Lear Corporation (NYSE:LEA) reported upbeat earnings for the third quarter on Friday.The company posted quarterly earnings of $2.79 per share which beat the analyst consensus estimate of $2.73 per share. The company reported quarterly sales of $5.680 billion which beat the analyst consensus estimate of $5.600 billion.Lear raised its FY2025 sales guidance from $22.470 billion-$23.070 billion to $22.850 billion-$23.150 billion.“Lear continued its solid momentum in the third quarter, delivering one of the high ...

Lear Corporation (NYSE:LEA) reported upbeat earnings for the third quarter on Friday.The company posted quarterly earnings of $2.79 per share which beat the analyst consensus estimate of $2.73 per share. The company reported quarterly sales of $5.680 billion which beat the analyst consensus estimate of $5.600 billion.Lear raised its FY2025 sales guidance from $22.470 billion-$23.070 billion to $22.850 billion-$23.150 billion.“Lear continued its solid momentum in the third quarter, delivering one of the high ...

Core Insights - Lear Corporation reported an earnings per share (EPS) of $2.79, exceeding the estimated $2.70, resulting in a positive earnings surprise of +3.72% [1][6] - The EPS of $2.79 represents a slight decrease from the $2.89 reported in the same quarter last year, but the company has consistently surpassed consensus EPS estimates over the past four quarters [2] - Revenue for the quarter ending September 2025 was $5.68 billion, slightly above the Zacks Consensus Estimate of $5.65 billion, and an increase from $5.58 billion reported in the same period last year [3][6] - Lear's operating cash flows for the third quarter were among the highest in its history, and despite disruptions from key customers, the company has raised the midpoint of its full-year free cash flow outlook [4][6] - The stock price of Lear Corporation is currently $102.67, with a market capitalization of approximately $5.46 billion [5] Financial Performance - EPS of $2.79, beating estimates by $0.09, with a positive surprise of +3.72% [1][6] - Revenue of $5.68 billion, slightly above estimates and an increase from the previous year [3][6] - Consistent outperformance in both EPS and revenue estimates over the last four quarters [2][3] Market Position - Strong market position demonstrated by consistent revenue and EPS outperformance [3][6] - High operating cash flows despite challenges from key customers [4][6] - Increased full-year free cash flow outlook indicates operational resilience [4][6]

Financial Data and Key Metrics Changes - Lear Corporation reported revenue of $5.7 billion for Q3 2025, a 2% increase from Q3 2024 [4] - Core operating earnings were $241 million, with an operating margin of 4.2% [4] - Adjusted earnings per share decreased to $2.79 from $2.89 year-over-year [20] - Operating cash flow reached $444 million, significantly up from $183 million in the previous year [20] Business Line Data and Key Metrics Changes - In the Seating segment, sales increased by 3% to $4.2 billion, with adjusted earnings flat at $261 million [20][21] - E-Systems segment sales decreased by 3% to $1.4 billion, with adjusted earnings down to $60 million [22] - The Jaguar Land Rover disruption negatively impacted revenue by $111 million and core operating earnings by $31 million [18][19] Market Data and Key Metrics Changes - Global vehicle production increased by 4%, with North America up 5%, Europe up 1%, and China up 10% [17] - The U.S. dollar weakened against the euro and remained flat against the RMB [17] Company Strategy and Development Direction - Lear's strategic priorities include extending leadership in seating, expanding margins in E-Systems, and supporting sustainable value creation through disciplined capital allocation [5] - The company is focused on automation and digital tools to enhance operational efficiency and reduce costs [15][16] - Lear is well-positioned to benefit from the onshoring trend, which is expected to drive incremental revenue and margin expansion [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth opportunities, particularly in light of the non-recurrence of the Jaguar Land Rover disruption and a strong backlog [30] - The Lear Fellowship program with Palantir is expected to enhance operational efficiency and reduce costs [31] - Management anticipates a healthy backlog for 2026 and 2027, estimating it to be approximately $1.2 billion [37] Other Important Information - Lear's strong cash flow allowed for $100 million in share repurchases during the quarter [29] - The company has a solid balance sheet with no near-term debt maturities and $3 billion in available liquidity [28] Q&A Session Summary Question: Impact of supply chain issues on guidance - Management indicated cautious production volume assumptions for Q4 due to potential risks from Novelis and JLR's production restart [32][34] Question: Backlog and production plans for 2026 - Management confirmed a backlog of approximately $1.2 billion for 2026 and 2027, with positive feedback from customers on automation and digital efforts [36][37] Question: Margin implications of automated manufacturing in the U.S. - Management stated that onshoring opportunities are expected to yield operating margins similar to existing North American seat business, aided by automation [50]

