Lear has posted second quarter sales of US$4.6bn, up 1% from a year ago, with record core operating earnings of US$337m, a rise of 23%. 

The seating and electrical distribution supplier also returned US$142m to shareholders through share repurchases and dividends.

"In the second quarter, we continued our positive momentum with record financial results," said Lear president and CEO, Matt Simoncini.

"The investments we have made in our core seating and electrical businesses have strengthened our competitiveness and given Lear an industry-leading cost position which is driving market share gains and margin improvements. 

"Going forward, we are well positioned to take advantage of major industry trends and profitable sales growth opportunities.  We are confident in our ability to sustain our success, and we are increasing our full year financial outlook for 2015." 

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Corporate Communications:
Mel Stephens
(248) 447-1624

Lear Reports Record Quarterly Earnings and Increases 2015 Financial Outlook

July 24, 2015

Lear Corporation (NYSE: LEA), a leading global supplier of automotive seating and electrical distribution systems, today reported financial results for the second quarter.  Highlights include:

Sales of $4.6 billion, up 1% from a year ago; 10% growth excluding impact of foreign exchange 

Record core operating earnings of $337 million, up 23% 

Adjusted earnings per share of $2.82, up 33% 

Core operating margin of 7.3%, up from 6.0% a year ago 

Improved margins in both business segments 

Returned $142 million to shareholders through share repurchases and dividends 

Increasing full year outlook for earnings and free cash flow

"In the second quarter, we continued our positive momentum with record financial results," said Matt Simoncini, Lear's president and chief executive officer.  "The investments we have made in our core Seating and Electrical businesses have strengthened our competitiveness and given Lear an industry-leading cost position which is driving market share gains and margin improvements.  Going forward, we are well positioned to take advantage of major industry trends and profitable sales growth opportunities.  We are confident in our ability to sustain our success, and we are increasing our full year financial outlook for 2015."  

Business Conditions 

In the second quarter, global vehicle production was relatively consistent with a year ago.  Production increased by 2% in both China and North America and by 1% in Europe & Africa.  Excluding Russia, where production was down 33%, Europe & Africa production was up 5%.  Production decreased by 17% in South America.  

Second Quarter 2015 Financial Results

For the second quarter of 2015, Lear reported sales of $4.6 billion, core operating earnings of $337 million, net income of $182 million and adjusted earnings per share of $2.82.  This compares with sales of $4.6 billion, core operating earnings of $275 million, net income of $149 million and adjusted earnings per share of $2.12 for the second quarter of 2014.

In the Seating segment, sales were up 4% to $3.6 billion, reflecting the acquisition of Eagle Ottawa, the addition of new business and higher production on key platforms, partially offset by the impact of foreign exchange.  Excluding the impact of foreign exchange, sales increased 12%.  Adjusted segment earnings were $253 million or 7.1% of sales.  Margins improved 140 basis points from a year ago, reflecting the increase in sales, the acquisition of Eagle Ottawa and favorable operating performance.  

In the Electrical segment, sales were down 7% to $1.1 billion.  Excluding the impact of foreign exchange, sales increased 4%, primarily reflecting the addition of new business.  Adjusted segment earnings were $147 million or 13.9% of sales, marking our 23rd consecutive quarter of year-over-year margin improvement.  Margins in the Electrical segment improved reflecting continued strong operating performance.  

In the second quarter of 2015, free cash flow was $361 million, and net cash provided by operating activities was $475 million.

Reconciliations of core operating earnings to pretax income before equity income, adjusted net income to net income attributable to Lear, adjusted earnings per share to diluted net income per share attributable to Lear, adjusted segment earnings to reported segment earnings and free cash flow to net cash provided by operating activities, in each case as determined in accordance with accounting principles generally accepted in the United States (GAAP), are provided in the attached supplemental data pages.  

Share Repurchase Program

During the second quarter of 2015, Lear repurchased 1.1 million shares of its common stock for a total of $122 million.   As of the end of the second quarter, Lear has a remaining share repurchase authorization of $765 million, which expires on December 31, 2017 and reflects approximately 10% of Lear's total market capitalization at current market prices.  

Since initiating the share repurchase program in early 2011, Lear has repurchased 33.0 million shares of its common stock for a total of $2.1 billion at an average price of $65.15 per share.  This represents a reduction of approximately 31% of our shares outstanding at the time we began the program.

Full Year 2015 Financial Outlook 

Lear has increased its full year 2015 financial outlook for earnings and free cash flow.  

Our 2015 financial outlook is based on industry vehicle production assumptions of 17.5 million units in North America, up 1% from the prior outlook, 21.1 million units in Europe & Africa, up 2% from the prior outlook and 22.5 million units in China, down 2% from the prior outlook.  Lear's financial guidance is based on an average full year exchange rate of $1.10/Euro, down 17% from 2014 and in line with our April 2015 guidance.

Sales in 2015 are expected to be in the range of $18.0 to $18.5 billion, consistent with our prior guidance.  Core operating earnings are expected to be in the range of $1.225 to $1.275 billion, up from the prior range of $1.175 to $1.225 billion.  Free cash flow is expected to be approximately $625 million, up $50 million from the prior guidance.

Pretax income before restructuring costs and other special items is estimated to be in the range of $1.13 to $1.18 billion in 2015.  Our effective tax rate is expected to be approximately 30%.  Adjusted net income is expected to be in the range of $760 to $795 million.  

Depreciation and amortization expense is estimated to be about $365 million, down $20 million from the prior outlook.  The outlook for pretax operational restructuring costs and capital spending is unchanged at approximately $80 million and $500 million, respectively.  

Original source: http://www.lear.com/InTheNews/1715/1/Lear-Reports-Record-Quarterly-Earnings-and-Increases-2015-Fi.aspx

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