Slide 1: Fourth Quarter and Full Year 2004 Results and First Quarter 2005 Guidance
fast forward advance relentlessly world's leading automotive interior supplier R Fourth Quarter and Full Year 2004 Results and First Quarter 2005 Guidance January 26, 2005 Exhibit 99.2
Slide 2: Agenda
Agenda Company Review Jim Vandenberghe, Vice Chairman Financial Review and First Quarter 2005 Guidance Dave Wajsgras, SVP and CFO Q & A
Slide 3: Company Review
Company Review
Slide 4: Highlights - Full Year 2004
Highlights - Full Year 2004 Record net sales of $17.0 billion, up 8% from 2003 Net income of $5.77 per share, up 9% from 2003 (see note below) Expanded infrastructure in Asia; grew sales with Asian automakers Increased low-cost country manufacturing and engineering capability Used cash flow to fund
Slide 5: Shareholder Value Scorecard
Shareholder Value Scorecard Invest in high return programs Awarded significant new business Increased revenue in Asia Pursue strategic acquisitions Acquired terminals & connectors business Continued to grow joint ventures Return cash to shareholders Paid first-ever dividend Repurchased 1.8 million s
Slide 6: Steadily increased net sales over the last ten years to $17 billion in 2004
Steadily increased net sales over the last ten years to $17 billion in 2004 Transformed from a seat assembly operation to one of the world's largest automotive interior systems suppliers 129 ranking and 23rd fastest growing company over the last ten years among the Fortune 500 1994 1995 1996 1997 19
Slide 7: Perspective On 2005 Operating Environment
Industry Production North America Neutral to improving, depending down 5%, reflecting on consumer demand inventory correction; Europe also down Platform Mix Very adverse Moderately adverse Raw Material Impact Adverse Negative impact moderates as cost offsets are implemented and negotiations conclude
Slide 8: Sales Backlog Supports Continued Growth
2005 backlog up $150 million from last year on a comparable basis Three-year backlog up $750 million from last year on a comparable basis Upside opportunity in 2007 from open sourcing Sales Backlog* (in millions) Sales Backlog Supports Continued Growth 2004 2005 2006 2007 2008 East 750 1550 1350 900
Slide 9: Net Debt/Capital Continuing to Strengthen Financial Position
1999* 2000 2001 2002 2003 2004 Net Debt 3.4 Debt/Cap 0.7 0.65 0.63 0.58 0.458 0.42 North 45.9 46.9 45 43.9 Net Debt*/Capital Continuing to Strengthen Financial Position * Net debt represents total debt plus utilization of our ABS facility, less cash and cash equivalents. Please see slides titled "Us
Slide 10: Financial Review and First Quarter 2005 Guidance
Financial Review and First Quarter 2005 Guidance
Slide 11: Challenging Fourth Quarter Production Environment
Challenging Fourth Quarter Production Environment Industry Production In Major Markets Down; Euro Continues To Be Strong North America Industry production down 2% Big Three down 5% Europe Industry production down 2% Key Lear platforms had double-digit declines Euro 9% stronger than a year ago
Slide 12: Financial Highlights - Fourth Quarter 2004
Fourth Quarter 2004 Fourth Quarter 2003 Record 4Q '04 B/(W) 4Q '03 (in millions, except net income per share) Financial Highlights - Fourth Quarter 2004 * Income before income taxes for the fourth quarter 2004 and 2003 was $159.5 and $182.8, respectively. Please see slides titled "Use of Non-GAAP Fi
Slide 13: 4Q04 vs. 4Q03 Change in Net Sales and Core Operating Earnings
4Q04 vs. 4Q03 Change in Net Sales and Core Operating Earnings Net Sales (up $31 million) Addition of new business globally Impact of foreign exchange, primarily stronger Euro Acquisitions offset in part by Global vehicle production and platform mix Core Operating Earnings* (down $19 million) Global
Slide 14: Fourth Quarter and Full Year Free Cash Flow
