LEA - Earnings call transcript Q4 2024

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Operator

Good morning, everyone, and welcome to the Lear Corporation Fourth Quarter and Full Year 2024 Earnings Conference Call.

[Operator Instructions] Please also note today's event is being recorded.

At this time, I'd like to turn the floor over to Tim Brumbaugh, Vice President, Investor Relations. Please go ahead.

Timothy Brumbaugh

Thanks, Jamie. thank full joining year and fourth for everyone, and quarter XXXX morning, you us for Lear's Good earnings call. Ray Vice are Jason today Scott, and President Presenting CEO; Cardew, Senior President CFO. and Lear and Lear's of call. the us members have also senior Other joined on team management

we Following prepared for open will remarks, call the Q&A.

the a these that remarks at can find presentation You ir.lear.com. copy of accompanies

in we Before understanding to as we that, to remind Ray you statements the for begins, I'd expectations forward-looking this Lear's like will call, future. to assist making take you this opportunity be conduct

As actual detailed many reports. XX-Q in statements from X, our latest safe harbor periodic to statement results these on Slide factors due materially our other our discussed in could differ and forward-looking

metrics. you during will to presentation, want remind also I that non-GAAP today's financial we refer to

in comparable GAAP You of of the appendix reconciliation the directed our measures. directly items for to to most non-GAAP slides the the presentation are

today's for agenda X. Slide The is call on

provide Jason year our First, year highlights from review the and and results financial quarter update. a for fourth our provide Ray XXXX. business outlook review then and will will full

Finally, some remarks. concluding offer Ray will

be Following to formal would happy we presentation, take your the questions.

Now to to invite like begin. I'd Ray

Raymond Scott

quarter X, full Tim. the turn for key year fourth Thanks, financial Please XXXX. metrics highlights which Slide to and

X% XXXX. billion, repurchase were our of flow and last XXXX. of revenue cash of $XXX Lear higher sales generated $XX.X year, $X.X billion or benefit Core $X.X operating driven and flow the share X.X% the Adjusted from free million in $XX.XX, was earnings. earnings increase was in was an earnings year. billion by for net of program Operating cash per share

initiatives Slide and we X highlights in strategic financial XXXX. key delivered the on

delivering and innovation; by performance X on for shareholders. have building digitalization automation improving and with market our we reminder, share Lear; our advantage four, our customers; two, growing through a priorities: financial and strategic one, Idea three, As

performance and us driven dividend. execution million our of inventory $XXX $XXX target worth maintaining repurchase surpassing cash operating strong us target, allowed the by XX% conversion, year, for priorities This these key free while generate to Our meeting our on million to shares, enabled flow our of management. our

and The count global we by helped reduce our restructuring us efficiency XX,XXX. head plans implemented

Our for exceeded we X% earlier by segments and laid These targets in head the reduced in X% in both reductions the out E-Systems. count was year. Seating

adjusted grew share consecutive earnings year, X% fourth per up We the for year-over-year.

outperformed segments Our with beat both by E-Systems company points. total by percentage points. in revenue X the Sales the percentage industry, market outperforming X

point, points While consolidated our Seating nonconsolidated percentage outgrowth growth percentage including less was it X joint through X than was ventures.

but We second consecutive have Additionally, we more clearly improved drive to X%. work strategic over year operational to executing margins for our improvements. the to margin E-Systems and do, we initiatives are

Seating, SUX in Chinese in both for E-Systems. Europe, and been Chinese has Chinese E-Systems, and BYD, domestic with Geely We Seating current components a won local OEMs Dongfeng we same won on as new supplier program seats Changan in with In displacing produces the launched well and also growth and who OEMs for the an market. other our Our significant. the award Geely Xiaomi awards as the

automation introduced we intelligence, capabilities WIP proven areas acquired Lear Idea innovation, of to by our returns. enhance and with terms In in and in these Automation investing artificial

harness most operational harness is specializes acquisition assembly labor-intensive improve the application. development which automation our announced process. recently Engineering, for in technology capabilities manufacturing excellence in our and efficiency the StoneShield our which of We of business, further wire will StoneShield's wire

Ford ComfortMax seat industry XX We've with validated the launched first Motor representing $XXX secured revenues new contracts and We growth approximately opportunities. opening the Company, ComfortFlex of annual million. module

manufacturing their are We modular in partnership trim trucks. comfort the midsized seat with seat heat solution covers the while XXXX. a recently seat streamlining Lear's occupant received be midyear first application launch bringing to the enhance a ComfortMax comfort with the will from to scheduled we our approval enter GM, Lear's to occupant market components process. by General to innovative incorporate thermal This closer ComfortMax into integrating Motors into the Through solution

for award the for first INTU program vehicle during and of Bentley health our This Finally, expect from we and we is our additional INTU wellness Product technology. we Day won software vehicle agreement and And first the Seating XXXX. awards in our June award announced award future applications.

incremental strategic the both over the savings we Slide to taking have XXXX, actions years. business flow been are few in we from actions cash are last generation X we segments. and our improve In margins executing highlights seeing

and and launch We are are continuing engineering to improve our from plants benefiting wire lower costs. in efficiency

automation, Although us investing X% to spend in-house maintain below CapEx our allows efficiency capabilities targeted from capital of revenue. our in are we and reuse our

benefits the making savings investments and annualized seeing $XX cost million expect growing been to have $XXX approximately automation from an of are We XXXX, in we million. savings of

new to We total facilities countries by and year we actions our facilities, closing move continue of was in to optimize and or the our XX an Europe facilities. implement the sold or we most see XXXX, wage reducing during excess automation In lower-cost capacity closed production when count industry selling X%. are in to capital X year, additional This X% in and process our facility mitigate where we capacity. a primarily down inflation, facilities,

company. X% expect target approximately the a realized margins As to we to for through operational and the rate year, exit run are total XXXX these with improve savings

