Slide 1: First Quarter 2004 Earnings Review
First Quarter 2004 Earnings Review April 26, 2004 fast forward advance relentlessly world's leading automotive interior supplier R Exhibit 99.2
Slide 2: Agenda
Agenda Operating Review Jim Vandenberghe, Vice Chairman Financial Review and Guidance Dave Wajsgras, SVP and CFO Q & A
Slide 3: Operating Review
Operating Review
Slide 4: Working Hard to Meet Aggressive Customer Requirements and Deliver Value to Our Shareholders
Working Hard to Meet Aggressive Customer Requirements and Deliver Value to Our Shareholders Operating Review Highlights Economic conditions and customer requirements remain challenging Achieved record first quarter net sales of $4.5 billion and net income per share of $1.30 Timing of facility action
Slide 5: Lear On Track Despite Industry Challenges
Lear On Track Despite Industry Challenges Operating Review Major Developments European operations continue to improve Grote & Hartmann acquisition a good fit Commodity prices moving up Total Interior Integrator Program on track; first prototypes delivered to GM
Slide 6: European Operations Continue to Improve
First quarter financials improve from prior year first quarter On track for second consecutive year of improvement European Content Per Vehicle and Operating Fundamentals Improving European Operating Fundamentals 1998 2001 2002 2003 1Q04 TGR 12.4 233 247 308 357 West 30.6 31.6 North 45.9 43.9 Europe
Slide 7: Acquisition Consistent with our Electrical/Electronics Strategy
High quality producer with technical expertise Improves overall competitiveness in electrical/electronics market Provides avenue for growth and customer diversification Acquisition Consistent with our Electrical/Electronics Strategy Grote & Hartmann** 1998 Wire Harness/Terminals & Connectors Add Bod
Slide 8: Higher Raw Material Prices Not Expected to Impact Full Year Net Income Per Share
Higher Raw Material Prices Not Expected to Impact Full Year Net Income Per Share Guidance Operating Review Higher Commodity Prices Not Expected to be a Major Issue for Lear Material costs represent about two-thirds of sales Commodity costs are small portion of overall material costs Key commodities
Slide 9: Lear Working in Close Partnership with GM to Deliver World Class Interiors
Lear Working in Close Partnership with GM to Deliver "World Class" Interiors for Next Generation Large and Luxury Vehicles Operating Review GM Total Interior Integrator Program On Track Total Interior prototypes have been completed and shipped to GM Refining engineering designs with GM to harmonize
Slide 10: Financial Review and Guidance
Financial Review and Guidance
Slide 11: Industry Environment - Lear's Major Markets Challenging
Financial Review Industry Environment - Lear's Major Markets Challenging Automotive Industry Dynamics Overcapacity Fierce Competition Shifts in Market Share on a Global Basis Slow Industry Growth Combined With Uncertain Demand Outlook, Has Resulted In: Pricing Environment - Consumers in the 'Driver'
Slide 12: Financial Highlights - First Quarter 2004
Net Sales $ 4,492.1 $ 3,898.7 $ 593.4 Income before Interest, Other Expense & Income Taxes (core operating earnings)* $ 179.2 $ 161.9 $ 17.3 Margin 4.0 % 4.2 % ( 0.2 )pts Net Income $ 91.4 $ 67.9 $ 23.5 Net Income Per Share $ 1.30 $ 1.01 $ 0.29 SG&A % of Net Sales 3.7 % 3.8 % 0.1 pts Interest Expens
Slide 13: 1Q04 vs 1Q03 - Change in Net Sales and Core Operating Earnings
Directional Year-Over-Year Impact Core Operating Net Sales Earnings* Industry Production & Platform Mix neutral neutral Foreign Exchange positive positive Global New Business positive positive Operating Efficiencies positive All Other Factors negative Total Change $ 593 $ 17 Financial Review 1Q04 vs
Slide 14: North American Content Per Vehicle
Phase-out of Ford Windstar and GM small car platforms Most of the new business backlog in the first quarter was outside North America Outlook for second quarter and 2004 North American CPV down year-over-year 2005 New Business Backlog Expected to Support North American CPV Improvement Factors Impact
Slide 15: European Content Per Vehicle Continues Upward Trend
Financial Review European Content Per Vehicle European Content Per Vehicle Continues Upward Trend European CPV of $357, up 7% from a year ago adjusted for currency Western Europe CPV of $380, up 9% from 2003 adjusted for currency Euro 17% stronger than a year ago
