Lear Corp Q1 2025 Earnings Call Transcript

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

Question: Joseph Spak - UBS Securities LLC - Analyst : Thanks. Good morning, everyone. Right, I guess first question. Have you seen any meaningful changes to the production schedules yet, or are you just anticipating this? And the reason I ask is it just seems interesting that, the further we get into earning season here, the more guidance's we're getting. So, I'm wondering if we're seeing some more breaking changes to the schedules.

Question: Joseph Spak - UBS Securities LLC - Analyst : Thanks for thanks for all that color. As a second question, I just want to make sure I understand, and sorry to sort of go back to tariffs here, but it seems like with the disclosure you laid out on the direct impact, actually Honduras ends up being one of the bigger factors here. Is there a way to get the your customers to be the importer record or get anointed as an approved importer record such that they could claim that 3.75% reimbursement and then. As you think about that that particular country exposure and the reimbursement is, expected to go down in one year, maybe in two years, is that where you need to see most of the work done, Ray? I know you've made some comments about, potentially moving some production around.

Question: Dan Levy - Barclays - Analyst : Hi, good morning. Thanks for taking the question. Wanted to start with a question on the Outlook, and I recognize there's uncertainty and you'll provide us with an update. Maybe we could just go back to the original outlook, that you provided and just, give us a sense, because it feels like you're getting most of the recoveries on the tariffs and you say you expect 100% recoveries, but What is the lower end of your outlook contemplating as far as LVP by region? Maybe you could just talk about, maybe some of the losses and minuses outside of tariffs that we've seen versus the guidance that you provided back in February. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 06, 2025 / 1:00PM, LEA.N - Q1 2025 Lear Corp Earnings Call

Question: Dan Levy - Barclays - Analyst : Great, thank you. And maybe just a follow-up question and if you could just maybe double click on, the pieces that are driving the performance, but broadly it feels like the tariffs just place an added pressure on both the seating and electrical architecture wire harness businesses which as it was, these are, tight margin businesses to begin with. You've laid out a series of all of these strategic actions. How are you starting to see this play into maybe separating yourselves from the pack and taking sharing you reference that you want some wars in in E-Systems.

Question: Dan Levy - Barclays - Analyst : Great, thank you.

Question: Emmanuel Rosner - Wolfe Research - Analyst : Great, thank you so much. I was actually hoping to follow up on this, on the cost performance, which obviously was quite impressive in the quarter. And so, you mentioned an accelerated investment in the restructuring. Curious to what extent you could still, inflect up the benefits from, these actions still this year, especially in case. Some of these indirect, tariff impact com and the volume play off sort of weaker. Do you have any room to offset some of that with accelerated benefits on the net performance side, basically higher than your initial guidance?

Question: Emmanuel Rosner - Wolfe Research - Analyst : Yeah, thanks for the color. And then, actually two quick follow-ups. The first one is, beyond just the, impact on, or risk to industry volumes. Do you see any risk from, the current uncertainty on backlog or the backlog that you announced, last quarter and then specifically, on the balance sheets, obviously continued commitments and returning excess cash to shareholders, but are you pausing the buyback at all, while figuring out what the outlook and free cash flow for the year looks like or is it just continuing?

Question: Emmanuel Rosner - Wolfe Research - Analyst : Thank you.

Question: Colin Langan - Wells Fargo - Analyst : Oh, great. Thanks for taking my questions. And congrats on a pretty good margin in the quarter. Just wondering, I think, a couple of weeks before the quarter ended, you were talking about a low 4%, you ended at 49. What came in so much better at the end of the quarter to kind of get you so much higher than what you were thinking?

Question: Colin Langan - Wells Fargo - Analyst : Oh that's helpful color and just talking on performance, which I covered a couple of times on the call already, but if I look at the initial full year guide, I think it implies something like $130 million and $0.55 basis points. I believe you got more than half of that already in Q1. Is that what you were anticipating? I mean, I guess it sounds like from comments earlier that performance is actually coming in stronger and should we interpret that as an if it wasn't for tariffs, you'd actually be raising guidance today.

Question: Colin Langan - Wells Fargo - Analyst : Guidance if it wasn't for the tariff issue, or is that it's just too early to say?

Question: Colin Langan - Wells Fargo - Analyst : Got it. All right, thanks for taking my questions.

Question: John Murphy - Bank of America Global Research - Analyst : Good morning guys. Just a very simple question, to start. When you think about doing, winding wiring harnesses in, Honduras, I just wonder, Ray, if you could walk us through sort of the evolution of how that, wound up being in Mexico, and then got, pushed down to Honduras from a labour cost perspective, but also maybe a labour availability perspective as well.

Question: John Murphy - Bank of America Global Research - Analyst : Oh, okay, maybe you missed the follow up when you think about wiring harness and other stuff that's, done outside of the US, what, what's kind of the hurdle bringing back to the US? Is it just labour costs, labour availability, and how much you think you can you can automate it, I'm just trying to understand really here, so I mean it kind of gets out there and, public a little bit more.

Question: John Murphy - Bank of America Global Research - Analyst : Okay, and then just another question, you highlighted and it was incredibly helpful, the tariff commentary, a billion dollars of, parts that are coming across. The Atlantic, from Europe on, European produced vehicles. Some of those might not make it here, it might be fewer, but in reality, there might, be market share shifts that occur in the US market that that offset that. So could you kind of remind us, generally what's coming across, the pond there, and then also maybe your exposures here in North America because there might be a really good story. The market share gains from your domestic automakers as well as a result of that.

Question: John Murphy - Bank of America Global Research - Analyst : So it's fair to say the uncertainty and the guidance is not all to the downside. It may actually eventually be to the upside, right? It's uncertainty.

Question: John Murphy - Bank of America Global Research - Analyst : And then just lastly, it sounds like there's some program extensions and stuff that's getting pushed out on wins. Yeah, can you just remind us, as programs are extended, we're looking at a five or six year program that goes to, seven or maybe eight years, whatever, it may be, what are the requirements for, refurbishing tooling or extending tooling and other, plant equipment for another year or two. Are there big capital commitments or is this more of a, of a gravy situation for you? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 06, 2025 / 1:00PM, LEA.N - Q1 2025 Lear Corp Earnings Call

Question: John Murphy - Bank of America Global Research - Analyst : Okay, very helpful. Thanks guys.

Question: Itay Michaeli - TD Cowen - Analyst : Great, thank you. Good morning, everyone. Just, two quick ones for me. First, going back to slide eight, you mentioned, mixed headwinds due to components on high content trends. Just curious whether you're actually seeing any pressure on remix thus far, in Q2, both in North America and perhaps.

Question: Itay Michaeli - TD Cowen - Analyst : That's very helpful. And a quick follow up on the new business awards in the quarter, congrats on the progress. How should we think about the timing of when these awards flow into revenue? Did some of these actually launch as early as 2027?

Question: Itay Michaeli - TD Cowen - Analyst : Great, that's very helpful. Thank you.