more and more of that as we go forward and executing very well.
From the customer and supplier partnerships, we continue to stay very close with our customers, not only on the launch activities, but how we're growing, where we're growing, and how to bring the right level of innovation and creative solutions for our customers as they execute onshoring, new program launches, and things like that. For example, we've had multiple customer meetings just even. In the month of July, we had one customer with members of their board of directors come to one of our manufacturing plants, and their top executive team to walk them through how we're executing today on their products and our vision with very tangible evidence on our shop floor of how we're executing the next generation with a new level of innovation, automation, implementation of AI in order to be more cost-effective, driving the right quality solutions for our customers going forward.
A lot of that customer interaction includes dealing with some of the ups and downs we've seen over the, call it 2026 in the truck market. Making sure that we're staying ready, available, and adaptable, and flexible. However, they choose to be able to run trucks from a high content version to a low content version, and some of the erratic nature that we're getting past on some of the truck production that we have. On the innovation and automation side, this is where we're spending one of the biggest parts of our energy and efforts right now. What's clear to us is that if you're not thinking of the next way to make seats or any type of interior product, if you're sticking with a traditional manufacturing mentality in this market, you're going to be left behind. We have to be very aggressive.
We have to be very creative on how we're driving cost out of our network. Whether it's the cost of labor going forward, availability of labor going forward, or simply a way to drive the overall vehicle price down. This has to be and is a way that we continue to challenge ourselves on the next way to manufacture design and manufacture seats going forward. We've started at this. We've been very aggressive with this. We started by targeting what I'd call the non-value activities as a part of seat manufacturing. Non-value activities would mean the end customer doesn't really care about it. End customer doesn't care if you have to test the seat to make sure it functions correctly or it looks pretty at the end of your seat assembly line. We started on really focusing on automation on that.
Since then, we've expanded that to look at how do we do more of the value-added content. How do we install components and parts as a part of the manufacturing process to be more cost-effective. So we've launched multiple pilots that are actually currently going on in our plants right now that all have, frankly, less than a two-year payback period. While a lot of the generation and creativity of these innovations start in a laboratory environment, start at our corporate offices, we work very quickly to get it onto the shop floor.
What we've seen is that once we get this technology and these new ideas and these new innovations into a plant's hands, they're going to drive a whole new level of execution and creativity to it to make sure that we have the right uptime, that we're delivering the right quality, and most importantly, we're getting the payback that we've committed their valuable capital dollars to as a part of a payback period to make sure that we're seeing the cost-effective on this, and not just increasing our fixed costs as a part of that going forward. That continues to be a very high priority for us. Our customers are extremely interested in it, and this is one of the keys that's a contributing factor to how we're growing within this market in the region of Americas.
Finally, on growth, I mentioned a little bit about the growth that we've had. We've recently announced wins on Dodge Durango, the VW business, Conquest business in South America, and finally, a lot of replacement business that we have today, like on the Ford Mustang. So we continue to be in a favorable position with several of our customers and have the ability to chase, pursue, and win business with the right customers, with the right products where it makes sense. For example, the Dodge Durango win for us was very strategic for us. We already supply Jeep seats to Stellantis on their Toledo Assembly Complex. Since the Dodge Durango will be built on that campus, for us, this fits in very well to our existing footprint, utilization of existing resources and assets. It'll build on one of the Jeep lines we already have today.
It's very strategic for us while increasing revenue and profitability while minimizing the amount of investment going forward. As a part of this growth, there's also a little bit of offset we've been very open and transparent about continuing to execute our strategy on minimizing third-party metals business. In our next fiscal year, we'll have a little bit less, around $100 million less on third-party metals business going forward. We'll continue to execute metals business with the right customers that like to have full integration that we do very well with. We want to continue and grow with them, and that's a part of the business model we have with them. While we're growing, we're also trying to make sure that we're being very smart about our fixed costs. Over a two-year period, we'll be restructuring growth through right sizing.
We'll be consolidating four plants within our network over the next two years. Some of that's already started, some of that is yet to be announced. We're making sure while we're growing, we're not just taking on the growth, but we're also trying to be very smart and strategic about how we mitigate our fixed costs and use some of the sale of those assets to fund some of our restructurings and some of that growth going forward.
Great. No, thanks so much for that quick overview. There are five or six topics, I think, which investors have been debating. Free cash flow is a big topic, then capital allocation, Europe restructuring, China margins, and then Americas obviously a pretty good story. Maybe I'll just start with Americas first. Could you unpack a little bit the GM conquest win that you had? How much of it came down to modularity, footprint, ability to support long-distance JIT or from low-cost labor? Just help us run through what helped you get that win.
