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Lear (LEA - Free Report) reported fourth-quarter 2022 adjusted earnings of $2.81 per share, surging from $1.22 recorded in the year-ago quarter. The bottom line also surpassed the Zacks Consensus Estimate of $2.54 per share. Higher-than-expected earnings across both business segments led to the outperformance.
In the reported quarter, revenues increased 10% year over year to $5,370.9 million. The top line also beat the Zacks Consensus Estimate of $5,226 million.
Lear Corporation Price, Consensus and EPS Surprise
Sales for the Seating segment totaled $4,036.8 million in the reported quarter, reflecting a 10% increase from the year-ago quarter and surpassing the Zacks Consensus Estimate of $3,918 million. Adjusted segmental earnings came in at $275.1 million, up 38.5% from a year ago. The reported figure topped the consensus mark of $263 million. The segment recorded adjusted margins of 6.8% of sales, up from 5.5% in the previous-year quarter.
Sales in the E-Systems segment were $1,334.1 million, up 7.7% year over year. However, the figure lagged behind the consensus mark of $1,337 million. Adjusted segmental earnings amounted to $63.9 million, rising 69.5% from the corresponding quarter of 2021. The metric also beat the consensus mark of $61 million. For the E-Systems segment, the adjusted margin was 4.8% of sales, up from 3% in the year-ago quarter.
Performance by Region
Sales in the North America region increased 18.2% year over year to $2,235.2 million in the quarter and topped the consensus mark of $2,114 million.
Sales in the South America region grew nearly 11.2% year over year to $220.2 million in the quarter. The metric lagged the consensus mark of $241 million.
Sales in the Europe and Africa region increased 13.3% year over year to $1,821.3 million in the quarter, topping the consensus mark of $1,563 million.
Sales in the Asia region fell 7.5% year over year to $1,094.2 million in the quarter, which also lagged the consensus mark of $1,329 million.
Financial Position
The company had $1,114.9 million in cash and cash equivalents at the quarter’s end versus $1,318.3 million recorded as of Dec 31, 2021. Lear had long-term debt of $2,591.2 million at the quarter end, lower than a debt of $2,595.2 million as of 2021-end.
At the fourth quarter-end, net cash provided by operating activities totaled $537 million, a noticeable improvement from the $167 million of cash inflow in the corresponding quarter of 2021. In the reported period, its capital expenditure amounted to $195.3 million, up from $179.6 million. The company registered a free cash flow of $342 million in the quarter under review compared with a negative free cash flow of $13 million in the previous-year quarter.
During the quarter, LEA repurchased 195,897 shares of its common stock for a total of $25.1 million. At the end of the quarter, Lear had a remaining share repurchase authorization of nearly $1.2 billion. In the fourth quarter of 2022, Lear returned $71 million to investors via buybacks and dividends.
2023 Guidance
Lear projects its full-year net sales in the band of $21,200-$22,200 million, up from $20,891 million recorded in 2022. Core operating earnings are envisioned in the range of $875-$1,075 million, implying an uptick from $871 generated in 2022. Operating cash flow is projected within $1,075-$1,225 million. Lear anticipates FCF in the band of $375-$525 million. Capital spending forecast is $700 million. Adjusted EBITDA is envisioned within the range of $1,475-$1,675 million.
Zacks Rank & Key Picks
LEA carries a Zacks Rank #3 (Hold)
A few top-ranked players in the same industry are Wabash (WNC - Free Report) and Byd Co (BYDDY - Free Report) , both sporting a Zacks Rank #1 (Strong Buy).
Wabash is one of the leading manufacturers of semi-trailers in North America. The Zacks Consensus Estimate for WNC’s 2023 earnings implies year-over-year growth of 17.78%.
BYD Company Limited is principally engaged in the research, development, manufacture and distribution of automobiles, secondary rechargeable batteries and mobile phone components. The Zacks Consensus Estimate for BYDDY’s 2023 sales and earnings implies year-over-year growth of 41.83% and 31.77%, respectively.
