Lear Corporation · NYSE:LEA
Lear — Q3 2003 Earnings Presentation
22 slides from Lear's earnings presentation, Oct 17, 2003
Slide 1: Third Quarter 2003 Earnings Review
Third Quarter 2003 Earnings Review October 17, 2003 fast forward world’s leading automotive interior supplier advance relentlessly
Slide 2: Agenda
Agenda I.I. Operating Operating Highlights Highlights Jim Jim Vandenberghe, Vandenberghe, Vice Vice Chairman Chairman II. II. Financial Financial Review Review & & Outlook Outlook Dave Dave Wajsgras, Wajsgras, SVP SVP & & CFO CFO III. III. Summary Summary and and Closing Closing Remarks Remarks Bob
Slide 3: Third Quarter 2003 Operating Highlights: Customer-Focused Strategy Driving Success
Third Quarter 2003 Operating Highlights Customer-Focused Strategy Driving Success In a Challenging Environment, with Industry Production Down and Intense Competitive Pressures in Both our Major Markets, the Lear Team is Focused on: Delivering Delivering high high value-add value-add to to our our cu
Slide 4: Delivering High Value-Add
Third Quarter 2003 Operating Highlights Delivering High Value-Add Global Global total total interior interior capabilities capabilities Economies Economies of of scale scale // common common architecture architecture Aggressive Aggressive VA VA // VE VE initiatives initiatives Higher Higher levels l
Slide 5: Quality Continues to Improve
Third Quarter 2003 Operating Highlights Quality Continues to Improve Parts Per Million (PPM) Defective* 27 % Management Managementpriority priority Imp rov e me Global Globalfocus nt focus Part Partof ofLear Learculture culture Six SixSigma Sigmadiscipline discipline Sharing Sharingbest bestpractice
Slide 6: Major Launches - Second Half 2003
Third Quarter 2003 Operating Highlights Major Launches - Second Half 2003 North NorthAmerica America Ford FordF-150 F-150 Dodge DodgeDurango Durango Nissan NissanTitan/Armada Titan/Armada Lexus LexusRX RX330 330 Mitsubishi MitsubishiGalant Galant Cadillac CadillacSRX SRX Chevrolet ChevroletMonza Mon
Slide 7: Production Environment - Third Quarter 2003
Financial Review Production Environment - Third Quarter 2003 North NorthAmerica America Industry Industryproduction productiondown down5%; 5%;Big BigThree Threedown down10% 10% Content ContentPer PerVehicle Vehicleof of$582, $582,about abouteven evenwith withaayear yearago ago Western WesternEurope
Slide 8: Financial Highlights - Third Quarter 2003
Financial Review Financial Highlights - Third Quarter 2003 (in millions, except net income per share) Third Third 3Q ‘03 Quarter 2003 Quarter 2002 B/(W) 3Q ‘02 Net NetSales Sales $$ 3,491.5 3,491.5 9 $$ 3,337.4 3,337.4 $$ 154.1 154.1 Income Incomebefore beforeInterest, Interest,Other OtherExpense Ex
Slide 9: 3Q03 vs 3Q02 - Change in Net Sales
Financial Review 3Q03 vs 3Q02 - Change in Net Sales Industry IndustryVehicle VehicleProduction Production N.A. N.A.(5)% (5)% W.E. W.E. (5)% (5)% S.A. S.A. (5)% (5)% $154 $184 $193 N/A ($223) Total Change Industry Production FX Global New Net Performance & Platform Mix Business Directional Impact on
Slide 10: 3Q03 Free Cash Flow
Financial Review 3Q03 Free Cash Flow Nine (in millions) 3Q03 Months Net NetIncome Income $$ 76 76 $$ 248 248 Depreciation Depreciation 83 83 235 235 Working WorkingCapital Capital//Other Other (( 55)) 67 67 Cash Cashfrom fromOperations* Operations* $$ 154 154 $$ 550 550 Capital CapitalExpenditures E
