SOUTHFIELD, Mich., April 30,
2024 /PRNewswire/ -- Lear Corporation (NYSE: LEA), a
global automotive technology leader in Seating and E-Systems, today
reported results for the first quarter 2024.
First Quarter 2024 Highlights
- Delivered first quarter record revenue of $6.0 billion, an increase of 3% compared to
$5.8 billion in the first quarter of
2023
- Sales outperformed global industry production, driven by growth
over market in E-Systems of 10 percentage points
- Net income of $110 million and
adjusted net income of $183 million,
compared to $144 million and
$166 million, respectively, in the
first quarter of 2023
- Core operating earnings increased 6% to $280 million, compared to $263 million in the first quarter of
2023
- Earnings per share of $1.90 and
adjusted earnings per share of $3.18,
compared to $2.41 and $2.78, respectively, in the first quarter of
2023
- Adjusted earnings per share increased 14% in the first quarter
compared to the same period last year
- Net cash used in operating activities of $(35) million and free cash flow of $(148) million, compared to $(36) million and $(147)
million, respectively, in the first quarter of 2023
- Seventh consecutive quarter of year-over-year margin
improvement in E-Systems
- Announced the acquisition of WIP Industrial Automation to
further strengthen our automation and artificial intelligence
capabilities; expected to close by Q3 2024
- Accelerating momentum in thermal comfort with two component
modularity projects launching in late 2024; initiated validation
work for our first complete seat module scheduled to launch in
North America in 2026
- Awarded our first JIT seat program with FAW Toyota for a new
sedan in China
- Recognized as a GM Supplier of the Year for the 7th
consecutive year and for the 23rd time
overall
- Cash and cash equivalents at quarter end of $930 million and total liquidity of $2.9 billion
- Increased the Company's share repurchase authorization to
$1.5 billion and extended the
authorization period until December 31,
2026
- Repurchased $30 million of Lear
shares and paid $46 million in
dividends
"Lear started 2024 strong, delivering record first quarter total
company revenue and improved year-over-year margins in E-Systems
for the seventh consecutive quarter," said Ray Scott, Lear's President and Chief Executive
Officer. "We have made substantial progress on our thermal comfort
strategy, and during the quarter, initiated the validation of our
first complete seat module scheduled to launch in 2026 with a
global automotive manufacturer. In E-Systems, we continue to
leverage our strong relationships to diversify our customer base,
leading to our second wire award with BMW. Today, we are
introducing IDEA by Lear, an evolution of our commitment to develop
innovative products and utilize automation to grow revenue, improve
margins and extend our leadership position in operational
excellence."
First Quarter
Financial Results (in millions, except per share
amounts)
|
|
|
2024
|
|
2023
|
Reported
|
|
|
|
Sales
|
$5,994.6
|
|
$5,845.5
|
Net income
|
$109.6
|
|
$143.6
|
Earnings per
share
|
$1.90
|
|
$2.41
|
|
|
|
|
Adjusted(1)
|
|
|
|
Core operating
earnings
|
$279.8
|
|
$263.4
|
Adjusted net
income
|
$183.2
|
|
$165.8
|
Adjusted earnings per
share
|
$3.18
|
|
$2.78
|
In the first quarter, global vehicle production decreased by 1%
compared to a year ago, with North
America up 1%, Europe down
2% and China up 5%. Global vehicle
production was flat on a Lear sales-weighted
basis(2).
Sales in the first quarter increased 3% to $6.0 billion
compared to a year ago. Excluding the impact of commodities,
foreign exchange and acquisitions, sales were up 2%, reflecting the
addition of new business in both of our business segments,
partially offset by lower production on key Lear platforms.
