Lear (LEA) Q1 2025 Earnings Call May 06, 2025 09:00 AM ET Company Participants Timothy Brumbaugh - VP of IRRay Scott - President, CEO & DirectorJason Cardew - Senior VP & CFOJoseph Spak - Managing DirectorJohn Murphy - Managing Director Conference Call Participants Dan Levy - Senior Equity Research AnalystEmmanuel Rosner - Managing Director - Senior Autos & Auto Technology AnalystColin Langan - Automotive & Mobility AnalystItay Michaeli - Equity Analyst Operator Good morning, everyone, and welcome to the Le ...

Lear (LEA) Q1 2025 Earnings Call May 06, 2025 09:00 AM ET Speaker0 Good morning, everyone, and welcome to the Lear Corporation First Quarter twenty twenty five Earnings Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. I would now like to turn the conference call over to Tim Brumbaugh, Vice President, Investor Relations. Please go ahead. Speaker1 Thanks, Jamie. Good mor ...

May 6, 2025 First Quarter 2025 Financial Results Ray Scott, President and CEO Jason Cardew, Senior Vice President and CFO Lear Proprietary: The information contained herein is the property of Lear Corporation. Safe Harbor Statement Forward-Looking Statements This presentation 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," "outloo ...

Financial Performance - Revenue for Q1 2025 was $5.6 billion, a decrease of 7% compared to $6.0 billion in Q1 2024[4] - Net income for Q1 2025 was $81 million, down from $110 million in Q1 2024, with adjusted net income at $169 million compared to $183 million[4] - Core operating earnings were $270 million, representing 4.9% of sales, compared to $280 million or 4.7% of sales in Q1 2024[6] - Earnings per share were $1.49, down from $1.90 in Q1 2024, while adjusted earnings per share were $3.12 compared to $3.18[10] - Total net sales for Q1 2025 were $5,560.3 million, a decrease of 7.2% compared to $5,994.6 million in Q1 2024[29] - North America net sales decreased to $2,248.8 million from $2,475.9 million, representing a decline of 9.2%[29] - Seating segment net sales were $4,151.1 million, down from $4,477.6 million, a decrease of 7.3%[33] - E-Systems segment net sales decreased to $1,409.2 million from $1,517.0 million, a decline of 7.1%[33] Cash Flow and Operating Activities - Net cash used in operating activities was $(128) million, and free cash flow was $(232) million, compared to $(35) million and $(148) million in Q1 2024[10] - Free cash flow for Q1 2025 was $(231.7) million, compared to $(148.2) million in Q1 2024, indicating a worsening cash flow situation[29] Business Operations and Market Conditions - Operating margins increased year-over-year for both Seating and E-Systems segments, with approximately 125 basis points in Seating and approximately 155 basis points in E-Systems[4] - Awarded business in E-Systems totaling over $750 million in average annual sales[4] - Global vehicle production was up 1% year-over-year, with North America down 5%, Europe down 7%, and China up 12%[6] Shareholder Actions - Lear repurchased $25 million of shares during Q1 2025, with a remaining share repurchase authorization of approximately $1.1 billion[11] Financial Outlook - The company did not reaffirm its 2025 financial outlook due to uncertainty in industry production caused by evolving tariff environments[13] Assets and Liabilities - Total assets increased to $14,623.3 million in Q1 2025 from $14,027.5 million in Q4 2024, an increase of 4.3%[27] - Total liabilities and equity also rose to $14,623.3 million in Q1 2025 from $14,027.5 million in Q4 2024, reflecting a 4.3% increase[27] Adjusted Financial Metrics - Adjusted net income for Q1 2025 was $169.3 million, compared to $183.2 million in Q1 2024, a decline of 7.9%[31] - Diluted net income per share available to Lear decreased to $1.49 from $1.90, a drop of 21.6% year-over-year[31] - Core operating earnings for Q1 2025 were $270.4 million, down from $279.8 million in Q1 2024, reflecting a decrease of 5.0%[29]

