Lear (LEA) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended March 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on April 30. On the ot ...

Production and Sales Performance - Lear Corporation reported a total light vehicle production of 88,619.2 thousand units in 2023, a 9% increase from 81,049.7 thousand units in 2022[29]. - Sales in North America reached $9,503.4 million in 2023, up 7% from $8,910.7 million in 2022, while total sales increased by 12% to $23,466.9 million[29]. - The automotive industry production increased by 9% in 2023 compared to 2022, reflecting a return to pre-pandemic levels but remaining 5% below the 2017 peak[27]. - Crossover and sport utility vehicle production accounted for approximately 46% of total vehicle production in 2023, up from 33% five years ago, positively impacting Lear's business[31]. - Net sales for the year ended December 31, 2023, consisted of 27% from passenger cars, 54% from crossover and sport utility vehicles, and 19% from trucks and vans[106]. Market Trends and Innovations - The battery electric vehicle market is projected to represent 15% of global light vehicle production in 2024, up from 12% in 2023 and 10% in 2022[30]. - The company has developed a new technology for customizable leather designs, improving comfort and style while enabling airflow for ventilated seats, with production expected to launch in 2024[52]. - The company is focusing on sustainable materials, including a fully recyclable fabric made from 100% recycled plastic bottles, set to launch with a global automotive manufacturer in 2024[52]. - The company has developed a zero gravity seat for second-row occupants, featuring a 65-degree recline and various comfort enhancements, with production expected to launch in 2024[55]. - The company has developed products designed for high-voltage applications, capitalizing on evolving regulatory requirements and consumer preferences[84]. Strategic Acquisitions and Partnerships - Lear Corporation's acquisitions include I.G. Bauerhin for approximately $175 million in April 2023, enhancing its thermal comfort systems portfolio[28]. - Recent acquisitions, including Kongsberg ICS and IGB, enhance capabilities in thermal comfort systems and support the electrification trend[33][43]. - The company has established partnerships to enhance its connection systems business, including a collaboration with Hu Lane Associate Inc. to access a broader catalog of automotive connector products[66]. - The company operates sixteen joint ventures in five countries, with a significant focus on expanding relationships with Asian automotive manufacturers[116]. Financial Performance and Risks - The company aims to maintain a strong balance sheet with investment-grade credit metrics while consistently returning capital to stockholders[17]. - The company has approximately 2,600 patents and patent applications pending, indicating a strong focus on intellectual property and innovation[110]. - The company is exposed to market risks associated with fluctuations in foreign exchange rates due to its low-cost footprint and vertical integration strategies[107]. - The automotive industry is cyclical, and a decline in production levels of major customers could adversely affect the company's financial performance[120]. - The company is exposed to financial performance risks due to potential disruptions in the supply chain, which may arise from adverse developments affecting suppliers or natural disasters[126]. Sustainability and Corporate Responsibility - The company aims for 100% renewable energy usage for electricity consumption and a 50% reduction in carbon emissions at its sites globally by 2030, with aspirations for carbon neutrality by 2050[80]. - The company is committed to sustainability, with products like FlexAir and ReNewKnit made from 100% recycled materials[35][42]. - The company is committed to diversity, equity, and inclusion, with over 200,000 hours of DEI and anti-harassment training completed by employees since 2022[95]. - The company is involved in various legal and regulatory proceedings that could adversely affect its financial performance[150]. - The company anticipates significant costs due to increasing human rights and environmental regulations globally, which may require investments in new innovations and changes in production processes[151]. Operational Efficiency and Technology - Lear Corporation operates 265 manufacturing, engineering, and administrative locations across 38 countries, with 68% of manufacturing facilities in low-cost countries[16]. - Lear Corporation's strategy includes investments in Industry 4.0 technologies to enhance operational efficiencies and streamline administrative functions[20]. - The company has invested in Industry 4.0 technologies, including the 2022 acquisitions of Thagora and InTouch, resulting in operational efficiencies in manufacturing processes[55]. - The company conducts advanced technology development at seven centers worldwide, focusing on compliance with safety standards and customer requirements[111]. - The company has achieved a 20% weight reduction, 32% size reduction, and 135% gain in current-carrying capability for its high-voltage power distribution products compared to existing offerings[74]. Employee Engagement and Workforce - The company employs approximately 186,600 employees worldwide as of December 31, 2023, an increase from 168,700 in 2022[90]. - The company has implemented a global employee engagement program, "Together We Win," which focuses on driving cultural change and improving operational efficiency[101]. - Approximately 88,000 employees are covered by labor agreements, with 86% of the global unionized workforce's agreements set to expire in 2024, posing risks of labor disputes that could impact operations[127]. Challenges and Future Outlook - The automotive industry is highly competitive, with pressures from traditional and non-traditional entrants that could impact pricing and margins[135]. - The shift towards electrification in the transportation industry poses risks; failure to innovate could lead to decreased demand for certain products[136]. - Cybersecurity threats and disruptions in information technology systems could adversely affect operations and financial performance[137]. - Future public health crises, similar to the COVID-19 pandemic, could disrupt operations and negatively impact financial condition and liquidity[140]. - The company regularly monitors goodwill and long-lived assets for impairment, which could result in significant charges to earnings if impairment is identified[143].

