Lear (LEA) Q3 Earnings & Sales Top Estimates, FCF Jumps Y/Y

Lear (NYSE:LEA) Corporation’s LEA third-quarter 2020 adjusted earnings came in at $3.73 per share, surpassing the Zacks Consensus Estimate of $3.22. Higher-than-expected revenues from both the company’s segments led to the outperformance. It recorded earnings of $3.56 per share in third-quarter 2019. For the reported quarter, revenues increased 1.5% year over year to $4,900 million. The top line also beat the Zacks Consensus Estimate of $4,722 million.

Lear Corporation Price, Consensus and EPS Surprise

Lear Corporation price-consensus-eps-surprise-chart | Lear Corporation Quote

Segment Performances

Sales in the Seating segment totaled $3,691.6 million for third-quarter 2020, reflecting a decline from the year-ago quarter’s $3,715 million. However, the metric surpassed the Zacks Consensus Estimate of $3,517 million. Adjusted segmental earnings came in at $286.3 million, lower than $303.5 million recorded in the third quarter of 2019. The segment recorded adjusted margins of 7.8% of sales.

Sales in the E-Systems segment summed $1208.5 million, up 8.8% year over year. The figure also topped the consensus mark of $1,082 million. Adjusted segmental earnings amounted to $93.1 million, higher than $84.7 million recorded in the year-ago quarter. For the E-Systems segment, adjusted margin was 7.7% of sales.

Financial Position

The company had $1,250.4 million of cash and cash equivalents as of Oct 3, 2020 compared with $1,487.7 million recorded on Dec 31, 2019. It had a long-term debt of $2.299.8 million as of Oct 3, 2020 compared with $2,293.7 million recorded on Dec 31, 2019.

At third quarter-end, cash provided by operating activities totaled $565 million, up 64.7% year over year. For the reported period, its capital expenditure amounted to $90.1 million, down from $150.8 million witnessed in the prior-year quarter. Free cash flow (FCF) came in at $474 million, higher than $192.6 million generated in the corresponding period of 2019.

2020 Guidance

Lear provided a full-year 2020 view that does not take into account any major coronavirus-led disruption and shutdown in the ongoing quarter. Full-year net sales are expected between $16.35 billion and $16.65 billion. Core operating earnings are forecast in the band of $520-$580 million. Capital spending is anticipated to be $425 million. FCF is envisioned in the range of $125-$175 million.

Zacks Rank & Other Stocks to Consider

Lear currently sports a Zacks Rank #1 (Strong Buy). Other top-ranked players in the industry include Autoliv (NYSE:ALV) Inc. ALV, Visteon (NASDAQ:VC) Corporation VC and Navistar (NYSE:NAV) International Corporation NAV, each carrying a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Visteon’s 2021 earnings and sales points to year-over-year growth of 120.2% and 20.4%, respectively.

The Zacks Consensus Estimate for Autoliv’s 2021 earnings and sales points to year-over-year growth of 554.9% and 23%, respectively.

The Zacks Consensus Estimate for Navistar’s fiscal 2021 earnings and sales points to year-over-year growth of 265.8% and 18%, respectively.

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