Yeah. GM's a great customer for us. We do have very strong relationships with them. We had an existing footprint. We have an existing footprint within the Kansas City area that supplied the GM plant there for a number of years. The feedback we got that helped us win that business is frankly around the creativity that we brought. A combination of modularity from a long-distance perspective, utilizing long-distance sub-assembly deliveries, using low-cost markets where possible, as well as a combination and commitment we've made to automation and that part of the innovation to be able to execute accordingly. That's really the feedback we got from General Motors. They really liked our creativity and aggressiveness on that. We have a very strong network within our Mexico region.
Utilizing those assets where we can build a trim for that product, the foam for the product, and incorporate the metals that will come from someone else. Executing non-traditional manufacturing solutions to be able to make sure we're optimizing the cost of that seat product going into GM's plant there, was really what set us apart as the feedback we've got. We're trying to maintain that level of creativity and aggressiveness while staying very flexible and nimble based on what happens with USMCA. We have multiple strategy and multiple solutions that while we control the things we can control and have, I like to say, operating or walking around on roller skates to be able to stay nimble and flex as we need to, on what we can't control, which is where USMCA ends up in some of those negotiations.
Maybe double-clicking on automation, can you give us a sense of what the payback looks like? Where the incremental margin opportunity sits.
Yeah.
When you're rolling these out?
Yeah. Every project we look at is ideally at minimum, worst case scenario, under a two-year payback. And that's going to vary based on where we're implementing the automation, what type of environment we're operating in, the cost structure of the facility where we're automating. We have great teams in our plants. What we like to make sure we're prioritizing is augmenting the great work that our teams do today while equipping them with the right tools to be able to automate some of those non-value-added activities. A great example for that for us within the region is we stay very close globally with our peers globally. For example, we have teams that work globally on the right way to move material around on the shop floor.
Our plants in China operate without a single team member doing a non-value-added activity of moving material around the shop floor to take it from a material storage area to line side to be built into a seat. They are our benchmark to be able to execute that within the Americas. So moving material around on the shop floor is an area that to us is low-hanging fruit, as non-value-added to be eliminated, all the way to actually installing components on the seat line side.
Installing headrests, installing the plastic side shields with the controls to move the seats. We've got a lot of innovation that are being executed right now, and some that are actually successful in plants that we can now roll out to the rest of our network. We do a lot of global partnership to make sure that we're taking the innovation and creativity around the globe and executing that in each region.
The other point on that, Rajat, it is across all of our components. Jim's team will focus on not only automation within the JIT plant, but also within our foaming operations. If you ever want to come and look at a metals plant, if you look at the weld inspection.
Yep.
What they're doing on that, what they're doing on the trim, the cut and sew. Again, it's not only Jim's network, but it's across the whole globe. As he indicates, we have the subject matter experts that share best practices. How do we look to move that from one region into another region? It's really a global effort on that in terms of making sure that we can get that across our network.
One of your competitors obviously talks about being a lot ahead when it comes to automation. What's the difference in approach would you say that you have, versus some of your bigger peers? Where do you think Adient is ahead, or where do you think there's still more work to do?
Yeah. I can't speak to whether we're ahead or not. We're trying to be as aggressive as we can within our market, and I believe our competitors are also doing things extremely well. I'm not going to say it's better or worse, but again, what we've seen is to be able to get the equipment, to get a new process into our plants as soon as possible, to allow them to take it, call it from a 40%, 50% concept, something that works well in a laboratory, to get it into the hands and actually have it executed on a shop floor is a real big enabler for us. Our plant managers are awesome, but they can also be very stubborn. why are you giving me this new toy to play with? Is it going to be reliable? Is it going to give us the right quality?
How many maintenance people do I have to be able to keep it up and running? Once we get it to the shop floor, we really see it really boom and grow to be able to be executable. If we can get one plant and one plant manager and their team to be able to find success in that, it's really easy to make that team a champion, to tell their peers, to say, no, we got it in and we kicked the tires on it.
We found a way to execute it. We changed X, Y, and Z. Now it runs awesome. It's got 99.5% uptime and those types of things. We can then sell it to the rest of our network, those other stubborn plant managers, if you will, that have their own financial commitments to make sure we're getting the payback at every site that we need to.
Got it. Maybe just rounding out Americas a little bit. You have the $100 million metals business rolling off, and it is low margin. Imagine then you have the $400 million, the backlog rolling in. How comfortable you are with America's outgrowth into 2027? Do you think investors or us, are we underestimating the margin opportunity here, given the mix dynamics and also the payback you are going to start to get from automation?
