Lear (LEA) 16th Annual Wells Fargo Industrials & Materials Conference summary

Business performance and outlook

• Positive momentum from Q1 and Q4 continued into Q2, with strong operational and commercial performance recognized by customers, including new awards from GM in both seating and wiring.

• Q2 revenue expected between $6.1–$6.2 billion, operating income around $300 million or slightly higher, with seating margins in the mid-6% range and E-Systems in the low-5% range, possibly up to 5.4%.

• Production schedules remain stable despite S&P lowering forecasts; North America is strong, Europe is steady, and Asia has minor disruptions.

• Guidance likely to be revised upward after Q2, with full-year outlook trending toward the midpoint to high end of the range.

• Lower margins expected in the second half due to seasonality, loss of tariff refunds, and European downtime, but performance programs will partially offset these headwinds.

Margins, cost structure, and commodity impacts

• Q1 margins were boosted by one-time tariff refunds and copper inventory revaluation; Q2 faces a sequential headwind from higher copper prices.

• Commodity costs, especially steel and copper, are up over 30% year-over-year, but 90% of exposure is hedged or indexed, limiting net impact to $20 million for the year.

• Lag effects from commodity indexing will create minor headwinds in Q2 and Q3, normalizing in Q4.

• Net performance targets of 40 basis points in seating and 80 in E-Systems are on track for the year.

Growth, new business, and competitive positioning

• $1.6 billion in new seating awards year-to-date, with a $5 billion pipeline split between new and replacement opportunities.

• Cost advantage of 200–500 basis points in seating versus peers, driven by digital and automated technologies (IDEA by Lear) and vertical integration.

• Onshoring trends present opportunities, especially with Korean and Japanese OEMs; active quoting and recent wins with Toyota and Hyundai.

• Targeting an increase in global seating market share from 26% to 29% through new business and onshoring.