Lear Corporation has reported results for the fourth quarter and full year 2019. They show a dip to Q4 profits which the company said were impacted by a number of factors, including GM’s October UAW contract strike. 

Highlights include:

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Fourth Quarter 2019

  • Sales of $4.8 billion, compared to $4.9 billion in the fourth quarter of 2018
  • Net income of $126 million and adjusted net income of $161 million, compared to $212 million and $261 million, respectively, in the prior year
  • Core operating earnings of $241 million, compared to $389 million in the fourth quarter of 2018
  • Earnings per share of $2.50 and adjusted earnings per share of $2.64, compared to $3.39 and $4.05, respectively, in the fourth quarter of 2018
  • Net cash provided by operating activities of $485 million and free cash flow of $291 million

Full Year 2019

  • Sales of $19.8 billion, compared to $21.1 billion for the full year 2018
  • Net income of $754 million and adjusted net income of $866 million, compared to $1,150 million and $1,205 million, respectively, in the prior year
  • Core operating earnings of $1,309 million, compared to $1,749 million for the full year 2018
  • Earnings per share of $12.75 and adjusted earnings per share of $13.99, compared to $17.22 and $18.22, respectively, for the full year 2018
  • Net cash provided by operating activities of $1.3 billion and free cash flow of $680 million

“Lear delivered solid financial results in 2019, considering the challenging macroeconomic and industry environment.  Our financial results were affected by a 6% decline in industry production, an extended labor strike at our largest customer, and the weakening of global currencies against the U.S. dollar,” said Ray Scott, Lear’s President and Chief Executive Officer.  “During 2019, we launched over $1 billion in new business, maintained our focus on operational excellence, and improved efficiencies.  Though the environment remains challenging, we are confident in our ability to deliver profitable growth, generate strong cash flow, and increase long-term shareholder value.”

Fourth Quarter Financial Results

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Reported and adjusted financial results for both the fourth quarter and full year 2019 were significantly impacted by an extended labor strike at our largest customer.

Sales in the fourth quarter decreased 3% to $4.8 billion.  Excluding the impact of foreign exchange and acquisitions, sales were down 1%, reflecting lower production on Lear platforms, partially offset by the addition of new business and the Xevo acquisition.

Core operating earnings were $241 million, or 5.0% of sales, compared to $389 million, or 7.9% of sales, in 2018.  In the Seating segment, margins and adjusted margins were 4.0% and 5.9% of sales, respectively.  In the E-Systems segment, margins and adjusted margins were 6.6% and 7.7% of sales, respectively.

Earnings per share were $2.50.  Adjusted earnings per share were $2.64 per share, down from $4.05 per share in 2018, reflecting lower operating earnings, partially offset by a reduced share count.

In the fourth quarter of 2019, net cash provided by operating activities was $485 million, and free cash flow was $291 million.

Full Year Financial Results

Sales for the full year decreased 6% to $19.8 billion.  Excluding the impact of foreign exchange and acquisitions, sales were down 3%, reflecting lower production on Lear platforms, partially offset by the addition of new business in both of our product segments.

Core operating earnings were $1,309 million, or 6.6% of sales, compared to $1,749 million, or 8.3% of sales, in 2018.  In the Seating segment, margins and adjusted margins were 6.4% and 7.5% of sales, respectively.  In the E-Systems segment, margins and adjusted margins were 7.8% and 8.7% of sales, respectively.

Earnings per share were $12.75.  Adjusted earnings per share were $13.99, down from $18.22 per share in 2018, reflecting lower operating earnings, partially offset by a reduced share count.

For the full year of 2019, net cash provided by operating activities was $1,284 million, and free cash flow was $680 million.