Yeah. We are very optimistic and very happy about the growth that we are seeing. It is a very exciting time to be within Americas region because of the growth that we are seeing. It is really based on the execution we see every day of our teams. The relationships from our business unit teams at our corporate offices with our customers continue to be extremely strong, driven by and supported by the execution of our plant teams day in and day out. For example, our South American region, the conquest business that we got there is almost a 50% improvement in their revenue on an annual basis that we get right now. So very excited and not concerned as far as we are looking to maintain that.
As we continue to see a level of onshoring within the region, Ford just announced yesterday that they are going to be moving some Lincoln production from China back into the Americas. Toyota recently announced that they are going to be moving Tacoma vehicle production by 2030 back into the Texas area. Each one of those moves and announcements is an opportunity for us. So each one of those we approach very aggressively with those customers that we continue to have very strong relationships with. So we have a lot of confidence in our ability to continue that growth above market that we have been describing.
Understood. That is helpful color. Maybe going to a little more global, maybe on Europe. So you have the same metals roll-off margin mix benefit that you would get, but I think you kind of indicated that the growth is a little more challenging. Maybe you could double-click on that, what you are seeing there, what are the risks? Given some of the uncertainty around growth, how comfortable are you with just still expanding margins in that region?
No, good question. As we look at Europe, you are absolutely right. We think of it as a low growth, no growth region for us, right? If you think about where we were a few years ago back to where we are now, we are down to about $4.5 billion revenue. We recognize that. We have taken some actions over the last couple of years to obviously lower costs, and I think we have done a good job on that. The big question mark is what is happening over in Europe in terms of our customers, what they are going to do with their programs, what plants they are going to be operating in, what does that do to us in terms of if we are supplying that plant? Put that aside, we will continue to focus on SG&A.
I know that the restructuring dollars that we spent the last couple of years will add to that business performance as I go from 2026 to 2027. I do have call it $90 million of third-party metals business rolling off within that region, so it is going to contribute to that business performance. Continuous improvement is going to continue.
I do have a good line of sight just in terms of even in a no growth environment, that margins can increase from where we are today. Let us just say that we are at 2.5% margins in Europe today. If I look out over the next couple of years, again, just on the roll-on, roll-off, if I look at the automation that has taken place there, if I look at the restructuring spend and the benefits of that, I do see the margins improving over in Europe, and we are confident with that.
The question becomes, what is the terminal margin for Europe, right? Do I think that that region will ever get to call it a 6%, 7%, 8% margin? No. I think it is structurally different than the other pieces of Adient. Do I see it going from, let us just say, a 2.5% margin business to a 4%, 4.5% over the next couple of years? Yes, I do see opportunity of that.
If you think about just the overall growth for the company, if I look at Jim's region, I see that top line continuing to grow. I look at China and APAC continuing to grow. My waiting for Europe is going to be less. Even if I get margin improvement there with no growth as a whole, I still continue to improve my margins over the next several years as we continue to march up from where we are today.
Got it. Is there a scenario where margin expansion might be difficult at all from these levels in Europe, given what you know today?
Yeah, I'd say, based on what we know today on an all else equal, I still say with my insight into the balance and balance out my benefits from restructuring and my automation, I still improve margins at that point. The uncertainty is what happens to the broader economy over there, what happens to consumer demand, what happens to some of those knock-on effects that could influence. But from what we have control, I see margins walking higher.
Understood. Maybe just pivoting to China a little bit. It seems like you're tracking a little bit better than what you communicated on just the margin headwind this year, the 100 basis points and maybe some of that flows into next year. Maybe help us understand how it's coming better, why it's coming better. Are we up for another surprise next year, maybe? Just help us run through that.
Yeah. I'd say that we've been very transparent over the course of the last year, indicating that as we pivot from being more concentrated in the past, go back two years ago, we were probably 60% weighted towards foreign manufacturers, 40% to local Chinese manufacturers. We announced a couple of years ago, based on our backlog, based on our wins, that we'd see that pivoting and we'd be more representative of what the Chinese macro looked like in the industry there. Today, we're sitting at call it 60%, 65% Chinese local, 40% foreign. As that has happened, we indicated that there'd be margin compression as certain of our legacy customers like the Volvos of the world, the Mercedes of the world, sold less, and the Chinese manufacturers sold more, but the team's done a good job at managing that.
