Lear Corp at Wolfe Research Virtual Autos Summit Transcript

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

Question: Emmanuel Rosner - Wolfe Research LLC - Analyst : So maybe to start, can you give us an update on the current state of business? Any update on how things are tracking for the first quarter?

Question: Emmanuel Rosner - Wolfe Research LLC - Analyst : Great. Thanks so much for the detailed updates. Maybe shifting gears to tariffs, a significant amount of focus on this. Can you please remind us what your exposure to Mexico and Canada is? And quantify the potential impact of tariff, if they were to be instated? And then what would be your strategy to mitigate the risk or the impact?

Question: Emmanuel Rosner - Wolfe Research LLC - Analyst : And on that last point, the ability to bring some back to the US, does that include also some of the labor-intensive products that you do such as wiring?

Question: Emmanuel Rosner - Wolfe Research LLC - Analyst : And then turning to your full year outlook. So you expect overall organic revenue to decline by 2% this year, roughly in line with the industry production outlook on a Lear-weighted basis. Can you just remind us what are the drivers of this? And how can you go back to outgrowing the market in the future? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 18, 2025 / 2:00PM, LEA.N - Lear Corp at Wolfe Research Virtual Autos Summit

Question: Emmanuel Rosner - Wolfe Research LLC - Analyst : That's very helpful. I want to come back to the backlog just in a minute, but I was going to ask you first on the cost savings side. You're targeting considerable cost savings this year, 40 bps of Seating margin, 80 bps in E-Systems, which is even more than what you achieved last year. And it seems based on your intro remarks that things are generally on track. So can you just remind us what the drivers are and how much visibility you have into achieving these targets for the full year?

Question: Emmanuel Rosner - Wolfe Research LLC - Analyst : Okay. I appreciate the color. So on the Seating side, help me understand the backlog dynamics. So this year, you have virtually no Seating backlog rolling on. But then next year, you expect a significant $900 million or so. And then you haven't disclosed a backlog number for 2027. So can you help us understand the current OEM sourcing dynamics?

Question: Emmanuel Rosner - Wolfe Research LLC - Analyst : Great. I had some questions around -- more questions around Seating in BYD. But just in the interest of time, I'll probably switch to E-Systems. And I also want to leave some time for questions around the strategic alternatives. So on E-Systems, it's generating margins around 5%. Obviously, it used to be considerably more. What are the drivers to continue to improve the margin towards your midterm targets? And particularly with the slower acceleration of EV, is there room in general to essentially invest maybe less in EVs based on the new trajectory for this powertrain? And would that help accelerate that trajectory towards the midterm margin targets?

Question: Emmanuel Rosner - Wolfe Research LLC - Analyst : I guess as a follow-up, just my bigger question would be, is there any appetite or would it make sense at all to reduce the scope of powertrains you support? Or is sort of like the investment in EVs generally needed just because you're a global player, and this is where essentially, the industry is going on a global basis? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 18, 2025 / 2:00PM, LEA.N - Lear Corp at Wolfe Research Virtual Autos Summit

Question: Emmanuel Rosner - Wolfe Research LLC - Analyst : Great. So here is really the biggest question I have for you. Having dealt with challenges over the past several years, many suppliers are evaluating strategic alternatives to unlock shareholder value. So things that are way, way above business as usual. How does Lear think about this? And when we think about it from the outside, it feels like there's so many different layers of optionality. Like we're curious whether Seating and E-Systems still belongs together, whether if some Seating assets were to come to the market from weaker players, would that be of interest? If E-Systems assets are coming to the market, would that be of interest? Like would you be a consolidator? Does the current structure make sense? It's a very broad question, but how are you thinking about strategic alternatives in the current environment?

Question: Emmanuel Rosner - Wolfe Research LLC - Analyst : And in the current environment, what are your -- just remind us what are your capital allocation priorities then?

Question: Emmanuel Rosner - Wolfe Research LLC - Analyst : And then maybe just going back to the BYD question since I think we have another minute or two. You've disclosed you've won 30% of BYD Seating business for 2026. How does doing business with Chinese customers? How is that different from traditional OEMs? Are they more receptive to some of your vertical integration technologies? And what's usually the margin profile on some of these wins?

Question: Emmanuel Rosner - Wolfe Research LLC - Analyst : Great. Well, I think that's an exciting place to conclude. So Ray and Jason, thank you so much for your time and insights today. Very much appreciate it.