We efficiency in strategy. Lear, areas optimization continue returns, our with such through we'll and proven and automation our are capacity by investing with Idea as

and seats gains programs in awards and see launch. Seating both are The continued on We will pursuing to our are conquest for Japanese automakers share E-Systems. market new with starting continue and potential progress grow we Chinese additional The drive growth opportunities are to excited domestic ComfortMax ComfortFlex to automakers. awarded

deliver process product innovations innovative quality looking and at that our products metrics cost. a as and meet these programs while for Our us components help reliability will can are win suppliers that competitive customers their delivering

for reflect will business, have the next-generation margins the The in market allowing than programs to current out. core long actions to these as to the has electronic of price shareholders. weighed launch fully improving lower-return grow our which In which and capital replacement combined And our years. generation, term, faster last the cash noncore effects economics, us flow while will continue -- return on pricing will couple margins us our build of to will their enable

Moving X. product to Slide cost We through process Seating. in our sustainable and highlight have we created the innovations advantage

and ComfortMax cost us also seat Our comfort solutions from X% ComfortFlex to while components a facilities. enabling remove complexity, to our thermal assembly and by by can drive Lear improvement weight reducing labor XX% just-in-time

in components the of complexity scale The potential the savings existing systems will system. higher dependent savings. result potential the The of on with is more

opportunity X-row luxury compared lumbar, has with greater and is there savings vehicle for mats. vent to example, mid-market a in heater only For a that SUV systems, massage

our are value-added for estimated by driven content Process XX% to approximately initiatives to cost improvements the reduce by XX%. Idea additional

driving We leather utilization. expanded our of Thagora capabilities facilities, better our into all

finesse is Seating. our detection and [ expanding as operations advantage designing automation our View Lear competitive to rollout well Our defect is in of product ] a our as capabilities leverage

process to allow industry-leading basis that Product costs new Seating XXX innovation improvements our margins innovative will points. when to value seat drive able proposition provide increase from with our over And reduce time-to-sensation, a continue to ourselves cost we're us have to competitors. to advantage better better to our designs customers. XXX and durable allowed efficiency and separate combined us and for This by programs

in Xiaopeng, automakers. has China. has seating. update has years its experience In automotive luxury an Chinese Over provides X on presence, Lear's leader growth that Nio. with Lear XX strengthened Changan, of the key domestic clear Geely, local several strong relationship launches become and BYD, time, and we Slide have with in Lear with XXXX, Dongfeng built customers

also to opportunities with We Xiaomi. for growth additional continue see sourcing

The from of total XXXX, portion than XX% by our domestic years and XX% business automakers consistent XX% increasing key to driving to revenue important pursuing, automakers are our XXXX. to new backlog we Chinese from our continues growth. from XX% ago Chinese and and about in be we domestic Lear in is with of to market approximately an China China opportunities automakers be for XXXX. relationships revenue in our With expect X the current grew domestic more

since turn to changes Slide our February. XX, please XXXX to last details which was announced on sales the it Now to backlog provides XXXX originally

awarded nonconsolidated business programs new lines business, off. our net and in in rolling It pursued E-Systems. sales reminder, includes joint net ventures lost discontinued programs our product the of and a As of business any excludes the backlog roll-off

typically We for time. on our update sales the backlog provide at years an next this X

limited have visibility and XXXX we industry However, to customer rapidly-evolving plans. the production environment into due

customer strategies to a due Our the in regulations, changes in and new the led and product awards. to which customers potential activities demand program sourcing has delay changes and in are powertrain reassessing

course stronger-than-expected the volumes, declined production As their of cuts launches XXXX Polestar powertrain including SUX volumes and our due canceled X, on several EVs, in BMW EVs significant offset vehicles year, EXXX, to EV reassess programs. programs made XXXX, and lower-than-expected several new Throughout OEMs they by the and delayed GM volume EV the for backlog the strategies Leapmotor. to on Xiaomi Volvo, the partially

resulting the including large buildup of XXXX, The pace in into activity in both several slowed in activity a significantly opportunities XXXX, of quoting sourcing conquest segments.

Ram $XXX the of XXXX, as the XXXX had we business Ram is lower decrease The REV. launch million production in an million of The XXXX assumptions the including at several expected million Charger, our well In of provided last reduction we when approximately primarily vehicles, $X.X compared offset EVs, is expect backlog for $XXX billion. we Volvo backlog EXXX, by and the from partially our driven start to update $XXX delay Polestar backlog XXXX. in increase net the approximately the new X to by various GM as our

that to been Aviator. including Several Lincoln extended, by ICE were off programs have XXXX the roll expected

with XXXX. are launching In Leapmotors addition, others business new awards in and Changan,

to launches Ram XXXX overview XXXX the to in in for launch of had appendix. key We XXXX programs for as XXXX, REV. now or program Some expected such launch segments the both scheduled that been provided in are an

from sales our XXXX prior our increased joint million to at $XXX nonconsolidated million. XXXX ventures $XXX update The to backlog by

domestic backlog. pivotal remains customer particularly XX% joint nonconsolidated ventures OEMs. continue a nonconsolidated Chinese of representing new approximately Our win BYD business, to with our

also to we beyond. joint We which and ventures, consolidate consolidated the delayed result that anticipate are will We XXXX exploring to and in resume was will for -- program the in months, options our backlog new Seating backlog. coming increase activity increase result and our in would XXXX sourcing will selective

on in update year an to X-year backlog this provide later XXXX. future the expect We

XX track revenue generating the can growth. Slide margins expanding to key our use towards progress outlines metrics and long-term investors

expect For billion history. year. of opportunities largest And we the conquest opportunities are we have in our of flow throughout conquest E-Systems, X $X worth pursuing our we Seating, that about to in

award awards key as provide on expect or the customers XXXX, early of updates process We over we'll completed. the complete year course sourcing to the our activity their is and