Net Income $ 123 $ 422 Depreciation / Amortization 97 355 Working Capital / Other 12 (31) Cash from Operations* $ 232 $ 746 Capital Expenditures ( 145 ) ( 429 ) Free Cash Flow $ 87 $ 317 Three Months Twelve Months Fourth Quarter and Full Year Free Cash Flow* (in millions) * Cash from Operations repr
Slide 15: 2005 Outlook Vehicle Production Assumptions
North America (in millions) First Quarter 2005 Production Down In Both North America And Europe 2005 Outlook Vehicle Production Assumptions* 2004 Actual 2005 Forecast 3rd Qtr 4th Qtr 4.1 4.2 East 11.6 11.6 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 2004 Actual 2005 Forecast 3rd Qtr 4th
Slide 16: 2005 Outlook Net Sales
2005 Outlook Net Sales* 2005 Net Sales Increase Reflects Strong Backlog (in billions) Please see slide titled "Forward-Looking Statements" at the end of this presentation. 2003 2004 2005 Guidance East 3.9 4.5 4.7 West 11.8 12.6 12.9 North 1 $17.0 $15.7 First Quarter Full Year ^ $17.6 - $18.0 ^ $4.3
Slide 17: 2005 Outlook Net Income Per Share
2005 Outlook Net Income Per Share* 2004 Reported 2005 Guidance East 1.4 1.4 1 West 4.37 4.17 4.3 North 1.2 $5.77 (see note below) First Quarter Full Year ^ $5.00 - $6.00 $0.50 - $0.70 $1.24 Production levels and platform mix Impact on supply chain from sustained high level of raw material prices Cus
Slide 18: 2005 Full Year Financial Guidance
Free Cash Flow $250 million Interest Expense $170 - $175 million Tax Rate 25% - 27% Depreciation $400 - $425 million Capital Expenditures $425 - $475 million Euro $1.25 - $1.35 / Euro Other 2005 Full Year Financial Guidance* * Please see slides titled "Use of Non-GAAP Financial Information" and "For
Slide 19: Three-Year Sales Backlog
Seating Systems Electronics Interior Systems East 0.49 0.33 0.18 Three-Year Sales Backlog North America - 58% Backlog By Region Backlog By Product North America Europe Asia East 0.58 0.34 0.08 Europe - 34% Asia - 8% Seats - 49% Interiors - 33% Electronics/ Electrical - 18%
Slide 20: Alternative Uses of Cash Flow While Maintaining a Strong Balance Sheet
Alternative Uses of Cash Flow. . . .. . . While Maintaining a Strong Balance Sheet 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 25 25 25 25 Invest internally in high return programs Pursue strategic acquisitions Dividends Repurchase shares Where We See Value Creation
Slide 21: Summary
Summary Despite a more challenging environment, 2004 was a solid year Challenges continue in 2005, with most significant negative impact on the first quarter Dividend increase reflects management's confidence in the long term outlook of the Company Lear Has A Balanced, Long-Term Approach To Creating
Slide 22: ADVANCE RELENTLESSLY
ADVANCE RELENTLESSLY(tm) www.lear.com LEA NYSE Listed R
Slide 23: 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 24: Core Operating Earnings
Q4 2004 Q4 2003 Income before interest, other expense and income taxes Income before income taxes $ 159.5 $ 182.8 Interest expense 43.9 41.9 Other expense, net 13.8 11.4 Income before interest, other expense and income taxes $ 217.2 $ 236.1 (core operating earnings) Three Months (in millions) Use of
Slide 25: Free Cash Flow
Q4 2004 2004 Free cash flow Net cash provided by operating activities $ 231.9 $ 675.9 Net change in sold accounts receivable - 70.4 Net cash provided by operating activities before net change in sold accounts receivable 231.9 746.3 Capital expenditures ( 145.3 ) ( 429.0 ) Free cash flow $ 86.6 $ 317
Slide 26: Net Debt
(in millions) Net debt Short-term borrowings $ 35.4 $ 17.1 $ 37.3 $ 63.2 $ 72.4 Current portion of long-term debt 632.8 4.0 3.9 129.5 155.6 Long-term debt 1,866.9 2,057.2 2,132.8 2,293.9 2,852.1 Total debt 2,535.1 2,078.3 2,174.0 2,486.6 3,080.1 Cash and cash equivalents ( 584.9 ) ( 169.3 ) ( 91.7 )
Slide 27: 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