Slide 1: Second Quarter 2021 Financial Results
Second Quarter 2021 Financial Results August 6, 2021 Ray Scott, President and CEO Jason Cardew, Senior Vice President and CFO Making every drive better™ 1
Slide 2: Safe Harbor Statement
Safe Harbor 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,” “outl
Slide 3: Agenda
Agenda BUSINESS UPDATE Ray Scott, President and CEO FINANCIAL REVIEW Jason Cardew, Senior Vice President and CFO CONCLUDING REMARKS Ray Scott, President and CEO Lear Proprietary: The information contained herein is the property of Lear Corporation. 3
Slide 4: Business Update
Business Update Ray Scott, President and CEO
Slide 5: Financial Overview Second Quarter 2021
Financial Overview Second Quarter 2021 $4.8B $233M SALES CORE OPERATING EARNINGS Q2 2020 $2.4B Q2 2020 $(248M) $2.45 4.9% ADJUSTED EARNINGS ADJUSTED OPERATING PER SHARE MARGIN Q2 2020 $(4.14) Q2 2020 (10.2%) Please see appendix for discussion of non-GAAP financial measures, as well as reconciliation
Slide 6: Second Quarter Business Highlights
Second Quarter Business Highlights Delivered solid financial results despite very challenging industry conditions Continuing to win business on new electrification programs in Seating and E-Systems Received General Motors’ Supplier of the Year and Overdrive Awards Released 2020 Sustainability Report
Slide 7: Seating Update
Seating Update • Strong second quarter financial performance despite industry supply constraints - 19 percentage points of growth over market - 7.3% adjusted operating margin • Executing key launches – Ford Bronco, Mercedes C-Class and EQS sedan, BMW iX, and Nissan Qashqai • Building new energy effi
Slide 8: E-Systems Update
E-Systems Update • Innovation and technology driving new business awards and opportunities - Lear Engineered Battery Disconnect Unit (BDU); PACE Award Finalist ▪ Supporting multiple GM BET programs, including Hummer EV SUV and Chevrolet EV Silverado - Integrated 5G Telecommunications Unit; PACE Pilo
Slide 9: Financial Review
Financial Review Jason Cardew, Senior Vice President and CFO
Slide 10: Global Vehicle Production and Currency
Second Quarter 2021 Global Vehicle Production and Currency INDUSTRY PRODUCTION (units in millions) GLOBAL NORTH AMERICA EUROPE AND AFRICA CHINA Q2 2020 12.2 Q2 2020 1.4 Q2 2020 2.2 Q2 2020 5.6 Q2 2021 18.3 Q2 2021 3.2 Q2 2021 4.3 Q2 2021 5.4 UP 51% YOY UP 132% YOY UP 93% YOY DOWN 3% YOY KEY CURRENCI
Slide 11: Growth Over Market
Growth Over Market Second Quarter 2021 11% Global GoM 10% EUROPE ▪ Seating: Favorable platform mix and backlog ▪ E-Systems: Unfavorable 24% NORTH AMERICA platform mix partially 19% offset by backlog (5%) CHINA ▪ Seating: Favorable Seating GoM ▪ Seating: Flat platform mix and backlog ▪ E-Systems: ▪ E
Slide 12: Key Financials
Key Financials Second Quarter ($ in millions, except per share amounts) 2020 2021 YEAR-OVER-YEAR DRIVERS Higher volume, favorable platform mix, backlog, foreign Net Sales $2,445 $4,761 exchange, and commodity passthrough Core Operating Earnings $(248) $233 Operating performance, higher volume, favor
Slide 13: Seating Sales and Margin Drivers
Seating Sales and Margin Drivers Second Quarter ($ in millions) SALES ADJUSTED EARNINGS AND MARGIN 280 bps 7.3% $160 $3,608 $106 $262 $1,587 50 bps (70 bps) 1,050 bps $1,755 Q2 2020 Q2 2020 Volume / Backlog Commodities Net Q2 2021 Mix Performance $(102) (5.8%) Q2 2020 Volume / Mix Backlog FX Q2 2021
Slide 14: E-Systems Sales and Margin Drivers
E-Systems Sales and Margin Drivers Second Quarter ($ in millions) SALES ADJUSTED EARNINGS AND MARGIN 595 bps 3.5% $44 $1,153 $61 $41 $111 $247 Q2 2020 Q2 2020 Volume / Backlog Commodities Net Q2 2021 Mix (15)bps Performance $690 250 bps $(91) (13.2%) 840 bps Q2 2020 Volume / Backlog FX Commodities Q
Slide 15: 2021 Outlook – Downtime Impact
2021 Outlook – Downtime Impact ADVERSE IMPACT OF DOWNTIME ANNOUNCEMENTS ($ in millions) • Semiconductor shortages driving additional customer downtime - COVID outbreaks in Malaysia and Thailand delaying recovery • Over $700 million in lost sales since providing our May outlook • Short notice product
Slide 16: 2021 Outlook – Commodity Impact
2021 Outlook – Commodity Impact US HRC Price – HOT ROLLED STEEL 1980-2021 ($ per sT) COVID-19 +257% $1,863 HR July CRU 1,758 HRC Spot 1,800 8/4/21 Months Spent Above: Financial $700/sT $800/sT $900/sT Crisis 1,350 Financial Crisis 8 7 6 +105% Section 232 * Section 232* 12 9 2 COVID 9 (so far) 8 (so
Slide 17: 2021 Outlook – Production
2021 Outlook – Production LEAR GLOBAL INDUSTRY PRODUCTION OUTLOOK (units in millions) Memo: First Second 2021 Second Half Half Actual Half Outlook Outlook Change from May Outlook High-End 38.5 40.5 79.0 (1.8) Reflects all customer announced downtime vs. 2020 30% (6%) 8% Mid-Point 38.5 39.0 77.4 (2.2