Financial Data and Key Metrics Changes - Lear Corporation achieved record revenue of $23.5 billion in 2023, a 12% increase from 2022. Core operating earnings grew by 29% to $1.1 billion, and adjusted earnings per share rose by 38% to $12.02. Operating cash flow improved by 22% to over $1.2 billion, exceeding the free cash flow conversion target of 80% [15][19][44]. Business Line Data and Key Metrics Changes - In the Seating segment, sales for Q4 2023 were $4.3 billion, an 8% increase from 2022, driven by a strong backlog. Core operating earnings improved to $294 million, with adjusted operating margins at 6.8% [41][42]. - The E-Systems segment reported sales of $1.5 billion for Q4 2023, a 12% increase from 2022. Core operating earnings improved to $84 million, reflecting strong net operating performance and margin recovery [50][43]. Market Data and Key Metrics Changes - Global vehicle production increased by 9% year-over-year, with production volumes up 5% in North America, 7% in Europe, and 18% in China. However, North America and China underperformed the market by four and three percentage points, respectively, due to unfavorable platform mix [34][37]. Company Strategy and Development Direction - Lear Corporation's strategy includes focusing on thermal comfort capabilities and modular seating solutions, with 15 projects in process with 11 customers. The company aims to diversify its customer base and has won significant awards with major automakers [16][18][62]. - The Lear Forward plan is designed to drive efficiencies and maximize cash flow generation, with a focus on automation to offset global wage inflation [52][46]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving higher sales, operating earnings, and earnings per share in 2024, despite expectations for flat industry volumes. Revenue is projected to be between $24 billion and $24.6 billion, representing a 4% increase over 2023 [48][56]. - Wage inflation and transactional foreign exchange are anticipated to be headwinds, but management expects to recover costs through negotiations and operational improvements [75][96]. Other Important Information - Lear Corporation's backlog for 2024 to 2026 is approximately $2.8 billion, with a significant portion driven by new business wins, particularly in the EV sector. The company has also seen a 70% increase in backlog at non-consolidated joint ventures [30][32]. - The company has received recognition for its quality and culture, being named one of the most admired companies by Fortune Magazine for the eighth consecutive year [20]. Q&A Session Summary Question: Guidance on revenue growth and EBIT conversion - Management indicated that with backlog as the primary driver of growth, a conversion rate of 10% to 12% is expected for revenue growth, with typical variable margins of 15% to 20% in Seating and around 25% in E-Systems [70][71]. Question: Potential sources of upside or downside in 2024 - Wage inflation is identified as a significant challenge, with expectations that it will moderate in the following year. Management is focused on efficiency programs and customer negotiations to offset these costs [73][75]. Question: Pricing environment and FX impact - The pricing environment is expected to remain similar to 2023, with anticipated price downs of around 1.5% in Seating and 2% in E-Systems. The impact of transactional FX, particularly from the Mexican peso, is also factored into the guidance [97][90]. Question: EV strategy and backlog adjustments - Management acknowledged that lower EV volumes have impacted the backlog, with a conservative approach taken regarding ICE vehicle backfilling. They are actively negotiating with customers to adjust capital deployment in response to changing EV plans [99][111].

