SOUTHFIELD, Mich., April 26, 2017 /PRNewswire/ -- Lear
Corporation (NYSE: LEA), a leading global supplier of automotive
seating and electrical systems, today reported record sales and
earnings for the first quarter 2017. Highlights include:
- Sales of $5.0 billion, up 7% from
a year ago; up 9% excluding the impact of foreign exchange
- Net income of $305.8 million, up
23% from $248.4 million in the prior
year
- Core operating earnings of $431.5
million with a margin of 8.6%, up from 8.3% a year ago
- Earnings per share of $4.35 and
adjusted earnings per share of $4.27,
up 26% from the prior year
- Net cash provided by operating activities and free cash flow of
$278.9 million and $158.1 million, respectively
- Increased quarterly cash dividend from $0.30 to $0.50 per
share and increased share repurchase authorization to $1 billion
- Signed a definitive agreement to acquire Grupo Antolin's seating business
"Our industry-leading cost structure and product capabilities
are driving outstanding financial results and market share gains in
both product segments," said Matt
Simoncini, Lear's president and chief executive
officer. "We have a record sales backlog that will provide
continued profitable sales growth and superior shareholder returns.
This year, we celebrate our 100th anniversary, and the
Company has never been in a stronger competitive position. I have
never been more optimistic about our future."
First Quarter
Financial Results
|
(in millions, except
per share amounts)
|
|
|
|
|
|
2017
|
|
2016
|
Reported
|
|
|
|
Sales
|
$4,998.5
|
|
$4,662.9
|
Net income
|
$305.8
|
|
$248.4
|
Earnings per
share
|
$4.35
|
|
$3.29
|
|
|
|
|
Adjusted
(1)
|
|
|
|
Core operating
earnings
|
$431.5
|
|
$386.8
|
Adjusted net
income
|
$300.1
|
|
$256.4
|
Adjusted earnings per
share
|
$4.27
|
|
$3.40
|
Sales in the first quarter increased 7% to $5.0 billion. Excluding the impact of
foreign exchange, sales were up 9%, with growth in all
regions. The increase reflects the addition of new business
and increased production volumes on key platforms in both of our
product segments. Sales for both of our segments were up
7%. Excluding the impact of foreign exchange, sales for our
Seating and E-Systems segments were up 9% and 8%,
respectively.
Core operating earnings were $431.5
million, or 8.6% of sales, reflecting the increase in sales
and favorable operating performance. In the Seating segment,
margins and adjusted margins increased 20 basis points to 8.3% and
8.5% of sales, respectively. In the E-Systems segment,
margins increased 50 basis points and adjusted margins increased 40
basis points to 14.6% and 14.9% of sales, respectively.
Earnings per share were up 32% to $4.35 per share and include a tax benefit related
to a change in the accounting for share-based compensation.
Adjusted earnings per share were up 26% to $4.27 per share, reflecting the improved
operating earnings, a reduced share count and a lower effective tax
rate.
In the first quarter of 2017, net cash provided by operating
activities was $278.9 million, and
free cash flow was $158.1
million.
(1) For more
information regarding our non-GAAP financial measures, see
"Non-GAAP Financial Information" below.
Increased Share Repurchase Authorization and Dividend
On February 13, 2017, Lear's Board
of Directors authorized an increase in Lear's share repurchase
authorization, bringing the total value of shares that may be
repurchased to $1 billion. In
addition, the Board increased Lear's quarterly cash dividend from
$0.30 per share to $0.50 per share.
During the first quarter of 2017, Lear repurchased approximately
0.9 million shares of its common stock for a total of $127 million. As of the end of the first quarter,
Lear had a remaining share repurchase authorization of $873 million, which expires on December 31, 2019, and reflects approximately 9%
of Lear's total market capitalization at current market
prices.
Since initiating the share repurchase program in early 2011,
Lear has repurchased 42.0 million shares of its common stock for a
total of $3.2 billion at an average
price of $75.96 per share. This
represents a reduction of approximately 40% of our shares
outstanding at the time that we began the program.