Core operating earnings were $280 million, or 4.7% of
sales, compared to $263 million, or 4.5% of sales, in
2023. The increase in earnings resulted primarily from net
performance, including commodities, and the addition of new
business, partially offset by the impact of foreign exchange and
lower production on key Lear platforms. In the Seating segment,
margins and adjusted margins were 5.4% and 6.6% of sales,
respectively. In the E-Systems segment, margins and adjusted
margins were 3.6% and 5.1% of sales, respectively.
Earnings per share were $1.90. Operational
restructuring charges and other special items totaled $74 million, primarily reflecting future plant
closures in Europe to improve our
manufacturing cost structure in light of the lower production
environment and impairment charges related to Fisker. Excluding the
impact of restructuring charges and other special items, adjusted
earnings per share were $3.18, up 14% compared to a year ago,
primarily reflecting higher operating earnings and the benefit of
our share repurchase program.
In the first quarter of 2024, net cash used in operating
activities was $(35)
million, and free cash flow(1)
was $(148) million.
(1) For more information regarding our non-GAAP
financial measures, see "Non-GAAP Financial Information" below.
(2) The production change on a Lear sales-weighted
basis is calculated using Lear's prior year regional sales mix and
first quarter fiscal calendar. Management believes this
provides a more meaningful comparison of the Company's global
revenue growth relative to global vehicle production.
Share Repurchase Program
During the first quarter of
2024, Lear repurchased 215,774 shares of our common stock for a
total of $30 million. In February 2024, Lear's Board of Directors approved
an increase to the Company's share repurchase authorization to
$1.5 billion and extended the
authorization period until December 31,
2026. At the end of the first quarter, we had a remaining
share repurchase authorization of approximately $1.5 billion, which reflects approximately 19% of
our total market capitalization at current market prices.
Since initiating the share repurchase program in 2011, we have
repurchased 55.7 million shares of our common stock for a total of
$5.2 billion at an average price of
$93.61 per share. This represents a
reduction of approximately 53% of our shares outstanding since the
time we began the program.
2024 Financial Outlook
Our 2024 financial outlook,
which is unchanged from our prior outlook, is summarized below:
|
Full Year 2024 Financial
Outlook
|
|
|
|
Net Sales
|
$24,000 million -
$24,600 million
|
|
|
Core Operating
Earnings
|
$1,155 million -
$1,305 million
|
|
|
Adjusted
EBITDA
|
$1,795 million -
$1,945 million
|
|
|
Restructuring
Costs
|
≈$125 million
|
|
|
Operating Cash
Flow
|
$1,275 million -
$1,425 million
|
|
|
Capital
Spending
|
≈$675 million
|
|
|
Free Cash
Flow
|
$600 million - $750
million
|
|
|
The financial outlook is based on a full year average exchange
rate of $1.09/Euro and 7.15 RMB/$.
Certain of the forward-looking financial measures above are
provided on a non-GAAP basis. The Company does not provide a
reconciliation of such forward-looking measures to the most
directly comparable financial measures calculated and presented in
accordance with GAAP because to do so would be potentially
misleading and not practical given the difficulty of projecting
event-driven transactional and other non-core operating items in
any future period. The magnitude of these items, however, may be
significant.
First Quarter 2024 Conference Call and Webcast
Information
A conference call and webcast will be held to
discuss Lear's first quarter 2024 financial results and related
matters on April 30, 2024, at
8:30 a.m. EDT. The webcast link for
the conference call will be available through Lear's investor
relations webpage at ir.lear.com. In addition, the conference call
can be accessed by dialing 1-877-883-0383 (domestic) or
1-412-902-6506 (international) with Conference I.D. 9500216. The
webcast replay will be available two hours following the call.
Non-GAAP Financial Information
In addition to the
results reported in accordance with accounting principles generally
accepted in the United States
(GAAP) included throughout this press release, the Company has
provided information regarding "pretax income before equity income,
interest, other expense, restructuring costs and other special
items" (core operating earnings or adjusted segment earnings),
"pretax income before equity income, interest, other expense,
depreciation expense, amortization of intangible assets,
restructuring costs and other special items" (adjusted EBITDA),
"adjusted depreciation and amortization," "adjusted net income
attributable to Lear" (adjusted net income), "adjusted diluted net
income per share attributable to Lear" (adjusted earnings per
share) and "free cash flow" (each, a non-GAAP financial measure).