Core Insights - Lear Corporation reported a solid start to 2025 with improved operational margins in both Seating and E-Systems segments despite lower industry production in key markets [3][4] - The company is facing challenges due to changes in global tariffs, which have created uncertainty in the automotive industry and impacted the cost structure of the supply chain [3][4] - Lear is focused on maintaining long-term competitiveness by managing near-term challenges, winning new business, and investing in automation and restructuring [3][4] Financial Performance - Total sales for Q1 2025 were $5,560.3 million, a decrease of 7% from $5,994.6 million in Q1 2024 [4][5] - Net income for Q1 2025 was $80.7 million, down from $109.6 million in the same period last year [4][5] - Adjusted net income was $169.3 million compared to $183.2 million in Q1 2024, with adjusted earnings per share at $3.12, down from $3.18 [4][5][8] Segment Performance - In the Seating segment, net sales were $4,151.1 million with segment margins of 5.2% and adjusted margins of 6.7% [34][35] - The E-Systems segment reported net sales of $1,409.2 million, with segment margins of 3.9% and adjusted margins of 5.2% [34][35] - Both segments experienced year-over-year margin improvements driven by efficiency gains and restructuring efforts [5][8] Cash Flow and Share Repurchase - Net cash used in operating activities was $(128) million, and free cash flow was $(232) million, compared to $(35) million and $(148) million in Q1 2024, respectively [5][9] - The company repurchased $25 million of shares during the quarter and had a remaining share repurchase authorization of approximately $1.1 billion [11][12] Market Outlook - Due to the uncertainty in industry production caused by evolving tariff environments, Lear is not reaffirming its 2025 financial outlook at this time [13] - The company remains confident in delivering its operating performance commitments as highlighted in previous earnings calls [13]

Company Overview - Lear (LEA) is expected to report earnings for the quarter ended March 2025, with a consensus estimate of $2.61 per share, reflecting a year-over-year decline of 17.9% [3] - Revenues are anticipated to be $5.56 billion, down 7.3% from the same quarter last year [3] Earnings Expectations - The earnings report is scheduled for release on May 6, 2025, and could influence stock movement based on whether actual results exceed or fall short of expectations [2] - The consensus EPS estimate has been revised 5.6% lower in the last 30 days, indicating a reassessment by analysts [4] Earnings Surprise Prediction - The Zacks Earnings ESP for Lear is +0.75%, suggesting a potential positive deviation from the consensus estimate [10][11] - However, Lear currently holds a Zacks Rank of 4 (Sell), complicating the prediction of an earnings beat [11] Historical Performance - In the last reported quarter, Lear exceeded the expected EPS of $2.59 by delivering $2.94, resulting in a surprise of +13.51% [12] - Over the past four quarters, Lear has beaten consensus EPS estimates consistently [13] Industry Context - In the Zacks Automotive - Original Equipment industry, Magna (MGA) is also expected to report earnings of $0.90 per share, down 16.7% year-over-year, with revenues projected at $9.53 billion, a decrease of 13.2% [17] - Magna's consensus EPS estimate has been revised 3.9% lower, but it has a higher Most Accurate Estimate leading to an Earnings ESP of 6.70% [18]

Priced as of April 17, 2025 In this note, we include the latest comp sheet and valuation metrics for global automotive OEMs (page 3), auto parts suppliers (page 5), auto auction service providers (page 13), tire manufacturers (page 14), auto rentals (page 15), and auto dealers (page 16). J P M O R G A N North America Equity Research 21 April 2025 Autos Valuation Comp Sheet Autos & Auto Parts Ryan Brinkman AC (1-212) 622-6581 ryan.j.brinkman@jpmorgan.com Rajat Gupta AC (1-212) 622-6382 rajat.gupta@jpmorgan.c ...

Group 1 - The article discusses the author's long position in shares of MGA, LEA, and ALV, indicating a positive outlook on these companies [1] - It emphasizes the importance of conducting due diligence and research before making any investment decisions, particularly in high-risk trading styles [2] - The article clarifies that past performance does not guarantee future results, and opinions expressed may not reflect the views of Seeking Alpha as a whole [3]

Group 1 - Lear Corporation will participate in a virtual fireside chat on March 18, 2025, during the Wolfe Research Virtual Autos Summit [1] - The webcast will begin at 10:00 AM EDT and will last approximately 40 minutes [1] - Lear Corporation is a global leader in automotive technology, specializing in Seating and E-Systems [2] Group 2 - Lear Corporation is headquartered in Southfield, Michigan, and serves every major automaker globally [2] - The company ranks 174 on the Fortune 500 list [2] - Lear's commitment includes innovation, operational excellence, and sustainability, aiming to enhance in-vehicle experiences [2]

Core Insights - Lear Corporation has appointed Julian Blissett, former Executive Vice President and President of GM China, to its Board of Directors, enhancing its strategic and operational capabilities [1][2] - Blissett brings over 28 years of experience from GM, including significant leadership in China, which is expected to contribute to Lear's growth and success [1] - Lear Corporation is recognized for its operational excellence and innovative strategies in the automotive industry, aiming to enhance in-vehicle experiences globally [2] Company Overview - Lear Corporation is a global leader in automotive technology, specializing in Seating and E-Systems, and serves every major automaker worldwide [2] - The company is headquartered in Southfield, Michigan, and employs a diverse team across 37 countries, focusing on innovation, operational excellence, and sustainability [2] - Lear ranks 174 on the Fortune 500, indicating its significant presence and influence in the automotive sector [2]