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Lear (LEA) Q4 Earnings Surpass Estimates, '23 View Upbeat
Lear (LEA - Free Report) reported fourth-quarter 2022 adjusted earnings of $2.81 per share, surging from $1.22 recorded in the year-ago quarter. The bottom line also surpassed the Zacks Consensus Estimate of $2.54 per share. Higher-than-expected earnings across both business segments led to the outperformance.
In the reported quarter, revenues increased 10% year over year to $5,370.9 million. The top line also beat the Zacks Consensus Estimate of $5,226 million.
Lear Corporation Price, Consensus and EPS Surprise
Lear Corporation price-consensus-eps-surprise-chart | Lear Corporation Quote
Segment Performance & Quarter Highlights
Sales for the Seating segment totaled $4,036.8 million in the reported quarter, reflecting a 10% increase from the year-ago quarter and surpassing the Zacks Consensus Estimate of $3,918 million. Adjusted segmental earnings came in at $275.1 million, up 38.5% from a year ago. The reported figure topped the consensus mark of $263 million. The segment recorded adjusted margins of 6.8% of sales, up from 5.5% in the previous-year quarter.
Sales in the E-Systems segment were $1,334.1 million, up 7.7% year over year. However, the figure lagged behind the consensus mark of $1,337 million. Adjusted segmental earnings amounted to $63.9 million, rising 69.5% from the corresponding quarter of 2021. The metric also beat the consensus mark of $61 million. For the E-Systems segment, the adjusted margin was 4.8% of sales, up from 3% in the year-ago quarter.
Performance by Region
Sales in the North America region increased 18.2% year over year to $2,235.2 million in the quarter and topped the consensus mark of $2,114 million.
Sales in the South America region grew nearly 11.2% year over year to $220.2 million in the quarter. The metric lagged the consensus mark of $241 million.
Sales in the Europe and Africa region increased 13.3% year over year to $1,821.3 million in the quarter, topping the consensus mark of $1,563 million.
Sales in the Asia region fell 7.5% year over year to $1,094.2 million in the quarter, which also lagged the consensus mark of $1,329 million.
Financial Position
The company had $1,114.9 million in cash and cash equivalents at the quarter’s end versus $1,318.3 million recorded as of Dec 31, 2021. Lear had long-term debt of $2,591.2 million at the quarter end, lower than a debt of $2,595.2 million as of 2021-end.
At the fourth quarter-end, net cash provided by operating activities totaled $537 million, a noticeable improvement from the $167 million of cash inflow in the corresponding quarter of 2021. In the reported period, its capital expenditure amounted to $195.3 million, up from $179.6 million. The company registered a free cash flow of $342 million in the quarter under review compared with a negative free cash flow of $13 million in the previous-year quarter.
During the quarter, LEA repurchased 195,897 shares of its common stock for a total of $25.1 million. At the end of the quarter, Lear had a remaining share repurchase authorization of nearly $1.2 billion. In the fourth quarter of 2022, Lear returned $71 million to investors via buybacks and dividends.
2023 Guidance
Lear projects its full-year net sales in the band of $21,200-$22,200 million, up from $20,891 million recorded in 2022. Core operating earnings are envisioned in the range of $875-$1,075 million, implying an uptick from $871 generated in 2022. Operating cash flow is projected within $1,075-$1,225 million. Lear anticipates FCF in the band of $375-$525 million. Capital spending forecast is $700 million. Adjusted EBITDA is envisioned within the range of $1,475-$1,675 million.
Zacks Rank & Key Picks
LEA carries a Zacks Rank #3 (Hold)
A few top-ranked players in the same industry are Wabash (WNC - Free Report) and Byd Co (BYDDY - Free Report) , both sporting a Zacks Rank #1 (Strong Buy).
Wabash is one of the leading manufacturers of semi-trailers in North America. The Zacks Consensus Estimate for WNC’s 2023 earnings implies year-over-year growth of 17.78%.
BYD Company Limited is principally engaged in the research, development, manufacture and distribution of automobiles, secondary rechargeable batteries and mobile phone components. The Zacks Consensus Estimate for BYDDY’s 2023 sales and earnings implies year-over-year growth of 41.83% and 31.77%, respectively.
You can see the complete list of today’s Zacks #1 Rank stocks here.