Lear Corporation

Good morning and welcome to the Lear Corporation first quarter 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Ed Lowenfeld, Vice President, Investor Relations. Please go ahead.

Thanks, Jamie. Good morning, everyone, and thank you for joining us for LEER's first quarter 2024 earnings call. Presenting today are Ray Scott, Senior President and CEO, and Jason Cardew, Senior Vice President and CFO. Other members of LEER's senior management team have also joined us on the call. Following prepared remarks, we will open the call for Q&A. You can find a copy of the presentation that accompanies these remarks at ir.leer.com. Before we begin, I'd like to take this opportunity to remind you that as we conduct this call, we will be making forward-looking statements to assist you in understanding LEER's expectations for the future. As detailed in our safe harbor statement on slide two, our actual results could differ materially from these forward-looking statements due to many factors discussed in our latest 10Q and other periodic reports. I also want to remind you that during today's presentation, we will refer to non-GAAP financial metrics. You are directed to the slide in the appendix of our presentation for the reconciliation of non-GAAP items to the most directly comparable GAAP measures. The agenda for today calls on slide three. First, Ray will review highlights from the quarter and provide a business update. Jason will then review our first quarter financial results. Finally, Ray will offer some concluding remarks. Following the formal presentation, we'd be happy to take your questions. Now I'd like to invite Ray to begin. Thanks, John. Thanks.

Please turn to slide five, which highlights key financial metrics for the first quarter of 2024. Lear started the year strong, delivering higher revenue and adjusted earnings in the first quarter compared to last year. Sales increased 3% to $6 billion, and core operating earnings grew by 6% to $280 million. Adjusted earnings per share was $3.18, an increase of 14% driven by stronger operating performance and the benefit of our share repurchase program. Operating cash flow was in line with the first quarter of last year. Slide 6 summarizes key business and financial highlights from the quarter. The $6 billion in revenue was a record for the first quarter. Our sales outperformed industry production, driven by 10 points of growth over market in each systems. The systems team continues to drive improvements in the business. as evidenced by the seventh consecutive quarter with higher year-over-year margins. Yesterday, we announced the acquisition of WIP Industrial Automation. To further strengthen our automation capabilities, WIP leverages robotics, automation, and software to design turnkey solutions for complex industrial challenges that will help accelerate our automation initiatives globally. We continue to make progress in our thermal comfort strategy. Later this year, we will be launching component modules with Volvo and Lucid. Their modular solutions reduce the number of parts, resulting in lower weight and complexity while improving performance at a lower cost. The Volvo module combines seat heat, ventilation, and massage, while the Lucid module combines ventilation, lumbar, and massage. In addition, We initiated the validation process with Ford Motor Company for our first complete seat module for a vehicle scheduled to launch in 2026. This opportunity is incredibly exciting for two reasons. First, it gives Lear design responsibility for the thermal comfort components and trim. Second, once validated, it will be the first automotive application fully integrating the thermal comfort components into the trim cover. This will allow us to reduce our complete seat assembly time in our JIT facilities. In China, we continue to diversify our customer base as we won our first complete seat program with FAW Toyota. And in eSystems, our second wiring award with BMW is a result of a strong customer relationship that we have built. Our customers continue to recognize Lear as a leader in innovation and technology and quality. For the seventh consecutive year, General Motors recognized Lear as supplier of the year. We remain committed to returning excess cash to our shareholders. In February, Lear's board approved an increase and an extension to the company's share repurchase authorization of $1.5 billion through the end of 2026. Okay, turning to slide seven, we are introducing IDEA by Lear. and an important evolution in our strategy. Accelerating the adoption of digital tools and automation will extend our competitive advantage and enable us to more efficiently engineer and develop and manufacture innovative products that will drive profitable growth. Elevated wage inflation, geopolitical risk, and uncertainty surrounding the pace of the EV transition, combined with the introduction of artificial intelligence, is creating new challenges and opportunities for automotive companies. Those that adapt most effectively will be best positioned for significant growth and margin expansion. Lear has consistently invested in our products and processes to become a leader in operational excellence. With Idea by Lear, we identified a broader opportunity to leverage new technologies to move faster and drive efficiencies in both businesses. Digital innovation combined with automation and robotics will allow Lear to streamline our processes while accelerating product development and reducing manufacturing costs. These tools improve ergonomics, quality, and safety, resulting in higher job satisfaction for employees while enhancing efficiencies at our plant. Slide 8 illustrates LEER's long history of strategic investments to enhance our manufacturing capabilities. Through our acquisitions, we brought key automation capabilities in-house, lowering our manufacturing costs. ASI's automated material delivery, storage, and retrieval systems have been deployed in all of our North American just-in-time facilities. ASI's equipment has improved reliability, uptime, and throughput within our plants. We will continue to automate material movement across our seating plans globally as well as within eSystems. The acquisition of InTouch added equipment to automate end-of-line testing to ensure all seat functions meet performance and quality specifications. The combination of ASI's material movement capabilities with InTouch's end-of-line testing has allowed us to fully automate the final steps of our just-in-time seating assembly process. Ultimately, we plan to automate from finesse, the process to remove wrinkles from the seat covers, all the way to installation within the customer's facility, resulting in significant manufacturing cost efficiencies and quality improvements. The GOR's use of vision systems and software, combined with precision cutting capabilities, optimizes utilization of leather heights, equipment uptime and productivity. We are expanding the first application of the GORA system across our leather facilities globally, with additional performance improvements to be deployed over the next 18 months. We continue to evaluate additional tools to accelerate automation in our plans. And yesterday, we announced the acquisition of WIP Industrial Automation. WIP is a European supplier that leverages AI, vision systems, and robotics to develop turnkey solutions to complex industrial problems. WIP's technology can be used in multiple applications in seating and e-systems and expands our automation footprint in Europe. Looking forward, we will continue to evaluate additional opportunities to accelerate the rollout of automation tools in both seating and e-systems. For example, last year we started working with Palantir and completed four pilot programs utilizing their foundry software in our manufacturing facilities. These acquisitions, coupled with organic strategic initiatives, are key enablers to continue to expand our competitive advantage and leadership in operational excellence. Turning to slide nine, we'd like to discuss several of the innovative products we have developed in recent years to expand our vertical integration capabilities in both seeding and eSystems. The combination of our engineering and manufacturing capabilities allows us to innovate and develop new product offerings to drive profitable growth. These products are accretive to our segment margin targets and offer an attractive value proposition for our customers. In seating, our acquisition of Kongsberg Automotive Interior Comfort Systems, IGB, and Grupo Antolin's seating business provided valuable vertical integration capabilities. We are the only complete seat manufacturer with thermal comfort components, allowing us to develop unique proprietary module solutions. The two recent component modularity awards and our first customer validation in process for our complete thermal comfort module are proof that our strategy is working. Our thermal comfort business is on track to achieve our target of $1 billion in revenue by 2027 with operating margins of 10%. In these systems, the acquisition of M&M expanded our connection systems and engineered component portfolio. Combining the molding and overmolding capabilities from M&M with the precision stamping technology from seeding improved the cost competitiveness of our battery disconnect unit and Intercel Connect Board products. As volumes grow on the BDU and ICB, we expect these products will be a key driver of continued margin growth in these systems. The initiatives we are implementing through IDEA will allow us to innovate and engineer next generation products faster with improved designs at a lower cost. Now I'd like to turn the call over to Jason for a financial review. Thanks, Ray.