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LEAR CORP

LEA
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Business Summary

Lear Corporation is a global automotive technology leader in Seating and E-Systems, supplying complete seat systems, key seat components, complete electrical distribution and connection systems, high-voltage power distribution products including battery disconnect units, and low-voltage power distribution products and electronic controllers to all of the world's major automotive manufacturers. The company has 258 manufacturing, engineering and administrative locations in 36 countries. The automotive industry is cyclical and sensitive to general economic conditions, including interest rates, inflation, consumer demand and spending levels, and geopolitical issues. Industry production in 2025 remained approximately 2% below 2017 peak levels, and 2025 industry production levels in North America and Europe, the company's two largest markets, remained approximately 10% and 24%, respectively, below prior peak levels. Industry production in 2025 increased 4% as compared to 2024, while on a Lear sales-weighted basis, industry production in 2025 increased 1% as compared to 2024. The adoption of electrified vehicles has been slower than anticipated, particularly in the United States. In 2026, the battery electric vehicle market is expected to represent 19% of global light vehicle production, as compared to 16% in 2025 and 13% in 2024. Battery electric vehicle production increased to 14.5 million units in 2025 from 11.3 million units in 2024, primarily driven by growth in China and Europe.

Based on independent market studies and management estimates, the company believes it is one of the two largest suppliers of complete seat systems globally on the basis of revenue with a 26% global market share in 2025. Key competitors in the Seating segment globally include Adient plc, Forvia SE, Magna International Inc., Ningbo Jifeng Auto Parts Co., Ltd. / Grammer AG, Toyota Boshoku Corporation, TS Tech Co., Ltd. and Yanfeng Automotive Systems Co., Ltd. Key competitors in electrical distribution and connection systems include Aptiv PLC, Leoni AG, Molex Incorporated, Sumitomo Corporation, TE Connectivity and Yazaki Corporation. Key competitors in BDUs include Delta Electronics, Inc., LS E-Mobility, Panasonic Holdings Corporation and Yazaki Corporation. Key competitors in electronic controllers include Aumovio SE, Aptiv PLC, Denso Corporation, Harman International Industries, Incorporated, Hella, Motherson Group, Robert Bosch GmbH, Valeo S.A. and Visteon Corporation. The company's competitive advantages include being the most vertically integrated global seat supplier, a strong culture of innovation, operational excellence, and engineering and program management capabilities.

The company generates revenue through the design, development, engineering and manufacture of complete seat systems and key seat components in its Seating segment, and through complete electrical distribution and connection systems, high-voltage power distribution products including BDUs, and low-voltage power distribution products and electronic controllers in its E-Systems segment. Revenue is recognized at a point in time when control of the product is transferred to the customer under standard commercial terms. The company's customers are the world's major automotive manufacturers, and it has automotive content on more than 500 vehicle nameplates worldwide. The company's contracts generally provide for annual price reductions over the production life of the vehicle, and prices may be adjusted on an ongoing basis to reflect changes in product content/cost and other commercial factors.

The Seating segment consists of the design, development, engineering and manufacture of complete seat systems and key seat components. Key seat component product offerings include seat trim covers; surface materials such as leather and fabric; seat mechanisms; seat cushioning; headrests; and thermal comfort systems such as seat heating, ventilation, active cooling, pneumatic lumbar and massage products. The company is executing on a strategy to extend its leadership position in the market through unique product offerings and selective vertical integration, with a mid-term target global market share of 29% in complete automotive seat systems. The Seating segment's net sales were $17,283.0 million for the year ended December 31, 2025, compared to $17,222.1 million for the year ended December 31, 2024. Segment earnings for Seating were $948.8 million in 2025, compared to $988.5 million in 2024, with margins of 5.5% and 5.7% , respectively.

The E-Systems segment consists of the design, development, engineering and manufacture of complete electrical distribution and connection systems; high-voltage power distribution products, including BDUs; and low-voltage power distribution products and electronic controllers. Key components of the electrical distribution and connection systems portfolio include wire harnesses, terminals and connectors, high-voltage battery connection systems and engineered components. High-voltage power distribution products include BDUs, which control all electrical energy flowing into and out of high-voltage batteries in electrified vehicles. Low-voltage power distribution products and electronic controllers include zonal controllers, body domain control modules, and smart and passive power distribution modules. The E-Systems segment's net sales were $5,976.1 million for the year ended December 31, 2025, compared to $6,083.9 million for the year ended December 31, 2024. Segment earnings for E-Systems were $186.2 million in 2025, compared to $247.4 million in 2024, with margins of 3.1% and 4.1% , respectively.

