Lear Corporation · NYSE:LEA
Lear — Q1 2004 Earnings Presentation
29 slides from Lear's earnings presentation, Apr 26, 2004
Slide 1: First Quarter 2004 Earnings Review
R First Quarter 2004 Earnings Review April 26, 2004 fast forward world’s leading automotive interior supplier advance relentlessly
Slide 2: Agenda
Agenda I.I. Operating Operating Review Review Jim Jim Vandenberghe, Vandenberghe, Vice Vice Chairman Chairman II. II. Financial Financial Review Review and and Guidance Guidance Dave Dave Wajsgras, Wajsgras, SVP SVP and and CFO CFO III. III. Q Q&&A A 2
Slide 3: Operating Review
LEAR CORPORATION Operating Review
Slide 4: Working Hard to Meet Aggressive Customer Requirements and Deliver Value to Our Shareholders
Operating Review Highlights Economic Economicconditions conditionsand andcustomer customerrequirements requirementsremain remain challenging challenging Achieved Achievedrecord recordfirst firstquarter quarternet netsales salesof of$4.5 $4.5billion billionand and net netincome incomeper pershare sha
Slide 5: Lear On Track Despite Industry Challenges
Operating Review Major Developments European Europeanoperations operationscontinue continueto toimprove improve Grote Grote&&Hartmann Hartmannacquisition acquisitionaagood goodfit fit Commodity Commodityprices pricesmoving movingup up Total TotalInterior InteriorIntegrator IntegratorProgram Programo
Slide 6: European Operations Continue to Improve
Operating Review European Operations Continue to Improve European Content Per Vehicle European Operating Fundamentals $357 $308 First quarter financials $233 $247 improve from prior year first quarter On track for second consecutive year of improvement 2001 2002 2003 1Q04 European Content Per Vehicl
Slide 7: Acquisition Consistent with our Electrical/Electronics Strategy
Operating Review Electrical/Electronics Market Electrical/Electronics Grote & Hartmann** Global Market Opportunity* High quality producer $44 with technical expertise (in billions) $28 Improves overall $18 $25 competitiveness in electrical/electronics market Provides avenue for growth and customer W
Slide 8: 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 Materialcosts costsrepresent representabout abouttwo-thirds two-thirdsof ofsales sales Commodity Commoditycosts costsare aresmall smallportion portionof ofoverall overallmaterial materialcosts costs Key Keyco
Slide 9: GM Total Interior Integrator Program On Track
Operating Review GM Total Interior Integrator Program On Track Total TotalInterior Interiorprototypes prototypeshave havebeen beencompleted completedand andshipped shippedto toGM GM Refining Refiningengineering engineeringdesigns designswith withGM GMto toharmonize harmonizetotal totalinterior inter
Slide 10: Financial Review and Guidance
Financial Review and Guidance 10
Slide 11: Industry Environment – Lear's Major Markets
Financial Review Industry Environment – Lear’s Major Markets Challenging ChallengingAutomotive AutomotiveIndustry IndustryDynamics Dynamics Overcapacity Overcapacity Fierce FierceCompetition Competition Shifts Shiftsin inMarket MarketShare Shareon onaaGlobal GlobalBasis Basis Slow SlowIndustry Indus
Slide 12: Financial Highlights – First Quarter 2004
Financial Review Financial Highlights – First Quarter 2004 (in millions, except net income per share) First First 1Q ‘04 Quarter 2004 Quarter 2003 B/(W) 1Q ‘03 Net NetSales Sales $$ 4,492.1 4,492.1 9 $$ 3,898.7 3,898.7 $$ 593.4 593.4 Income Incomebefore beforeInterest, Interest,Other OtherExpense Ex
Slide 13: 1Q04 vs 1Q03 - Change in Net Sales and Core Operating Earnings
Financial Review 1Q04 vs 1Q03 - Change in Net Sales and Core Operating Earnings Directional DirectionalYear-Over-Year Year-Over-YearImpact Impact (millions) Core CoreOperating Operating Net NetSales Sales Earnings* Earnings* Industry IndustryProduction Production &&Platform PlatformMix Mix neutral n
Slide 14: North American Content Per Vehicle
Financial Review North American Content Per Vehicle North American Factors Impacting Content Per Vehicle (CPV) North American CPV Phase-out of Ford Windstar $596 $589 and GM small car platforms Most of the new business backlog in the first quarter was outside North America Outlook for second quarter
