Lear Corp at Goldman Sachs Industrials Conference Summary

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

Question: Mark Delaney - Goldman Sachs & Co. - Analyst : <_ALACRA_META_ABSTRACT>I thought to kick things off, there's been a lot of volatility and uncertainty in the broader auto market, not only from a fundamental perspective, but also some volatility in terms of public policy. Given that backdrop, can you share your current views on how the year is shaping up? And maybe, Ray, I can start with you.

Question: Mark Delaney - Goldman Sachs & Co. - Analyst : And Jason, would you like to add anything around the market outlook?

Question: Mark Delaney - Goldman Sachs & Co. - Analyst : That's a very helpful update. And maybe sticking on the topic of cost and automation. The company has highlighted automation as one of the key drivers of cost improvement including with its IDEA initiative. I think you said in the past that labor is about 13% of total company sales, roughly $3 billion on an absolute basis. How much of that could be automated? And what are the largest areas of opportunity for automation?

Question: Mark Delaney - Goldman Sachs & Co. - Analyst : That's really interesting. I mean, it sounds like even with what you have in the pipeline for '24 and '25 in terms of some of these investments, even with that, you'll still be in the earlier innings of this journey around automation. Is that a fair takeaway?

Question: Mark Delaney - Goldman Sachs & Co. - Analyst : No. That's great. I mean, it sounds like there's a lot that's going on there both from a cost and business sourcing perspective. And I just want to make sure I got it correctly. So just-in-time 20% to 25% automation opportunity for some of these programs you're looking at?

Question: Mark Delaney - Goldman Sachs & Co. - Analyst : Okay. There's been a lot of market share shifts in the industry, especially in China, maybe talk about how that's affecting Lear.

Question: Mark Delaney - Goldman Sachs & Co. - Analyst : That's great. And picking up on that broader theme of market share and some of the success the company is having, specifically within Seating. And Lear has spoken in the past about its just-in-time market share having been about 25% as of 2023. You've got a goal to get to 29% by 2027. Ray, maybe give us an update on how that's progressing?

Question: Mark Delaney - Goldman Sachs & Co. - Analyst : Okay. That's great. And then another opportunity within your Seating business has been around thermal comfort system or TCS. Is Lear still on track for about $1 billion in sales and reaching your profitability targets for TCS by 2027?

Question: Mark Delaney - Goldman Sachs & Co. - Analyst : Maybe we could shift gears to E-Systems. Lear's electrification business is assumed to be about $800 million of revenue in your 2024 guidance. The company had been targeting over $1 billion by 2025 prior to the EV slowdown. Recognizing EV production has been slower, what are some of the growth catalysts you see from here for E-Systems?

Question: Mark Delaney - Goldman Sachs & Co. - Analyst : And Ray, you mentioned two conquest opportunities. I think you said they're both power distribution. Would that be high-voltage products you're providing in terms of wiring or is there --

Question: Mark Delaney - Goldman Sachs & Co. - Analyst : Okay. One of the things that's been very topical for the broader market and industry has been around tariffs. And I'm hoping to double click a little bit on that topic with Lear. Maybe help us better understand how much of the -- as you're having conversations with some of your customers and thinking about how you could potentially share some of these costs if tariffs are enacted, how are some of those discussions progressing?

Question: Mark Delaney - Goldman Sachs & Co. - Analyst : Would there be an opportunity to move labor from Mexico to Honduras faster if --

Question: Mark Delaney - Goldman Sachs & Co. - Analyst : Okay. Jason, a couple of financial questions, if I could, please, for you. Given the increased focus on automation and your IDEA initiative, assuming industry volumes were to be flattish next year, how should investors think about margin improvement in both segments? Maybe you can touch on both 2025 and then also longer term?

Question: Mark Delaney - Goldman Sachs & Co. - Analyst : Very helpful. Jason, I was hoping you could provide an update on your priorities for capital allocation? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 2:20PM, LEA.N - Lear Corp at Goldman Sachs Industrials Conference

Question: Mark Delaney - Goldman Sachs & Co. - Analyst : Great. Well, unfortunately, we have run out of time. Jason, Ray, thank you both for joining.