We gave you the guidance of about 100 basis points. Team's done a good job of offsetting certain of those headwinds. Whether it is through automation, whether it is being more efficient with SG&A. As Jim and his team continues to work to expand margins over there, the APAC team and the China team is working very hard to at least minimize any type of degradation. That is why you are seeing the margins result come out a little bit better this year. There is some of that bleed into 2027 probably will be out within call it November 1st with our guidance for 2027.
Our overall thought is if we can contain that margin degradation to call it 100-150 basis points in total from where we were starting with, which was a very robust double digit margin. As long as we are continuing to grow the top line, it is going to convert into additional EBITDA, it is going to convert into additional cash flow. Net-net it is better for the region and for the company.
Got it. Once you are done with the 150 basis points maybe in a couple of years, you would still be happy with the trade-off of maybe. Is there a risk of maybe ongoing compression, but you offset that with much higher growth?
Yeah, I think, as we get out two years, we will have to evaluate. If you look at our growth over market today, it is extremely strong. I wouldn't plan on that happening in perpetuity. Is it 3x, is it 2x? It is going to be growth over market. I just don't know in two or three years what that is going to be. Then obviously you have to do the analysis to say, okay, does it still make sense to go after and continue to outpace the market, even if it could be further detrimental to your margins, right?
We'll do that analysis, but again, I think if you look out into the next couple of years, when you start looking at automation, when you start looking at what the team can do over there to continue to drive their business performance, I don't see any risk of that. I see that being a continuous double-digit margin, highly generative part of the business for Adient.
Understood. Maybe I'll just pause to see if there's any question from the audience here. Not yet. Maybe just to continue on that path. Whenever we talk about China and Europe, we have to talk about some of the intricacies between the two regions, given the whole export dynamic. A lot of talk about OEMs localizing production in Europe, Chinese OEMs localizing production in Europe at some point. How is Adient positioned for that? Where do you expect to win content, foam, trim, recliner? Could that even maybe help change the margin profile of Europe?
Yeah, it's a good question. I think we're very well positioned. The fact that we are, if I just look at our history in China, we've been in the China market for 20 plus years. We have a very good relationship with the Chinese OEMs, as I indicated. That's why we're winning the business. Our manufacturing capabilities, the speed that we're able to produce and run for them is at their speed, which they really enjoy and like. As they've continued to move outside of China, we've been partnering with them. If I look at BYD, for example, as they moved into Thailand, for example, we're able to source and win certain of the component business over there, whether it's trim, whether it's foam. As they move to Eastern Europe, it's the same. We continue to have those relationships. We're continuing to build on that.
There's some, what I'd say, limitations from being certain of the JIT suppliers over there. Especially for like a BYD where they can do it internally. But again, if I look at and I focus on my foaming business or I think about the trim business, those are good margin components for us, and we'll continue to source and we'll continue to win that business with them now.
Understood. Maybe just putting it all together, if you look at, you have also given us a little high level color on fiscal 2027, but it looks like Americas, you have decent outgrowth visibility despite the metals roll-off. China looks like a good guy. Europe is kind of uncertain, but it looks like in totality, there is still a revenue growth excluding FX and other one-timers. From a margin perspective, you clearly have the mixed benefit of the metals roll-off.
Maybe some Chinese margin pressure continuing, but then you have the benefits of automation continuing, and then just the incremental margins that come in Americas. Then you have a lot of one-time stuff from this year that hurt you, like $35 million- $40 million Middle East disruption related. Is there any way you can help size? It looks like you have both growth and decent margin expansion opportunity, but any way to size or range bound that for us?
Yeah, I think your summary was spot on. When we look at the bridge from 2026 into 2027, there is a lot of reasons to be optimistic, right? We are going to continue with the outgrowth. Business performance is going to continue to move forward. That is going to drive margins higher. Again, it is supported by a combination of factors, whether it is automation, whether it is the top line growth, whether it is the roll-on, roll-off, et cetera. Premature to tell you exactly what that EBITDA will end up being. I can just indicate that would we be expecting obviously margin expansion from 2026 to 2027? Absolutely.
That would be in what I would say, even if I look at current expectations for IHS at this point, just in terms of, depending on where you think you are going to go with FX rates, production obviously can move over the next couple of months. That is why we will fine tune that. Even based on where we are today, if I just drew the snap, the chalk line right now, I still see that margin expansion as we go into 2027.
And-
For total company.
Got it. If you look at just business performance, $75 million-ish this year, sometime stuff. You have done around $100 million in the past year. With all the benefits from automation and the restructuring, is it reasonable to expect that you have a better contribution?
Yeah.
From business performance?
I think we would be disappointed if we were not targeting that $75 million- $100 million.