These opportunities, with products. by significant with We seat our million see comfort driving thermal from are target interest continued of core continue innovative to products, growth $X along revenues to customers for our our billion XXXX from modular $XXX XXXX. in our

new with of growing. pipeline is strong and Chinese domestic automakers Our business

continue in to updates will new growth We China with give both key and globally. customers, on awards and

improvement. update we margin The We taking our in to to of are making key efficiency actions investments growing restructuring expected metrics our will operations. projects The are the The $XX will this generate $XXX progress we million and additional drive drive in million in savings. investments that will automation savings are savings an million we of XXXX. also annualized continue improve of to over will on Idea year, $XX making are

XXXX, a to very head XX,XXX In costs targeting us are were to operations. allowing we lower our able XXXX, in count reduce similar labor reduction by throughout and

You actions come on these through the in basis. the benefits report performance net from quarterly we see will a

of performance Seating XXXX, we In in improvement about performance delivered Seating basis of XX about accelerate improvement E-Systems. and deliver points in XXXX, in points basis performance net and -- in we basis and points net points XX our XX net positive performance E-Systems. of expect XX basis to In improvement

approximately performance XXXX. strong expect throughout margins. underlying we run exit us on the to rate total and on for metrics growth expected Demonstrating improve and improve margin for put the clear Margins as we are operating to core these company will the year, X% improved to path for sustained a segments both

continue to is XX% to least -- continue program. our to Our to capital focus allowing through income returning to to free repurchase convert cash shareholders of our adjusted at our flow, net us continue

XXXX EPS will per outlook. track drive our per performance strong average growth share on share The to our combined to repurchase continue on with XXXX. based from earnings year XX% grow is on operating to

Now to to the for like Jason turn review. the financial I'd call over

Jason Cardew

on last Thanks, but North a in The basis. same Ray. Lear China down declined period fourth vehicle increased the Slide and up year, while dollar the by euro for rates were exchange and in the to flat against Global X% volumes volumes shows XX production X% compared key was the America against X% was U.S. X%. Production sales but X% production in quarter. by Europe, RMB. weighted weakened

highlights the the for to XX Slide as quarter. growth full well compared for the as market Lear's year fourth

company Seating with over For growth was slightly above points E-Systems X up percentage market and year, total full the points, X market.

our full segments. America points, growth was favorable XXXX, North growth market both region, backlog at X in business Looking reflecting year by in over

conquest New Wagoneer as ZDX contributed to Chevrolet platform, growth systems the new at as the programs Wagoneer such on and Jeep Blazer Seating, Prologue the including Honda as Grand EV, in the Acura Ultium and region. General business Motors the well

Seating and iX. The the in to lower Range in Land X benefited was in BMW by X Sport. and was percentage with over Audi benefiting both new Series the contributed growth several Rover outperformance. from e-tron point, and the vehicles E-Systems with The and business Rover the electronics partially growth business the volumes higher Europe BMW business Volvo also region Renault Range segments XCXX from on volumes E-Systems. offset Rover Seating across market on

XX year. for China growth points, revenue the joint to their on X our over BMW XCXX by X you volumes revenue driven lower include and E-Systems. from growth points market platforms, the in Buick ventures, such percentage and by lagged When by China Seating, market our as Volvo iXX improved percentage nonconsolidated points the X in the Regal,

E-Systems and our Chinese offset to in New continue going as and key Geely, business share China. of portion grow the in Mona SUX we Xiaomi customer with in improve underperformance such sales Seating in a the on Xiaopeng consolidated in mix And the our China which forward. BYD will automakers

consolidated a partners clearer potentially which We also this active ventures, are China view our over consolidate and to select of provide positive strength the our forward a seating the in market joint competitive position impact have in with going growth discussions in market. with would of JV on key investors

global our percentage X%. total was In by impact nonconsolidated total market the by from point, quarter, fourth offset the company outperforming E-Systems joint partially by lagged growth global X%, line company by in underperforming market. Including ventures, our growth revenue with the with Seating the X revenue

XXXX. highlight fourth Slide to financial will I Turning XX, our results the for quarter

X% to $X.X declined year-over-year billion. sales Our

Lear exchange, foreign lower new reflecting and divestitures, of Excluding by in sales of also platforms, the were X%, offset segments. partially the our impact both business addition of acquisitions commodities, down volumes on business

our last platforms, partially reflecting positive Core $XXX Lear operating driven earnings offset benefit were million, on Adjusted compared $X.XX to to volumes our by net of offset by program. $X.XX were income, year per share lower compared net and as million year, backlog. a repurchase ago, by earnings partially $XXX performance the share lower margin-accretive adjusted

capital, Fourth year, costs. quarter operating offset cash in restructuring earnings last improvements million, and partially $XXX higher to flow lower to working $XXX was compared by core operating million due cash primarily

for and million a for in were quarter variance the the in sales Sales explains the XXXX. the adjusted billion, $X.X quarter fourth from $XXX XX Slide decrease X% Seating of fourth segment. operating or margins

divestitures, impact the exchange, on platforms, Excluding business. due partially of foreign Lear offset were X% commodities, by and the lower to of sales addition acquisitions down volumes new

production earnings by on margins ] down compared lower to X.X%. the reflecting XXXX, from Lear on Adjusted operating backlog platforms, positive margins [ or of Operating performance. $XX of net last our partially million, year, were with million XX% were key offset down and margin-accretive $XXX adjusted roll

segment quarter. quarter from XX of fourth an in $X.X variance sales operating XXXX. for Sales for the million increase the explains margins fourth billion, or were adjusted the X% $XX in E-Systems Slide and the

sales by exchange X%, strong partially foreign by commodities, primarily our and up key the volumes Excluding of offset on were [ driven lower also Lear backlog, platforms. impact ]