Acquisition of Grupo Antolin's
Seating Business
On February 6, 2017, Lear signed a
definitive agreement to acquire Grupo
Antolin's seating business, which is headquartered in
France with operations in five
countries in Europe and North
Africa. Grupo Antolin's
seating business is comprised of just-in-time seat assembly, seat
structures & mechanisms and seat covers, and is well positioned
among the largest European automakers, including Daimler, Peugeot
Citroen, Renault Nissan and Volkswagen. Grupo Antolin's seating business has an
experienced management team, modern facilities and a reputation for
lean manufacturing, superior quality and innovation, including
high-functionality and light weight seat designs. We believe
that Grupo Antolin's capabilities
are an excellent complement to Lear's existing seating
business.
The transaction is expected to close in the second quarter of
2017.
Full Year 2017 Financial Outlook
Lear's 2017 financial outlook is unchanged from the prior
outlook. The current outlook is based on industry vehicle
production assumptions of 17.6 million units in North America, down 1% from the prior year,
22.8 million units in Europe and
Africa, up 2% from the prior year,
and 26.3 million units in China,
up 2% from the prior year. Lear's financial outlook is based
on an average full year exchange rate of $1.05/Euro.
Sales in 2017 are expected to be approximately $19.5 billion, and core operating earnings are
expected to be about $1.6
billion. Net cash provided by operating activities is
estimated to be $1.6 billion, and
capital spending is expected to be $550
million, resulting in free cash flow in excess of
$1.0 billion.
The Company's effective tax rate on an adjusted basis is
expected to be approximately 26%. Adjusted net income is
expected to be approximately $1.1
billion.
Pretax operational restructuring costs are estimated to be
$65 million, and depreciation and
amortization expense is estimated to be $385
million.
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 accounting principles generally accepted in
the United States ("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.
Webcast Information
Lear will webcast a conference call to review the Company's
first quarter 2017 financial results and related matters on
April 26, 2017, at 9:00 a.m. Eastern Time, through the investor
relations link at http://ir.lear.com/. In addition, the
conference call can be accessed by dialing 1-800-789-4751
(domestic) or 1-973-200-3975 (international). The audio
replay will be available two hours following the call at
1-855-859-2056 (domestic) or 1-404-537-3406 (international) and
will be available until May 10, 2017,
with a Conference I.D. of 19652648.
Non-GAAP Financial Information
In addition to the results reported in accordance with 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),
"adjusted net income attributable to Lear" (adjusted net income),
"adjusted diluted net income per share attributable to Lear"
(adjusted earnings per share), "tax expense excluding the impact of
restructuring costs and other special items" 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, and gains and losses on the
disposal of fixed assets. 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 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 net income, adjusted earnings per
share and tax expense excluding the impact of restructuring costs
and other special items 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 are useful to both management and investors in their
analysis of the Company's results of operations and 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 net income, adjusted earnings
per share, tax expense excluding the impact of restructuring costs
and other special items 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 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.
For reconciliations of these non-GAAP financial measures to the
most directly comparable financial measures calculated and
presented in accordance with GAAP, see the attached supplemental
data pages which, together with this press release, have been
posted on the Company's website through the investor relations link
at http://www.lear.com.
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, 2016 and its other Securities and
Exchange Commission filings. Future operating results will be based
on various factors, including actual industry production volumes,
commodity prices and the Company's success in implementing its
operating strategy.
Information in this press release relies on assumptions in the
Company's sales backlog. The Company's sales backlog reflects
anticipated net sales from formally awarded new programs less lost
and discontinued programs. The calculation of the sales backlog
does not reflect customer price reductions on existing or newly
awarded programs. The 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
Lear Corporation (NYSE: LEA) was founded in Detroit in 1917 as American Metal
Products. In 2017, the Company will celebrate its 100th year
anniversary. Lear is one of the world's leading suppliers of
automotive seating systems and electrical distribution systems
(E-Systems). Lear serves every major automaker in the world,
and Lear content can be found on more than 400 vehicle
nameplates. Lear's world-class products are designed,
engineered and manufactured by a diverse team of approximately
150,000 employees located in 37 countries. Lear currently
ranks #154 on the Fortune 500. Lear's headquarters are in
Southfield, Michigan.
Further information about Lear is available at http://www.lear.com
or follow us on Twitter
@LearCorporation.