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Financial Performance - Q3 2025 - Sales reached $5.7 billion, a slight increase from $5.6 billion in Q3 2024[11] - Core operating earnings were $241 million, down from $257 million in Q3 2024[11] - Adjusted earnings per share decreased to $2.79 from $2.89 year-over-year[11] - Operating cash flow significantly increased to $444 million compared to $183 million in the same quarter last year[11] Segment Performance - Seating sales were $4.25 billion with adjusted earnings of $261 million, resulting in a 6.14% margin[32] - E-Systems sales were $1.43 billion with adjusted earnings of $60 million, resulting in a 4.20% margin[36] Full Year 2025 Outlook - Net sales are projected to be between $22.85 billion and $23.15 billion[41] - Core operating earnings are expected to be between $995 million and $1.055 billion[41] - The company anticipates generating free cash flow between $475 million and $525 million[41] Market and Currency - Global vehicle production increased by 1% year-over-year, with China showing the strongest growth at 10%[25] - The Euro appreciated against the dollar, increasing 6% from $1.10/€ to $1.17/€[26]

Core Insights - Lear (LEA) reported quarterly earnings of $2.79 per share, exceeding the Zacks Consensus Estimate of $2.69 per share, but down from $2.89 per share a year ago [1] - The earnings surprise for this quarter was +3.72%, following a previous surprise of +7.43% [2] - The company achieved revenues of $5.68 billion for the quarter, surpassing the Zacks Consensus Estimate by 0.09% and up from $5.58 billion year-over-year [3] Earnings Performance - Lear has consistently surpassed consensus EPS estimates over the last four quarters [2] - The current consensus EPS estimate for the upcoming quarter is $2.83, with expected revenues of $5.74 billion, and for the current fiscal year, the estimate is $12.10 on $23.01 billion in revenues [8] Stock Performance and Outlook - Lear shares have increased approximately 9.3% since the beginning of the year, compared to a 16% gain in the S&P 500 [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [7] Industry Context - The Automotive - Original Equipment industry, to which Lear belongs, is currently ranked in the top 37% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [9] - Commercial Vehicle Group (CVGI), another company in the same industry, is expected to report a quarterly loss, indicating potential challenges within the sector [10][11]

Financial Performance - Revenue for Q3 2025 was $5.7 billion, a 2% increase from $5.6 billion in Q3 2024[4] - Net income was $108 million, down from $136 million in Q3 2024, with adjusted net income at $150 million compared to $163 million[4] - Core operating earnings were $241 million, representing 4.2% of sales, down from $257 million or 4.6% of sales in Q3 2024[8] - Net sales for the three months ended September 27, 2025, were $5,679.8 million, an increase of 1.7% compared to $5,584.4 million for the same period in 2024[27] - Consolidated net income attributable to Lear for the three months ended September 27, 2025, was $108.2 million, down 20.4% from $135.8 million in the prior year[27] - Net income attributable to Lear for the nine months ended September 27, 2025, was $354.1 million, down from $418.5 million in the same period of 2024, representing a decrease of approximately 15.4%[39] - Adjusted net income attributable to Lear for the nine months ended September 27, 2025, was $506.9 million, compared to $551.8 million in the prior year, reflecting a decline of about 8.1%[39] - Diluted net income per share attributable to Lear for the three months ended September 27, 2025, was $2.02, down from $2.41 in the same period last year[27] - Diluted net income per share available to Lear common stockholders for the nine months ended September 27, 2025, was $6.56, down from $7.33 in the same period of 2024, a decline of approximately 10.5%[39] - Adjusted earnings per share for the nine months ended September 27, 2025, were $9.39, compared to $9.67 in the prior year, indicating a decrease of about 2.9%[39] Cash Flow and Shareholder Returns - Free cash flow for the quarter was $307 million, significantly up from $51 million in Q3 2024[4] - Operating cash flow for Q3 2025 was the second-highest in Lear's history, at $444 million[4] - Free cash flow for the three months ended September 27, 2025, was $307.0 million, significantly higher than $50.5 million in the same period last year[33] - Lear repurchased $100 million worth of shares during the quarter, with a remaining authorization of approximately $0.9 billion[12] Sales and Market Performance - Global vehicle production increased by 4% year-over-year, with North America up 5% and China up 10%[6] - North America net sales for the three months ended September 27, 2025, were $2,581.0 million, up 7.4% from $2,403.4 million in the prior year[33] - The estimated impact of the JLR cyberattack on sales was a reduction of $111 million for the three months ended September 27, 2025[33] Segment Performance - Total net sales for the Seating segment in the nine months ended September 27, 2025, were $12,874.6 million, a slight decrease from $13,036.4 million in the same period of 2024, indicating a reduction of approximately 1.2%[43] - Adjusted segment earnings for the Seating segment were $839.8 million for the nine months ended September 27, 2025, compared to $858.5 million in the prior year, a decrease of about 2.2%[43] - E-Systems segment net sales for the nine months ended September 27, 2025, were $4,395.9 million, down from $4,555.0 million in the same period of 2024, representing a decline of approximately 3.5%[43] - Adjusted segment earnings for the E-Systems segment were $209.3 million for the nine months ended September 27, 2025, compared to $233.5 million in the prior year, reflecting a decrease of about 10.4%[43] - Segment margins for the Seating segment were 5.6% for the three months ended September 27, 2025, compared to 5.9% in the same period of 2024[41] - Adjusted segment margins for the E-Systems segment were 4.2% for the three months ended September 27, 2025, down from 5.0% in the same period of 2024[41] Outlook and Future Initiatives - The full-year 2025 financial outlook projects net sales between $22.85 billion and $23.15 billion[14] - The company launched the Lear fellowship program with Palantir to enhance digital and AI capabilities[4] Assets and Liabilities - Total assets increased to $15,157.7 million as of September 27, 2025, compared to $14,027.5 million as of December 31, 2024[31] - Total liabilities increased to $9,188.2 million as of September 27, 2025, compared to $9,426.5 million as of December 31, 2024[31] - The weighted average number of diluted shares outstanding decreased to 53.7 million for the three months ended September 27, 2025, from 56.4 million in the same period last year[35]