Other expense includes, among other things, non-income related
taxes, foreign exchange gains and losses, gains and losses related
to certain derivative instruments and hedging activities, gains and
losses on the disposal of fixed assets and the non-service cost
components of net periodic benefit cost. Adjusted depreciation and
amortization represents depreciation expense and amortization of
intangible assets adjusted for intangible asset impairment charges.
Adjusted net income and adjusted earnings per share represent net
income attributable to Lear and diluted net income per share
attributable to Lear, respectively, adjusted for restructuring
costs and other special items, including the tax effect thereon.
Free cash flow represents net cash provided by (used in) operating
activities less capital expenditures.
Management believes the non-GAAP financial measures used in this
press release are useful to both management and investors in their
analysis of the Company's financial position and results of
operations. In particular, management believes that core operating
earnings, adjusted EBITDA, adjusted depreciation and amortization,
adjusted net income and adjusted earnings per share are useful
measures in assessing the Company's financial performance by
excluding certain items that are not indicative of the Company's
core operating performance or that may obscure trends useful in
evaluating the Company's continuing operating activities.
Management also believes that these measures provide improved
comparability between fiscal periods. Management believes that free
cash flow is useful to both management and investors in their
analysis of the Company's ability to service and repay its debt.
Further, management uses these non-GAAP financial measures for
planning and forecasting future periods.
Core operating earnings, adjusted EBITDA, adjusted depreciation
and amortization, adjusted net income, adjusted earnings per share
and free cash flow should not be considered in isolation or as a
substitute for net income attributable to Lear, diluted net income
per share attributable to Lear, cash provided by (used in)
operating activities or other income statement or cash flow
statement data prepared in accordance with GAAP or as a measure of
profitability or liquidity. In addition, the calculation of free
cash flow does not reflect cash used to service debt and,
therefore, does not reflect funds available for investment or other
discretionary uses. Also, these non-GAAP financial measures, as
determined and presented by the Company, may not be comparable to
related or similarly titled measures reported by other companies.
Set forth below are reconciliations of these non-GAAP financial
measures to the most directly comparable financial measures
calculated and presented in accordance with GAAP.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements regarding anticipated financial results and
liquidity. The words "will," "may," "designed to," "outlook,"
"believes," "should," "anticipates," "plans," "expects," "intends,"
"estimates," "forecasts" and similar expressions identify certain
of these forward-looking statements. The Company also may provide
forward-looking statements in oral statements or other written
materials released to the public. All statements contained or
incorporated in this press release or in any other public
statements that address operating performance, events or
developments that the Company expects or anticipates may occur in
the future are forward-looking statements. Factors that could cause
actual results to differ materially from these forward-looking
statements are discussed in the Company's Annual Report on Form
10-K for the year ended December 31,
2023, and its other Securities and Exchange Commission
filings. Future operating results will be based on various factors,
including actual industry production volumes, supply chain
disruptions, labor disruptions, commodity prices, changes in
foreign exchange rates, the impact of restructuring actions and the
Company's success in implementing its operating strategy.
Information in this press release relies on assumptions in the
Company's core sales backlog. The Company's core sales backlog
reflects anticipated net sales from formally awarded new programs
less lost and discontinued programs and excludes the impact of
non-core products winding down in our E-Systems business. The
Company enters into contracts with its customers to provide
production parts generally at the beginning of a vehicle's life
cycle. Typically, these contracts do not provide for a specified
quantity of production, and many of these contracts may be
terminated by the Company's customers at any time. Therefore, these
contracts do not represent firm orders. Further, the calculation of
the core sales backlog does not reflect customer price reductions
on existing or newly awarded programs. The core sales backlog may
be impacted by various assumptions embedded in the calculation,
including vehicle production levels on new programs, foreign
exchange rates and the timing of major program launches.