Lear Corporation
and Subsidiaries
|
Condensed
Consolidated Statements of Income
|
|
|
|
|
|
(Unaudited; in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Month
|
|
|
Period
Ended
|
|
|
April
1,
|
|
April
2,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Net sales
|
|
$
4,998.5
|
|
$
4,662.9
|
|
|
|
|
|
Cost of
sales
|
|
4,416.0
|
|
4,127.2
|
Selling, general and
administrative expenses
|
|
155.7
|
|
149.0
|
Amortization of
intangible assets
|
|
10.1
|
|
13.2
|
Interest
expense
|
|
20.8
|
|
21.1
|
Other expense,
net
|
|
3.7
|
|
8.5
|
|
|
|
|
|
Consolidated income
before income taxes and
|
|
|
|
|
equity in net income
of affiliates
|
|
392.2
|
|
343.9
|
Income
taxes
|
|
89.1
|
|
98.2
|
Equity in net income
of affiliates
|
|
(15.4)
|
|
(16.8)
|
|
|
|
|
|
Consolidated net
income
|
|
318.5
|
|
262.5
|
Net income
attributable to noncontrolling interests
|
|
12.7
|
|
14.1
|
|
|
|
|
|
Net income
attributable to Lear
|
|
$
305.8
|
|
$
248.4
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
per share attributable to Lear
|
|
$
4.35
|
|
$
3.29
|
|
|
|
|
|
Weighted average
number of diluted shares outstanding
|
|
70.3
|
|
75.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lear Corporation
and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April
1,
|
|
December
31,
|
|
|
2017
|
|
2016
|
|
|
(Unaudited)
|
|
(Audited)
|
ASSETS
|
|
|
|
|
Current:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,209.7
|
|
$
1,271.6
|
Accounts
receivable
|
|
3,308.8
|
|
2,746.5
|
Inventories
|
|
1,067.8
|
|
1,020.6
|
Other
|
|
642.6
|
|
610.6
|
|
|
6,228.9
|
|
5,649.3
|
Long-Term:
|
|
|
|
|
PP&E,
net
|
|
2,070.7
|
|
2,019.3
|
Goodwill
|
|
1,129.4
|
|
1,121.3
|
Other
|
|
1,171.5
|
|
1,110.7
|
|
|
4,371.6
|
|
4,251.3
|
|
|
|
|
|
Total
Assets
|
|
$
10,600.5
|
|
$
9,900.6
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current:
|
|
|
|
|
Short-term
borrowings
|
|
$
10.2
|
|
$
8.6
|
Accounts payable and
drafts
|
|
3,043.0
|
|
2,640.5
|
Accrued
liabilities
|
|
1,538.7
|
|
1,497.6
|
Current portion of
long-term debt
|
|
38.8
|
|
35.6
|
|
|
4,630.7
|
|
4,182.3
|
Long-Term:
|
|
|
|
|
Long-term
debt
|
|
1,889.0
|
|
1,898.0
|
Other
|
|
617.3
|
|
627.4
|
|
|
2,506.3
|
|
2,525.4
|
|
|
|
|
|
Equity
|
|
3,463.5
|
|
3,192.9
|
|
|
|
|
|
Total Liabilities
and Equity
|
|
$
10,600.5
|
|
$
9,900.6
|
|
|
|
|
|
|
|
|
|
|
Lear Corporation
and Subsidiaries
|
|
Supplemental
Data
|
|
|
|
|
|
|
|
|
(Unaudited; in
millions, except content per vehicle and per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
April
1,
|
|
April
2,
|
|
|
|
|
2017
|
|
2016
|
|
|
Net
Sales
|
|
|
|
|
|
|
North
America
|
|
$
1,989.2
|
|
$
1,926.1
|
|
|
Europe and
Africa
|
|
1,915.4
|
|
1,827.7
|
|
|
Asia
|
|
923.3
|
|
817.4
|
|
|
South
America
|
|
170.6
|
|
91.7
|
|
|
Total
|
|
$
4,998.5
|
|
$
4,662.9
|
|
|
|
|
|
|
|
|
|
Content per
Vehicle1
|
|
|
|
|
|
|
North
America
|
|
$
435
|
|
$
425
|
|
|
Europe and
Africa
|
|
$
316
|
|
$
315
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow2
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
|
$
278.9
|
|
$
288.6
|
|
|
Capital
expenditures
|
|
(120.8)
|
|
(88.1)
|
|
|
Free cash
flow
|
|
$
158.1
|
|
$
200.5
|
|
|
|
|
|
|
|
|
|
Depreciation and
Amortization
|
|
