Lear Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue was $5.8 billion, a 2% increase year-over-year compared to $5.7 billion in Q3 2025.
• Net income increased 26% to $137 million from $108 million in Q3 2025.
• Adjusted net income increased 23% to $185 million from $150 million in Q3 2025.
• Core operating earnings rose 6% to $256 million from $241 million in Q3 2025, representing 4.4% of sales compared to 4.2% in the prior year.
• Earnings per share (EPS) increased 36% year-over-year to $2.74 from $2.02.
• Adjusted EPS increased 33% year-over-year to $3.71 from $2.79.
• Net cash provided by operating activities was $329 million, down from $444 million in Q3 2025.
• Free cash flow was $158 million, down from $307 million in Q3 2025.
• Cash and cash equivalents at quarter-end were $889 million, with total liquidity of $2.9 billion.
• Seating segment margins were 5.5% (adjusted 6.3%), compared to 5.6% (adjusted 6.1%) in Q3 2025.
• E-Systems segment margins were 3.5% (adjusted 4.8%), compared to 2.9% (adjusted 4.2%) in Q3 2025.

Guidance and Future Outlook:

• Lear maintained its full-year 2026 core operating earnings guidance despite adjusting the outlook to reflect changing production schedules for key platforms.
• Full-year 2026 Net Sales guidance is $23.35 billion to $23.75 billion.
• Full-year 2026 Core Operating Earnings guidance is $1.08 billion to $1.20 billion.
• Full-year 2026 Adjusted EBITDA guidance is $1.70 billion to $1.82 billion.
• Full-year 2026 Operating Cash Flow guidance is $1.225 billion to $1.325 billion.
• Full-year 2026 Free Cash Flow guidance is $565 million to $665 million.
• Full-year 2026 Restructuring Costs are estimated at approximately $200 million.
• Full-year 2026 Capital Spending is estimated at approximately $660 million.
• The outlook assumes full-year global industry production will be approximately 1% lower than 2025 on a Lear sales-weighted basis.
• The outlook excludes potential impacts from future tariff changes or production disruptions.
• The financial outlook assumes average exchange rates of $1.15/Euro and 6.80 RMB/$.

Business Segments and Product Lines:

• Seating segment delivered positive operating performance with approximately 40 basis points of growth over the market.
• E-Systems segment delivered positive operating performance with approximately 120 basis points of growth over the market.
• Seating awards included a key replacement program and a future program with a North American automaker, the largest complete seat award in India with Mahindra & Mahindra, an award with a Chinese luxury EV automaker, awards with BYD in Indonesia and Thailand, a ComfortFlex™ award with Mercedes, and ComfortMax Seat™ and FlexAir® awards with JLR.
• E-Systems growth included a conquest award on a commercial and passenger van with a North American automaker in Europe, and multiple conquest and new wire awards with customers in China.
• The complete seat facility in Orion, Michigan, is on track to launch early next year.

Market and Competitive Landscape:

• Global vehicle production was down 2% year-over-year, with North America down 5%, Europe up 1%, and China down 7%.
• Global vehicle production was down approximately 2% on a Lear sales-weighted basis.
• Lear achieved total company growth over the market of 4 percentage points, with 4 percentage points in Seating and 2 percentage points in E-Systems.
• Mahindra & Mahindra is identified as a market leader in India where Lear secured its largest complete seat award.

Risks and Challenges:

• Lower production on key Lear platforms and the wind-down of non-core electronics programs partially offset revenue growth.
• Increases in engineering and launch costs impacted earnings.
• Future operating results depend on actual industry production volumes, trade policies (tariffs and export restrictions), customer production schedule changes, government shutdowns, industry disruptions, supply chain disruptions, labor disruptions, commodity prices, and foreign exchange rates.
• Contracts generally do not provide for specified production quantities and may be terminated by customers at any time.
• Core sales backlog calculations exclude non-core product wind-downs and do not reflect customer price reductions.

Management Commentary and Tone:

• Ray Scott, President and CEO, stated the company delivered improved year-over-year revenue and core operating earnings for the fourth consecutive quarter despite lower industry production.
• Management expressed confidence in delivering full-year earnings guidance through strong operational execution and savings from restructuring actions.
• Management highlighted the Orion, Michigan facility as a showcase for the next phase of the technology roadmap driven by IDEA by Lear™.
• Management emphasized a commitment to returning cash to shareholders through share repurchases and dividends.

Other Key Points:

• Lear repurchased $175 million of shares in Q3 2026, achieving the full-year target of $350 million.
• The share repurchase authorization was expanded to $1.5 billion and extended through December 31, 2029.
• Since 2011, Lear has repurchased 64.9 million shares for a total of $6.3 billion, reducing shares outstanding by approximately 62%.
• Lear paid $38 million in dividends during the quarter.
• At the end of the quarter, the remaining share repurchase authorization represented approximately 26% of total market capitalization.
• Net income attributable to Lear for the nine months ended October 3, 2026, was $501.7 million, compared to $354.1 million in the prior year period.
• Adjusted net income attributable to Lear for the nine months ended October 3, 2026, was $601.9 million, compared to $506.9 million in the prior year period.