Lear Corporation · NYSE:LEA
Lear — Q1 2007 Earnings Presentation
37 slides from Lear's earnings presentation, Apr 25, 2007
Slide 1: First-Quarter 2007 Results and Full-Year 2007 Financial Outlook
Exhibit 99.2 First-Quarter 2007 Results and Full-Year 2007 Financial Outlook April 25, 2007
Slide 2: Agenda
Agenda First-Quarter 2007 Highlights Bob Rossiter, Chairman and CEO Operating Priorities Doug DelGrosso, President and COO Financial Review Jim Vandenberghe, Vice Chairman and CFO Q and A Session 2
Slide 3: First-Quarter 2007 Highlights
First-Quarter 2007 Highlights 3
Slide 4: First Quarter 2007 Company Overview
First Quarter 2007 Company Overview Improved first-quarter financial results and 2007 outlook Completed North American Interior business joint venture Continued to manage the business on a product-line basis Maintained quality and customer service momentum and received numerous customer awards and i
Slide 5: Update on Merger Proposal
Update on Merger Proposal Merger-Related Events Date 45-day “Go-Shop” or solicitation period ended, with no competing bids received March 26 Record date for Annual Stockholders’ Meeting May 14 Distribute final Proxy and 2006 Annual Report Mid-May Annual Stockholders’ Meeting June 27 5
Slide 6: Long-Range Plan: A Strategic Partner For OEMs
Long-Range Plan A Strategic Partner For OEMs Evolution of Lear 1994 – 1999 2000 – 2005 2006 – Forward Systems Strategic Supplier Integrator Partner Seat Total Interior Product-Line Focus; Manufacturer Capability Collaborative Partnership With Customers Major Initiatives Over Time Strategic Acquisiti
Slide 7: Strategic Repositioning -- Key Elements
Strategic Repositioning -- Key Elements Product-Line Focus Divest Interior business -- now complete Focus on strengthening core businesses -- ongoing Leverage leadership position in Seating Systems Strengthen capabilities in Electronics and Electrical Distribution Systems and Expand capabilities in
Slide 8: Operating Priorities
Operating Priorities 8
Slide 9: Making Progress on Operating Priorities
Making Progress on Operating Priorities Continued improvement in quality and customer satisfaction metrics; received numerous customer awards and industry recognition Continued progress on global restructuring initiatives and cost improvements Significant progress on expanding our infrastructure in
Slide 10: Major Customer Awards and Industry Recognition
Operating Priorities Major Customer Awards and Industry Recognition Customer Awards “Supplier of the Year” for global Seating Systems 3 World Excellence Awards-- "Gold Award” for Genk, Belgium seating plant "Silver Award” for St. Thomas, Ontario Canada seating plant "Recognition of Achievement” for
Slide 11: Implementing Global Restructuring Initiative
Operating Priorities Implementing Global Restructuring Initiative * Initiated closure of 15+ manufacturing facilities and consolidating numerous administrative centers, reducing census by 5-7% and increasing sourcing and engineering in low-cost countries: Move manufacture of seat components (metals
Slide 12: Expanding Our Presence in Asia
Operating Priorities Expanding Our Presence in Asia* Well positioned for growth in fast growing Asian markets China India 18 facilities (+6 new in 2007) 7 facilities (+3 new in 2007) 2 engineering/R&D centers in Shanghai 1 engineering center in Mumbai (+1 new CTO center in 2007) 3 program launches i
Slide 13: Aggressively Growing Total Asian Sales
Operating Priorities Aggressively Growing Total Asian Sales*** 2006 Highlights 75% seating / 25% electronics and Total Asian Sales -- Core Business ** electrical ($ in millions) 53% in Asia / 44% in North America / 3% in Europe ~$2,700 2007 Highlights $2,200 Automotive leader in China seating $1,850
Slide 14: New Asian Program Awards in First Quarter
Operating Priorities New Asian Program Awards in First Quarter ** Customer Market Lear Content Future Vehicle Program(s) SOP Nissan Motor Co. Global Smart Junction Box B Car/Light Truck 2008/2009 Hyundai Motor Company China Seating Elantra Notchback Feb-08 Nissan Motor Co. Japan Seating Micra/March
Slide 15: Production Innovation and Technology – Seating Systems
Operating Priorities Production Innovation and Technology – Seating Systems 15
Slide 16: Production Innovation and Technology – Electronics and Electrical
Operating Priorities Production Innovation and Technology – Electronics and Electrical 16
Slide 17: Financial Review
Financial Review 17
Slide 18: First Quarter 2007 Major Factors Impacting Financial Results
First Quarter 2007 Major Factors Impacting Financial Results* Special items in first quarter: Consolidated results include North American Interior business Costs related to divestiture of Interior business Costs related to restructuring actions and merger proposal Curtailment gain related to freezin
Slide 19: First Quarter 2007 Industry Environment
First Quarter 2007 Industry Environment First Quarter First Quarter 2007 2007 vs. 2006 North American Production Industry 3.8 mil Down 8% Big Three 2.4 mil Down 12% European Production Industry 5.1 mil Flat Lear's Top 5 Customers 2.6 mil Flat Key Commodities (Quarterly Average) vs. Prior Quarter Ste
Slide 20: First Quarter 2007 Financial Summary
First Quarter 2007 Financial Summary* First First 1Q '07 (in millions, except net income per share) Quarter 2007 Quarter 2006 B/(W) 1Q '06 Net Sales $4,406.1 $4,678.5 ($272.4) Income Before Interest, Other (Income) Expense and Income Taxes $184.4 $54.2 $130.2 Pretax Income $82.3 $14.8 $67.5 Net Inco
