Lear Reports Adjusted Earnings of $3.71 Per Share and Cuts 2026 Sales Forecast
Key Facts
Lear reported adjusted earnings per share of $3.71 in the third quarter of 2026, exceeding the pre-earnings estimate of $3.31, while sales came to $5.773 billion. Results showed year-over-year sales growth from $5.6798 billion in the third quarter of 2025, while core operating earnings and net income also increased. But the company lowered its annual sales forecast range, weighing on the stock in premarket trading. Lear said year-over-year revenue and core operating earnings growth continued for the fourth consecutive quarter despite a decline in industry production. The results thus combined stronger quarterly earnings with a weaker signal for sales expected over the rest of the year.
Core operating earnings were $255.7 million, up from $241.1 million in the same period a year earlier, while adjusted earnings per share rose to $3.71 from $2.79. Net income increased to $136.6 million from $108.2 million, and adjusted net income rose to $185.0 million from $149.8 million. Earnings per share came in above the prior average estimate of $3.31, according to coverage that also cited a sales estimate of $5.81 billion. Actual sales were $5.773 billion, compared with $5.6798 billion a year earlier. The comparison shows year-over-year growth in revenue and earnings, while sales remained below the prior estimate cited in the coverage.
Global auto sales fell 2% year over year in the third quarter, as production declined 5% in North America and 7% in China, while rising 1% in Europe. Lear said sales, excluding the effects of commodities, currencies and tariff recoveries, rose 2% year over year. The company attributed this to new business awards and commercial recoveries, while lower production on key platforms and the conclusion of non-core electronics programs limited the increase. This performance places the improvement in adjusted sales in the context of a declining global production environment, with regional markets moving in different directions. Lear had said the midpoint of its annual forecast assumes global industry production will decline by about 2% in 2026 compared with 2025, weighted according to its sales.
Lear cut its 2026 sales forecast to a range of $23.35 billion to $23.75 billion, compared with the average analyst estimate of $23.79 billion. The company kept its annual core operating earnings range at $1.08 billion to $1.2 billion. It said the updated forecast reflects changes in production schedules on key platforms, and that strong operating execution and restructuring savings will offset the impact of lower revenue and higher costs for commodities and other inputs. The prior average sales forecast range cited in the coverage was wider, but the new range put the upper end below the analyst consensus. Market concerns therefore focused on the annual revenue outlook, despite the core operating earnings forecast remaining within its stated range.
Cash flow from operating activities was $329 million in the third quarter, compared with $444 million in the same period a year earlier, while free cash flow was $158 million versus $307 million. In the quarter, Lear repurchased $175 million of shares and said it had achieved its annual repurchase target of $350 million; it also paid $38 million in dividends. The declines in both cash flow measures coincided with year-over-year increases in net income and core operating earnings. In its statement, the company emphasized continued growth in revenue and core operating earnings despite weak industry production. The cash figures and shareholder returns add another dimension to the quarter's results, alongside earnings growth and the sales forecast cut.
Lear shares fell 14.81% in premarket trading on Oct. 30 following the results and outlook, according to Investing.com. The company's earnings conference call was scheduled for the same day at 9:00 a.m. Eastern time. Lear said a replay of the call would be available two hours after it ended. The company said its updated forecast reflects changes in production schedules on key platforms, while its annual plan assumes global industry production will decline by about 2% compared with 2025, weighted according to its sales. The call and its replay provide an opportunity to follow up on details of the annual forecast after the results were released.