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Lear (LEA) Affirms 2012 Forecast; Lifts Share Repurchase Authorization

 January 14, 2013 08:09 AM

(By Balaseshan) Lear Corp. (NYSE: LEA) has launched financing actions to raise liquidity and increased its existing share repurchase program authorization. In addition, the automobile parts supplier affirmed its guidance for 2012 and issued its financial outlook for 2013.

Lear still expects 2012 net sales of about $14.5 billion, while Street predicts $14.34 billion. The company projects core operating earnings of $745 million to $785 million and adjusted earnings of $520 million to $560 million. Adjusted capital spending is still anticipated to be about $435 million.

For 2013, Lear anticipates net sales of $15.0 billion to $15.5 billion, while Street analysts predict $15.02 billion. The company guides core operating earnings of $725 million to $775 million, and adjusted earnings of $420 million to $455 million. Adjusted capital spending is expected to be about $450 million.

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Lear said its forecast is based on expected global industry vehicle production of 79 million units in 2012 and 81 million units in 2013. In addition, the company expects margins to improve in 2014 and 2015.

The company's sales backlog for 2013 to 2015 is $1.8 billion. The backlog continues to support further diversification of Lear's sales by geographic region, customer and vehicle platform.

The financing actions include the launch of an offering of $500 million in senior unsecured notes due 2023 and a new $1 billion revolving line of credit, which will replace the company's existing $500 million facility.

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With respect to the revolving line of credit, the company presently has commitments for the vast majority of the $1 billion facility. Combined, the proposed financing actions will increase the company's liquidity by about $1 billion.

The company plans to use this liquidity for the redemption of $70 million in aggregate principal amount of its existing notes during 2013.

Lear also said it is increasing its existing share repurchase program authorization by $800 million to $1.5 billion and extending the authorization until January 10, 2016. As of December 31, 2012, the company has repurchased $502 million of its shares.

The new repurchase program provides for future share repurchases of about $1 billion, including $198 million available under the previous program.

LEA closed Friday's regular session up 0.02% at $48.01. The stock has been trading between $34.81 and $48.49 for the past 52 weeks.

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