Got it. Understood. Now, going from that framework to free cash flow, which is a big topic. $130 million this year. You have $15 million of one-time stuff that does not repeat next year. There are some of the You are going to have natural margin expansion in the Middle East, costs not repeating to some degree. I think the two big TBDs you have talked about are restructuring and CapEx. If you could just dig into those a little bit, where is the uncertainty coming from? What are you waiting for to get more visibility on those items?
You are absolutely right. If you think about Adient's calls for cash. If you start off with your adjusted EBITDA assumption, if I just look at my calls for cash, my cash taxes should be lower from 2026 to 2027 because 2026 we indicated that there is $20 million of what I would call a one-time settlement in one of our jurisdictions that we had to pay. So that should be a good guy as I move from 2026 and 2027.
My interest expense, we are somewhere around that 190-ish in cash interest this year. We are doing a lot of work on the capital structure to make sure that we can bring those cash interest costs down. In fact, we are in the market this week refinancing the 7% notes. So again, it is just what I would say a constant chipping away. So I would expect our cash interest to be down year on year.
The two big unknowns are really the CapEx and the restructuring, as indicated. I talked a little bit so far this morning on the restructuring dollars. We are somewhere around $120 million this year. Most of that is primarily in Europe. Still working very closely with certain of our customers over in Europe as they finalize their production plans, where their products are going to be made.
What effect does that have? So it is really week-to-week conversations with them. So that is why there is big uncertainty there, just in terms of if there is a plant that is impacted, it could be a $30 million- $40 million tab that either us, the customer, or a combination of us and the customer would have to eat. So that is why we are being a little bit vague as it relates to that. And then the CapEx number, we guided to 300 this year.
It is all going to come down to we know what programs we have won. Obviously, there is a cost that goes along with it. So as Jim and his team have won the onshoring business, his CFO constantly reminds me growth is not free. And I push back and I say, well, you have to be more efficient and resourceful with how you spend that CapEx. But there is going to be an element of automation that has to go in the plants. Again, that is what the customers are expecting, as Jim indicated earlier. If you just look at the onshoring wins that we had with GM, there is a level of expectation that we do have to take some labor out of the plants. We do have to be more efficient.
That's, again, each of us then will sit, Jerome, myself, each of the heads of the regions will sit over the coming weeks, month. We'll review all the automation projects. We'll look at the returns on those. We'll look at the paybacks and decide ultimately where it makes sense to spend that. Again, that's the other uncertainty. Some puts, some good guys there, probably some headwinds there. We'll look and we'll provide you a little bit more color in November in terms of where that ultimately lands.
Got it. How much does the automation spend typically within that CapEx number?
If I go back a couple of years ago, it was, call it, $20 million. I think this year we're closer to $40 million. So again, just as Jim and team puts things back in the plants then to sort of implement, it's going to go higher than $40 million. It's just going to be a level of how much higher.
Got it. So that's kind of like the main toggle on the CapEx.
Exactly.
Just lastly, since you have a minute left, 1.7x net debt to EBITDA.
Yep.
You've given us indication that you're going to start buying back stock for your fourth quarter results. Just curious, you've talked about some refinance. You're refinancing the 7%.
Yep.
You have the 8% next year. How should we think about priorities on capital allocation outside of the buyback as well?
Great question, and great point about the net leverage. We came out with a target a couple of years ago indicating that we'd like to be between 1.5x and 2x. If I looked at what my cost of debt was back then versus where it was today, it was a lot lower. I think our cash interest expense back then was about $150 million. We're closer to $190 million. Even though we're within that nice, what I'd say, range, we'd still recognize there's a lot of cash going out the door. Like eight and a quarter is a perfect example. If I can go out in the open market and if I look at where those are trading for now, it's somewhere around $103 million. It's a year, a little less than a year payback.
I'll be apt to sprinkle a little bit of that in there with the share repurchases. We've always said that we're going to be balanced. Again, if the stock is trading 18, 19, I'll probably be a little heavier towards the repurchases. I do think that we're very much undervalued where we're sitting today. I also have to address certain of the debt stack. Again, it's going to be the combination of the two, and we'll just be optimistic or opportunistic in terms of how we've operated the last couple of years. In fact, if I look at over the last couple of years, we've basically returned $600 million to investors, $520 of that with repurchases, $80 with debt. Again, I'll look to be a little bit more balanced probably as I go out over the next.
Understood. It makes a lot of sense. With that, we're on time. Thanks, Mark and Jim, for doing this.
Thank you for having us.
Appreciate it.
Thanks, [inaudible].
Thank you very much.
Thank you very much.