Lear Posts Record Second Quarter Net Sales of $4.3 Billion
Mich., July 22, 2004 -- Lear Corporation [NYSE: LEA], the world's
largest automotive interior systems supplier, today reported financial
results for the second quarter of 2004 and updated 2004 guidance.
Second Quarter Highlights:
- Posted record net sales of $4.3 billion, up 4% from a year ago
- Reported net income of $1.65 per share, up 7% from a year ago
- Awarded new seat business with Mazda in North America
- Continued to expand the business in China and Korea
- Completed Grote & Hartmann acquisition; integration in process
- Received four World Excellence Awards from Ford Motor Company
For the second quarter of 2004, Lear posted record net sales of $4.3
billion and net income of $116.1 million, or $1.65 per share. These
results compare to net sales of $4.1 billion and net income of $104.1
million, or $1.54 per share, for the second quarter of 2003.
Net sales rose $183 million, or 4%, from the comparable period last
year. The net sales increase reflects primarily the addition of new
business globally and the impact of foreign currency, offset in part by
unfavorable vehicle production mix.
Net income per share of $1.65 in the quarter was a 7% improvement
compared with a year earlier, reflecting the change in net sales as well
as favorable operating performance, partially offset by the impact of
new business development expenses and the costs associated with facility
actions. The current year results also benefited from lower interest
expense and a reduced overall tax rate.
“At Lear, the entire team is focused on delivering the best possible
overall value to our customers and our shareholders," said Bob
Rossiter, Lear Chairman and Chief Executive Officer. “I am pleased that
once again in the second quarter, we were able to post solid financial
results, win new business globally, improve our quality and continue to
satisfy the aggressive requirements of our customers."
Free cash flow was $140.0 million for the second quarter of 2004.
(Net cash provided by operating activities was $255.3 million. A
reconciliation of free cash flow to net cash provided by operating
activities is provided in the supplemental data page.)
During the second quarter, Lear was awarded new seating business with
Mazda in North America. In addition, the Company continued to expand
and grow the business in China and Korea. The Grote & Hartmann
acquisition was completed on July 5, 2004, and the integration is in
Lear received four World Excellence Awards from Ford Motor Company,
including three Gold Awards for excellence in quality, cost and delivery
and a Recognition of Achievement for Six Sigma efforts that improved
Ford customer satisfaction.
Third Quarter and Full Year 2004 Outlook
In the second half, net sales are expected to benefit primarily from
the addition of new business globally and the acquisition of Grote &
Hartmann, offset in part by the mix of vehicle production.
For the third quarter of 2004, net sales are expected to be up about
9% from a year ago, to approximately $3.8 billion. Net income per share
is expected to be in the range of $1.05 to $1.20.
For the full year, net sales are estimated at $16.8 billion, compared
with $15.7 billion in 2003. The full year sales forecast is up $200
million from the prior guidance, reflecting primarily new business wins
in Asia and with Asian automakers globally coming on-line this year.
Lear's 2004 industry production planning assumptions are 16.0 million
units for North America and 18.5 million units for Europe (16.1 million
for Western Europe). Net income per share guidance remains unchanged
in the $5.85 to $6.25 range. Full year capital spending is now
forecasted to be in the high- $300 million range, up from the prior
guidance, reflecting spending for near term programs and strategically
important business development initiatives. Depreciation is expected to
be approximately $375 million. Free cash flow is expected to be in the
low- to mid- $300 million range. Interest expense is expected to be
about $170 million. The second half effective tax rate is expected to be
in the 26 - 27% range.
Lear will webcast its second quarter earnings conference call through
the Investor Relations link at www.lear.com at 9:00 a.m. EDT on July
22, 2004. In addition, the conference call can be accessed by dialing
1-800-789-4751 (domestic) or 1-706-679-3323 (international). The audio
replay will be available two hours following the call at 1-800-642-1687
(domestic) or 1-706-645-9291 (international) and will be available until
August 6, 2004, with a Conference I.D. of 7533508.
Lear Corporation, a FORTUNE 500 company headquartered in Southfield,
Michigan, USA, focuses on integrating complete automotive interiors,
including seat systems, interior trim and electrical systems. With
annual net sales of $15.75 billion in 2003, Lear is the world's largest
automotive interior systems supplier. The Company's world-class
products are designed, engineered and manufactured by more than 110,000
employees. At December 31, 2003, Lear had 289 facilities located in 34
countries. Further information about Lear and its products is available
on the internet at www.lear.com.
Use of 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 news release, the Company has provided information
regarding “free cash flow" (a non GAAP financial measure). Free cash
flow represents net cash provided by operating activities before the net
change in sold accounts receivable, less capital expenditures. The
Company believes it is appropriate to exclude the net change in sold
accounts receivable in the calculation of free cash flow since the sale
of receivables may be viewed as a substitute for borrowing activity.
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 free cash flow for planning
and forecasting in future periods.
Free cash flow should not be considered in isolation or as a
substitute for net income, net cash provided by operating activities or
other 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 thus, does
not reflect funds available for investment or other discretionary uses.
Also, free cash flow, as determined and presented by the Company, may
not be comparable to related or similarly titled measures reported by
For a reconciliation of free cash flow to net cash provided by
operating activities, see the supplemental data page which, together
with this press release, has been posted on the Company's website
through the Investor Relations link at www.lear.com.
Forward Looking Statements
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements regarding anticipated financial results. Actual
results may differ materially from anticipated results as a result of
certain risks and uncertainties, including but not limited to general
economic conditions in the markets in which the Company operates,
including changes in interest rates and fuel prices, fluctuations in the
production of vehicles for which the Company is a supplier, labor
disputes involving the Company or its significant customers or that
otherwise affect the Company, the Company's ability to achieve cost
reductions that offset or exceed customer-mandated selling price
reductions, the impact and timing of program launch costs, the costs and
timing of facility closures or similar actions, increases in warranty
or product liability costs, risks associated with conducting business in
foreign countries, fluctuations in foreign exchange rates, adverse
changes in economic conditions or political instability in the
jurisdictions in which the Company operates, competitive conditions
impacting the Company's key customers, raw material cost and
availability, the Company's ability to successfully integrate the
recently acquired Grote & Hartmann operations, the outcome of legal
or regulatory proceedings, unanticipated changes in free cash flow and
other risks described from time to time in the Company's Securities and
Exchange Commission filings.
In addition, the third quarter and full year 2004 per share earnings
guidance is based on an assumed 70.6 million and 70.5 million shares
outstanding, respectively, and does not reflect the potential dilutive
impact of the Company's outstanding convertible senior notes.
The forward looking statements in this news release are made as of
the date hereof, and the Company does not assume any obligation to
Posted on 7/22/2004