offset and goods $XX Adjusted performance in lower levels. exchange, X.X% of on in finished X% from resulted reductions earnings million in backlog. margin-accretive sales net partially our in by million compared net foreign XXXX. primarily margins platforms, sales, reflected performance The were The or year-over-year of negative volumes decrease Lear to $XX negative inventory

margins full explains billion, or in and $XXX million Slide the X% sales were of for Seating in the operating a segment. year Sales $XX.X the XXXX. decrease adjusted for XXXX XX from variance

commodities, impact due business. new lower volumes on and to exchange, of acquisitions down sales addition partially platforms, the were X% of Excluding divestitures, the foreign offset also Lear by

were lower rollout the partially key [ earnings production Adjusted $X.X impact margin-accretive platforms, operating our by down the and million X% billion, or with reflecting margins ] backlog. down positive Lear $XX Operating last year, from of adjusted and net X.X%. XXXX, to performance acquisitions were divestitures, and of of offset compared foreign exchange on margins

in the full E-Systems Slide for billion, year Sales for in operating XX or from of variance an X% increase explains $XXX XXXX. $X.X the and adjusted segment. were margins million sales the XXXX

foreign impact volumes the by backlog, platforms. of primarily strong up X%, by and lower were Excluding driven commodities, exchange sales on our partially Lear offset

$XXX Adjusted margin-accretive reflected increase million sales of our or performance and strong $XXX platforms. XXXX. million volumes to backlog, in sales, earnings Lear margins lower on by of net were X.X% in The offset compared X.X% partially and

our We estimates, schedules Now Slide provides outlook. customer assumptions assumptions internal full vehicle XXXX our including shifting on several XX that forecasts. production and basis production of sources, production to the and form global S&P volume outlook. base year our currency

industry production our primarily X% driven X sales-weighted Europe. down At guidance midpoint North will and on lower in than we markets, America XXXX that range, largest the lower basis, our Lear of a be assume by global in or volumes X%

a combination few estimates are While SUVs for current S&P due our of Rover key a and generally to full-size customer such latest releases production our demand differ as assumptions GM and global expectations. the the forecasts, aligned programs vehicles with Land

average to X.X RMB $X.XX average rate perspective, currency of RMB exchange XXXX rate an of euro and assumes the euro exchange per a an our dollar. Chinese From outlook

detail we Slide to tariffs. XX our Due for provides implementation, of the from impact changes potential scope have and not on XXXX. to uncertainty outlook any assumed size,

expected XXXX. the revenue to $XX.X billion. be decrease million At midpoint, to the in $XX.X compared or of $XXX be to is billion a this Our will range of X%

of foreign exchange, commodities, divestitures, impact the revenue down and Excluding X%. our acquisitions be would

to earnings XXXX. be midpoint, income implies million expected to operating in the in decrease compared to billion. of are $XXX X% a At is expected range range to Core be of $XXX net the $X.XXX million to million. Adjusted $XXX of the this

to be continued expected are capacity, through costs and reduce in we manufacturing support regions. Restructuring footprint $XXX as costs to and automation aggressively excess continue particularly rationalization to our actions to footprint approximately our million by Europe, lower-cost shifting reduce

Capital automation. spending in is our expected launches be vehicle $XXX to million new approximately fund investments and to

is Our outlook for $X.X to is our in is billion, The of $XXX $X.X cash guidance. cash balance for our inorganic the free share to flow us billion of outlook our of expected allows on midpoint strengthen with free maintain be midpoint to funding repurchases. year a at cash focus range target flow consistent to Lear's our our sheet well cash investments to business generating making conversion while million as be organic operating continue flow and expected the and of to the as XX%. strong strong

a to the our due to XXXX negative foreign from midpoint $XXX million the operation. walks as divestiture outlook. exchange and revenue is expected noncore our XX XXXX the decline Slide of Year-over-year volumes as of Seating well lower to impact actual by results

primarily from normal Positive actions, suppliers, cost offset and company margins efficiency our net by recoveries performance and price adjusted driven commercial reductions the optimization, and maintain Lear to performance with X.X%, contractual inflation restructuring technology savings programs. Idea customer reflects benefits by by cost net overall reductions our from plant our fully material from wage initiatives margin-accretive strong in expect at backlog. We

by We've maintain E-Systems in lower performance, volumes our be by flat midpoint detailed operating X.X%, Seating The at by of existing strong is of the and margins walks the improvements net margin-accretive to impact flat to operating expected of driven in offset for included platforms. continued to margins performance backlog, the on reflecting on at our volumes Seating the are guidance platforms. appendix. E-Systems segment existing impact offset expected X.X%, lower

points reflecting investments positive basis XX increase expect net points E-Systems We in XXXX, improvement Seating in in previously estimated, both to XX and points we our basis to the of and momentum automation performance margin contribute XX restructuring the actions. XX in from an basis

of our conversion, shareholders. to in the repurchases to full half target million. In highlight continue we the XX% share enabled back second our our XX, $XXX target repurchases cash the return quarter, capital we commitment our fourth Slide us flow we bought stock, to to In Moving million, approximately of worth year. of to exceeding free bringing to $XXX which million accelerate XXXX, of $XXX achieved year

which Over we the year, will by course share count the approximately EPS going growth support forward. our of X%, reduced

repurchase XX% flow with which generation in buy and shares we repurchases a of cash XX% Since and program XXXX, XXXX, flow back In are depending stock acquisition have again worth $XXX over of of we opportunities. cash to returned of free minimum worth enable free conversion, share on and billion repurchases initiating to the free million cash shareholders additional repurchased targeting $X.X dividends. flow through will us

