Lear(US:LEA)2022-02-10 14:17Operations and Workforce - Lear Corporation operates 253 manufacturing, engineering, and administrative locations across 38 countries, with 61% of manufacturing facilities and 85% of employees located in low-cost countries[18]. - Total global employment decreased from 174,600 in 2020 to 160,100 in 2021, with significant reductions in Mexico (from 55,200 to 47,500) and Europe and Africa (from 56,500 to 55,100) [43]. - Approximately 77,500 employees globally are covered by labor agreements, with 86% of the global unionized workforce's agreements set to expire in 2022[128]. - The inability to attract and retain qualified employees could impair the company's ability to execute its business strategy, particularly in light of increased employee separations since 2020[129]. Financial Performance - The company reported a focus on profitable growth, aiming to balance risks and returns while maintaining a strong balance sheet with investment-grade credit metrics[19]. - Sales revenue rose by 13% from $17,045.5 million in 2020 to $19,263.1 million in 2021, with North America showing a 14% increase [54]. - In 2021, the sales backlog for the company increased by 18% to $3.3 billion compared to January 2021, with $1.3 billion related to 2022 and 70% and 30% attributed to the Seating and E-Systems segments, respectively[98]. - The company had approximately $2.6 billion of outstanding indebtedness as of December 31, 2021, with an additional $2.0 billion available for borrowing under its revolving credit facility[143]. Market Trends and Product Development - The demand for electric vehicles is accelerating, with a significant shift towards electrification, connectivity, and autonomy in the automotive industry [57]. - Lear's Seating segment includes advanced comfort, wellness, and safety offerings compatible with both internal combustion engine and electrified powertrains[19]. - The E-Systems segment provides electrical distribution and connection systems, utilizing low and high voltage wires for various powertrains, including traditional and electrified[19]. - The company holds a 25% global market share in complete seat systems as of 2021, ranking 2 globally based on revenue[61]. - The target global market share for complete automotive seat systems is set at 28%[62]. Sustainability and ESG Initiatives - The company aims for 100% renewable energy usage for electricity consumption and a 50% reduction in carbon emissions at manufacturing facilities by 2030[31]. - Lear has made strategic acquisitions to enhance its technology portfolio, including the acquisition of Xevo Inc. for approximately $322 million, which specializes in connected car software[33]. - The company is focused on developing environmentally sustainable products, including those made from recycled materials and alternatives to petroleum-based products[38]. - The company is committed to sustainability, utilizing materials like SoyFoam and recycled polyester to reduce environmental impact[66]. - Lear's commitment to ESG includes initiatives like the "Focus on the Drive" campaign to raise awareness about distracted driving and contributions exceeding $1 million to local programs[39]. Risks and Challenges - The automotive industry is cyclical, and a decline in production levels from major customers could adversely affect the company's financial performance[114]. - The company faces risks from increases in costs and restrictions on the availability of raw materials, energy, and commodities, which could negatively impact financial performance[115]. - The COVID-19 pandemic has led to significant disruptions in the automotive industry, resulting in reduced orders and potential financial distress for customers and suppliers[117]. - Significant risks associated with international operations include currency fluctuations and political instability, which could adversely affect financial performance[131]. - The company is facing increasing cybersecurity risks, with potential breaches leading to business disruptions and significant costs for protection and compliance[145]. Innovation and Technology - The company has developed advanced seating technologies, including INTU Seating, which offers personalized comfort adjustments based on occupant inputs[70]. - ConfigurE+ seating architecture allows for flexible seat positioning and has won a PACE Award for its innovative design[71]. - The company has approximately 720 patents issued or applied for in advanced efficiency systems product technology, supporting its competitive edge in the market[90]. - The company’s electronic systems business has been significantly enhanced by investments in electrification over the past thirteen years, focusing on hybrid and electric vehicle technologies[88]. Customer Base and Partnerships - The top five customers include General Motors, Daimler, Stellantis, Volkswagen, and Ford, indicating a strong customer base[79]. - The top five customers in the E-Systems segment accounted for significant sales, including Ford (18%), Renault-Nissan, Jaguar Land Rover, Geely, and Volkswagen[94][96]. - The company has established partnerships with IMS Connector System and Hu Lane Associate Inc. to enhance its connection systems capabilities and expand product offerings[86][87].