Lear Corp at Deutsche Bank DB Global Auto Industry Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Emmanuel Rosner - Deutsche Bank AG - Analyst : That's extremely helpful. Just a quick point of clarification. So when you were talking about the second quarter so far, as you said, revenues maybe a bit softer than expected, some one-times, et cetera, but operating income still, but in line with where you said that, does that imply a decent sequential improvement in margin?

Question: Emmanuel Rosner - Deutsche Bank AG - Analyst : And that upside would be driven by (inaudible)

Question: Emmanuel Rosner - Deutsche Bank AG - Analyst : So, the benefit of people in the back of the room. There's a few there's a few seats in the front (inaudible) from table here. Thanks so much for this overview. You were mentioning in initially you recently announced this evolution of your strategy idea by Lear as well as the acquisition of the industrial automation. What role will automation in new technology play in your plan for expanding margins in both sides.

Question: Emmanuel Rosner - Deutsche Bank AG - Analyst : One additional topic on the environment, and then we'll dive into your businesses, but the moderation of EV demand is having a large impact across the boards for OEMs, for suppliers. At the same time, we're seeing combustion engine programs having longer [tails]. How has this impacted your backlog and obviously are adjusting to the changing environment?

Question: Emmanuel Rosner - Deutsche Bank AG - Analyst : There's one quick follow-up. I guess what had surprised me when you updated the '24 backlog was that obviously the electrification piece would come under pressure, but obviously seating as well as earnings, even though you essentially could sell the same seats on promotion and then on EV, like it's essentially the same. So is there sort of like eventually a one for one replacement in terms of if an EV doesn't get made and you get the business on the (inaudible) side or is it a function of in the end every new vehicle, it was done, the launch was likely going to be an easy and that is sort of like being pushed out and you don't really see that thing (inaudible)

Question: Emmanuel Rosner - Deutsche Bank AG - Analyst : Let's talk into a seating business, what do you view as sustainable growth of the market, particularly over the midterm. At your seating product day last year, you introduced midterm market share targets 29% for JIT, 32% for total ceiling, including components, what are the catalysts and how the thermal comforts and the opportunities for complete the modularity helping you achieve this target.

Question: Emmanuel Rosner - Deutsche Bank AG - Analyst : Your large sitting competitor recently complained about some in-sourcing of chip sitting by some OEMs in Europe. Have you seen this does it concern you? And how does thermal comfort along with your automation initiatives contribute to your margin?

Question: Emmanuel Rosner - Deutsche Bank AG - Analyst : Let's talk about E-Systems and electrification of a system, a particularly strong Q1, equivalent to 10% growth of the market, partly due to the Ford and [GM] platforms. Do you expect this strength to continue through the rest of the year? What kind of incremental margins can we expect from this segment going forward?

Question: Emmanuel Rosner - Deutsche Bank AG - Analyst : Can you remind us of the size of the electrification opportunity for Lear? What's in the backlog, what's being quoted, what can revenue look down the line?

Question: Emmanuel Rosner - Deutsche Bank AG - Analyst : What's the opportunity from hybrid specifically in your portfolio?

Question: Emmanuel Rosner - Deutsche Bank AG - Analyst : Maybe capital allocation is the next question. What are your priorities for capital allocation in the current environment in between CapEx, M&A, buybacks, regular dividends? And can you walk us through your M&A strategy?

Question: Emmanuel Rosner - Deutsche Bank AG - Analyst : Right. I have one more question on margins and then we can open it up. If there's any questions in the room, you are targeting 8% operating margins of both segments in the mid-and midterm. Coming out of last earnings, we generated 6.6% and Seating, 5.1% in E-Systems, what do you need to see and do in order to get to the 8%? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 11, 2024 / 1:00PM, LEA.N - Lear Corp at Deutsche Bank DB Global Auto Industry Conference

Question: Emmanuel Rosner - Deutsche Bank AG - Analyst : Thank you. So we have time for maybe one or two questions. Unidentified Participant Good to see you guys again. I guess, Ray, my question and follow up on your competitive position, low-cost leading technology or capability and you're winning share. My question for you is the subsector seeding, the pricing dynamics versus OEMs. And what we've seen is from some major miscues from your competitors in the last five years and more recently, mid-cycle conquest was just unprecedented, great for you but in terms of the sector's pricing power versus that OEM unrelenting pressure, are you seeing or are you concerned about your competition being a little bit more aggressive on trying to win business three years out or two years out depending on the lead time? And is that a big variable for you when you're thinking about your three-year targets that Emmanuel just ask you about?

Question: Emmanuel Rosner - Deutsche Bank AG - Analyst : I think we're out of time. Ray and Jason, thank you so much for the coming inside.