Slide 1: Second-Quarter Results and Full-Year 2006 Financial Guidance
Exhibit 99.2 R Second-Quarter Results and Full-Year 2006 Financial Guidance July 28, 2006 fast forward advance relentlessly 1
Slide 2: Agenda
Agenda Financial Review Jim Vandenberghe, Vice Chairman and CFO Operating Review Doug DelGrosso, President and COO Summary and Outlook Bob Rossiter, Chairman and CEO Q and A Session 2
Slide 3: Financial Review
Financial Review 3
Slide 4: Second Quarter 2006 Highlights
Second Quarter 2006 Highlights Second-quarter financial results showed year-over-year improvement; full year earnings guidance unchanged* Signed definitive agreement to contribute European Interiors business to JV with WL Ross & Co. LLC in return for a 34% stake (subject to adjustment); Lear will re
Slide 5: Second Quarter 2006 Industry Environment
Second Quarter 2006 Industry Environment Second Quarter Second Quarter 2006 2006 vs. 2005 North America Production Industry 4.1 mil Down 1% Big Three 2.9 mil Down 1% Lear's Top 15 Platforms 1.4 mil Down 2% Europe Production Industry 5.0 mil Down 4% Lear's Top 5 Customers 2.5 mil Down 2% Euro $1.25 /
Slide 6: Second Quarter 2006 Financial Summary
Second Quarter 2006 Financial Summary* Second Second 2Q '06 (in millions, except net income per share) Quarter 2006 Quarter 2005 B/(W) 2Q '05 Net Sales $4,810.2 $4,419.3 $390.9 Income Before Interest, Other Expense and Income Taxes* $110.3 $30.0 $80.3 Margin 2.3% 0.7% 1.6 pts. Pretax Income (Loss) $
Slide 7: Second Quarter 2006 Restructuring and Special Items
Second Quarter 2006 Restructuring and Special Items Second Quarter Income Before Memo: Interest, Other Pretax Expense and Income (in millions) Income Taxes* (Loss) Income Statement Category Other COGS SG&A (Income) 2006 Reported Results $ 110.3 $ 31.5 Reported results include the following items: Co
Slide 8: Net Sales Changes and Margin Impact Versus Prior Year
Second Quarter 2006 Net Sales Changes and Margin Impact Versus Prior Year Net Sales Margin Performance Factor Change Impact Comments (millions) Industry Production / $ (280) Negative Primarily unfavorable platform mix, Platform Mix / Net Pricing reflecting lower pickup truck and mid-size SUV product
Slide 9: Second Quarter 2006 Segment Results
Second Quarter 2006 Segment Results 2Q '06 2Q '05 Comments Seating Net Sales $ 3,096.1 $ 2,879.9 • Strong new business globally Segment Earnings* $ 171.5 $ 48.5 • Improved Asian profitability % of Sales 5.5 % 1.7 % • Net cost improvements Adjusted % of Sales** 5.7 % 3.2 % Electronic and Electrical N
Slide 10: Second Quarter 2006 Free Cash Flow
Second Quarter 2006 Free Cash Flow* (in millions) Second Quarter 2006 Net Loss $ (6.4) Depreciation / Amortization 103.5 Working Capital / Other (4.2) Cash from Operations $ 92.9 Capital Expenditures (92.1) Free Cash Flow $ 0.8 * Free Cash Flow represents net cash provided by operating activities ($
Slide 11: 2006 Guidance Key Assumptions
2006 Guidance Key Assumptions* 2006 Guidance 2006 vs. 2005 North America Production Industry ˜ 15.7 mil down slightly Lear's Top 15 Platforms ˜ 5.0 mil down about 5% Lear Launches high down from 2005 peak Europe Production Industry ˜ 19.0 mil about flat Lear's Top 5 Customers ˜ 9.5 mil about flat Le
Slide 12: Key Factors Impacting Our Second Half Outlook
2006 Guidance Key Factors Impacting Our Second Half Outlook North American production turns less favorable: Industry forecast to be down 3% (vs. 2% increase in first half) Lear’s top 15 platforms expected to be down 7% (vs. 2% decline in first half) European production environment unchanged Raw mate
Slide 13: 2006 Guidance Key Financial Projections
2006 Guidance Key Financial Projections* (in millions) 2005 2006 Guidance Net Sales $17,089 ˜ $18,000 Core Operating Earnings $325 $400 - 440 Income before interest, other expense, income taxes, impairments, restructuring costs and other special items Interest Expense $183 $220 - 230 Pretax Income $
Slide 14: 2006 Guidance Capital Spending Forecast
2006 Guidance Capital Spending Forecast* (in millions) $568 Capital Spending Impacts: More moderate launch ~ $400 schedule in 2006 Spending for common architecture strategy, such as Lear Flexible Seating, largely in place Low-cost country spending moderates Memo: Depreciation and Amortization $ 393
Slide 15: 2006 Guidance Free Cash Flow Forecast
2006 Guidance Free Cash Flow Forecast* (in millions) Cash Flow Drivers: Higher earnings Lower capital spending Reduced tooling and engineering Improved net working capital 2005 2006 Guidance Net cash provided by operating activities for 2005 was $561 million. Please see slides titled “Use of Non-GAA
Slide 16: Strategy For Interior Segment
2006 Guidance Strategy For Interior Segment* Signed Definitive Agreement to Contribute Substantially all of Lear’s European Interior Business to International Automotive Components Group, LLC in Return for a 34% Stake: Creates a large [20 manufacturing facilities in 9 countries, with $1.2 billion in
Slide 17: Operating Review
Operating Review 17
Slide 18: Operating Priorities
Operating Priorities Customer Focus Superior Quality and Service Competitiveness / Operational Excellence Global Restructuring Actions Competitive Global Footprint Efficient Launch Execution Sales Growth and Customer Diversification Innovation and Technology New Asian Business 18