August Outlook $1,610 - $1,740 million Interest Expense ≈$105 million No Change Effective Tax Rate 21% to 22% No Change Adjusted Net Income $680 - $710 million Operating Cash Flow $1,230 - $1,270 million August Outlook $1,180 - $1,280 million Capital Expenditures ≈$675 million August Outlook ≈$700 million Free Cash Flow $555 - $595 million August Outlook $480 - $580 million 2023 Full Year Outlook assumes an average Euro of $1.08 and an average Chinese RMB of 7.02 / $, S&P Global Mobility production forecast ...

Financial Data and Key Metrics Changes - Adjusted earnings per share increased by 23% to $2.87 compared to $2.33 a year ago [129] - Operating cash flow improved significantly to $404 million for the quarter, up from $252 million in 2022 [129] - Core operating earnings increased by 14% from last year to $267 million [138] Business Line Data and Key Metrics Changes - Core operating earnings improved to $79 million or 5.3% of sales compared to $53 million and 3.9% of sales in 2022 [1] - E-Systems achieved the highest operating margins in over two years, marking the fifth consecutive quarter of year-over-year margin improvement [124] - Seating margins were negatively impacted by production disruptions related to the UAW strike and GM full-size truck downtime [130] Market Data and Key Metrics Changes - Global vehicle production increased by 4% compared to the same period last year, with North America up by 9% and Europe by 6% [126] - Total company revenue growth lagged the market by one percentage point, primarily due to unfavorable platform mix and downtime in seating at General Motors [127] Company Strategy and Development Direction - The company is focused on vertical integration capabilities across the entire seat, allowing for more complete systems and improved sourcing control [72] - The thermal comfort integration and innovation strategy is gaining traction, with positive customer feedback and new awards [120][121] - The company aims to achieve a target of 8% operating margin in E-Systems by 2025, with expectations for meaningful improvement next year [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the three-year backlog, with $2.85 billion overall, despite some expected revenue reductions due to customer announcements [105] - The ongoing UAW labor strike is expected to impact revenue, with an estimated loss of approximately $60 million per week [133] - Management remains optimistic about the growth trajectory, citing a strong pipeline of new business and customer engagement [39][40] Other Important Information - The company has $3 billion of available liquidity and is on track to meet or exceed its target of 80% free cash flow conversion for the year [2] - The company repurchased $75 million of stock in the third quarter, more than the first and second quarters combined [2] - The company is experiencing wage inflation pressures, particularly in Mexico and Eastern Europe, which may impact future margins [28] Q&A Session Summary Question: E-Systems performance and profitability modeling for 2024 - Management indicated that E-Systems performance exceeded expectations, with a strong exit rate of 6.4% in the fourth quarter excluding the strike [7] Question: Impact of EV launches on backlog - Management noted that the timing of EV launches is critical, and they will update the three-year backlog in the fourth quarter earnings call [12][13] Question: Commodity pricing and earnings impact - Management discussed a modest softening in commodities, with steel prices drifting down, but wage inflation remains a concern [28] Question: Cost recoveries and negotiations with customers - Management confirmed ongoing negotiations for cost recoveries, with an increased focus on design changes and cost optimization [62] Question: Exposure to Altium and EV platforms - Management provided details on the company's exposure to the Altium platform, including battery disconnect units and expected revenue impacts [93][94]

[Part I – Financial Information](index=4&type=section&id=Part%20I%20%E2%80%93%20Financial%20Information) [Item 1 – Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201%20%E2%80%93%20Condensed%20Consolidated%20Financial%20Statements) For the nine months ended September 30, 2023, Lear Corporation reported a significant increase in financial performance, with net sales rising to $17.6 billion from $15.5 billion year-over-year, and consolidated net income more than doubled to $502.7 million Condensed Consolidated Balance Sheet Highlights (in millions) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total current assets** | $7,737.7 | $6,994.1 | | **Total assets** | $14,613.7 | $13,763.0 | | **Total current liabilities** | $5,701.4 | $5,188.3 | | **Long-term debt** | $2,742.1 | $2,591.2 | | **Total liabilities** | $9,630.4 | $8,932.7 | | **Total equity** | $4,983.3 | $4,830.3 | Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (in millions, except per share data) | Metric | Q3 2023 | Q3 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $5,781.0 | $5,241.2 | $17,625.7 | $15,520.6 | | **Consolidated net income** | $152.1 | $119.2 | $502.7 | $271.4 | | **Net income attributable to Lear** | $132.9 | $92.3 | $445.2 | $210.2 | | **Diluted EPS attributable to Lear** | $2.25 | $1.54 | $7.50 | $3.50 | Condensed Consolidated Statements of Cash Flows Highlights (in millions) | Cash Flow Category | 9 Months Ended Sep 30, 2023 | 9 Months Ended Oct 1, 2022 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $679.6 | $484.2 | | **Net cash used in investing activities** | $(603.1) | $(616.7) | | **Net cash used in financing activities** | $(207.8) | $(313.2) | | **Net Change in Cash** | $(134.2) | $(477.0) | - On April 26, 2023, the company completed the acquisition of I.G. Bauerhin (IGB), a supplier of automotive seat thermal comfort systems, for a preliminary purchase price of **$174.5 million**, net of cash acquired. This acquisition is part of the Seating segment and aims to expand the company's thermal comfort systems portfolio[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) [Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202%20%E2%80%93%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 14% year-over-year sales growth for the first nine months of 2023 to higher vehicle production volumes and new business wins, with both segments reporting increased sales and improved operating margins [Executive Overview](index=36&type=section&id=Executive%20Overview) Lear operates through Seating and E-Systems segments, focusing on extending leadership, transforming for electrification, enhancing operational excellence, and prioritizing sustainability amidst a recovering but challenging automotive market - Lear operates through two main segments: **Seating**, which designs and manufactures complete seat systems and components, and **E-Systems**, which designs and manufactures electrical distribution systems and electronic products[142](index=142&type=chunk)[143](index=143&type=chunk) - The automotive industry production is expected to **increase by 7% in 2023**, returning to pre-pandemic levels but still facing headwinds from component shortages, inflation, higher interest rates, and labor strikes[148](index=148&type=chunk) - The company's strategy focuses on **extending leadership in Seating**, **transforming E-Systems for electrification growth**, **enhancing operational excellence**, and **prioritizing sustainability**[154](index=154&type=chunk) - On April 26, 2023, Lear acquired IGB for approximately **$175 million** to enhance its thermal comfort systems portfolio within the Seating segment, partially financed with a **$150 million** draw from its term loan facility[160](index=160&type=chunk)[164](index=164&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Net sales increased by 10% in Q3 2023 and 13.6% for the nine months, driven by higher production volumes, new business, and the IGB acquisition, leading to significant growth in net income attributable to Lear Consolidated Results of Operations (in millions) | Metric | Q3 2023 | Q3 2022 | % Change | 9 Months 2023 | 9 Months 2022 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $5,781.0 | $5,241.2 | +10.3% | $17,625.7 | $15,520.6 | +13.6% | | **Gross Profit** | $418.2 | $376.9 | +10.9% | $1,305.2 | $1,038.3 | +25.7% | | **Net Income Attributable to Lear** | $132.9 | $92.3 | +44.0% | $445.2 | $210.2 | +111.8% | - Q3 2023 net sales increased by **$540 million (10%)** year-over-year, driven by higher production volumes (**$231 million**), new business (**$177 million**), favorable foreign exchange (**$100 million**), and the IGB acquisition (**$52 million**)[174](index=174&type=chunk) Segment Performance (in millions) | Segment | Period | Net Sales | Segment Earnings | Margin (%) | | :--- | :--- | :--- | :--- | :--- | | **Seating** | Q3 2023 | $4,284.9 | $244.7 | 5.7% | | | Q3 2022 | $3,887.8 | $222.6 | 5.7% | | | 9M 2023 | $13,206.0 | $823.4 | 6.2% | | | 9M 2022 | $11,674.4 | $636.6 | 5.5% | | **E-Systems** | Q3 2023 | $1,496.1 | $60.4 | 4.0% | | | Q3 2022 | $1,353.4 | $46.8 | 3.5% | | | 9M 2023 | $4,419.7 | $155.6 | 3.5% | | | 9M 2022 | $3,846.2 | $64.7 | 1.7% | [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $980 million in cash and $2.0 billion available credit, utilizing operating cash flow to fund investments, share repurchases, and dividends - As of September 30, 2023, the company had **$980 million in cash and cash equivalents** and **$2.0 billion available** under its credit agreement, which management deems sufficient for foreseeable liquidity needs[218](index=218&type=chunk) Cash Flow Summary (in millions) | Activity | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $680 | $484 | | **Net cash used in investing activities** | $(603) | $(617) | | **Net cash used in financing activities** | $(208) | $(313) | - Key financing activities in the first nine months of 2023 included borrowing **$150 million** under the Term Loan, paying **$138 million** for share repurchases, and paying **$137 million** in dividends to Lear