Slide 1: Third Quarter 2020 Financial Results
Third Quarter 2020 Financial Results October 30, 2020 Ray Scott, President and CEO Jason Cardew, Senior Vice President and CFO
Slide 2: Safe Harbor Statement
Safe H arbor Statement Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated financial results and liquidity. The words “will,” “may,” “designed to,” “out
Slide 3: Agenda
A genda • Business Update Ray Scott, President and CEO • Financial Review Jason Cardew, Senior Vice President and CFO • Concluding Remarks Ray Scott, President and CEO 3
Slide 4: Business Update
Business Update Ray Scott, President and CEO 4
Slide 5: Business Highlights
B usiness H ighlights Delivered strong financial results, with both business segments reporting margins in the high-7% range Continued to grow sales faster than the market in both segments; E-Systems growth over market of 12% Restarted and sustained ramped-up levels of production with robust safety
Slide 6: Seating Business Profile
Seating B usiness Profile • Demonstrated record of strong and consistent financial results Historical Seating Adjusted Margins − Industry-leading margins − Significant free cash flow • Well positioned to benefit from secular trends 8.2% 8.3% 8.3% 8.0% − Market leader in luxury seats with over 45% gl
Slide 7: E-Systems Portfolio
E-Systems Portfolio Product Offerings Key 2020 / 2021 Launches • Low Voltage Wire Harness Jaguar I-Pace OBC, Mazda MX-30 OBC Electrical Distribution • Low Voltage Connection Systems DC/DC Converter Electrification • High Voltage Wire Harness Electrification and Connection Systems • High Voltage Conn
Slide 8: E-Systems – High Voltage Electrical Architecture
E-Systems – High Voltage Electrical Architecture 1. HV Wire Harness 1 2. HV Connection Systems 5 3. Integrated Power Modules: On-Board 2 In Lear’s Chargers & DC/DC Converters Portfolio 2 4. Battery Management Systems 5. HV Power Distribution Box / Battery Disconnect Unit Off-Board Charging Equipment
Slide 9: E-Systems – Electrification Opportunity
E-Systems – Electrification Opportunity I H S Vo l u m e F o r e c a s t b y P r o p u l s i o n Ty p e 5-Year 9% EV CAGR 30% 24% 91% 76% 2020 2025 ICE / Mild Hybrid HEV / PHEV / BEV HEV: Full Hybrid PHEV: Plug-In Hybrid Source: IHS Markit September 2020 Alternative Powertrain Study BEV: Battery Ele
Slide 10: E-Systems – Electrification Sales Outlook
E-Systems – Electrification Sales Outlook Electrification Sales Outlook 2025 Sales Mix by Product Type ($ in millions) ≈ $1,000 32% HV Wire & CAGR Connection ≈ $700 Systems 40% ≈ $250 Electronics 60% 2020 2025 Booked Target Source: Lear estimates 10
Slide 11: Financial Review
Financial Review Third Quarter 2020 Results Jason Cardew, Senior Vice President and CFO 11
Slide 12: Third Quarter 2020 Global Vehicle Production and Currency
Third Quarter 2020 Global Vehicle Production and Currency Industry Production (units in millions) Global North America Europe and Africa China Q3 2019 20.7 Q3 2019 4.0 Q3 2019 4.8 Q3 2019 5.5 Q3 2020 19.8 Q3 2020 4.0 Q3 2020 4.4 Q3 2020 5.9 vs Prior Year vs Prior Year vs Prior Year vs Prior Year Dow
Slide 13: Key Financials
Key Financials ($ in millions, except per share amounts) Third Quarter Comments 2019 2020 • Reflects new business backlog of $293 million, partially offset Net Sales $ 4,825 $ 4,900 by decline in global vehicle production • Unfavorable impact of lower industry production, partially offset Core Opera
Slide 14: Seating Sales and Margin Drivers Third Quarter
Seating Sales and Margin D rivers Third Quarter ($ in millions) Sales Adjusted Earnings and Margin $3,715 $180 $5 $3,692 8.2% 5bps 30bps 7.8% ($208) $304 $286 (75bps) ≈22% conversion Q3 2019 Volume / Mix / Backlog FX Q3 2020 Q3 2019 Volume / Mix / Backlog Net Performance Q3 2020 Other Other Please s
Slide 15: E-Systems Sales and Margin Drivers Third Quarter