The forward-looking statements in this press release are made as
of the date hereof, and the Company does not assume any obligation
to update, amend or clarify them to reflect events, new information
or circumstances occurring after the date hereof.
About Lear Corporation
Lear, a global automotive
technology leader in Seating and E-Systems, enables superior
in-vehicle experiences for consumers around the world. Lear's
diverse team of talented employees in 38 countries is driven by a
commitment to innovation, operational excellence, and
sustainability. Lear is Making every drive better™ by providing the
technology for safer, smarter, and more comfortable journeys. Lear,
headquartered in Southfield,
Michigan, serves every major automaker in the world and
ranks 189 on the Fortune 500. Further information about Lear is
available at lear.com.
Lear Corporation
and Subsidiaries
Condensed
Consolidated Statements of Income
(Unaudited; in
millions, except per share amounts)
|
|
|
|
Three Months Ended
|
|
|
March 30,
2024
|
|
April 1,
2023
|
Net sales
|
|
$
5,994.6
|
|
$
5,845.5
|
|
|
|
|
|
Cost of
sales
|
|
5,596.5
|
|
5,415.5
|
Selling, general and
administrative expenses
|
|
186.5
|
|
176.8
|
Amortization of
intangible assets
|
|
15.1
|
|
15.9
|
Interest
expense
|
|
26.1
|
|
24.2
|
Other expense,
net
|
|
13.5
|
|
13.7
|
|
|
|
|
|
Consolidated income
before income taxes and equity in net income of
affiliates
|
|
156.9
|
|
199.4
|
Income taxes
|
|
40.5
|
|
45.6
|
Equity in net income of
affiliates
|
|
(10.5)
|
|
(9.6)
|
|
|
|
|
|
Consolidated net
income
|
|
126.9
|
|
163.4
|
Net income attributable
to noncontrolling interests
|
|
17.3
|
|
19.8
|
|
|
|
|
|
Net income attributable
to Lear
|
|
$
109.6
|
|
$
143.6
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per
share attributable to Lear
|
|
$
1.90
|
|
$
2.41
|
|
|
|
|
|
Weighted average number
of diluted shares outstanding
|
|
57.6
|
|
59.6
|
|
|
|
|
|
Lear Corporation
and Subsidiaries
Condensed
Consolidated Balance Sheets
(In
millions)
|
|
|
|
March 30,
2024
|
|
December 31,
2023
|
|
|
(Unaudited)
|
|
(Audited)
|
ASSETS
|
|
|
|
|
Current:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
930.4
|
|
$
1,196.3
|
Accounts
receivable
|
|
4,154.9
|
|
3,681.2
|
Inventories
|
|
1,735.4
|
|
1,758.0
|
Other
|
|
1,087.0
|
|
1,001.4
|
|
|
7,907.7
|
|
7,636.9
|
Long-Term:
|
|
|
|
|
PP&E,
net
|
|
2,910.4
|
|
2,977.4
|
Goodwill
|
|
1,719.9
|
|
1,737.9
|
Other
|
|
2,334.0
|
|
2,343.3
|
|
|
6,964.3
|
|
7,058.6
|
|
|
|
|
|
Total Assets
|
|
$
14,872.0
|
|
$
14,695.5
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
Current:
|
|
|
|
|
Short-term
borrowings
|
|
$
27.0
|
|
$
27.5
|
Accounts payable and
