Financial Data and Key Metrics Changes - Lear Corporation reported a 5% increase in revenue for Q4 2025, totaling $23.3 billion for the full year [4] - Core operating earnings reached $1.1 billion, representing 4.6% of net sales for the full year [4] - Adjusted earnings per share increased by 1% to $12.80, marking the fifth consecutive year of year-over-year growth [4] - Free cash flow was reported at $527 million for 2025 [4] Business Line Data and Key Metrics Changes - In the Seating segment, sales for 2025 were $17.3 billion, a slight increase of 0.4% from 2024, with adjusted operating margins at 6.4% [34][35] - E-Systems segment sales decreased by 2% to $6 billion, with adjusted earnings at $293 million, or 4.9% of sales [36][37] - Both segments exceeded expectations in operational performance, contributing 60 basis points to Seating and 110 basis points to E-Systems margins [8][28] Market Data and Key Metrics Changes - Global vehicle production increased by 1% year-over-year, with production volumes flat in North America and down 2% in Europe, while China saw a 3% increase [30] - Lear expects more than 50% of its revenue in China to come from domestic automakers in the next year [22] Company Strategy and Development Direction - Lear's strategic priorities include extending leadership in Seating, expanding margins in E-Systems, and supporting sustainable value creation through disciplined capital allocation [5] - The company secured over $1.4 billion in E-Systems business awards, marking the strongest performance in over a decade [8] - Lear is focused on automation and digital transformation, with significant investments in operational excellence and quality leadership [9][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving growth targets, with a robust pipeline of conquest opportunities in both Seating and E-Systems [21][22] - The company anticipates continued strong cash flow generation and plans to return excess cash to shareholders through share repurchases and dividends [44][45] - Management highlighted the importance of innovation and technology in securing new business awards, particularly in the context of competitive advantages [55][59] Other Important Information - Lear repurchased $325 million in shares during 2025, exceeding the initial target of $250 million [11] - The company achieved a record net performance savings of $195 million, significantly above the original target of $125 million [20] Q&A Session Summary Question: Can you discuss the conquest win and its impact on Seating share? - Management noted that the conquest win was significant, being the largest in Lear's history, driven by innovation and technology [52][53] - The company remains committed to achieving a 29% market share in Seating, supported by strong relationships and technological advancements [58][60] Question: What is the outlook for net performance in 2026? - Management indicated that they expect similar levels of net performance in 2026 as in 2025, with continued savings from digital and automation initiatives [62][64] Question: How should investors think about earnings cadence throughout the year? - Management expects a solid start to the year, with revenues in the $6 billion range and operating income around $260 million for Q1 [69][70] Question: What is the potential for onshoring wins? - The Orion award is expected to benefit 2027, with limited additional onshoring activity anticipated until 2028 and 2029 [74][75] Question: Can you confirm the revenue potential of the large conquest win? - Management confirmed that the large conquest win is outside the backlog window and is expected to launch at the end of 2028, benefiting 2029 [80]

Financial Data and Key Metrics Changes - Lear Corporation reported a 5% increase in revenue for Q4 2025, totaling $23.3 billion for the full year, with core operating earnings at $1.1 billion, representing 4.6% of net sales [4][27] - Adjusted earnings per share rose to $12.80, marking a 1% increase from 2024, and operating cash flow was $1.1 billion, with free cash flow at $527 million for 2025 [4][28] Business Line Data and Key Metrics Changes - In the Seating segment, sales for 2025 were $17.3 billion, a slight increase of 0.4% from 2024, while adjusted earnings were $1.1 billion, down 1% compared to the previous year [35][36] - E-Systems sales decreased by 2% to $6 billion for 2025, with adjusted earnings at $293 million, or 4.9% of sales, compared to 5.1% in 2024 [36][37] Market Data and Key Metrics Changes - Global vehicle production increased by 1% year-over-year, with production volumes flat in North America, down 2% in Europe, and up 3% in China [31] - Lear expects more than 50% of its revenue in China to come from domestic automakers next year, driven by strong relationships with local teams [23] Company Strategy and Development Direction - Lear's strategic priorities focus on extending leadership in Seating, expanding margins in E-Systems, and supporting sustainable value creation through disciplined capital allocation [5][10] - The company aims to achieve a seating market share of 29%, leveraging innovation and technology to drive growth and maintain competitive advantages [60][61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue, operating income, margins, and free cash flow growth in 2026, supported by a robust backlog of $1.325 billion [29][41] - The company anticipates continued strong performance in automation and digital transformation initiatives, which are expected to drive future savings and operational improvements [66][67] Other Important Information - Lear repurchased $325 million in shares during 2025, exceeding the initial target of $250 million, and returned nearly $500 million to shareholders through dividends and buybacks [10][11] - The company has a strong focus on automation and digital tools, which have led to significant operational efficiencies and cost savings [17][18] Q&A Session Summary Question: Can you discuss the conquest win and its impact on seating share aspirations? - Management highlighted the significance of the conquest win as the largest in Lear's history, emphasizing innovation and technology as key factors in securing the award [53][54] Question: What is the outlook for Net Performance in 2026? - Management indicated that they expect similar levels of Net Performance in 2026, driven by digital and automation initiatives under the IDEA program [63][64] Question: How should investors think about earnings cadence throughout the year? - Management noted a strong start to the year, with expectations for revenues around $6 billion and operating income near $260 million for Q1, despite some anticipated downtime [70][71] Question: What is the potential for onshoring wins and their timing? - Management confirmed that the Orion award will benefit 2027, with limited additional onshoring opportunities expected until 2028 and 2029 [75][76] Question: Can you provide estimates for the large conquest win's revenue potential? - Management indicated that the program is outside the backlog window and is expected to launch in late 2028, potentially generating $400 million-$500 million in annual revenue [81][82]

Group 1: Core Issues Facing Lear Corporation - Lear Corporation is experiencing challenges due to economic uncertainty and labor scarcity in wire harness production in the United States [1][2] - Global production forecasts for 2025 have worsened, now expecting a 4% decline on a Lear-weighted basis compared to a previous guidance of 2% [2] - The company faces difficulties relocating wire harness production to the U.S. due to labor scarcity and the labor-intensive nature of the work, compounded by a 25% tariff on wire harnesses [3] Group 2: Customer Concentration and Financial Outlook - Lear has a concentrated customer base, with six major customers accounting for over 50% of total sales in 2024, making the company vulnerable to losing any of these clients [4] - The Zacks Consensus Estimate for Lear's 2025 sales indicates a year-over-year decline of 5.04%, while earnings per share are expected to decline by 7.21% [5] Group 3: Comparison with Other Stocks - Other better-ranked stocks in the automotive sector include Hesai Group, Ferrari N.V., and Standard Motor Products, with significant expected growth in earnings for 2025 [6][7]