In February 2025, the company completed the acquisition of StoneShield Engineering, a privately held system integrator based in Castelo Branco, Portugal, specializing in automation technology for the wire harness industry. In July 2024, the company completed the acquisition of WIP Industrial Automation, a privately held company based in Valladolid, Spain. In 2025, the company incurred pretax restructuring costs of $253 million and related manufacturing inefficiency charges of approximately $4 million , compared to pretax restructuring costs of $139 million and related manufacturing inefficiency charges of approximately $6 million in 2024. In June 2025, the company amended its unsecured delayed-draw term loan facility to extend the maturity date to September 30, 2027, and reduce the pricing across the grid. In July 2025, the company amended and restated its unsecured credit agreement to extend the maturity date to July 24, 2030, consisting of a $2.0 billion revolving credit facility. Since the first quarter of 2011, the Board has authorized $6.7 billion in share repurchases under the common stock share repurchase program. As of December 31, 2025, the company has repurchased, in aggregate, $5.9 billion of its outstanding common stock, at an average price of $95.01 per share, and has a remaining repurchase authorization of $775 million , which expires on December 31, 2026. In 2025, the company repurchased $325 million of its outstanding common stock. In 2025, 2024 and 2023, the Board declared a quarterly cash dividend of $0.77 per share of common stock in all quarters.

Net sales were $23,259.1 million in 2025, compared to $23,306.0 million in 2024 and $23,466.9 million in 2023. Net income attributable to Lear was $436.8 million , or $8.15 per diluted share, in 2025, compared to $506.6 million , or $8.97 per diluted share, in 2024, and $572.5 million , or $9.68 per diluted share, in 2023. Gross profit was $1,504.4 million and gross margin was 6.5% of net sales in 2025, compared to $1,639.3 million and 7.0% in 2024. Net cash provided by operating activities was $1,088.8 million in 2025, compared to $1,120.1 million in 2024.

Business Outlook

The company's core sales backlog reflects estimated net sales over the next two years from formally awarded new programs, less lost and discontinued programs. As of February 2026, the 2026 to 2027 sales backlog is $1.3 billion , of which 90% and 10% are related to the Seating and E-Systems segments, respectively. The current sales backlog reflects $0.6 billion related to 2026. In addition, the 2026 to 2027 sales backlog at non-consolidated joint ventures is approximately $0.6 billion . The sales backlog assumes volumes based on the independent industry projections of S&P Global Mobility as of January 2026 and internal estimates, a Euro exchange rate of $1.16/Euro and a Chinese renminbi exchange rate of 7.10/$ .

In the Seating business, the company is leveraging its unique product offerings, including ComfortFlex by Lear and ComfortMax Seat by Lear modules, which can reduce sub-components by up to 50% and increase airflow directly to the occupant by up to 40% , as compared to currently available designs. The company is also executing on its strategy to extend its leadership position in the market through unique product offerings and selective vertical integration, with a mid-term target global market share of 29% in complete automotive seat systems. The company's new facility in Rochester Hills, Michigan is an industry first site, capable of fully automated manufacturing of ComfortFlex by Lear and ComfortMax Seat by Lear seating systems.

In the E-Systems business, the company is focusing future investments on those products where it believes it has a competitive advantage and can achieve industry-leading financial returns. The company is de-emphasizing and exiting certain electronics product lines, including audio modules, lighting modules, on-board chargers, telematics control units and niche electronic controllers, where it does not see a path to sustainable risk-adjusted financial returns. The company is also investing in and expanding its electrical distribution and connection systems business, which is benefiting from expanded content per vehicle in line with higher circuit counts supporting high-speed data movement within the vehicle, as well as high-voltage wire harnesses and high-voltage battery components such as intercell connect boards on electrified powertrains.

The company expects to incur approximately $36 million of additional restructuring costs related to activities initiated as of December 31, 2025, all of which are expected to be incurred in the next twelve months. The company plans to implement additional restructuring actions in order to align its manufacturing capacity and other costs with prevailing regional automotive production levels. The company's material cost as a percentage of net sales was 64.1% in 2025, as compared to 64.2% in 2024 and 65.2% in 2023.

Capital spending was $562 million in 2025, as compared to $559 million in 2024. Capital spending is estimated to be approximately $660 million in 2026. The company expects to continue to pay quarterly cash dividends in the future, although such payments are at the discretion of the Board. The company may implement share repurchases through a variety of methods, including open market purchases, accelerated stock repurchase programs and structured repurchase transactions. As of December 31, 2025, the company had a remaining repurchase authorization of $775 million , which expires on December 31, 2026.

