Lear Corp at Morgan Stanley Laguna Conference Transcript

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

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : I just wanted to just -- what do you want to talk about? Let's start out at the top. What are the key messages that you wanted to kind of convey to investors here, and then I'll let William kind of go into -- double click on some of the topics.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Thanks, Jason. You basically answered my next two questions. I was going to say sometimes you use these opportunities to update some of the guidance. We just had a big chunk of the German auto complex warn. Our team thinks Stellantis is next. Ford depends on the quarter. GM hasn't warned yet, which means -- I don't know. Draw your own conclusions. So anything else you want to -- like this is revenue driven, right? This is just pure production. Is there anything mix-related as well beyond the EV cancellations that you've noted?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Well, I mean -- so you've seen Ford, Volvo. You mentioned they pulled back more formally on the timing of the EVs, and taking some charges, some large charges at Ford to help compensate suppliers that -- where you made investments or product that won't be made or won't be made in the time line or volume anticipated. How disruptive is that for you? And does that provide you -- would you have been building up some of the capacities yet to make those products such that what starts out as a restructuring charge or an impairment at your customer then provides an opportunity for you to make restructuring improvements in your business going forward? Or is it just -- is it -- or have you not developed far enough into those programs to find that?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : And you think these kinds of things -- I don't know if you want to express, do you think that this is the kind of thing you are expecting maybe some other of your OEM customers to follow through on, these delays?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Thanks, Jason. William? Unidentified Participant Maybe just to double click into China for a second. I think in the past, you've said you're winning your fair share of business with the Chinese domestic OEMs. I guess how should we think about the opportunity for Lear in China? And I guess, how do you think about the competitive landscape as well? I think right now, there's not really a lot of domestic seating completion. How do you think about the potential for a rise of domestic seating competition in China?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : 30% of BYD in three years?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : And where is that today?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Okay.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Not Xiaomi? Who does the seats for -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2024 / 9:00PM, LEA.N - Lear Corp at Morgan Stanley Laguna Conference

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : What are they like to work with? What's it like working with a phone company that's doing auto?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Maybe just a moment, if we can just check with the audience, any questions for the team here, if you want to double-click on anything. Have a think about it. I'm going to come back to you before it's over. William, keep going. Unidentified Participant With shareholder return top of mind for investors, especially in the suppliers, anything automotive, you've said in the past that you're targeting $500 million of dividends and buybacks this year. Obviously, maybe some M&A fits into that. You've done a lot of automotive -- sorry, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2024 / 9:00PM, LEA.N - Lear Corp at Morgan Stanley Laguna Conference automation-related M&A. But can you maintain that level of cash return into the coming years and also investing internally? And I guess kind of going back to the M&A point, where does M&A fit into that strategy?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Okay. Jason, why can't your legacy auto customers make money with EVs?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Would you say -- is it cost? Is that the main -- so why is the volume not there?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Okay. So given your knowledge of the automobile, not just the seating, but of the electrical architecture through e-systems. Do you believe that there is a credible path? And then also of your increasing knowledge of the winning kind of formula in China with the Chinese domestics, your growing relationships with BYD, Xiaomi, et cetera. Do you see a path for like very affordable EVs, kind of like -- the kind of where you could look back and be like, I cannot believe how expensive EVs were in 2024. Is that something you think is realistic this side of 2030?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Do you see scope for Chinese firms to work with your Western legacy OEMs onshore in Europe and US in some capacity?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : I know you don't.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Okay. And I respect -- I don't want you speaking on behalf of your OEM customers. I get it. I get it. But given, again, what you're learning about the Chinese, and your perspective of what's driving the success there is evident and valuable, what is it? Beyond volume, beyond the Chinese -- like BYD just has x times more volume than a Western player in the similar segment, is there something about the way the cars are designed or the piece of their innovation or something cultural or vertical integration? I mean I don't want to put words in your mouth, but what would be the one or two major differences when you see how BYD and Xiaomi vehicles are designed and engineered versus others that are maybe struggling now in China, including some of your Western customers, but not all of them? How do you -- where are the biggest gaps, not speaking for any one OEM?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Is that cultural? Is this --

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : And one of the things we've learned the last year or so is consumer seems to be -- incremental consumers going towards hybrid, PHEV or just HEV,

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Complete seat?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : I want to wrap up with buy, sell or hold, okay? We're going to play a game. Buy, sell, hold. I'm going to give you some topics, some brief topics, maybe some words. Jason, I'm going to kind of start with you, okay? You're going to do this one. Frank, I might throw a couple at you, you tell me buy, sell or hold. You good?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Okay. Morocco?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Is that what you're talking about, when it comes to North Africa?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Okay. 800-volt? You want to try that one?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Hydrogen.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Okay. China growing share in Western markets.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : It sounds like a sell.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : All right. So hold or sell, or at least sell for now. SU7?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : The IRA, as it applies to EVs?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Okay. OEM consolidation.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Okay. Detroit Lions?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Taylor Swift? I'm serious.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Buy it? Okay. And humanoids?

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Yes. I'm buying.

Question: Adam Jonas - Morgan Stanley & Co. LLC - Analyst : Jason, Frank, thank you for your time. Unidentified Participant Yes. Thank you.