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Lear (LEA) Tops Q1 Earnings Estimates, Lowers '22 Guidance

Zacks Equity Research
·4 min read

Lear Corporation LEA reported first-quarter 2022 adjusted earnings of $1.80 per share, plunging around 51.7% year over year. The bottom line, however, surpassed the Zacks Consensus Estimate of $1.56 per share. Higher-than-expected sales from both the company’s segments led to the upside.

In the reported quarter, revenues declined around 2.7% year over year to $5,208.4 million. The top line beat the Zacks Consensus Estimate of $4,957.8 million.

Lear Corporation Price, Consensus and EPS Surprise

Lear Corporation Price, Consensus and EPS Surprise
Lear Corporation Price, Consensus and EPS Surprise

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

Segment Performances

Sales for the Seating segment totaled $3,912.5 million in first-quarter 2022, reflecting a 2.1% decline from the year-ago quarter’s $3,996 million. Nonetheless, the metric surpassed the Zacks Consensus Estimate of $3,696 million. Adjusted segmental earnings came in at $217.7 million, declining 29.1% from a year ago but matching the consensus mark. The segment recorded adjusted margins of 5.6% of sales, a decline from 7.7% in the previous-year quarter.

Sales in the E-Systems segment summed $1,295.9 million, down around 4.6% year over year. The figure, however, topped the consensus mark of $1,267 million. Adjusted segmental earnings amounted to $41.9 million, plummeting 56%. The metric, however, surpassed the consensus mark of $34.09 million. For the E-Systems segment, the adjusted margin was 3.2% of sales, down from 7% in the year-ago quarter.

Financial Position

The company had $1,162 million of cash and cash equivalents at the quarter-end, compared with $1,318.3 million recorded at the end of 2021. It had long-term debt of $2,595.8 in the quarter, almost flat with the 2021-end level.

At the first quarter-end, net cash used in operating activities totaled around $221 million, down from $247.5 million a year ago. In the reported period, its capital expenditure amounted to $130.3 million, increasing from $112.9 million. Free cash flow (FCF) was $90.4 million, declining from $134.6 million in the previous-year quarter.

2022 Guidance

Lear has brought down its full-year net sales to the band of $20.4-$21.2 billion from the previous range of $20.8-$22.3 billion. Core operating earnings are now envisioned in the band of $765-$965 million from the earlier range of $900-$1200 million. Lear’s anticipated FCF has been lowered to the band of $225-$425 million from $300-$600 million. Capital spending forecast remains constant within $650-$700 million. Adjusted EBITDA estimation has been lowered to $1,365-$1,565 million from $1,500-$1,800 million.

Zacks Rank & Key Picks

LEA currently carries a Zacks Rank #4 (Sell).

Better-ranked players in the auto space include BRP Group, Inc. DOOO, sporting a Zacks Rank #1 (Strong Buy) and Dorman Products DORM and Tesla Inc. TSLA, each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

BRP Group has an expected earnings growth rate of 9.1% for fiscal 2023. The Zacks Consensus Estimate for current-year earnings has been revised around 7.9% upward in the past 60 days.

BRP Group’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. DOOO pulled off a trailing four-quarter earnings surprise of 68%, on average. The stock has declined 8.5% over the past year.

Dorman Products has an expected earnings growth rate of 18.8% for the current year. The Zacks Consensus Estimate for current-year earnings has been marginally revised 0.7% upwards in the past 60 days.

Dorman Products’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. DORM pulled off a trailing four-quarter earnings surprise of 3.1%, on average. The stock has lost 2.1% over the past year.

Tesla has an expected earnings growth rate of 66.1% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 18.7% upward in the past 60 days.

Tesla’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. TSLA pulled off a trailing four-quarter earnings surprise of 41.27%, on average. The stock has gained 35.5% over the past year.


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