Lear Corp Q4 2024 Earnings Call Summary

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

Question: John Murphy - Bank of America - Analyst : I just want to ask, maybe one question with kind of two parts. I'm just curious if you could talk about sort of the dynamics of competition in the Seating business, specifically if you think about market share, in '25, '26, '27, in the next few years from two specific angles. I mean, first on the innovation side, particularly stuff like ComfortMax, which it sounds like you're winning business very quickly and it's being launched very quickly on ComfortMax with GM. And then also from the angle of your cost actions and automation, which kind of go hand in glove with that, are you able to underprice the competition and still earn good margins and adequate returns? I'm just curious what you think those two factors will drive as sort of your market share go forward and your ability to potentially win even greater business in these out years.

Question: John Murphy - Bank of America - Analyst : Ray, just one follow up, bid to book to launch obviously is faster in China, but it now sounds like what you just did with GM with ComfortMax that actually your products are on a shorter schedule than that traditionally. So are we looking at bid to book to launch might be 18 to 24 months as opposed to 36 to three years to six years, like we used to think? What's kind of just the timeframe traditional players in China now, because it sounds like a lot faster? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2025 / 2:00PM, LEA.N - Q4 2024 Lear Corp Earnings Call

Question: Colin Langan - Wells Fargo - Analyst : Can you help us frame the market assumption? You're down one. There's a lot of uncertainty how the market's actually going to settle out this year. Any color on how we should think about incrementals, decrementals? Is there any more opportunity to cut costs, if things slow down? And you also commented that you're in line with S&P, but you're different on GMS, EVs, and Land Rover. Is that you're more cautious there? I was trying to understand what that reference was.

Question: Colin Langan - Wells Fargo - Analyst : And any color on the cadence of margins? A lot of people are warning about Q1 being kind of tough. Is that something we should be considering?

Question: Dan Levy - Barclays - Analyst : Wanted to first start with a question on the recoveries and how you're pricing your programs. Interesting that you're saying there is less visibility, so only two years of backlog, and you've had some cancellations. So to what extent are you having discussions with automakers, A, on recovering for some of these programs where you allocated resources, but the volume has never materialized? And B, reflecting the fact that there's just less visibility on the launches than what we've seen in the past?

Question: Dan Levy - Barclays - Analyst : The second question, I wanted to ask about E-Systems then. In light of the move by one of your competitors to spin off their wire harness business, which I think some may look at as isolating a piece of their business that was punching at lower margins, just wondering how you view the competitive landscape playing out in E-Systems. Is there an opportunity for consolidation? Will consolidation emerge? And then maybe you could just mention, I know in the past you gave some long-term targets on where E-Systems margins could go. At one point you said 8%. That was, I think, a long time ago at this point. What is the updated view today, given all of the labor inflation that we've seen?

Question: Joe Spak - UBS - Analyst : If I could start, just maybe a point of clarification or housekeeping. I just want to understand in the walk, and I guess even for the first part and when you talk about the backlog, this wind down, what exactly is that? Because I think it says it's excluded from above on the backlog slide. But I thought you said today, and I know in the past you've said that's a net number. So I guess I just want to understand what that is. And then also, just sorry if I miss this, but in the full-year sales walk, what are you divesting? That's that headwind. And then what is the nearly $200 million in other?

Question: Joe Spak - UBS - Analyst : Yes.

Question: Joe Spak - UBS - Analyst : It was like, I think, $1 million.

Question: Joe Spak - UBS - Analyst : Okay. That's helpful. The second question is, I guess, just in terms of cash and capital. I guess maybe two parts of that, if I could. One, you mentioned a number of times or alluded to some potential consolidation of the China JVs. I guess I'm wondering if you're earmarking cash for that and how significant that could be. And also on cash, and again, Ray, we sort of talked about this as a driver for the improvement, the investment in automation. And you've talked in the past about higher CapEx for that as well. I am wondering, not that you would sort of completely go off that path, but are you pausing that at all near term just to sort of see exactly how policy plays out just in case you need to move facilities or anything? Or is it sort of just all systems go on the continued automation investment?

Question: Mark Delaney - Goldman Sachs - Analyst : We did 1% of growth under market in 4Q, and guidance for '25 implies some headwinds again this year. You spoke to some of those factors, including the program cancellations and pushouts. As you look at where these schedules are now landing and the new backlog, including for 2026, maybe you can help us better understand when you think you get back to your targeted growth over market levels and if that could occur in 2026 based on what you're seeing in the business today?

Question: Mark Delaney - Goldman Sachs - Analyst : And then on tariffs, maybe you could speak in a little bit more detail around how much of your business, both in Seating and E-Systems, might be exposed to the potential increase in tariffs. And if the 25% tariffs do go into effect, I recognize it's not in your guidance, but if it does, maybe speak more around the incremental steps Lear might be able to take and how much of the extra costs you may be able to mitigate?