stockholders[224](index=224&type=chunk) [Item 3 – Quantitative and Qualitative Disclosures about Market Risk](index=51&type=section&id=Item%203%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Lear is exposed to market risks from foreign exchange rates, interest rates, and commodity prices, actively managing a portion of these exposures using derivative instruments - The company's primary market risks are fluctuations in foreign exchange rates, interest rates, and commodity prices, utilizing derivative financial instruments to manage a portion of these risks without engaging in trading activities[239](index=239&type=chunk) Foreign Exchange Transactional Exposure Sensitivity (in millions) | Currency | Hypothetical Strengthening | Potential Annual Earnings Impact | | :--- | :--- | :--- | | U.S. Dollar | 10% | $19 | | Euro | 10% | $31 | - With **$150 million** in variable rate debt outstanding under its Term Loan, a hypothetical **100 basis point increase** in interest rates would raise annual interest expense by approximately **$2 million**[245](index=245&type=chunk)[246](index=246&type=chunk) [Item 4 – Controls and Procedures](index=52&type=section&id=Item%204%20%E2%80%93%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting, excluding the recently acquired IGB from the 2023 assessment - The President and CEO, along with the Senior Vice President and CFO, concluded that the company's disclosure controls and procedures were **effective** as of the end of the reporting period[248](index=248&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter[250](index=250&type=chunk) - The acquired operations of IGB will be **excluded** from the assessment of internal control over financial reporting as of December 31, 2023, as permitted during the first year post-acquisition[250](index=250&type=chunk) [Part II – Other Information](index=53&type=section&id=Part%20II%20%E2%80%93%20Other%20Information) [Item 1 – Legal Proceedings](index=53&type=section&id=Item%201%20%E2%80%93%20Legal%20Proceedings) The company is involved in various legal proceedings and claims, having recorded reserves for disputes, warranty, and environmental matters, with management not expecting a material adverse impact - As of September 30, 2023, the company has recorded reserves of **$15 million** for pending legal disputes, **$30 million** for warranty and recall matters, and **$6 million** for environmental matters[231](index=231&type=chunk) [Item 1A – Risk Factors](index=53&type=section&id=Item%201A%20%E2%80%93%20Risk%20Factors) There have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 - No material changes from the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[254](index=254&type=chunk) [Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202%20%E2%80%93%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2023, Lear repurchased 521,552 shares of common stock for approximately $75 million, with $1.1 billion remaining under its share repurchase authorization Common Stock Repurchases (Q3 2023) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2 - July 29, 2023 | 4,426 | $144.55 | | July 30 - Aug 26, 2023 | 265,703 | $145.11 | | Aug 27 - Sep 30, 2023 | 251,423 | $141.92 | | **Total** | **521,552** | **$143.57** | - As of September 30, 2023, the remaining authorization under the common stock share repurchase program was approximately **$1.1 billion**[255](index=255&type=chunk)[256](index=256&type=chunk) [Item 5 – Other Information](index=54&type=section&id=Item%205%20%E2%80%93%20Other%20Information) President and CEO Raymond E. Scott established a Rule 10b5-1 trading plan on September 14, 2023, for potential sales of up to 23,528 shares of Lear's common stock through June 28, 2024 - President and CEO Raymond E. Scott entered into a Rule 10b5-1 trading plan on September 14, 2023, for potential sales of up to **23,528 shares** of common stock through June 28, 2024[258](index=258&type=chunk) [Item 6 – Exhibits](index=54&type=section&id=Item%206%20%E2%80%93%20Exhibits) This section lists the exhibits filed with the Form 10-Q report. Key exhibits include certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act, and XBRL data files - The report includes certifications from the CEO and CFO pursuant to Rule 13a-14(a)/15d-14(a) and Section 906 of the Sarbanes-Oxley Act of 2002[261](index=261&type=chunk)

Company Participants Conference Call Participants Operator At this time, I'd like to turn the floor over to Ed Lowenfeld, Vice President, Investor Relations. Sir, please go ahead. Before Ray begins, I'd like to take this opportunity to remind you that as we conduct this call, we will be making forward-looking statements to assist you in understanding Lear's expectations for the future. As detailed in our safe harbor statement on Slide 2, our actual results could differ materially from these forward-looking ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022. ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number: 1-11311 (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Delaware 1 ...