Our has $X.X remaining, allows shares current us to authorization repurchase share December XX, repurchase billion through which XXXX. approximately

turn to closing it I'll thoughts. for some Now Ray back

Raymond Scott

Jason. turn Thanks, to XX. Please Slide

margin with are expanding our our Chinese and reducing In are by initiatives growing are complexity. grow automakers, cost on share Seating, solutions profile. domestic strategic our we all executing market and We innovative particularly improve the focused to our while customers,

in are thermal optimization, new segments. we steps visits accretive accelerating we aggressive both and capacity of and operational while to to the including making improve business In in deployment continuing manufacturing products comfort will our deployment We're Investments drive margin winning margins. the E-Systems, accelerate of are powertrains across continue to advanced our expansion at win automation, all new performance.

help committed shareholders. excess to free remain on will we to our of continue Our to cash strong cash conversion achieve flow And generating returning XX%. cash us focus will

your Now we'd questions. take happy to be

Operator

from [Operator today comes John first BOA. our Instructions] question Murphy And from

John Murphy

'XX, side, dynamics of kind angles. on think of the business, of as Seating talk mean, I curious just share want about innovation specifically X with parts. to sort in 'XX, X could question the you market like sounds automation, like ComfortMax which also go launched of particularly hand-and-glove that. your GM. like with it's competition cost and quickly adequate quickly to underprice earn winning of the the ComfortMax, competition just business very I next X and angle kind ask, stuff And 'XX, are you're years, And about if maybe from which very and in you still specific then good few you Ray, margins it being the in on I'm the actions able and returns? first from

what will I'm win greater X market think you sort and of forward just to curious ability those go years. factors share business drive out your even these a your potentially in

Raymond Scott

mean Yes. need was I've seen to where efficiency and been There so and similar good this drive even cushion Thanks, change. we've the the change. I've obviously, Seating question. need in and need Murph. really years been in back building some XXXX, ago, I That's absolutely change at way the to about to And since time. process. for even to were thinking a we been States rooms the the things very the were we've to

the end consumer. all strategic that which weight, the a from respects, the really for of seeing, us cost, modular change comfort, think So a in mass. more of lot about feel seat really acquiring lot we're very and really to we've selectively data allow it that very, eliminates improves in the been sensation the a and approach, And dynamics of companies

components now, components. automation, manufacturing of with looking And we and digitalization, is to have combination. continuing itself facility been the that the so at themselves combination a how right It's work we're

costs out towards efficiency can inefficient. really geared your being we're selective looking buy So the and and on generic to manufacturing capital able equipment now, The lower way is as at buying is benefit. it of very own more a very we floor, going our much plant capital driving

look what take, really plants, get think capabilities, a Lear next it we I [ our holistic hold we all that into really facilities. was grabbing the to how all by we're seeing had of them and was our the ] a really step culminize in into the at Idea of different

within And our so a within continuation one facilities is Seating. our expansion drive to just margin

But facility. of at makes absolutely, integrate down your generate can second it with our is how our and with to all the seeing goal very, to they innovation, And is very manufacturing look that on in what our costs seeing really but we're we're really actually side both "holistically" nice now whole is And we modular question components driving the continue across good. the competitive. what seating, so returns is it

actually nice And that's why I at durable, using level through we We the think and we being done protecting We're how "assumptions" as model job really going our margins. talk and competitive. we've very at a the approach a at now really to been have a that investments to think margins, to sets a look And nice really We've -- we're protect And benchmark. we our think margins. future Murph. we're really a is able the return. compete that made, our in we deserve sustainable look this I margin We about applications. gets that it has

for of it's what looking bit investors but to. because understand ourselves I we're we've in competition And lasting the don't about internally, advantage we're presentation to our business. tracking it margin, so what careful, fair durable, also And the how a I we're I'm I'm I at type created see think and in a want intentionally, to advantages little think, this hesitant we put seeing how that's

way thinking. a get drive and we different to And different the of so That's a get process we to the retain goal. margin. And

go even these and ability doing. we're confident why that's to in in show really though of confident, delays really so our our really, we've we're quoting in had And some customers what feel programs, we

recent most won and confidence what of we validated, it. year, the and in this enormous gave did with And to General was and midsize big that think we an I as Ford us that's we're went the That going talked Motors. and this modular launch announcement, amount a I truck there approach step. And it's about later

this go launch, existing it these of so and tone think that of to could kind kind be we And to in used cost programs we about and drive program program. was new efficiency in an had the what sets a

timing the better. be And couldn't

talk something we different. innovative it cost innovative and when what customers, looking solutions and automation weeks and digitalization, getting solutions, for that's side, Our they're on they're looking We about delays, ago, right is just these have for, through in it. the we China several were

helping retain it's board, across so get profile. the really margin and we us to And that

John Murphy

GM Ray, shorter Bid products faster obviously, on with just are launch, you now than just to with that, that your schedule traditionally. sounds a but one it to in it do what like follow-up. book, China, ComfortMax, actually

I opposed we of to to at lot XX now? years what's kind I XX looking just in we to used mean it players that faster. to mean a X -- are might think? timeframe like be Because like sounds the traditional to years book So XX bid as China months X to to launch

Raymond Scott

Yes.

our think -- recent turnaround. faster we designed determined I much the much award. think, have isn't like I validating a everybody move actually And don't style it so by on is this that I frame, to push results to think was seat. validated, a having system can And I said, certain and for by it's was agnostic We so quicker.

significant. got, announced I think the was we award it, we

to moving I approach credibility is towards how seats. gives been with talking think at of we're what modular a Motors a again, seeing lot really, General we've looking how quick about

to It us allows scale.

allows flexible with to as think of is, our the capital. to one comes in, be capital questions putting we're mind us I that it

for across to single continuing And that's multiple cost. our so lower invested modules program a we can run capital

Operator

Fargo. comes question Colin Langan from next from Our Wells

Colin Langan

the this cut going help we think things you You're opportunity can any incremental, slow frame should lot decrementals? how color Any market on There's on a of us Just to how to there cost actually market about uncertainty out if Is one. down, the is year. settle more assumption? down?

