Seating and electrical power management systems (EPMS) supplier Lear Corporation reported adjusted earnings per share up 19% to US$1.29 on sales up 2% to US$3.5bn in the third quarter of 2012.

Lear noted its EPMS sales of $877m set a quarterly record with adjusted margin of 7.5% up from 5.4% last year.

It also rasied full year net income guidance $15m.

The supplier said third quarter global industry production increased 2% year on year with rises in all major automotive markets except Europe. Production in North America and China was up 14% and 7%, respectively. Business conditions in Europe remained depressed, with production down 7% and the euro weaker by 12%.

"Lear performed well in the third quarter, with year-over-year improvements in sales, earnings and free cash flow," said president and CEO Matt Simoncini.

"Despite a challenging operating environment in Europe, we remained solidly profitable in that region and increased earnings per share significantly from the prior year. We continue to win new business globally and strengthen our capabilities in emerging markets."

The third quarter's $3.5bn sales tally, operating proft of $179m, net income of $121m and earnings per share of $1.23 compared with $3.5bn, $178m, $101m and $0.95 respectively in Q3 2011.

Seating sales were down 1% to $2.7bn, due to negative foreign exchange and lower industry production in Europe. Adjusted segment earnings were $161m or 6.1%. Earnings in this segment fell from last year due to increased product and facility launch costs, plus development costs for new business, primarily in South America.

EPMS sales grew 14% to a quarterly record of $877m, thanks mainly to new business but were partially offset by negative foreign exchange.  Adjusted segment earnings were $66m or 7.5%.  Earnings increased year on yeardue to higher sales and productivity improvements, though there were increased product and facility launch costs and programme development costs.

Lear's latest 2012 outlook is based on industry vehicle production of 15.2m units in North America, up 2%, and 16.6m units in Europe, down 1%, and an average full year exchange rate of $1.28/EUR, up 2% from August guidance.

The supplier expects 2012 sales of approximately $14.3bn, compared with previous guidance of $13.9 to $14.4bn. Core operating earnings are expected to be in the range of $745 to $785m ($740 to $790m).

Show the press release

Lear Reports Improved Third Quarter 2012 Financial Results and Increases Full Year 2012 Outlook for Net Income

 

SOUTHFIELD, Mich., Oct. 26, 2012 /PRNewswire/ -- Lear Corporation (NYSE: LEA), a leading global supplier of automotive seating and electrical power management systems, today reported financial results for the third quarter of 2012.  Highlights include:

 

 

    --  Net sales of $3.5 billion, up 2%

    --  Adjusted earnings per share of $1.29, up 19%; diluted earnings per share

        of $1.23

    --  Free cash flow of $88 million, up 37%

    --  EPMS sales of $877 million, a quarterly record, and adjusted margin of

        7.5%, up from 5.4% last year

    --  Returned $63 million to shareholders through share repurchases and

        dividends during the quarter and $214 million year-to-date

    --  Increased full year guidance for net income by $15 million

    --  Ranked as the highest quality major independent seat manufacturer for

        eleventh time in 12 years by J.D. Power and Associates

Business Conditions

 

In the third quarter, global industry production increased 2% from a year ago, reflecting production increases in all of the major automotive markets in the world except Europe.  Production in North America and China was up 14% and 7%, respectively.  Business conditions in Europe remained depressed, with production down 7% and the Euro weaker by 12%.

 

"Lear performed well in the third quarter, with year-over-year improvements in sales, earnings and free cash flow," said Matt Simoncini, Lear's president and chief executive officer.  "Despite a challenging operating environment in Europe, we remained solidly profitable in that region and increased earnings per share significantly from the prior year.  We continue to win new business globally and strengthen our capabilities in emerging markets."

 

Third Quarter 2012 Financial Results

 

For the third quarter of 2012, Lear reported net sales of $3.5 billion, core operating earnings of $179 million, net income of $121 million and diluted earnings per share of $1.23.  This compares with net sales of $3.5 billion, core operating earnings of $178 million, net income of $101 million and diluted earnings per share of $0.95 in the third quarter of 2011.  A reconciliation of core operating earnings to pretax income before equity income, as determined in accordance with accounting principles generally accepted in the United States (GAAP), is provided in the attached supplemental data pages.

 

In the Seating segment, net sales were down 1% to $2.7 billion, reflecting primarily the negative impact of foreign exchange and lower industry production in Europe, partially offset by the acquisition of Guilford and Lear's sales backlog.  Adjusted segment earnings were $161 million or 6.1%.  Earnings in this business segment decreased from last year, reflecting increased product and facility launch costs, as well as program development costs to support new business, primarily in South America.  A reconciliation of adjusted segment earnings to reported segment earnings, as determined in accordance with GAAP, is provided in the attached supplemental data pages.

 

In the Electrical Power Management Systems segment, net sales grew by 14% to a quarterly record of $877 million, driven primarily by the addition of new business, partially offset by the negative impact of foreign exchange.  Adjusted segment earnings were $66 million or 7.5%.  Earnings increased from last year, reflecting the increase in sales and productivity improvements, partially offset by increased product and facility launch costs and program development costs.  A reconciliation of adjusted segment earnings to reported segment earnings, as determined in accordance with GAAP, is provided in the attached supplemental data pages.

 

In the third quarter of 2012, free cash flow was $88 million, and net cash provided by operating activities was $201 million.  A reconciliation of free cash flow to net cash provided by operating activities, as determined in accordance with GAAP, is provided in the attached supplemental data pages.

 

During the quarter, Lear repurchased 1.3 million shares of its common stock for a total of $50 million.  Year-to-date, Lear has repurchased 4.2 million shares for $173 million, and since initiating the share repurchase program last year, Lear has repurchased 10.4 million shares of its common stock for a total of $452 million.  As of the end of the third quarter, $248 million remained available under the existing share repurchase authorization, which expires in February 2014.

 

During the quarter, Lear was recognized as the highest quality major independent seat manufacturer for the eleventh time in the last 12 years by J.D. Power and Associates in its 2012 Seat Quality and Satisfaction Study(SM).

 

Full Year 2012 Financial Outlook

 

Lear's 2012 outlook is based on industry vehicle production of 15.2 million units in North America, up 2% from the prior outlook, and 16.6 million units in Europe, down 1% from the prior outlook.  Lear's financial guidance is based on an average full year exchange rate of $1.28/Euro, up 2% from the August guidance.

 

Lear's full year outlook for revenue, core operating earnings and free cash flow remains in line with prior guidance.  Lear expects 2012 net sales of approximately $14.3 billion, as compared to the prior guidance of $13.9 to $14.4 billion. Core operating earnings are expected to be in the range of $745 to $785 million, which reflects a narrowing of the range as compared to the prior guidance of $740 to $790 million.  Free cash flow in 2012 is expected to be approximately $275 million, unchanged from the prior guidance.

 

Tax expense, excluding the impact of restructuring costs and other special items, is expected to be approximately $130 million, as compared to the prior guidance of $130 to $150 million.  The lower tax expense reflects the change in mix of earnings by country.  Adjusted net income attributable to Lear is expected to be in the range of $520 to $560 million, up from the prior guidance of $510 to $540 million, primarily reflecting lower tax expense.

 

Lear's outlook for depreciation and amortization is $250 million, down $5 million from the prior guidance.  Lear's outlook for interest expense, pretax operational restructuring costs and adjusted capital expenditures in 2012 is unchanged at $52 million, $40 million and $435 million, respectively.

Original source: via PRN

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