The company's near-term climate goals for 2030 include 100% usage of renewable energy for electricity consumption and a 50% reduction in Scope 1 and 2 carbon emissions at its facilities globally. The company also aims to achieve a 35% reduction in Scope 3 emissions by 2033. The company aspires to achieve carbon neutrality by 2050 .

The company faces headwinds from the cyclical nature of the automotive industry, which is sensitive to general economic conditions including interest rates, inflation, consumer demand and spending levels, and geopolitical issues. The company also faces risks from international trade policies, such as tariffs, sanctions, export controls and other trade restrictions. Since his inauguration in January 2025, U.S. President Donald J. Trump has announced various tariffs that impact industries around the world, including the automotive industry, which could adversely impact the company's business by increasing operating costs, requiring significant costs to transition to alternative suppliers, or negatively impacting customers' production. The United States-Mexico-Canada Agreement is subject to trilateral review and renewal in 2026, and there can be no assurances that it will be renewed or that any newly negotiated terms will not adversely affect the company's business.

The company faces risks from the evolution of the global transportation industry toward electrification, as the adoption of electrified vehicles has been slower than anticipated, particularly in the United States, resulting in volume decreases related to and cancellations of vehicle programs for which the company is a supplier, as well as general uncertainty about the overall rate of transition to electric and hybrid vehicles in certain regions. The company also faces risks from the increasing use of AI and other emerging technologies, which may expose it to operational, legal and regulatory risks. Additionally, the company faces risks from a disruption in its information technology systems or those of its customers, suppliers, sub-suppliers or other contract parties, including a disruption related to cybersecurity.

Risk Factors

The company's industry is cyclical, and a decline or significant fluctuation in the production levels of its major customers, particularly with respect to models for which it is a significant supplier, could adversely affect financial performance. In 2025, General Motors accounted for 22% of net sales, Ford accounted for 12% , Mercedes-Benz and Volkswagen each accounted for 10% and Stellantis accounted for 9% of net sales. International trade policies, such as tariffs, sanctions, export controls and other trade restrictions, could adversely affect financial performance, as many tariffs announced by the current U.S. administration apply to countries in which the company does business, including China, Mexico and Canada, and to materials or components it purchases, including steel, aluminum and automobile parts. A significant labor dispute involving the company or one or more of its customers or suppliers could adversely affect financial performance; the company has labor agreements covering approximately 75,000 employees globally, and labor agreements covering approximately 67% of its global unionized work force are scheduled to expire in 2026. The company's substantial international operations make it vulnerable to risks associated with volatile economic and political environments, including exposure to local economic conditions, political instability, currency exchange rate fluctuations, and trade wars. The company's increasing use of AI and other emerging technologies may expose it to operational, legal and regulatory risks that could adversely affect its business and reputation.