Financial Data and Key Metrics Changes - Sales increased by 10% to $5.4 billion in Q4 2022, with core operating earnings rising by 67% to $265 million [8][9] - For the full year, sales reached $20.9 billion, and core operating earnings were $871 million [8] - Adjusted earnings per share improved by 10% to $8.72, while operating cash flow surged by 52% to over $1 billion [9][8] Business Segment Data and Key Metrics Changes - In the Seating segment, sales for Q4 were $4 billion, an increase of 11% from 2021, with core operating earnings up 38% to $275 million [71] - E-Systems segment sales in Q4 were $1.3 billion, an increase of 8% from 2021, with core operating earnings improving to $64 million [29][26] Market Data and Key Metrics Changes - Global vehicle production increased by 2% year-over-year, with North America up 8% and Europe up 5%, while production in China decreased by 5% [26] - The backlog for 2023 and 2024 increased by 22% to $2.5 billion, with over 75% of the Seating backlog related to electric vehicles [23] Company Strategy and Development Direction - The company aims to achieve sustainable long-term growth in revenues and financial returns as the industry transitions to electrification [35] - The Lear Forward plan is focused on driving efficiencies and improving operational performance across segments [52][53] - The company has made targeted acquisitions to enhance its component capabilities, increasing market share in seating to 25% [36] Management's Comments on Operating Environment and Future Outlook - Management expects modest changes in industry volumes but anticipates improved financial results for 2023, with revenue projected between $21.2 billion and $22.2 billion [31] - The company is confident in margin expansion, targeting 8% margins in both Seating and E-Systems by 2025 [61][78] Other Important Information - The company returned nearly $300 million to shareholders through dividends and share repurchase programs [13] - The backlog in E-Systems is the second largest ever, with a focus on electrification products [94] Q&A Session Summary Question: Insights on 2023 margin expectations - Management indicated that the second half of 2022 had a timing benefit affecting margins, and they expect modest improvements in 2023 due to wage inflation and other factors [56][60] Question: Backlog changes and market assumptions - The 2023 backlog decreased due to changes in production plans, but the three-year backlog remains strong, supporting future growth [62][94] Question: E-Systems margin target and required bookings - Management stated that no significant new business is required beyond what has been booked to achieve the 8% margin target in E-Systems by 2025 [95][120] Question: Impact of electrification on margins - The growth in connection systems and electronics is expected to drive margin expansion, particularly through battery disconnect units [108][132] Question: Future acquisitions and growth strategy - The company is focused on free cash flow generation and returning excess cash to shareholders, with potential for small tuck-in acquisitions to enhance growth [121][124]

| --- | --- | --- | --- | --- | --- | |-------|-------|--------------------------------------------------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Third Quarter 2022 | | | | | | | Financial Results | | | | | | | November 1, 2022 | | | | | | | | | | | | | | Ray Scott, President and CEO Jason Cardew, Senior Vice President and CFO | | | | Safe Harbor Statement Forward-Looking Statements This presenta ...