Slide 11: Further Debt Reduction & Increased Financial Flexibility
Financial Review Further Debt Reduction & Increased Financial Flexibility $3,385 Net Debt* $2,981 $2,660 $2,271 (in millions) $2,006 1999 2000 2001 2002 Sept '03 Net Debt to Cap 70% 65% 63% 58% 50% * Net debt represents total debt plus utilization of our ABS facility, less cash. Please see slides ti
Slide 12: Rating Agency Update
Financial Review Rating Agency Update Rating Rating Outlook Outlook Standard Standardand andPoor’s Poor’s BBB- BBB- Stable Stable Upgraded Upgraded7/28/03 7/28/03 Moody’s Moody’s Ba1 Ba1 Positive Positive Outlook Outlookraised raised10/14/03 10/14/03 Fitch FitchRatings Ratings BBB- BBB- Stable Stabl
Slide 13: 2003 Vehicle Production Outlook
Financial Review 2003 Vehicle Production Outlook North America Western Europe (in millions) (in millions) 16.4 16.4 15.9 15.9 FY 2002 Actual FY 2003 Outlook FY 2002 Actual FY 2003 Outlook Q4* 4.0 Up 2% Q4 3.8 Down 7% 2003 Production Down in North America and Western Europe * Big Three down 3% 13
Slide 14: Fourth Quarter and Full Year 2003 Guidance
Financial Review Fourth Quarter and Full Year 2003 Guidance Fourth Quarter Net Income Per Share Full Year Net Income Per Share Net Sales of Net Sales of $4.0 Billion $15.5 Billion $5.50 $1.85 $1.76 $5.40 $1.75 $4.65 2002 2003 2002 2003 Capital Expenditures $ 100 M $ 315 M Free Cash Flow $ 75 M $ 400
Slide 15: Future Cash Flow Opportunities Enhance Value
Summary and Outlook Future Cash Flow Opportunities Enhance Value Support Support strategic strategic growth growth opportunities opportunities -- Asia AsiaPacific Pacificregion regionand andelectronics electronicsglobally globally -- Internally Internallygenerated generatedor oracquired acquired Mai
Slide 16: Customer-Focused Strategy Driving our Success
Summary and Outlook Customer-Focused Strategy Driving our Success Quality Qualityand andcustomer customerservice serviceremain remainour ourtop top priorities priorities Top Topline linegrowing growingas ascustomers customersrecognize recognizeLear’s Lear’s value-add value-add Credit Creditratings r
Slide 17: Advance Relentlessly
R ADVANCE RELENTLESSLY™ LEA Listed NYSE www.lear.com
Slide 18: 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 19: Core Operating Earnings
Use of Non-GAAP Financial Information Core Operating Earnings (in millions) Three Months Nine Months Q3 2003 Q3 2002 Q3 2003 Q3 2002 Income before interest, other expense and income taxes Income before income taxes $ 105.7 $ 92.7 $ 351.4 $ 291.0 Interest expense 44.5 53.0 146.7 163.4 Other expense,
Slide 20: Free Cash Flow
Use of Non-GAAP Financial Information Free Cash Flow (in millions) Three Months Nine Months Q3 2003 Q3 2002 Q3 2003 Q3 2002 Free cash flow Net cash provided by operating activities $ 102.3 $ 69.8 $ 359.6 $ 370.1 Net change in sold accounts receivable 51.3 21.6 190.9 27.4 Net cash provided by operati
Slide 21: Net Debt
Use of Non-GAAP Financial Information Net Debt (in millions) September 27, December 31, Net debt 2003 2002 2001 2000 1999 Short-term borrowings $ 11.3 $ 37.3 $ 63.2 $ 72.4 $ 103.6 Current portion of long-term debt 4.4 3.9 129.5 155.6 63.6 Long-term debt 2,042.2 2,132.8 2,293.9 2,852.1 3,324.8 Total
Slide 22: 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. Actual results may differ materially from anticipated results as a result of cert