Lear Corp Earnings: Higher Expenses Shrinks Margins, Profit Declines

Lear Corporation (NYSE:LEA) reported its results for the first quarter. Lear and its affiliates design and manufacture complete automotive seat systems and components as well as electrical distribution systems and electronic products.

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Lear Earnings Cheat Sheet for the First Quarter

Results: Net income for Lear Corporation fell to $134.1 million ($1.32 per share) vs. $156 million ($1.44 per share) a year earlier. This is a decline of 14% from the year-earlier quarter.

Revenue: Rose 3.8% to $3.64 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Lear Corporation beat the mean analyst estimate of $1.20 per share. Analysts were expecting revenue of $3.6 billion.

Quoting Management: “Lear had another quarter of strong operating performance,” said Matt Simoncini, Lear’s president and chief executive officer. “We are continuing to increase our investments in component capabilities, which will improve our long-term competitiveness and facilitate growth. In addition, we are excited about our recently announced acquisition of Guilford Mills, and we plan to continue to pursue additional acquisitions to further strengthen our core businesses.”

Key Stats:

Gross margin shrank 0.7 percentage point to 8.5%. The contraction appeared to be driven by increased costs, which rose 4.6% from the year earlier quarter while revenue rose 3.8%.

Revenue has risen the past four quarters. Revenue increased 11.2% to $3.51 billion in the fourth quarter of the last fiscal year. The figure rose 22.7% in the third quarter of the last fiscal year from the year earlier and climbed 21% in the second quarter of the last fiscal year from the year-ago quarter.

The company’s net income has fallen in each of the last two quarters. In the fourth quarter of the last fiscal year, net income fell 9.1% from the year-earlier quarter.

The company has beaten estiamtes for two quarters in a row. In the fourth quarter of the last fiscal year, it topped expectations with net income of $1.26 versus a mean estimate of net income of $1.17 per share.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the second quarter has moved down from $1.50 a share to $1.35 over the last ninety days. For the fiscal year, the average estimate has moved down from $5.30 a share to $5.14 over the last ninety days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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