) posted a 20.0% rise in adjusted earnings per share to $1.62 in
the second quarter of 2013 from $1.35 in the corresponding
quarter last year. With this, earnings beat the Zacks Consensus
Estimate by a significant margin of 27 cents.
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Adjusted net earnings rose only 2.1% to $138.3 million in the
quarter from $135.4 million in the year-ago quarter. The
significant rise in earnings per share compared to a meager rise
in net earnings can be attributable to a year-over-year decrease
in average shares outstanding during the quarter.
Revenues increased 12.2% to $4.1 billion in the reported quarter,
surpassing the Zacks Consensus Estimate of $3.9 million. Global
industry production increased 3% year over year, with an 11% rise
in China and 6% hike in North America. Industry production in
Europe and Africa went up 2% for the first time since the fourth
quarter of 2011.
Revenues from the Seating segment went up 9.9% to $3.1 billion,
driven by higher production on key platforms, addition of new
business and the acquisition of Guilford. Adjusted earnings
declined 3.6% to $178.0 million or 5.8% of sales in the quarter.
The year-over-year fall in earnings was due to changeovers of key
program, partially offset by the increase in sales.
Revenues from Electrical Power Management Systems segment rose
19.8% to $1.0 billion due to addition of new business and higher
production on key platforms. Adjusted earnings surged 71.6% to
$101.4 million or 8.4% of sales in the quarter, driven by
increase in sales and improved operating efficiencies.
Lear initiated an $800 million accelerated share repurchase (ASR)
program and retired 11.9 million shares of its common stock in
the quarter. The new share repurchase program will be completed
by Mar 2014. After the completion of the program, Lear will have
$750 million remaining under its existing share repurchase
authorization, which will expire two years after the completion
of the ASR program.
Since the initiation of the share repurchase program in early
2011, Lear repurchased 27.1 million shares of its common stock.
This represented a reduction of roughly 25% of its shares since
the inception of the program.
Lear had cash and cash equivalents of $841.1 million as of Jun
29, 2013, down from $1.4 billion as of Dec 31, 2012. Long-term
debt rose to $1.06 billion as of Jun 29, 2013 compared with
$626.3 million as of Dec 31, 2012.
In the first six months of 2013, cash flow from operating
activities soared 66.1% to $265.4 million from $159.8 million in
the same period of 2012. Capital expenditure (adjusted) increased
24.7% to $219.3 million compared with $175.9 million a year ago.
These led to a free cash flow of $46.1 million in the 2013-first
half compared with a free cash flow use of $16.1 million in the
In 2013, Lear anticipates revenues of $15.8 billion, up from the
prior range of $15.0 to $15.5 billion. Adjusted net earnings are
expected to be in the range of $440 to $475 million for the year.
Adjusted capital expenditures are estimated to be $450 million
for the year.
Lear anticipates industry vehicle production of 16.2 million
units in North America, up 1% from the prior guidance; 19.2
million units in Europe and Africa, up 1% from the prior outlook;
and 18.7 million units in China, down slightly from the prior
Lear Corporation designs, manufactures, assembles and supplies
automotive seat systems, electrical distribution systems, and
related components primarily to automotive original equipment
manufacturers. The company sells its products chiefly in North
America, South America, Europe, and Asia. The company retains a
Zacks Rank #2 (Buy).
Other stocks that are also performing well in the automotive
components industry include
American Axle & Manufacturing Holdings Inc.
). Visteon and Gentex are Zacks Rank #1 (Strong Buy) stocks while
American Axle & Manufacturing retains a Zacks Rank #2