Management Priorities

Management's message emphasizes the company's strategy to deliver industry-leading, long-term financial returns based on four pillars: extending market leadership in Seating with priceable features including modularity and thermal comfort systems; expanding margins in E-Systems through a focused portfolio; building on the reputation for operational excellence through organic and inorganic investments in automation and digital technologies; and prioritizing employee and sustainability initiatives. The company is focused on profitably growing its businesses and has implemented a strategy designed to deliver industry-leading, long-term financial returns. Management highlights the company's commitment to innovation, operational excellence, and engineering and program management capabilities. The company's financial goals and objectives include continuing to deliver profitable growth while balancing risks and returns, investing in product and process innovations to drive business growth and profitability, maintaining a strong balance sheet with investment grade credit metrics, and generating strong cash flow and returning excess cash to shareholders.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 7, MD&A — Results of Operations
  2. [2] Item 7, MD&A — Results of Operations
  3. [3] Item 7, MD&A — Reportable Operating Segments
  4. [4] Item 7, MD&A — Reportable Operating Segments
  5. [5] Item 7, MD&A — Reportable Operating Segments
  6. [6] Item 7, MD&A — Reportable Operating Segments
  7. [7] Item 7, MD&A — Results of Operations
  8. [8] Item 7, MD&A — Results of Operations
  9. [9] Item 7, MD&A — Reportable Operating Segments
  10. [10] Item 7, MD&A — Reportable Operating Segments
  11. [11] Item 7, MD&A — Reportable Operating Segments
  12. [12] Item 7, MD&A — Reportable Operating Segments
  13. [13] Item 7, MD&A — Executive Overview
  14. [14] Item 7, MD&A — Executive Overview
  15. [15] Item 7, MD&A — Executive Overview
  16. [16] Item 7, MD&A — Executive Overview
  17. [17] Item 7, MD&A — Capitalization — Credit Agreement
  18. [18] Item 5, Market for the Company's Common Equity
  19. [19] Item 5, Market for the Company's Common Equity
  20. [20] Item 5, Market for the Company's Common Equity
  21. [21] Item 5, Market for the Company's Common Equity
  22. [22] Item 7, MD&A — Executive Overview
  23. [23] Item 7, MD&A — Executive Overview
  24. [24] Item 8, Consolidated Statements of Income
  25. [25] Item 8, Consolidated Statements of Income
  26. [26] Item 8, Consolidated Statements of Income
  27. [27] Item 8, Consolidated Statements of Income
  28. [28] Item 8, Consolidated Statements of Income
  29. [29] Item 8, Consolidated Statements of Income
  30. [30] Item 8, Consolidated Statements of Income
  31. [31] Item 8, Consolidated Statements of Income
  32. [32] Item 8, Consolidated Statements of Income
  33. [33] Item 7, MD&A — Results of Operations
  34. [34] Item 7, MD&A — Results of Operations
  35. [35] Item 7, MD&A — Results of Operations
  36. [36] Item 7, MD&A — Results of Operations
  37. [37] Item 8, Consolidated Statements of Cash Flows
  38. [38] Item 8, Consolidated Statements of Cash Flows
  39. [39] Item 1, Business — Customers
  40. [40] Item 1, Business — Customers
  41. [41] Item 1, Business — Customers
  42. [42] Item 1, Business — Customers
  43. [43] Item 1, Business — Customers
  44. [44] Item 1, Business — Customers
  45. [45] Item 1, Business — Customers
  46. [46] Item 1, Business — Strategy
  47. [47] Item 1, Business — Strategy
  48. [48] Item 1, Business — Seating Segment
  49. [49] Item 7, MD&A — Executive Overview
  50. [50] Item 7, MD&A — Executive Overview
  51. [51] Item 7, MD&A — Executive Overview
  52. [52] Item 7, MD&A — Executive Overview
  53. [53] Item 7, MD&A — Cash Flows
  54. [54] Item 7, MD&A — Cash Flows
  55. [55] Item 7, MD&A — Cash Flows
  56. [56] Item 5, Market for the Company's Common Equity
  57. [57] Item 1, Business — Sustainability
  58. [58] Item 1, Business — Sustainability
  59. [59] Item 1, Business — Sustainability
  60. [60] Item 1, Business — Sustainability
  61. [61] Item 1, Business — Customers
  62. [62] Item 1, Business — Customers
  63. [63] Item 1, Business — Customers
  64. [64] Item 1, Business — Customers
  65. [65] Item 1A, Risk Factors
  66. [66] Item 1A, Risk Factors
  67. [67] Item 8, Consolidated Statements of Income
  68. [68] Item 8, Consolidated Statements of Income
  69. [69] Item 8, Consolidated Statements of Income
  70. [70] Item 8, Consolidated Statements of Income
  71. [71] Item 8, Consolidated Statements of Income
  72. [72] Item 8, Consolidated Statements of Income
  73. [73] Item 8, Consolidated Statements of Income
  74. [74] Item 8, Consolidated Statements of Income
  75. [75] Item 8, Consolidated Statements of Income
  76. [76] Item 7, MD&A — Results of Operations
  77. [77] Item 7, MD&A — Results of Operations
  78. [78] Item 7, MD&A — Results of Operations
  79. [79] Item 8, Consolidated Statements of Income
  80. [80] Item 8, Consolidated Statements of Income
  81. [81] Item 8, Consolidated Statements of Income
  82. [82] Item 8, Consolidated Statements of Cash Flows
  83. [83] Item 8, Consolidated Statements of Cash Flows
  84. [84] Item 8, Consolidated Statements of Cash Flows
  85. [85] Item 8, Consolidated Balance Sheets
  86. [86] Item 8, Consolidated Balance Sheets
  87. [87] Item 8, Note 5 — Debt
  88. [88] Item 8, Note 5 — Debt
  89. [89] Item 8, Consolidated Statements of Income
  90. [90] Item 7, MD&A — Results of Operations
  91. [91] Item 8, Consolidated Statements of Income
  92. [92] Item 8, Consolidated Statements of Income
  93. [93] Item 7, MD&A — Results of Operations
  94. [94] Item 8, Consolidated Statements of Income
  95. [95] Item 7, MD&A — Executive Overview
  96. [96] Item 7, MD&A — Executive Overview
  97. [97] Item 7, MD&A — Reportable Operating Segments
  98. [98] Item 7, MD&A — Reportable Operating Segments
  99. [99] Item 7, MD&A — Reportable Operating Segments
  100. [100] Item 7, MD&A — Reportable Operating Segments

Analysis on 9/27/2026