Slide 15: European Content Per Vehicle Continues Upward Trend
Financial Review European Content Per Vehicle European EuropeanCPV CPVofof$357, $357,up up7% 7%from fromaayear yearago ago adjusted adjustedfor forcurrency currency Western WesternEurope EuropeCPV CPVofof$380, $380,up up9% 9%from from2003 2003 adjusted adjustedfor forcurrency currency Euro Euro17% 1
Slide 16: First Quarter Cash Flow
Financial Review First Quarter Cash Flow (in millions) First Quarter 2004 Net NetIncome Income $$ 91 91 Depreciation Depreciation 83 83 Working WorkingCapital Capital//Other Other ((47 47)) Cash Cashfrom fromOperations* Operations* $$ 127 127 Capital CapitalExpenditures Expenditures ((77 77)) Free F
Slide 17: 2004 Production Stable in North America and Europe
2004 Guidance Full Year Vehicle Production Assumptions* North America Europe (in millions) (in millions) Total Europe 18.3 ≈ 18.2 15.9 ≈ 16.0 Western 16.4 ≈ 16.0 Europe 2003 Actual 2004 Guidance 2003 Actual 2004 Guidance Memo: Second Quarter Memo: Second Quarter 4.2 ≈ 4.2 Total Europe 4.8 ≈ 4.7 West
Slide 18: Record Net Sales in 2004 Anticipated
2004 Guidance Second Quarter and Full Year Net Sales* First Second Full Quarter Quarter Year (in billions) ≈ $16.6 2004 Guidance $4.5 ≈ $4.3 $3.9 $4.1 $15.7 2003 $14.4 2002 $3.5 $3.8 Record Net Sales in 2004 Anticipated * Please see slide titled “Forward-Looking Statements” at the end of this presen
Slide 19: Capital Spending and Free Cash Flow
2004 Guidance Capital Spending and Free Cash Flow Capital Spending* Free Cash Flow* (in millions) (in millions) $509 Two Year Average $376 ≈ $350 $350 $300 2003 Actual 2004 Guidance 2003 Actual 2004 Guidance Interest Deprec. $322 ≈ $375 Expense $187 ≈ $170 * Please see slides titled “Use of Non-GAAP
Slide 20: Full Year EPS Guidance Remains Unchanged
2004 Guidance Net Income Per Share** $6.25 $5.55 $5.85 Full Year $4.65* $1.65 to $1.54 $1.55 Second Quarter $1.27 First Quarter $1.01 $1.30 $0.70* 2002 2003 2004 Guidance Full Year EPS Guidance Remains Unchanged * Represents income per share before cumulative effect of a change in accounting princip
Slide 21: Comprehensive Approach to Profitably Growing Our Business
Financial Review Growth Strategy Deliver Deliver record record sales sales backlog backlog Continue Continue to to form form alliances alliances and and joint joint ventures ventures Accelerate Accelerate new new product product innovations innovations Win Win new new total total interior interior i
Slide 22: Grote & Hartmann Acquisition
Financial Review Grote & Hartmann Acquisition Total Totaltransaction transactionvalue: value:$220 $220million million Headquarters: Headquarters:Wuppertal, Wuppertal,Germany; Germany;1,900 1,900employees employees Major Majorproducts: products:terminals terminals&&connectors connectorsand andjunctio
Slide 23: Terminals & Connectors are an Integral Part of a Wire Harness Assembly
Financial Review Wire Harness Composition Average Wire Harness Terminals & Composition Connectors Wire Harness Terminals & Connectors 40% 60% Wiring / Assembly Terminals & Connectors are an Integral Part of a Wire Harness Assembly 23
Slide 24: Summary: Blueprint for Success
Summary Blueprint for Success ¾ Put Our Customers First in Everything We Do Superior ¾ Continually Improve Our Operating Fundamentals Culture ¾ Work Closely Together and ‘Advance Relentlessly’ ¾ World’s Largest & Most Admired Automotive Interior Supplier Superior ¾ Total Interior Integration Capabil
Slide 25: Advance Relentlessly
R ADVANCE RELENTLESSLY™ LEA Listed NYSE www.lear.com
Slide 26: Use of Non-GAAP Financial Information
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 measure
Slide 27: Use of Non-GAAP Financial Information: Core Operating Earnings
Use of Non-GAAP Financial Information Core Operating Earnings (in millions) Three Months 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
Slide 28: Use of Non-GAAP Financial Information: Free Cash Flow
Use of Non-GAAP Financial Information Free Cash Flow (in millions) Three Months Twelve Months 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 acc
Slide 29: Forward-Looking Statements
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 cert