that line commented Is reference there? also just that and you you're And you're GM was. Rover. S&P, with you're different understand on to I'm trying but Land in SUVs more what that cautious

Jason Cardew

Sure.

in S&P's thought the we cautious. at we for with of start platforms that last question, me Colin. were forecast Let too look When part particular, they those

I that. significantly, down on was That gone platform I it S&P a change, I that given the magnitude XX%. just highlight us, make pretty their platform the just On full-size -- think, through sense SUV, for the GM CPV of think volume to assumption design us, had that important they've to on didn't that that year-over-year thought

one The really for of think, strong we finally, fourth I line JLR in the really we other for primary performance the Rover, reasons December saw That we demand of particular. programs, was exceeded the Volumes those the sort strong platforms. with than Defender, of group Sport a were from in our and and Range stronger had in -- guidance expected, Rover Range quarter.

at JLR a shortages. dealt were whether there level run they was so issue aluminum of targeted other throughout last of that supply of finally, part able with to or it year, the disruptions their the year, And the And number were end at production.

we XXXX well. so as continuing And see into that

IHS little S&P higher a as or we're platforms than bit on So those well.

In terms year-over-year. and of do market, the have Europe America overall we North again down

a Europe. that market And So weak that started relatively off we in or expecting way, we particularly demand. are weak see January

XX% than richer appendix that in back, as the little the around that that in margins, in than a E-Systems given well, and decremental presentation. we that of They're and range. Seating included are that of just in the they're in the right a richer little of the programs you'll bit down terms see mix In slides

terms the thought guidance the about laser-focused for overall, of plan as and this year. year our for what we that's built company decremental the our on for really were In margins we

sales And than is the so are conversion the million downward down on that $XXX X%. less

we're million think down year-over-year. $XX I

impact offsetting downward on conversion segments. automation performance volumes so in that we're and through that And net both lower driving we restructuring in making very investments were of and the focused the

of So that's part the XXXX. key here for story a

Colin Langan

of color something on margins? considering? QX be should tough. warning we cadence about that are kind being any people of Is A lot the And of

Jason Cardew

Yes.

the We trough specifically today, first haven't to to quarter the first expect guided quarter the we year. or plan be for didn't do the margin to but

last at building second year. of year an to we in the maybe half earnings, down of of terms were And similar cadence revenue of the the half improvement the and of pretty revenues, see we the the plan even then half and in As slightly. we see second sort looking first

And year. in the see happening performance throughout business we terms of the steadily the in improvements that

last carrying sort from and momentum we of year of some efforts year in that customer the automation First, and got last because have wage of in we've year the heading But inflation. into we've made process the investments this nice into offset the restructuring price-downs start year. to are

the we And will quarter-to-quarter. of improve kind rate year, through so progress run underlying as the

trying the You combination automation improve may see have run some will is to year include that that, be outside and concentrated the really the underlying going choppiness restructuring. throughout those due some driven But that adjustments. we're of to and commercial particular today negotiations, of rate, by what stress to oftentimes you're kind in one retroactive of steadily quarter

Operator

from Our comes Dan question Levy from next Barclays.

Dan Levy

through is to I first years visibility, you your programs. that start pricing there on X question wanted of a had some Interesting you're how less and to you're backlog, only recoveries with and cancellations. saying

are seen the So for resources materialized, automakers, you to recovering having than there's of you volumes fact these just B, that allocated the on the what extent the on never we've what where in A, discussions visibility with reflecting programs but some past? less launches and

Raymond Scott

Well, I we But not volumes cases, these the to And particular some nature that from in all, start type of we changed see to in we guaranteeing the continue volume. commercial so and change. lost and are negotiations, obviously a some as our volumes ability that's we've cases we'll capital put where settlement requires in negotiations. customer And for of recover, dramatically recovery in think, volume. given typical the successful first contract the In of perspective, in place been of have

the I aggressive deploying more capital. other are bit think that was how nature of conservative on we're a the thing we little

good particular deploy for we particular given cases, some a completely a on uncertainty. volume. at in so a a would record, was didn't capital rate run If facility track the historical capitalize there we for And particular

our deploying recovery And want more so customer. after tempered combination to I capital we've with we excess, in deployed bit little much of investment capital, those areas we're though we But how you in at do of have at new our we particularly look and that's just that about from how we it. the customers. think And a get go Jason, talk even look if X,

Jason Cardew

Yes. how our year the and volumes that we've last start where to the you are year, we to we capital capacity we're Well, at quickly that's if look the of scale at been guidance think deploying new of I best the ended the seeing market. back expenditure indication able lower up in in response

your pricing and not so to steps can by to that certainly And demonstrate them that taken you've putting in place. try helps help capacity you that in negotiations the already customers when

a the think I the you're that on, volumes margin. repriced certainly rolling margin to accretive segment on you to overall -- result of the at as But it's margin impact the programs. And a backlog on seeing have look on them an point where new business lower the we consistently

over for that seen this with our We're we've So continues backlog. a the that guidance several at at the last the about backlog albeit converting coming XX% smaller year, and years, year.

