
SOUTHFIELD — The Southfield auto parts supplier Lear Corp. (NYSE: LEA) reported net income of $149 million or $1.81 a share in the second fiscal quarer ended June 28, up from $137 million or $1.60 a share in the same fiscal quarter of the previous year, which ended June 29, 2013.
Sales were $4.59 billion, up from $4.11 billion a year earlier.
For the six months, net income was $271 million or $3.28 a share, up from $246 million or $2.71 a share in the first half of 2013. Sales for the first half were $8.94 billion, up from $8.06 billion a year earlier.
“In the second quarter, we continued our positive momentum with record financial results,” said Matt Simoncini, Lear’s president and CEO. “Our record performance in the quarter reflects the investments that we have made in improving our cost structure and expanding our component capabilities globally. We are well positioned to take advantage of industry trends toward global vehicle platforms, direct component sourcing and increasing electrical content.”
In the second quarter, global vehicle production increased 3 percent from a year ago, reflecting production increases in each of the three largest automotive markets in the world. Production was up 12 percent in China, 4 percent in North America and 2 percent in Europe and Africa. Production was down 25 percent in South America.
In the seating segment, sales were up 12 percent to a record $3.4 billion, reflecting the addition of new business and higher production on key platforms. Adjusted segment earnings were $197 million or 5.7 percent of sales. Earnings increased 10 percent from last year, primarily reflecting the increase in sales and favorable operating performance.
Sales in the electrical segment grew by 9 percent to a record $1.1 billion, driven primarily by the addition of new business. Adjusted segment earnings were a record $143 million or 12.5 percent of sales, the 19th consecutive quarter of year-over-year margin improvement. Earnings increased 41 percent from last year, reflecting favorable operating performance, as well as the increase in sales.
Net free cash flow for the quarter was $137 million, and net cash provided by operating activities was $229 million.
During the second quarter of 2014, Lear repurchased 1.2 million shares of its common stock for a total of $101 million. As of June 28, Lear had a remaining share repurchase authorization of $594 million, which expires in April 2016 and reflects about 8 percent of Lear’s total market capitalization at current market prices.
Since initiating the share repurchase program in early 2011, Lear has repurchased 28.2 million shares of its common stock at a cost of $1.7 billion. This represents a reduction of approximately 25 percent of shares outstanding.
Lear also increased its full year 2014 financial outlook for sales, core operating earnings and free cash flow. Sales in 2014 are expected to be in the range of $17.6 billion to $17.9 billion, up from the prior range of $17.2 billion to $17.7 billion. Core operating earnings are expected to be in the range of $975 million to $1.03 billion, up from the prior range of $935 million to $985 million. Free cash flow is expected to be in the range of $400 million to $450 million, up $25 million from the prior outlook.
Pretax income before restructuring costs and other special items is estimated to be in the range of $910 million to $960 million. Tax expense, excluding the impact of restructuring costs and other special items, is expected to be in the range of $270 to $285 million. Adjusted net income attributable to Lear is expected to be in the range of $610 million to $645 million.
Pretax operational restructuring costs are expected to be approximately $90 million, up $25 million from the prior outlook, reflecting plant consolidations in Europe and other actions. The outlook for capital spending and depreciation and amortization expense is unchanged at approximately $450 million and $310 million, respectively.
To listen to a replay of the management call discussing these results, call (855) 859-2056 in the United States or (404) 537-3406 elsewhere and use the conference ID 62876056.
More at www.lear.com.