drafts
|
|
3,688.7
|
|
3,434.2
|
Accrued
liabilities
|
|
2,227.0
|
|
2,205.2
|
Current portion of
long-term debt
|
|
0.3
|
|
0.3
|
|
|
5,943.0
|
|
5,667.2
|
Long-Term:
|
|
|
|
|
Long-term
debt
|
|
2,743.0
|
|
2,742.6
|
Other
|
|
1,199.8
|
|
1,225.1
|
|
|
3,942.8
|
|
3,967.7
|
|
|
|
|
|
Equity
|
|
4,986.2
|
|
5,060.6
|
|
|
|
|
|
Total Liabilities and Equity
|
|
$
14,872.0
|
|
$
14,695.5
|
|
|
|
|
|
Lear Corporation
and Subsidiaries
Consolidated
Supplemental Data
(Unaudited; in
millions, except content per vehicle and per share
amounts)
|
|
|
|
Three Months Ended
|
|
|
March 30,
2024
|
|
April 1,
2023
|
Net Sales
|
|
|
|
|
North
America
|
|
$
2,475.9
|
|
$
2,380.0
|
Europe and
Africa
|
|
2,253.8
|
|
2,231.0
|
Asia
|
|
1,059.7
|
|
1,019.5
|
South
America
|
|
205.2
|
|
215.0
|
Total
|
|
$
5,994.6
|
|
$
5,845.5
|
|
|
|
|
|
Content per Vehicle 1
|
|
|
|
|
North
America
|
|
$
628
|
|
$
612
|
Europe and
Africa
|
|
$
484
|
|
$
468
|
|
|
|
|
|
Free Cash Flow 2
|
|
|
|
|
Net cash used in
operating activities
|
|
$
(34.6)
|
|
$
(35.6)
|
Capital
expenditures
|
|
(113.6)
|
|
(111.8)
|
Free cash
flow
|
|
$
(148.2)
|
|
$
(147.4)
|
|
|
|
|
|
Core Operating Earnings 2
|
|
|
|
|
Net income attributable
to Lear
|
|
$
109.6
|
|
$
143.6
|
Interest
expense
|
|
26.1
|
|
24.2
|
Other expense,
net
|
|
13.5
|
|
13.7
|
Income
taxes
|
|
40.5
|
|
45.6
|
Equity in net income
of affiliates
|
|
(10.5)
|
|
(9.6)
|
Net income
attributable to noncontrolling interests
|
|
17.3
|
|
19.8
|
Restructuring costs and
other special items -
|
|
|
|
|
Costs related to
restructuring actions
|
|
54.3
|
|
14.6
|
Acquisition
costs
|
|
0.1
|
|
0.3
|
Impairments related to
Fisker
|
|
14.5
|
|
—
|
Impairments related to
Russian operations
|
|
1.4
|
|
—
|
Intangible asset
impairment
|
|
—
|
|
0.9
|
Costs related to
Typhoon in Philippines
|
|
—
|
|
0.5
|
Other
|
|
13.0
|
|
9.8
|
Core operating
earnings
|
|
$
279.8
|
|
$
263.4
|
|
|
|
|
|
Lear Corporation
and Subsidiaries
Consolidated
Supplemental Data
(continued)
(Unaudited; in
millions, except content per vehicle and per share
amounts)
|
|
|
|
Three Months Ended
|
|
|
March 30,
2024
|
|
April 1,
2023
|
Adjusted Net Income and Adjusted Earnings Per
Share 2
|
|
|
|
|
Net income attributable
to Lear
|
|
$
109.6
|
|
$
143.6
|
Restructuring costs and
other special items -
|
|
|
|
|
Costs related to
restructuring actions
|
|
54.3
|
|
14.6
|
Acquisition
costs
|
|
0.1
|
|
0.3
|
Impairments related to
Fisker
|
|
14.5
|
|
—
|
Impairments related to
Russian operations
|
|
1.4
|
|
—
|
Intangible asset
impairment
|
|
—
|
|
0.9
|
Costs related to
Typhoon in Philippines
|
|
—
|
|
0.5
|
Foreign exchange
(gains) losses due to foreign exchange rate volatility
