Lear (LEA) Q4 2023 earnings summary

Executive summary

• FY 2023 sales reached a record $23.5B, up 12% YoY; core operating earnings rose 29% to $1.12B and adjusted EPS increased 38% to $12.02.

• Q4 sales grew 9% YoY to $5.841B; core operating earnings rose 9% to $288M, adjusted EPS increased 8% to $3.03, and operating cash flow rose 6% to $570M.

• Core operating earnings increased YoY for a sixth consecutive quarter, while E-Systems margin improved for a sixth consecutive quarter.

Financial highlights

• FY net sales were $23,466.9M versus $20,891.5M in 2022; net income was $572.5M versus $327.7M and adjusted net income was $710.3M versus $522.5M.

• FY diluted EPS was $9.68 versus $5.47 and adjusted EPS was $12.02 versus $8.72; Q4 net income was $127.3M versus $117.5M and adjusted net income was $177.0M versus $167.5M.

• Q4 reported EPS was $2.18 versus $1.97; adjusted EPS was $3.03 versus $2.81.

• FY operating cash flow was $1,249M versus $1,021M; free cash flow was $638.2M versus $383M. Q4 operating cash flow was $570M versus $537M.

Outlook and guidance

• FY 2024 guidance: sales $24.0B–$24.6B, core operating earnings $1,155M–$1,305M, adjusted EBITDA $1,795M–$1,945M and adjusted net income $730M–$840M.

• FY 2024 operating cash flow is forecast at $1,275M–$1,425M and free cash flow at $600M–$750M; capital expenditures are ~$675M and restructuring costs ~$125M.

• At the outlook midpoint, sales are $24.3B and core operating earnings $1.23B, with a 5.1% margin versus 4.8% in FY 2023; backlog adds 35 bps to the margin bridge.

• Guidance assumes average exchange rates of $1.09/€ and RMB 7.15/$ and global industry production 1% below 2023.