Core Insights - Lear Corporation reported solid momentum in Q3 2025, achieving one of the highest operating cash flows in its history despite disruptions at key customers [3] - The company increased the midpoint of its full-year free cash flow outlook and noted that without significant lost production at a key customer, it would have raised revenue and operating income forecasts [3] - Strategic investments in automation, digital tools, and restructuring are driving operational excellence and positioning Lear for sustainable margin improvement [3] Financial Performance - Q3 2025 sales reached $5.68 billion, a 2% increase from $5.58 billion in Q3 2024 [4][5] - Net income was $108 million, down from $136 million in the same quarter last year, with adjusted net income at $150 million compared to $163 million in Q3 2024 [5][9] - Earnings per share were $2.02, down from $2.41 in Q3 2024, while adjusted earnings per share were $2.79 compared to $2.89 [5][9] - Core operating earnings were $241 million, or 4.2% of sales, compared to $257 million, or 4.6% of sales in Q3 2024 [8] Cash Flow and Liquidity - Net cash provided by operating activities was $444 million, with free cash flow of $307 million, significantly up from $183 million and $51 million, respectively, in Q3 2024 [5][9] - Cash and cash equivalents totaled $1.0 billion, with total liquidity at $3.0 billion at the end of the quarter [5] Business Segments Performance - Positive operating performance was noted in both Seating and E-Systems segments, with margin improvements of 50 basis points in Seating and 95 basis points in E-Systems [5] - Global vehicle production increased by 4% year-over-year, with North America up 5%, Europe up 1%, and China up 10% [6] Strategic Initiatives - Lear launched the Lear fellowship program with Palantir to enhance its digital and AI capabilities [5] - The company secured $1.1 billion in E-Systems business awards year-to-date and awarded several complete seat programs to key Chinese automakers [5] - Lear achieved recognition in the J.D. Power 2025 U.S. Seat Quality and Satisfaction Study, finishing in the top four more than any other seating competitor for the third consecutive year [5]

Core Viewpoint - Lear Corporation will hold a conference call to discuss its third quarter 2025 financial results on October 31, 2025, at 9:00 a.m. EDT [1]. Group 1: Conference Call Details - The conference call can be accessed using the conference code 4394275 [2]. - A live audio webcast will be available on Lear's Investor Relations website, with a replay accessible two hours after the call [2]. - A slide presentation for the third quarter 2025 will be available on Lear's website prior to the earnings call [2]. Group 2: Company Performance - Lear Corporation achieved seven top-four finishes in the J.D. Power 2025 Seat Quality and Satisfaction Study, leading all automotive suppliers [4].