related to Russia
|
|
—
|
|
(1.0)
|
Loss related to
affiliate
|
|
2.2
|
|
5.0
|
Other
|
|
13.8
|
|
5.0
|
Tax impact of special
items and other net tax adjustments 3
|
|
(12.7)
|
|
(3.1)
|
Adjusted net
income
|
|
$
183.2
|
|
$
165.8
|
|
|
|
|
|
Weighted average number
of diluted shares outstanding
|
|
57.6
|
|
59.6
|
|
|
|
|
|
Diluted net income per
share available to Lear
|
|
$
1.90
|
|
$
2.41
|
|
|
|
|
|
Adjusted earnings per
share
|
|
$
3.18
|
|
$
2.78
|
|
|
|
|
|
Adjusted Depreciation and Amortization
2
|
|
|
|
|
Depreciation and
amortization
|
|
$
155.3
|
|
$
147.2
|
Less - Intangible asset
impairment
|
|
—
|
|
0.9
|
Adjusted depreciation
and amortization
|
|
$
155.3
|
|
$
146.3
|
|
|
|
|
|
Diluted Shares Outstanding at End of
Period 4
|
|
57,417,052
|
|
59,392,786
|
|
|
|
|
|
1
Content per Vehicle for 2023 has been
updated to reflect actual production levels.
|
|
|
|
|
|
2
See "Non-GAAP Financial Information"
included in this press release.
|
|
|
|
|
|
|
|
|
|
3
Represents the tax effect of
restructuring costs and other special items, as well as several
discrete tax items. The identification of these tax items is
judgmental in nature, and their calculation is based on various
assumptions and estimates.
|
|
|
|
|
|
4
Calculated using stock price at end of
quarter.
|
|
|
|
|
Lear Corporation
and Subsidiaries
Segment
Supplemental Data
(Unaudited; in
millions, except margins)
|
|
|
|
Three Months Ended
|
|
|
March 30,
2024
|
|
April 1,
2023
|
Adjusted Segment Earnings
|
|
|
|
|
|
|
|
|
|
Seating
|
|
|
|
|
Net sales
|
|
$
4,477.6
|
|
$
4,453.0
|
|
|
|
|
|
Segment
earnings
|
|
$
241.6
|
|
$
285.8
|
Restructuring costs
and other special items -
|
|
|
|
|
Costs related to
restructuring actions
|
|
43.7
|
|
12.0
|
Impairments related to
Fisker
|
|
2.3
|
|
—
|
Impairments related to
Russian operations
|
|
1.4
|
|
—
|
Other
|
|
5.9
|
|
2.6
|
Adjusted segment
earnings
|
|
$
294.9
|
|
$
300.4
|
|
|
|
|
|
Segment
margins
|
|
5.4 %
|
|
6.4 %
|
|
|
|
|
|
Adjusted segment
margins
|
|
6.6 %
|
|
6.7 %
|
|
|
|
|
|
E-Systems
|
|
|
|
|
Net sales
|
|
$
1,517.0
|
|
$
1,392.5
|
|
|
|
|
|
Segment
earnings
|
|
$
54.1
|
|
$
42.3
|
Restructuring and
other special items -
|
|
|
|
|
Costs related to
restructuring actions
|
|
8.8
|
|
2.3
|
Impairments related to
Fisker
|
|
12.2
|
|
—
|
Intangible asset
impairment
|
|
—
|
|
0.9
|
Costs related to
typhoon in the Philippines
|
|
—
|
|
0.4
|
Other
|
|
2.0
|
|
3.0
|
Adjusted segment
earnings
|
|
$
77.1
|
|
$
48.9
|
|
|
|
|
|
Segment
margins
|
|
3.6 %
|
|
3.0 %
|
|
|
|
|
|
Adjusted segment
margins
|
|
5.1 %
|
|
3.5 %
|
|
|
|
|
|
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SOURCE Lear Corporation