E -Systems Sales and Margin D rivers Third Quarter ($ in millions) Sales Adjusted Earnings and Margin $113 $6 $1,209 $1,110 45bps 20bps 7.7% 7.6% ($20) $85 $93 (55bps) ≈36% conversion Q3 2019 Volume / Mix / Backlog FX Q3 2020 Q3 2019 Volume / Mix Backlog Net Performance Q3 2020 Other Please see appe
Slide 16: Strong Balance Sheet and Ample Liquidity
Strong Balance Sheet and Ample Liquidity Liquidity Debt Maturities ($ in millions) Term Loan Available Revolver Bonds $1,750 • Fully repaid $1.0 billion draw on revolver • $3.0 billion in total liquidity, including $1.75 $750 billion available under revolver (3.80%) $625 (5.25%) $375 $350 • No signi
Slide 17: 2020 Full Year Outlook Global Vehicle Production and Currency
2020 Full Year Outlook Global Vehicle Production and C urrency Industry Production (units in millions) Global North America Europe and Africa China Actual FY 2019 87.2 FY 2019 16.3 FY 2019 21.7 FY 2019 23.1 Outlook FY 2020 70.0 FY 2020 12.9 FY 2020 16.3 FY 2020 20.8 vs Prior Year vs Prior Year vs Pr
Slide 18: 2020 Full Year Outlook
2020 Full Year Outlook $16.35 - $16.65 Net Sales billion Core Operating $520 - $580 Earnings million $125 - $175 Free Cash Flow million Note: 2020 Outlook assumes an average Euro of $1.13 and an average Chinese RMB of 7.00/$ Certain of the forward-looking financial measures are provided on a non-GAA
Slide 19: Concluding Remarks
Concluding Remarks Ray Scott, President and CEO 19
Slide 20: Concluding Remarks
C oncluding R emarks Strong balance sheet Experienced, industry-leading Long history of and liquidity management team operational excellence Strong strategic position Trusted relationships with key stakeholders 20
Slide 21: Appendix
LEAR Making every drive b
Slide 22: Non-GAAP Financial Information
Non-GAAP Financial Information In addition to the results reported in accordance with GAAP included throughout this presentation, the Company has provided information regarding “pretax income before equity income, interest, other expense, restructuring costs and other special items” (core operating
Slide 23: Non-GAAP Financial Information – Impact of Restructuring and Special Items
N on -GA A P Financial Information Impact of R estructuring and Special Items (in millions, except per share amounts) Third Quarter 2020 Memo: Restructuring Other Q3 2019 Reported Costs Special Items Adjusted Adjusted Pretax Income Before Equity Income, Interest and Other Expense 1 $ 278.8 $ 40.1 $
Slide 24: Non-GAAP Financial Information
Non-GAAP Financial Information Core Operating Earnings and Adjusted Margins Third Quarter ($ in millions) 2019 2020 Net sales $ 4,825.0 $ 4,900.1 Net income attributable to Lear $ 215.9 $ 174.4 Interest expense 24.0 26.5 Other expense, net 9.7 17.1 Income taxes 33.5 44.6 Equity in net income of affi
Slide 25: Non-GAAP Financial Information
Non-GAAP Financial Information Adjusted Segment Earnings and Margins Third Quarter Seating 2019 2020 2015 2016 2017 2018 2019 ($ in millions) Seating E-Systems Seating E-Systems Net sales $ 3,715.0 $ 1,110.0 $ 3,691.6 $ 1,208.5 $ 14,098.5 $ 14,356.7 $ 15,873.0 $ 16,021.9 $ 15,097.2 GM strike 295.4 N
Slide 26: Non-GAAP Financial Information
Non-GAAP Financial Information Adjusted Net Income and Earnings Per Share Third Quarter (In millions, except per share amounts) 2019 2020 Net income available to Lear common stockholders $ 219.5 $ 174.4 Redeemable noncontrolling interest (3.6) - Net income attributable to Lear 215.9 174.4 Costs rela
Slide 27: Non-GAAP Financial Information
Non-GAAP Financial Information Free Cash Flow 2019 2020 ($ in millions) Q3 Q1 Q2 Q3 Q3 YTD Net cash provided by (used in) operating activities $343.4 $222.3 ($524.5) $564.5 $262.3 Capital expenditures (150.8) (109.1) (86.1) (90.1) (285.3) Free cash flow $192.6 $113.2 ($610.6) $474.4 ($23.0) 27