Slide 19: Maintain Quality and Customer Service Momentum
Operating Priorities Maintain Quality and Customer Service Momentum Customer General Motors--Supplier of the Year for Seating Systems (Global) Ford Motor Company--Special Recognition for Customer Service (Global) --Special Recognition for Design Engagement (Europe) Toyota--Superior Logistics Perform
Slide 20: Continue to be a Leader in Seat Quality
Operating Priorities Continue to be a Leader in Seat Quality Things Gone Wrong (TGW) Lear’s 2006 J.D. Power Results per 100 vehicles Same Excellent Performance in TGW 35% improvement since 1999 Lear leads in 2 out of 5 Major Vehicle Segments for Best Quality Seats: Best Light Truck Seat Quality-- Fo
Slide 21: Implement Restructuring Actions
Operating Priorities Implement Restructuring Actions* 2006 Cost and Cash Impact Cumulative Actions (in millions) Pretax Announced closure of nine Cost Cash manufacturing facilities and several administrative offices First Quarter $ 25 $ 25 Targeting closure of five to Second Quarter 15 17 seven addi
Slide 22: Competitive Global Footprint
Operating Priorities Competitive Global Footprint Legend for Product Examples Wire Harness……WH Trim Cover……….TC Eastern Europe Interior Trim………IT Czech Republic [ WH, IT] Estonia Hungary [ WH, TC] Poland [ WH, TC, IT] Romania [ WH] Russia Asia Slovakia [ IT] China [ WH, TC, IT] Slovenia India [ IT]
Slide 23: Efficiently Manage Product Launch Schedule
Operating Priorities Efficiently Manage Product Launch Schedule % of North American Sales on Platforms Undergoing Changeover to New Models Global Launch Activity Peaked In 2005, As Half Of Our North American Sales Were Undergoing Changeover 23
Slide 24: Driving Innovation and Technology
Operating Priorities Driving Innovation and Technology Launched New Core Dimension Product Strategy and Advertising Campaign Opened New Global Innovation and Technology Center in Southfield, MI 24
Slide 25: Innovative Product Solutions--Car2U
Operating Priorities Innovative Product Solutions--Car2UTM Two-Way Remote Keyless Entry Home Automation System Leveraging Lear’s Radio Frequency Expertise To Launch A Family Of Car2UTM Wireless Products 25
Slide 26: Win New Asian Business
Operating Priorities Win New Asian Business* Lear Automaker Market Business Vehicle Nissan Europe Est. Tacle JV in New Compact Sunderland, U.K. with Crossover and Tachi-S Future Programs Honda U.S. Wiring Accord Nanjing Group China Seating Rover BMW China Seating and 5-Series Entertainment System Ni
Slide 27: Summary and Outlook
Summary and Outlook 27
Slide 28: Lear Financial Results Improving
Summary and Outlook Lear Financial Results Improving* Second-quarter and first half operating results better than a year ago Launch costs expected to moderate in second half Capital spending returning to more moderate levels Free cash flow expected to turn positive this year Given the production out
Slide 29: Improving our Global Competitiveness
Summary and Outlook Improving our Global Competitiveness* Continuously improving our quality and customer satisfaction levels Successfully implementing global restructuring initiatives Increasing sourcing and engineering from low-cost locations Strategically managing the business to improve individu
Slide 30: Making Progress on Strategic Priorities
Summary and Outlook Making Progress on Strategic Priorities* Global Seating margins improving Plans in place to maintain Electronic and Electrical margins Signed definitive agreement to contribute European Interior business to International Automotive Components Group, LLC Priority focus on improvin
Slide 31: Advance Relentlessly
R ADVANCE RELENTLESSLY™ LEA Listed NYSE www.lear.com 31
Slide 32: 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 33: Use of Non-GAAP Financial Information
Use of Non-GAAP Financial Information Income before interest, other expense and income taxes Q2 2006 Q2 2005 (in millions) Income (loss) before income taxes $ 31.5 $ (50.4) Interest expense 53.2 48.2 Other expense, net 25.6 32.2 Income before interest, other expense and income taxes $ 110.3 $ 30.0 3
Slide 34: Use of Non-GAAP Financial Information
Use of Non-GAAP Financial Information Income before interest, other expense, income taxes, impairments, restructuring costs and other special items 2005 Q2 2005 (in millions) Loss before provision for income taxes $ (1,187.2) $ (50.4) Goodwill impairment charges 1,012.8 - Interest expense 183.2 48.2
Slide 35: Use of Non-GAAP Financial Information
Use of Non-GAAP Financial Information Pretax income before impairments, restructuring costs and other special items 2005 Q2 2005 (in millions) Loss before provision for income taxes $ (1,187.2) $ (50.4) Goodwill impairment charges 1,012.8 - Restructuring actions 102.8 27.1 Fixed asset impairment cha
Slide 36: Use of Non-GAAP Financial Information
Use of Non-GAAP Financial Information Free Cash Flow Q2 2006 2005 (in millions) Net cash provided by operating activities $ 74.8 $ 560.8 Net change in sold accounts receivable 18.1 (411.1) Net cash provided by operating activities before net change in sold accounts receivable (cash from operations)
Slide 37: 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 and liquidity. Actual results may differ materially from anticipated results as a