$
96.9
|
|
$
90.2
|
|
|
|
|
|
|
|
|
|
Diluted Shares
Outstanding at end of Quarter3
|
|
69,481,327
|
|
74,227,995
|
|
|
|
|
|
|
|
|
|
Core Operating
Earnings2
|
|
|
|
|
|
|
Net income
attributable to Lear
|
|
$
305.8
|
|
$
248.4
|
|
|
Interest
expense
|
|
20.8
|
|
21.1
|
|
|
Other expense,
net
|
|
3.7
|
|
8.5
|
|
|
Income
taxes
|
|
89.1
|
|
98.2
|
|
|
Equity in net income
of affiliates
|
|
(15.4)
|
|
(16.8)
|
|
|
Net income
attributable to noncontrolling interests
|
|
12.7
|
|
14.1
|
|
|
Pretax income before
equity income, interest and
|
|
|
|
|
|
|
other
expense
|
|
416.7
|
|
373.5
|
|
|
Restructuring costs
and other special items -
|
|
|
|
|
|
|
Costs related to
restructuring actions
|
|
8.8
|
|
11.7
|
|
|
Acquisition
costs
|
|
1.6
|
|
-
|
|
|
Acquisition-related
inventory fair value adjustment
|
|
1.7
|
|
-
|
|
|
Other
|
|
2.7
|
|
1.6
|
|
|
Core operating
earnings
|
|
$
431.5
|
|
$
386.8
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income Attributable to Lear2
|
|
|
|
|
|
|
Net income
attributable to Lear
|
|
$
305.8
|
|
$
248.4
|
|
|
Restructuring costs
and other special items -
|
|
|
|
|
|
|
Costs related to
restructuring actions
|
|
8.8
|
|
11.7
|
|
|
Acquisition
costs
|
|
1.6
|
|
-
|
|
|
Acquisition-related
inventory fair value adjustment
|
|
1.7
|
|
-
|
|
|
Other
|
|
1.3
|
|
1.3
|
|
|
Tax impact of special
items and other net tax adjustments 4
|
|
(19.1)
|
|
(5.0)
|
|
|
Adjusted net income
attributable to Lear
|
|
$
300.1
|
|
$
256.4
|
|
|
|
|
|
|
|
|
|
Weighted average
number of diluted shares outstanding
|
|
70.3
|
|
75.5
|
|
|
|
|
|
|
|
|
|
Diluted net income
per share attributable to Lear
|
|
$
4.35
|
|
$
3.29
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
share
|
|
$
4.27
|
|
$
3.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Content per Vehicle
for 2016 has been updated to reflect actual production
levels.
|
|
|
|
|
|
|
|
|
|
|
2
|
See "Non-GAAP
Financial Information" included in this press release.
|
|
|
|
|
|
|
|
|
3
|
Calculated using
stock price at end of quarter.
|
|
|
|
|
|
|
|
|
4
|
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.
|
|
|
|
|
|
|
|
Lear Corporation
and Subsidiaries
|
Supplemental
Data
|
|
|
|
|
|
|
(Unaudited; in
millions, except margins)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
April
1,
|
|
April
2,
|
|
|
|
2017
|
|
2016
|
|
Adjusted Segment
Earnings
|
|
|
|
|
|
|
|
|
|
|
|
Seating
|
|
|
|
|
|
Net sales
|
|
$
3,868.0
|
|
$
3,602.0
|
|
|
|
|
|
|
|
Segment
earnings
|
|
$
320.3
|
|
$
291.6
|
|
Costs related to
restructuring actions
|
|
6.7
|
|
7.2
|
|
Acquisition-related
inventory fair value adjustment
|
|
1.7
|
|
-
|
|
Adjusted segment
earnings
|
|
$
328.7
|
|
$
298.8
|
|
|
|
|
|
|
|
Adjusted segment
margins
|
|
8.5%
|
|
8.3%
|
|
|
|
|
|
|
|
E-Systems
|
|
|
|
|
|
Net sales
|
|
$
1,130.5
|
|
$
1,060.9
|
|
|
|
|
|
|
|
Segment
earnings
|
|
$
164.9
|
|
$
149.8
|
|
Costs related to
restructuring actions
|
|
2.0
|
|
2.9
|
|
Other
|
|
1.2
|
|
1.2
|
|
Adjusted segment
earnings
|
|
$
168.1
|
|
$
153.9
|
|
|
|
|
|
|
|
Adjusted segment
margins
|
|
14.9%
|
|
14.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/lear-reports-record-first-quarter-2017-results-300445617.html
SOURCE Lear Corporation