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Lear (LEA) Earnings & Revenues Beat Estimates in Q1, Down Y/Y
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Lear Corporation’s (LEA - Free Report) first-quarter 2020 adjusted earnings came in at $2.05 per share, down from the prior-year quarter’s $4. However, the bottom line surpassed the Zacks Consensus Estimate of $1.08. Higher-than-expected adjusted earnings in its Seating segment led to this outperformance.
At the end of first-quarter 2020, adjusted net income was $124 million compared with the prior-year quarter’s $253 million.
In the reported quarter, revenues declined 13.6% year over year to $4,458 million. This downside resulted from lower production amid the coronavirus pandemic and foreign-exchange rate fluctuations, partly offset by the addition of new business. The top line, however, beat the Zacks Consensus Estimate of $4,281 million.
The company’s core operating earnings declined to $205 million from the $378 million reported in first-quarter 2019.
Lear Corporation Price, Consensus and EPS Surprise
In first-quarter 2020, sales in the Seating segment totaled $3,367 million, down 14% year over year. Adjusted segment earnings were $201.3 million compared with the $297.3 million witnessed in the first quarter of 2019. However, it topped the Zacks Consensus Estimate of $227 million in the quarter. Adjusted margin for the Seating segment was 6% of sales.
Sales in the E-Systems segment totaled $1,091.1 million, marking a decline of 12.4% year over year in first-quarter 2020. Adjusted segment earnings amounted to $52.7 million in the quarter compared with the $140.3 million recorded in the first quarter of 2019. Further, the figure missed the consensus mark of $79 million. For the E-Systems segment, adjusted margin was 4.8% of sales.
Dividends & Share Repurchase
During the first quarter, Lear repurchased $70 million of stock. The company also paid cash dividend of 77 cents per common share on Mar 18, 2020.
However, Lear suspended its quarterly dividend for second-quarter 2020 and existing share-repurchase program until further notice on the coronavirus scare.
Lear has also suspended the 2020 guidance as it expects the coronavirus pandemic’s impact to strain its operations in the days to come.
Financial Position
The company had $2,449.1 million of cash and cash equivalents as of Apr 4, 2020, compared with $1,487.7 million recorded as of Dec 31, 2019. It had a long-term debt of $2306.8 million as of Apr 4, 2020, compared with $2,293.7 million recorded as of Dec 31, 2019.
At the end of the first quarter, Lear’s net operating cash inflow was $222.3 million compared with $51.6 million as of Mar 30, 2019. During the period, its capital expenditure amounted to $109.1 million, down from the $122.8 million recorded in the prior-year quarter.
Zacks Rank & Stocks to Consider
Lear currently carries a Zacks Rank #5 (Strong Sell).
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
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Lear (LEA) Earnings & Revenues Beat Estimates in Q1, Down Y/Y
Lear Corporation’s (LEA - Free Report) first-quarter 2020 adjusted earnings came in at $2.05 per share, down from the prior-year quarter’s $4. However, the bottom line surpassed the Zacks Consensus Estimate of $1.08. Higher-than-expected adjusted earnings in its Seating segment led to this outperformance.
At the end of first-quarter 2020, adjusted net income was $124 million compared with the prior-year quarter’s $253 million.
In the reported quarter, revenues declined 13.6% year over year to $4,458 million. This downside resulted from lower production amid the coronavirus pandemic and foreign-exchange rate fluctuations, partly offset by the addition of new business. The top line, however, beat the Zacks Consensus Estimate of $4,281 million.
The company’s core operating earnings declined to $205 million from the $378 million reported in first-quarter 2019.
Lear Corporation Price, Consensus and EPS Surprise
Lear Corporation price-consensus-eps-surprise-chart | Lear Corporation Quote
Segment Performances
In first-quarter 2020, sales in the Seating segment totaled $3,367 million, down 14% year over year. Adjusted segment earnings were $201.3 million compared with the $297.3 million witnessed in the first quarter of 2019. However, it topped the Zacks Consensus Estimate of $227 million in the quarter. Adjusted margin for the Seating segment was 6% of sales.
Sales in the E-Systems segment totaled $1,091.1 million, marking a decline of 12.4% year over year in first-quarter 2020. Adjusted segment earnings amounted to $52.7 million in the quarter compared with the $140.3 million recorded in the first quarter of 2019. Further, the figure missed the consensus mark of $79 million. For the E-Systems segment, adjusted margin was 4.8% of sales.
Dividends & Share Repurchase
During the first quarter, Lear repurchased $70 million of stock. The company also paid cash dividend of 77 cents per common share on Mar 18, 2020.
However, Lear suspended its quarterly dividend for second-quarter 2020 and existing share-repurchase program until further notice on the coronavirus scare.
Lear has also suspended the 2020 guidance as it expects the coronavirus pandemic’s impact to strain its operations in the days to come.
Financial Position
The company had $2,449.1 million of cash and cash equivalents as of Apr 4, 2020, compared with $1,487.7 million recorded as of Dec 31, 2019. It had a long-term debt of $2306.8 million as of Apr 4, 2020, compared with $2,293.7 million recorded as of Dec 31, 2019.
At the end of the first quarter, Lear’s net operating cash inflow was $222.3 million compared with $51.6 million as of Mar 30, 2019. During the period, its capital expenditure amounted to $109.1 million, down from the $122.8 million recorded in the prior-year quarter.
Zacks Rank & Stocks to Consider
Lear currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the same sector are Veoneer, Inc. , Unique Fabricating, Inc. and Modine Manufacturing Company (MOD - Free Report) , each carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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