Lear(LEA) - 2025 Q2 - Quarterly Results

Lear Reports Second Quarter 2025 Results Second Quarter 2025 Financial Highlights Lear reported stable Q2 2025 revenue of $6.0 billion, with slight declines in net income and core operating earnings, and strong free cash flow generation Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $6.0 billion | $6.0 billion | | Net Income | $165 million | $173 million | | Adjusted Net Income | $188 million | $206 million | | Core Operating Earnings | $292 million | $302 million | | EPS | $3.06 | $3.02 | | Adjusted EPS | $3.47 | $3.60 | | Free Cash Flow | $171 million | $170 million | - The company restored its full-year guidance, projecting revenue between $22.47 billion and $23.07 billion, and core operating earnings from $955 million to $1.095 billion[4] - Capital return activities in Q2 included repurchasing $25 million of shares and paying $41 million in dividends[4] - Secured significant new business, including a conquest complete seat program with BMW in Asia, two conquest seat component awards with Ford, and conquest wire business with a global EV automaker[4] Second Quarter Financial Results Analysis Q2 2025 sales remained flat at $6.0 billion year-over-year, with core operating earnings decreasing to $292 million due to lower production volumes - Global vehicle production increased 3% year-over-year, remaining flat on a Lear sales-weighted basis, with North America down 3%, Europe down 2%, and China up 9%[6] - Excluding impacts from commodities, foreign exchange, and tariffs, sales decreased by 1%, attributed to reduced production on key Lear platforms[6] - Core operating earnings were $292 million, or 4.8% of sales, compared to $302 million, or 5.0% of sales, in Q2 2024[7] - Net cash from operating activities was $296 million, and free cash flow was $171 million for the quarter[8] Business Segment Performance In Q2 2025, Seating segment sales grew slightly with marginal margin compression, while E-Systems sales declined with reduced adjusted margins Seating The Seating segment reported Q2 2025 net sales of $4.47 billion, a slight increase, with adjusted margins marginally decreasing to 6.7% Seating Segment Performance (Q2) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Sales | $4,473.9 million | $4,447.0 million | | Adjusted Segment Earnings | $298.9 million | $302.1 million | | Adjusted Segment Margins | 6.7% | 6.8% | Seating Segment Performance (Six Months) | Metric | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Net Sales | $8,625.0 million | $8,924.6 million | | Adjusted Segment Earnings | $578.8 million | $597.0 million | | Adjusted Segment Margins | 6.7% | 6.7% | E-Systems The E-Systems segment's Q2 2025 net sales slightly decreased to $1.56 billion, with adjusted margins contracting to 4.9% E-Systems Segment Performance (Q2) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Sales | $1,556.5 million | $1,565.4 million | | Adjusted Segment Earnings | $75.8 million | $82.2 million | | Adjusted Segment Margins | 4.9% | 5.3% | E-Systems Segment Performance (Six Months) | Metric | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Net Sales | $2,965.7 million | $3,082.4 million | | Adjusted Segment Earnings | $149.6 million | $159.3 million | | Adjusted Segment Margins | 5.0% | 5.2% | Share Repurchase Program In Q2 2025, Lear repurchased $25 million in shares, with $1.0 billion remaining authorized, contributing to a 57% reduction in shares outstanding since 2011 - In Q2 2025, the company repurchased 271,117 shares for a total of $25 million[10] - At the end of Q2, approximately $1.0 billion remained authorized for future share repurchases, representing about 18% of the company's market capitalization[10] - Since 2011, Lear has repurchased 59.6 million shares for $5.6 billion, at an average price of $94.53 per share, reducing total shares outstanding by approximately 57%[11] 2025 Financial Outlook Lear restored its full-year 2025 guidance, projecting net sales between $22.47 billion and $23.07 billion and free cash flow from $420 million to $520 million, assuming a 2% decline in global production Full Year 2025 Financial Outlook | Metric | Guidance Range (in millions) | | :--- | :--- | | Net Sales | $22.47 billion - $23.07 billion | | Core Operating Earnings | $955 million - $1.095 billion | | Adjusted EBITDA | $1.57 billion - $1.71 billion | | Operating Cash Flow | $1.01 billion - $1.11 billion | | Free Cash Flow | $420 million - $520 million | - The guidance assumes global industry production will be 2% lower than in 2024 on a Lear sales-weighted basis[12] - The outlook assumes the continuation of agreements to recover costs associated with new tariffs through the second half of the year[13] Financial Statements and Supplemental Data This section presents detailed unaudited financial statements for Q2 and YTD 2025, including income statements, balance sheets, and supplemental data with GAAP to non-GAAP reconciliations Condensed Consolidated Statements of Income For Q2 2025, net sales were $6.03 billion with net income of $165.2 million, while six-month net sales reached $11.59 billion with $245.9 million in net income Income Statement Summary (Three Months Ended) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Sales | $6,030.4 million | $6,012.4 million | | Net Income Attributable to Lear | $165.2 million | $173.1 million | | Diluted EPS | $3.06 | $3.02 | Income Statement Summary (Six Months Ended) | Metric | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Net Sales | $11,590.7 million | $12,007.0 million | | Net Income Attributable to Lear | $245.9 million | $282.7 million | | Diluted EPS | $4.54 | $4.92 | Condensed Consolidated Balance Sheets As of June 28, 2025, total assets were $15.32 billion, with cash at $887.9 million, total debt around $2.79 billion, and total equity at $5.21 billion Balance Sheet Summary (as of June 28, 2025) | Account | June 28, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $887.9 million | $1,052.9 million | | Total Assets | $15.32 billion | $14.03 billion | | Long-term debt | $2.76 billion | $2.73 billion | | Total Equity | $5.21 billion | $4.60 billion | Consolidated Supplemental Data Q2 2025 supplemental data highlights North America as the largest sales region at $2.52 billion, with free cash flow of $170.8 million, and reconciliations for non-GAAP metrics Net Sales by Region (Q2) | Region | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | North America | $2,519.3 million | $2,552.5 million | | Europe and Africa | $2,163.2 million | $2,171.6 million | | Asia | $1,144.6 million | $1,074.4 million | | South America | $203.3 million | $213.9 million | Free Cash Flow Reconciliation (Q2) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $296.2 million | $291.2 million | | Capital expenditures | ($125.4 million) | ($120.8 million) | | Free cash flow | $170.8 million | $170.4 million | Adjusted Earnings Per Share Reconciliation (Q2) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Diluted net income per share | $3.06 | $3.02 | | Adjusted earnings per share | $3.47 | $3.60 | Other Information Conference Call and Webcast Information Lear will host a conference call and webcast on July 25, 2025, at 9:00 a.m. EDT, to discuss its second quarter 2025 financial results - A conference call and webcast to discuss Q2 2025 results is scheduled for July 25, 2025, at 9:00 a.m. EDT[16] Non-GAAP Financial Information This section defines non-GAAP financial measures like core operating earnings and free cash flow, which management uses to analyze core operating performance - The company uses non-GAAP measures like core operating earnings, adjusted EBITDA, and free cash flow to provide a clearer view of its core operational performance[17][18] - Management states that these non-GAAP measures should not be considered in isolation and may not be comparable to similar measures reported by other companies[19][20] Forward-Looking Statements The press release contains forward-looking statements regarding anticipated financial results, subject to various risks and factors, with sales backlog based on assumptions, not firm orders - The report includes forward-looking statements concerning financial results, which are subject to risks and uncertainties detailed in SEC filings[21] - The company's core sales backlog reflects anticipated net sales from new programs but is not a guarantee of future revenue, as contracts can be terminated and are subject to various assumptions[22]