Slide 16: First Quarter Cash Flow
Net Income $ 91 Depreciation 83 Working Capital / Other ( 47 ) Cash from Operations* $ 127 Capital Expenditures ( 77 ) Free Cash Flow $ 50 First Quarter 2004 * Cash from Operations represents net cash provided by operating activities ($56.8 for first quarter 2004) before net change in sold accounts
Slide 17: 2004 Production Stable in North America and Europe
North America (in millions) 2004 Production Stable in North America and Europe 2004 Guidance Full Year Vehicle Production Assumptions* 2003 Actual 2004 Guidance 3rd Qtr 4th Qtr East 15.9 16 90 20.4 West 34.6 31.6 North 45 43.9 2003 Actual 2004 Guidance 3rd Qtr 4th Qtr East 16.4 16 90 20.4 West 1.9 2
Slide 18: Record Net Sales in 2004
2004 Guidance Second Quarter and Full Year Net Sales* Record Net Sales in 2004 Anticipated 2002 2003 2004 Guidance East 3.5 3.9 4.3 West 3.8 4.1 4.5 North 7.1 7.7 7.4 (in billions) ^ $16.6 $15.7 $3.5 Please see slide titled "Forward-Looking Statements" at the end of this presentation for further inf
Slide 19: Capital Spending and Free Cash Flow
Capital Spending* (in millions) 2004 Guidance Capital Spending and Free Cash Flow 2003 Actual 2004 Guidance 3rd Qtr 4th Qtr East 376 350 90 20.4 West 34.6 31.6 North 45.9 46.9 45 43.9 2003 Actual 2004 Guidance 3rd Qtr 4th Qtr East 509 300 90 20.4 West 50 34.6 31.6 North 45.9 46.9 45 43.9 $376 $509 ^
Slide 20: Full Year EPS Guidance Remains Unchanged
2004 Guidance Net Income Per Share** Full Year EPS Guidance Remains Unchanged 2002 2003 2004 Guidance Net Sales 0.7 1.01 1.3 Increase in Net Sales 1.27 1.54 1.6 2.68 3 2.72 0.4 $0.70* $1.01 $4.65* $5.55 $5.85 $6.25 First Quarter Full Year * Represents income per share before cumulative effect of a c
Slide 21: Comprehensive Approach to Profitably Growing Our Business
Comprehensive Approach to Profitably Growing Our Business Financial Review Growth Strategy Deliver record sales backlog Continue to form alliances and joint ventures Accelerate new product innovations Win new total interior integrator programs Pursue strategic acquisitions
Slide 22: Grote & Hartmann Acquisition
Financial Review Grote & Hartmann Acquisition Total transaction value: $220 million Headquarters: Wuppertal, Germany; 1,900 employees Major products: terminals & connectors and junction boxes ^ $275 million in revenue, with about 75% in Europe Major customers: VW, BMW, Ford, Opel, DCX, Renault, MAN
Slide 23: Terminals & Connectors are an Integral Part of a Wire Harness Assembly
Wire Harness Terminals & Connectors Terminals & Connectors are an Integral Part of a Wire Harness Assembly Financial Review Wire Harness Composition US/Canada ROW Europe East 0.66 0.1 0.34 Average Wire Harness Composition Wiring / Assembly Terminals & Connectors 40% 60%
Slide 24: Summary Blueprint for Success
Summary Blueprint for Success Superior Culture Superior Organizational Capability Superior Competitive Advantage Put Our Customers First in Everything We Do Continually Improve Our Operating Fundamentals Work Closely Together and 'Advance Relentlessly' World's Largest & Most Admired Automotive Inter
Slide 25: Advance Relentlessly
ADVANCE RELENTLESSLY(tm) www.lear.com LEA NYSE Listed R
Slide 26: Use of Non-GAAP Financial Information
In addition to the results reported in accordance with accounting principles generally accepted in the United States ("GAAP") included throughout this presentation, the Company has provided information regarding certain non-GAAP financial measures. These measures include "income before interest, oth
Slide 27: Core Operating Earnings
Q1 2004 Q1 2003 Income before interest, other expense and income taxes Income before income taxes $ 126.0 $ 97.0 Interest expense 39.1 52.4 Other expense, net 14.1 12.5 Income before interest, other expense and income taxes $ 179.2 $ 161.9 (core operating earnings) Three Months (in millions) Use of
Slide 28: Free Cash Flow
Q1 2004 2003 Free cash flow Net cash provided by operating activities $ 56.8 $ 586.3 Net change in sold accounts receivable 70.4 298.1 Net cash provided by operating activities before net change in sold accounts receivable 127.2 884.4 Capital expenditures ( 77.3 ) ( 375.6 ) Free cash flow $ 49.9 $ 5
Slide 29: Forward-Looking Statements
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated financial results. Actual results may differ materially from anticipated results as a result of certain risks and uncertainties