Slide 18: 2021 Outlook – Range
2021 Outlook – Range ($ in millions) SALES OUTLOOK CORE OPERATING EARNINGS • No/limited incremental customer No/limited incremental customer High-End downtime $20,500 • downtime $1,110 • 4% incremental second half • 4% incremental second half downtime Mid-Point downtime $20,100 • Downtime weighted m
Slide 19: May Outlook to August Outlook – Mid-Point
May Outlook to August Outlook – Mid-Point ($ in millions) SALES ADJUSTED EARNINGS AND MARGIN $20,750 5.9% $262 $20,100 $1,225 $(650) 5.1% $20 $(155) $(75) $1,015 May Volume August May Volume Commodities Net August Outlook Outlook Outlook Performance Outlook (Mid-Point) (Mid-Point) (Mid-Point) (Mid-P
Slide 20: Long-Term Outlook – Key Drivers
Long-Term Outlook – Key Drivers INDUSTRY DRIVERS 2021 vs. 2022 2023 May Outlook Outlook Outlook Industry Volume -- + ++ Commodities -- +/- + Covid Premiums Neutral + Neutral Semi-conductor Supply Constraints -- + ++ Electrification Penetration Rates Neutral + ++ LEAR DRIVERS Backlog Neutral + + Vert
Slide 21: Strong Balance Sheet and Ample Liquidity to Invest for Growth
Strong Balance Sheet and Ample Liquidity to Invest for Growth LIQUIDITY AND CAPITAL ALLOCATION DEBT MATURITIES ($ in millions) • $3.2 billion in total liquidity, including $1.75 billion available under revolving line of credit • Moody’s and Fitch upgraded rating outlook Term Loan Available Revolver
Slide 22: Concluding Remarks
Concluding Remarks Ray Scott, President and CEO
Slide 23: Strong execution in second quarter despite a challenging environment
Strong execution in second quarter Supply chain volatility driving despite a challenging environment uncertainty in the second half Strong liquidity position and free cash Strategy will drive profitable growth and flow generation will enable organic and sustained shareholder returns inorganic invest
Slide 24: Appendix
Appendix
Slide 25: 2021 Outlook – Global Vehicle Production and Currency
2021 Outlook – Global Vehicle Production and Currency INDUSTRY PRODUCTION (units in millions) GLOBAL NORTH AMERICA EUROPE AND AFRICA CHINA FY 2020 72.8 FY 2020 13.0 FY 2020 16.9 FY 2020 21.9 FY 2021 77.4 FY 2021 14.0 FY 2021 17.8 FY 2021 22.6 vs Prior Year vs Prior Year vs Prior Year vs Prior Year U
Slide 26: 2021 Full Year Outlook
2021 Full Year Outlook Net Sales Interest Expense Restructuring Costs $19,700 - $20,500 million ≈$90 million ≈$100 million May Outlook $20,350 - $21,150 million Core Operating Earnings Effective Tax Rate Capital Spending $920 - $1,110 million ≈21% ≈$625 million May Outlook $1,140 - $1,310 million Ad
Slide 27: Non-GAAP Financial Information
Non-GAAP Financial Information In addition to the results reported in accordance with GAAP included throughout this presentation, the Company has provided information regarding “pretax income (loss) before equity income, interest, other (income) expense, restructuring costs and other special items”
Slide 28: Non-GAAP Financial Information
Non-GAAP Financial Information Core Operating Earnings and Adjusted Margins Second Quarter ($ in millions) 2020 2021 Net sales $ 2,444.5 $ 4,760.7 Net income (loss) attributable to Lear $ (293.9) $ 175.2 Interest expense 27.2 22.3 Other income, net (3.2) (46.1) Income taxes (41.0) 39.3 Equity in net
Slide 29: Non-GAAP Financial Information
Non-GAAP Financial Information Adjusted Earnings Per Share Second Quarter (In millions, except per share amounts) 2020 2021 Net income (loss) attributable to Lear $ (293.9) $ 175.2 C osts related to restructuring actions 38.9 14.8 Intangible asset impairment - 8.5 Favorable indirect tax ruling in a
Slide 30: Non-GAAP Financial Information
Non-GAAP Financial Information Adjusted Segment Earnings and Margins Second Quarter Seating E-Systems ($ in millions) 2020 2021 2020 2021 Net sales $ 1,754.9 $ 3,608.2 $ 689.6 $ 1,152.5 Segment earnings $ (116.4) $ 252.2 $ (113.4) $ 26.6 Restructuring costs and other special items - Costs related to
Slide 31: Non-GAAP Financial Information
Non-GAAP Financial Information Free Cash Flow Second Quarter ($ in millions) 2020 2021 Net cash provided by (used in) operating activities $ (524.5) $ 260.1 C apital expenditures (86.1) (140.0) Free cash flow $ (610.6) $ 120.1 Lear Proprietary: The information contained herein is the property of Lea
Slide 32: Non-GAAP Financial Information
Non-GAAP Financial Information (in millions, except per share amounts) Second Quarter 2021 Restructuring Other Reported Costs Special Items Adjusted Pretax Income Before Equity Income, Interest and Other (Income) Expense $ 205.5 $ 14.8 * $ 12.9* $ 233.2 Equity Income (4.9) (4.9) Pretax Income Before