Raymond Scott

looking bit level of that how will rate they a Dan, I confidence what dollars, And at into deploying, we're production, look that that or real but of delays we is really talked have and capital capital we're are we've I mean how will in deployment volume. their contract in the think, activity questionable. We Seating, working the get traditional there's some other E-Systems both customers are quoting at programs at like a those. buildup look signing the and investment talking just as about as or a higher we have this up then quote about through powertrains, little and and more different but of you look and run what not

cover it significantly very we And make not and our so it's the is a ability have questionable we program. in -- volumes look so kind But to that -- on if cost And program. something in And questionable, in some of place of we history, not come modifications. down do we're targeted it's the delays and quoting quotes really cases, capacity of at too some some have that the a process. putting won't contractually we given we that's the

Dan Levy

That's commentary. helpful Okay.

think their look business in which the your by competitors Second I of to as spin question, may punching move at is of I light harness at business, about piece of E-Systems. isolating wanted to And ask margins. that off some wire their lower one a

Just you for wondering Is playing there consolidation landscape merge. and competitive the an view consolidation E-Systems. out in opportunity or how

the was, on time long-term mention, What a of some think, all maybe long And inflation seen? go. you E-Systems is I past, I at update labor the just the one know in margins point. this then today targets could that where you of That you gave could ago At X%. given we've point,

Raymond Scott

point believe not E-Systems, that one, I particularly just, lot where we're given board, consolidations. first the in that but made, I think think of different see at, and I the Well, a you we're going there's industry across to the

front we're make think at where sense I other the we've ability seen going And companies are think to announcements. their stuff. scale, that this And to of to all thing. that at, have they're probably I of synergies, efficiencies,

don't think E-Systems. exclusive to just I So it's

constantly something within we're respect course may very look we over And of Lear we today ways it increase on, to obviously how and looking next both at focused value. it And shareholder Corporation, or in Lear year. the so it's at stay can that we look create the how

way we to remain flexible. always we'll that our any for shareholders And so create we're and value open can very

right But our continue to plan now to is generate.

executing, I think we executing, talk executing. about

plan and and to continue something that more have in margins We look generate to it. build if to durable absolutely itself willing segments. is faster, we're else And a at value creates to present both

Jason Cardew

of of highlighted as is capital right that's volumes, challenges, a those operating that end to of continuation the stability right And add some in longer in of pinpoint year performance when of today is this our still in the deployment North of asset think we first this America right see the in wire long-term of business year the Dan, underlying space. benefit that way the the in year any some And and the this target target. have part margin actions that terms we efficiency going our think year, restructuring improvements provide fixed call. as difference will significant as still kind investments, made segment. That We're terms term, term. I that North move think X% see in particular, we well in our to only last that the given we don't I and, continue happening you is gains in as the not particularly year. And on the business working level throughout we've see margin timing operations long thing I'll towards into to But automation the throughout of business, the happen improvement and America of last in about

Operator

next Joe question from UBS. comes from Our Spak

Joseph Spak

a first I I just want maybe or about clarification in housekeeping. always it's the I backlog understand for just you've number. could of like walk, but think and the and part even exactly is above start the I guess I net said thought point What when to talk like a If backlog, this wind-down. said you but of it that in that? says past today, excluded the that's you sort I -- side, Because I the from on know

guess I is. So that to I want understand just what

are then walk, you And nearly the a just but in $XXX is that's headwind? sales I is what the other? missed full-year divesting then in what sorry And -- million also if this, what --

Jason Cardew

right. All Okay.

So starting the wind-down. with

talked product of about categories and year we the we've And this XXXX that So most which that significant out to broke are our separately, Joe, years, when we audio have lighting for exited backlog, electronics on backlog. the last side, certain disclosed we that multiple initial XXXX business.

is so And speak. of kind that facility now. the product closing largest down Germany produces that We're as rapidly we in that winding

captured we in And thought was just and And so as that next to level important the backlog. separate the to over several visibility of it separated business provide programs winding the go-forward it. we of the magnitude from given some years, have that the down

but the business that not anticipate portion item divesting, where had We completing primary that's of And end selling is complete. fourth business. fabric that that terms value that quarter, walk special nearly the down wrote that the a of key driver the complete, expected kind the nonautomotive proceeds to towards in was In that And of the here we to what relative of we nonautomotive business, today. million quarter, transaction book we're in in we're of see small of by there a quarter. first from the driver that we a fabric have yet you sale the assets deal reflecting a fourth $XX is what the

And question to in others -- terms in the in what your last walk, regards of other was the the part comprises that... of is

Joseph Spak

Yes.

Jason Cardew

Okay.

how of me. Yes. have it So front I much is it? in don't

that. No I'm through increases one's that and we'll driver customer sorry, for Joe inflation pass-through the we think the that commodity [indiscernible] I to primarily you the back to directed biggest have missed Yes, side? pass after. suppliers. other to get the revenue we on received that's from that. of our were That's I what

Joseph Spak

Okay. That's helpful.

out or exactly sort I'm investment? see and is guess, times a of guess to anything? to all near systems and, as One, off it go about for I term China you of terms pausing all and at but the of go move JVs. investment parts, continued that I you you've plays maybe again, CapEx -- you a just how alluded need significant could sort I higher for just and or improvement, cash past completely of in sort for about talked that on wondering facilities in on automation, in cash to you're this well. I like the be. Ray, And not that that driver if earmarking mentioned path, of second case of that you like talked could. as if also I question in would the of wondering you is, that the number potential just cash Or some just sort The X how consolidation am policy guess, are automation capital,

Raymond Scott

doing been the the the we get. Well, on automation, I think capital, we've best paybacks

is One biggest the just-in-time of facilities. the

And so really to pause. no need

on significantly X% integrated thing it target think, have it's lower capital that more or capital, We our only again, that. the -- of needs. a above We our go and because a good don't and to a our now, that right we're I don't think come need less improving, significantly see going capital revenue and dollars. I very, we've for around efficiency -- we actually own as down are seeing manufacture numbers numbers our and specialized in-house I

And are based way And in looking going don't regions. and that's I really we've higher-cost are got place. spending at really to a change now I the investment it. some, going see good, right dollars policy think, been so higher-cost on the areas, around we're change plans We've

it more validation no our Some of just But within changes. and plants. improvements significant that's process

Jason Cardew

opportunities at we benefit even Ray so program the the automation target we just-in-time there the side investments, programs that just launched, that a paybacks incorporating when ample or where have are Those the mentioned, are on is the long that. And you -- as full better remaining and of of have Yes. get the short. start program, life

And any don't benefit so see that there's -- to we holding no back investment.

