Lear Reports First-Quarter 2009 Financial Results
SOUTHFIELD, Mich., May 14, 2009 -- Lear Corporation , a leading global supplier of automotive seating systems, electrical distribution systems and electronic products, today reported financial results for the first quarter of 2009, as follows:
Net sales of $2.2 billion, down 44% from a year ago
Core operating earnings of negative $67 million
Accelerated global restructuring and cost reduction
68% of net sales generated outside of North America
Cash and cash equivalents of $1.2 billion at quarter end
The business environment in the first quarter was extremely challenging due to significantly lower production volumes globally. In North America, industry production compared with a year ago was down 51%. In Europe, industry production was down 40%. Globally, automotive production was down 36%.
"Given the adverse economic conditions and dramatic slowdown in automotive demand at the end of last year, many of our major customers had extended plant shutdowns in the first quarter," said Bob Rossiter, Lear's chairman, chief executive officer and president. "As a result, production was down sharply in North America and Europe. In this difficult environment, we are minimizing our operating costs and accelerating our restructuring efforts."
"Despite these challenges, Lear continued to make progress on its operating priorities, including further diversification of its global sales, business development in emerging markets and continued new product innovation. We have global scale and excellent technical capabilities in critical product lines, as well as a competitive low-cost footprint, a solid backlog of new business and a strong cash position of $1.2 billion," Rossiter added. "We remain focused on weathering the current downturn, while positioning ourselves for future success when industry conditions improve."
First-Quarter 2009 Financial Results
For the first quarter of 2009, Lear reported net sales of $2.2 billion and a pretax loss of $257.1 million, including restructuring costs and other special items of $121.2 million. Pretax income (loss) before interest, other expense, restructuring costs and other special items (core operating earnings) was negative $66.7 million in the first quarter of 2009. This compares with net sales of $3.9 billion, pretax income of $113.5 million and core operating earnings of $186.5 million in the first quarter of 2008. A reconciliation of core operating earnings to pretax income (loss) as determined by generally accepted accounting principles ("GAAP") is provided in the attached supplemental data page.
The decline in net sales for the quarter, compared with a year ago, primarily reflects the significant decline in industry production in North America and Europe.
In the seating segment, net sales were down 42% to $1.8 billion due to significantly lower production volumes. Operating margins declined sharply, reflecting the impact of lower industry production, offset partially by the continued benefits from our restructuring and other cost reduction activities. In the electrical and electronic segment, net sales were down 49% to $416 million driven by lower production volumes. Operating margins declined significantly, reflecting the impact of lower industry production, offset in part by the continued benefits from our restructuring actions.
Net loss attributable to Lear was $264.8 million, or $3.42 per share, in the first quarter of 2009. This compares with net income attributable to Lear of $78.2 million, or $1.00 per share, in the first quarter of 2008.
In the first quarter of 2009, free cash flow was negative $219.0 million, as compared with free cash flow of negative $21.2 million in the first quarter of 2008. The decline in free cash flow compared with a year ago primarily reflects lower earnings. Net cash used in operating activities was $336.8 million in the first quarter of 2009, and net cash provided by operating activities was $136.0 million in the first quarter of 2008. A reconciliation of free cash flow to net cash provided by (used in) operating activities as determined by GAAP is provided in the attached supplemental data page.
The Company had approximately $1.2 billion in cash and cash equivalents as of April 4, 2009, as compared to approximately $1.6 billion as of December 31, 2008. The decline reflects negative free cash flow in the first quarter, as well as the termination of our accounts receivable factoring facility in Europe. On May 13, 2009, the Company and the lenders under its primary credit facility entered into an amendment and waiver of covenant defaults through June 30, 2009. Discussions with the Company's lenders and others regarding alternatives to address the Company's capital structure are on-going. See "Forward-Looking Statements."
Lear will webcast a conference call to review the Company's first-quarter 2009 financial results and related matters on Thursday, May 14, 2009, at 9:00 a.m. eastern time through the Investor Relations link at LEAR. In addition, the conference call can be accessed by dialing 1-800-789-4751 (domestic) or 1-973-200-3975 (international). The audio replay will be available two hours following the call at 1-800-642-1687 (domestic) or 1-706-645-9291 (international) and will be available until May 28, 2009, with a Conference I.D. of 91758299.