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Lear (LEA) Q4 Earnings and Sales Trump Estimates, Up Y/Y

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Zacks Equity Research
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Lear Corporation’s LEA fourth-quarter 2020 adjusted earnings came in at $3.66 per share, surpassing the Zacks Consensus Estimate of $3.37. Higher-than-expected revenues from both the company’s segments led to the outperformance. It recorded earnings of $2.64 per share in fourth-quarter 2019. For the reported quarter, revenues increased 8.3% year over year to $5,243.2 million. The top line also beat the Zacks Consensus Estimate of $5,014 million.

Lear Corporation Price, Consensus and EPS Surprise

Lear Corporation Price, Consensus and EPS Surprise
Lear Corporation Price, Consensus and EPS Surprise

Lear Corporation price-consensus-eps-surprise-chart | Lear Corporation Quote

Segment Performances

Sales in the Seating segment totaled $3,899.6 million for fourth-quarter 2020, reflecting an increase from the year-ago quarter’s $3,629.1 million. Moreover, the metric surpassed the Zacks Consensus Estimate of $3,659 million. Adjusted segmental earnings came in at $295.2 million, higher than $212.7 million recorded in the fourth quarter of 2019. The segment recorded adjusted margins of 7.6% of sales.

Sales in the E-Systems segment summed $1,343.6 million, up 13% year over year. The figure also topped the consensus mark of $1,244 million. Adjusted segmental earnings amounted to $102.6 million, higher than $91.9 million recorded in the year-ago quarter. For the E-Systems segment, adjusted margin was 7.6% of sales.

Financial Position

The company had $1,306.7 million of cash and cash equivalents as of Dec 31, 2020 compared with $1,487.7 million recorded in the corresponding period of 2019. It had a long-term debt of $2,300.3 million as of Dec 31, 2020 compared with $2,293.7 million recorded in the comparable period of 2019.

At third quarter-end, net cash provided by operating activities totaled $400.8 million, down from $485 million generated in the year-ago quarter. For the reported period, its capital expenditure amounted to $167 million, down from $193.8 million in the prior-year quarter. Free cash flow (FCF) came in at $233.8 million, lower than $291.2 million generated in the corresponding period of 2019.

2021 Guidance

Full-year net sales are expected between $19.8 billion and $20.8 billion. Core operating earnings are forecast in the band of $1,130-$1,300 million. Capital spending is anticipated to be $600 million. FCF is envisioned in the range of $550-$700 million. Lear — whose peers include Magna International MGA, Adient PLC ADNT and American Axle and Manufacturing AXL — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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