Slide 21: First Quarter 2007 Restructuring and Special Items
First Quarter 2007 Restructuring and Special Items* Memo: Income Before Interest, Other (Income) Expense Pretax (in millions) and Income Taxes Income Income Statement Category Loss on COGS SG&A Divestiture/Other 2007 Reported Results $ 184.4 $ 82.3 Reported results include the following items: Costs
Slide 22: Net Sales Changes and Margin Impact Versus Prior Year
First Quarter 2007 Net Sales Changes and Margin Impact Versus Prior Year Net Sales Margin Performance Factor Change Impact Comments (in millions) Industry Production / $ (484) Negative Primarily lower industry production in Platform Mix / Net Pricing / North America (down 8%) and unfavorable Other p
Slide 23: First Quarter 2007 Business Segment Results
First Quarter 2007 Business Segment Results* First Quarter ($ in millions) 2007 2006 Seating Net Sales $ 2,994.2 $ 2,992.5 Reported Segment Earnings* $ 197.1 $ 125.9 Adjusted Segment Earnings $ 192.5 $ 142.0 % of Sales 6.6 % 4.2 % Adjusted % of Sales** 6.4 % 4.7 % Electronic and Electrical Net Sales
Slide 24: First Quarter 2007 Seating Segment Performance
First Quarter 2007 Seating Segment Performance* Explanation of Adjusted Seating Margin Year-to-Year Change Benefit from new Seating business outside N. A. Savings from restructuring actions Ongoing cost and efficiency actions Improving results in Europe/Asia Net commodities slightly favorable Adj. S
Slide 25: First Quarter 2007 Electronic and Electrical Segment Performance
First Quarter 2007 Electronic and Electrical Segment Performance* Adjusted Explanation of Electronic and Electrical Margin Year-to-Year Change Lower industry production and unfavorable platform mix in N. A. Unfavorable net pricing -/+ Higher copper prices offset by prior period recovery Improving re
Slide 26: First Quarter 2007 Interior Segment and Headquarters Performance
First Quarter 2007 Interior Segment and Headquarters Performance* Explanation of Year-to-Year Change Adjusted Interior Margin Interior Segment 1.8% Elimination of depreciation expense Ongoing cost and efficiency actions Lower new program development and launch costs Timing of commercial recoveries (
Slide 27: First Quarter 2007 Free Cash Flow
First Quarter 2007 Free Cash Flow* (in millions) First Quarter 2007 Net Income $ 49.9 Divestiture of Interior Business 25.6 Depreciation / Amortization 74.5 Working Capital / Other (152.9) Cash used in Operations $ (2.9) Capital Expenditures (29.2) Free Cash Flow $ (32.1) * Free Cash Flow represents
Slide 28: 2007 Outlook Full-Year Production Assumptions
2007 Outlook Full-Year Production Assumptions* Full-Year Change from 2007 Outlook Prior Year North American Production Total Industry ˜ 15.2 mil flat Big Three ˜ 9.8 mil down 4% European Production Total Industry ˜ 19.3 mil flat Lear's Top 5 Customers ˜ 9.7 mil down 1% Euro $1.32 / Euro up 5% Key Co
Slide 29: 2007 Outlook Full-Year Financial Projections
2007 Outlook Full-Year Financial Projections* 2007 Full-Year Financial Outlook for Core Business (excludes Interior business) Net Sales ˜ $14.8 billion Core Operating Earnings $580 to $620 million Income before interest, other expense, income taxes, restructuring costs and other special items Intere
Slide 30: Advance Relentlessly
R ADVANCE RELENTLESSLY™ LEA Listed NYSE www.lear.com 30
Slide 31: Non-GAAP Financial Information
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 “income before interest, other (income) expense and incom
Slide 32: Cash used in Operations and Free Cash Flow
Non-GAAP Financial Information Cash used in Operations and Free Cash Flow Three Months (in millions) Q1 2007 Net cash used in operating activities $ (41.8) Net change in sold accounts receivable 38.9 Net cash used in operating activities before net change in sold accounts receivable (cash used in op
Slide 33: Core Operating Earnings
Non-GAAP Financial Information Core Operating Earnings Three Months (in millions) Q1 2007 Q1 2006 Pretax income $ 82.3 $ 14.8 Loss on divestiture of Interior business 25.6 - Interest expense 51.5 47.7 Other (income) expense, net 25.0 (8.3) Income before interest, other (income) expense and income ta
Slide 34: Pretax Income before Restructuring Costs and Other Special Items
Non-GAAP Financial Information Pretax Income before Restructuring Costs and Other Special Items Three Months (in millions) Q1 2007 Q1 2006 Pretax income $ 82.3 $ 14.8 Costs related to divestiture of Interior business 33.8 - Fixed asset impairment charges - 2.0 Costs related to restructuring actions
Slide 35: Segment Earnings Reconciliation
Non-GAAP Financial Information Segment Earnings Reconciliation Three Months (in millions) Q1 2007 Q1 2006 Seating $ 197.1 $ 125.9 Electronic and Electrical 17.5 53.1 Interior 8.8 (59.5) Segment earnings $ 223.4 $ 119.5 Corporate and geographic headquarters and elimination of intercompany activity (3
Slide 36: Adjusted Segment Earnings
Non-GAAP Financial Information Adjusted Segment Earnings Three Months Q1 2007 Three Months Q1 2006 Electronic Electronic and HQ/ and HQ/ (in millions) Seating Electrical Interior Other Seating Electrical Interior Other Segment earnings $ 197.1 $ 17.5 $ 8.8 $ (39.0) $ 125.9 $ 53.1 $ (59.5) $ (65.3) C
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