This article first appeared on GuruFocus.
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Revenue: $5.7 billion, an increase of 2% from the third quarter of 2024.
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Core Operating Earnings: $241 million.
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Operating Margin: 4.2%.
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Adjusted Earnings Per Share: $2.79.
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Operating Cash Flow: $444 million, one of the strongest in the company’s history.
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Impact of Jaguar Land Rover Disruption: Reduced revenue by $111 million and core operating earnings by $31 million.
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Seating Segment Sales: $4.2 billion, a 3% increase from 2024.
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Seating Segment Operating Margin: 6.1%.
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E-Systems Segment Sales: $1.4 billion, a 3% decrease from 2024.
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E-Systems Segment Operating Margin: 4.2%.
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Share Repurchases: $100 million for the quarter.
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Dividend: Maintained at $0.77 per share.
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Full Year Revenue Outlook: Increased to approximately $23 billion.
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Full Year Free Cash Flow Outlook: Increased to approximately $500 million.
Release Date: October 31, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Lear Corp (NYSE:LEA) reported a 2% increase in revenue to $5.7 billion for the third quarter of 2025, despite disruptions.
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The company achieved one of its strongest operating cash flows in history at $444 million.
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Lear Corp (NYSE:LEA) accelerated its share repurchases, totaling $100 million for the quarter, while maintaining its dividend.
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The company continues to win new business, securing approximately $1.1 billion in e-systems awards year-to-date.
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Lear Corp (NYSE:LEA) is leveraging digital tools and automation, expecting $70 million in cost savings this year, with further savings anticipated in the coming years.
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A cybersecurity incident disrupted production for a key customer, Jaguar Land Rover, impacting third-quarter results.
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Core operating earnings decreased to $241 million from $257 million the previous year.
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Sales in the e-systems segment decreased by 3% year-over-year, partly due to the Jaguar Land Rover disruption.
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The company is facing headwinds from the wind down of discontinued product lines in the e-systems segment.
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Lear Corp (NYSE:LEA) anticipates higher restructuring costs, increasing its outlook by $20 million to reduce excess capacity.
Q: Can you discuss the impact of the Jaguar Land Rover (JLR) production disruption and other supply chain issues on your guidance? A: Jason Cardew, CFO, explained that the guidance reflects potential risks from the JLR disruption, Novelis issues, and Nexperia uncertainties. The guidance includes $55 million of impact from Novelis-related disruptions affecting Ford and Stellantis. JLR’s production ramp-up has been impressive, and they expect full production by the end of November.
Q: How do you view the backlog for 2026 and beyond, considering reshoring and EV shifts? A: Ray Scott, CEO, noted stabilization in customer plans and sees opportunities from onshoring and new program announcements. They expect a $1.2 billion backlog for 2026 and 2027, despite some program cancellations and delays. The company is optimistic about growth, particularly with onshoring and automation efforts.
Q: Can you clarify the net performance targets and expectations for the fourth quarter? A: Jason Cardew stated that the strong third-quarter performance pulled some expected fourth-quarter results forward. They anticipate higher engineering spending and compensation costs in Q4 but expect to outperform the midpoint of guidance if there are no further disruptions.
Q: What are the margin implications of increased automation in US manufacturing? A: Jason Cardew mentioned that automation helps offset higher US labor costs, resulting in strong operating margins similar to their North American seating business. The automation strategy supports maintaining industry-leading returns on invested capital (ROIC).
Q: How do you plan to allocate capital, particularly regarding share buybacks? A: Jason Cardew indicated that the company prioritizes share repurchases, targeting $300 million for the year. They plan to continue buybacks into next year, viewing it as the best use of excess cash, given the current valuation and lack of compelling acquisition opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.