hit flow cash of that restructuring sort balancing meeting capital what through share Again, to that around using we're can as by XX% long make terms decisions that shareholders we conversion can target. investments, repurchases returning [ cash of we as free target, investments, of XX% ] sort do to that's cash the vessel in

that's the cash making way around decisions deployment. we're So flow free

small being likely contributor allocation this In significant cost, don't year. a anticipate nonconsolidated JVs, that reach any, to to if we terms a It consolidation. be the capital of will

plans not a particular for that's overall. in our So allocation capital factor

Operator

Delaney Mark from Goldman question Sachs. final comes our from And

Mark Delaney

in Coming some XQ guidance at this market 'XX X% again year. for growth of and under implies headwinds

factors, cancellations the pushouts. those You to spoke program and including of some

you As schedules your including could business get today? maybe occur landing you and better can help based the you're growth are us understand what you on back in XXXX, XXXX backlog, to the new at levels for in that look think over the you market seeing if now in where when targeted

Jason Cardew

Yes.

going to think growth a choppy. be near-term the I little is

in as for programs quoting is in coming year us. we're highlighted, weak, you've that timeframe. XXXX off launched quarter. weak that a that are may strong growth is for relatively will still a And fourth programs that XXXX be be timeframe. be There 'XX So There's But extended open. may that

number an modeling a provide business. parts, we XXXX to the not for give that to backlog it's today, to many moving or helpful there's -- to just is accurate analyst really would the be provide so that's chose reason them the for difficult And investors

a But to clear and the 'XX path pretty 'XX we see both backlog.

to of in say sort so that's the could what midterm. we And near

'XX, 'XX, going prepared competitive opportunities. We're remarks, advantage 'XX, Looking we've billion in you Seating. $X out of not to countless Seating that's highlighted the opportunities built to to new see leading the in launch of to going the we we're that growth share pursuing where In will we're previously significant lead a all that significant win we've business 'XX going the but market in communicated. that of and portion Seating to growth allow 'XX, and And the achieve us in to win significant sort 'XX, that. that's of targets window to that,

growth have our to have share. relatively with grow. seen nonconsolidated our including market, year, continuing Even we market And share market the still and the last of market growth weak we did JVs, added positive over

step be a certainly forward bigger will 'XX continue. though. to trend that 'XX than expect we so And

Mark Delaney

extra just your in but recognize if And around speak cost do might able in take be it potential on increase it's then could how E-Systems the mitigate. the little go exposed incremental in more in you your able of tariffs, you And might you steps detail maybe guidance, effect, tariffs? of and and into not to you may much around a maybe both more to business can bit tariffs XX% Seating if the be does, be to speak much how the

Raymond Scott

on It's XX%. -- And XX% of here I'm the that several from I've the midnight. Obviously, thing or see Yes, a And to I'll to with little a for this last realized more going give leading solution not here get then, a I a up going of issue. night, days you learned table executives you an going insight. come the customers sit to and obviously, and over we're pound suppliers, is one lot industry all our clearly whole this to the industry. holistic tell talking or and to Saturday XX%

choices. talking mean you they really run then run in I long can end-customer, down that the may -- is they around. can, then on what through of the that we're very the might which seem is customers, to similar inventory, products executives as run then COVID, pass hope back that to one move have to as I that be what can a and they and realized, from doesn't have and their And again, think happened programs shut reasonable, run it or I get like from business them I they trying they and said, for by through that intermittently inventory, what highlighted And run

So your weakest It to be customers this how in as at an issue. of is only protecting industry on strong how position was Sunday, to It's we're that But going respects holistically. there solved the going board. was in work lot themselves. isn't you're would as be a looking link done some -- across ourselves,

to we be going going had it But And shutdowns a solved be with said, similar in the it's it's of end going going intermittent lead fashion. And in were that to the downtime, the kinds of with at day, to suppliers. different. different be lot like of think all across that suppliers a letters I clear a I all it's so was because of to board had very it's solved, to all lot but that requests solved and

Jason Cardew

I'm the lots you from been to everyone our glad Mexico point are what And Mark, one make, and in numbers asked to U.S., level-set think just just want on opportunity I question, of that. this there's the floating around take of terms to imports I do

in the and total E-Systems. Mexico billion U.S. year million that to billion, So of from last imports $X.X Seating were $X.X $XXX about in our and

our a seat And than in Seating, cover primarily various component. that's think circulated what's comfort our larger trim, and I so number business estimates. In it's structures thermal our it's little been

in Mexico. going for is anything North competitors all to And well. the same that's case of in So that's manufactured America our in be Seating labor-intensive as

primarily it's business. our wire E-Systems, In harness

customer. of eventually we're wire harness so is importer the And a oftentimes, to that shipped before record

by roughly China, from our and the much [indiscernible] U.S. last the on are is imports China imports terms million In Canada had very year and exposures $XXX of And that from it's than a Most of to to us. negligible $XX million of our recoverable impact U.S. of smaller, less customers. Canada

So impact. modest

And risk of reduce customers know building tariffs are with actively working near some the to we in term by and up try our near-term I inventory. the

of the And to so Frank just of and on as working But are imports that you have so actively level Nick, you well. kind the with level-set I us on wanted that. teams

Raymond Scott

Okay.

last thank you and the on think -- to the the for but XXXX. think I again attending the team, Lear I in you team, that's question. for call. Lear just thank did team, for the you the I those majority call, the everything of And

We to in continue invest areas. right the

We what focus do we're far going as to on continue to as executing ourselves differentiate continue this to and year.

going we're for and go continue So through year build this I appreciate efforts long to a to all the to sustainable path execute margin growth.

So thank you very much.

Operator

for thank we'll call concluding today's that, And do We joining. be ladies presentation. with gentlemen, and and you conference

now your disconnect may lines. You

Lear (LEA) 6 Feb 252024 Q4 Earnings call transcript