LEAR CORP

Previous wording

Lear is built on a foundation and strong culture of innovation, operational excellence, and engineering and program management capabilities. We use our product and process design and technological expertise, as well as our global reach and competitive manufacturing footprint, to achieve our financial goals and objectives. These 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. Further, we have aligned our strategy with key trends affecting our business. At Lear, we are Making every drive better TM by providing technology for safer, smarter and more comfortable journeys, while adhering to our values —Be Inclusive. Be Inventive. Get Results the Right Way.

Current wording

Lear is built on a strong foundation and culture of innovation, operational excellence, and engineering and program management capabilities. We use our product and process design and technological expertise, as well as our global reach and competitive manufacturing footprint, to achieve our financial goals and objectives. These 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. Further, we have aligned our strategy with key trends affecting our business. At Lear, we are Making every drive better TM by providing technology for safer, smarter and more comfortable journeys, while adhering to our values —Be Inclusive. Be Inventive. Get Results the Right Way.

Previous wording

We serve all of the world's major automotive manufacturers through both our Seating and E-Systems businesses, and we have automotive content on more than 500 vehicle nameplates worldwide. It is common for us to have both seating and electrical and/or electronic content on the same vehicle platform.

Current wording

We serve all of the world's major automotive manufacturers through both our Seating and E-Systems businesses, and we have automotive content on more than 500 vehicle nameplates worldwide as of December 31, 2025. It is common for us to have both seating and electrical and/or electronic content on the same vehicle platform.

Previous wording

IDEA by Lear TM - Innovative. Digital. Engineered. Automated. - reflects our commitment to continue to strengthen our competitive position in both of our business segments and to enhance the efficiency of our administrative functions. IDEA by Lear TM supports our strategy to drive growth and improve profitability through the development of innovative products and the utilization of advanced technologies and process automation that increase efficiency and extend our leadership position in operational excellence. We are leveraging our internal capabilities through strategic partnerships (e.g., Palantir Technologies, Inc.) and acquisitions to rapidly develop and deploy automation and AI solutions. Our strategic acquisitions of ASI Automation, InTouch Automation, StoneShield Engineering, Thagora Technology SRL and WIP Industrial Automation are further enhancing our automation system integration expertise. Our new facility in Rochester Hills, Michigan is an industry first site, capable of fully automated manufacturing of ComfortFlex by Lear TM and ComfortMax Seat by Lear TMseating systems. These strategic initiatives further advance our leadership in automotive technology and enable greater efficiency, superior quality and faster execution.

Current wording

IDEA by Lear TM - Innovative. Digital. Engineered. Automated. - reflects our commitment to continue to strengthen our competitive position in both of our business segments and to enhance the efficiency of our administrative functions. IDEA by Lear TM supports our strategy to drive growth and improve profitability through the development of innovative products and the utilization of advanced technologies and process automation that increase efficiency and extend our leadership position in operational excellence. We are leveraging our internal capabilities through strategic partnerships (e.g., Palantir Technologies, Inc.) and acquisitions to rapidly develop and deploy automation and AI solutions. Our strategic acquisitions of ASI Automation, InTouch Automation, StoneShield Engineering, Thagora Technology SRL and WIP Industrial Automation are further enhancing our automation system integration expertise. Our advanced manufacturing integration center in Rochester Hills, Michigan showcases our industry-leading capabilities in automation and digital tools, including fully automated ComfortFlex by Lear TM, ComfortMax Seat by Lear TMand FlexAir® assembly lines, as well as automated end-of-line testing, sewing and wire taping capabilities. These strategic initiatives further advance our leadership in automotive technology and enable greater efficiency, superior quality and faster execution.

Previous wording

Since 2020, the global economy, as well as the automotive industry, have been influenced directly and indirectly by macroeconomic events resulting in unfavorable conditions, including the imposition of or increases in tariffs, shortages of semiconductor chips and other components, elevated inflation levels on commodities and labor, higher interest rates, and labor and energy shortages in certain markets. Certain of these factors, among others, continue to impact consumer demand. Our strategy to mitigate these impacts encompasses our comprehensive cost management process, including cost technology optimization, actions to further align our manufacturing capacity to the current industry production environment and investments in automation and other advanced manufacturing technologies, as well as commercial recovery mechanisms. This will allow us to enhance operational efficiencies, improve the utilization of existing facilities and equipment to reduce future expenditures, and streamline administrative functions.

Current wording

Since 2020, the global economy, as well as the automotive industry, have been influenced directly and indirectly by macroeconomic events resulting in unfavorable conditions, including the imposition of or increases in tariffs, shortages of semiconductor chips and other components, elevated inflation levels on commodities and labor, higher interest rates and energy shortages in certain markets. Certain of these factors, among others, continue to impact consumer demand. Our strategy to mitigate these impacts encompasses our comprehensive cost management process, including cost technology optimization, actions to further align our manufacturing capacity to the current industry production environment and investments in automation and other advanced manufacturing technologies, as well as commercial recovery mechanisms. This is designed to allow us to enhance operational efficiencies, improve the utilization of existing facilities and equipment to reduce future expenditures, and streamline administrative functions.

Previous wording

Due to the interconnectedness of the global economy, policy changes in one area of the world can have an immediate and material impact on markets around the world. 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. As of the date of this Report, many of the tariffs announced, implemented or threatened by the current U.S. administration apply to (a) the countries in which we do business or from which we purchase, either directly or indirectly, materials or components, including Mexico, Canada and China, and (b) the materials or components that we purchase, either directly or indirectly, or produce, including steel, aluminum and automobile parts, among others, and therefore could adversely impact our business by increasing our operating costs, requiring us to incur significant costs to transition to alternative suppliers if our mitigation efforts are unsuccessful, or negatively impacting our customers' production. In addition to tariffs, the U.S. and foreign governments have implemented sanctions, export controls and other trade restrictions that impact industries around the world, including the automotive industry.

Current wording

Due to the interconnectedness of the global economy, policy changes in one area of the world can have an immediate and material impact on markets around the world. 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. As of the date of this Report, many of the tariffs announced, implemented or threatened by the current U.S. administration apply to (a) the countries in which we do business or from which we purchase, either directly or indirectly, materials or components, including Mexico, Canada and China, and (b) the materials or components that we purchase, either directly or indirectly, or produce, including steel, aluminum and automobile parts, among others, and therefore could adversely impact our business by increasing our operating costs, requiring us to incur costs to transition to alternative suppliers if our mitigation efforts are unsuccessful, or negatively impacting our customers' production. In addition to tariffs, the U.S. and foreign governments have implemented sanctions, export controls and other trade restrictions that impact industries around the world, including the automotive industry.

Previous wording

Although U.S. tariffs did not have a material impact on our gross profit in the first quarter of 2026, the tariff and trade landscape continues to evolve, including with respect to the type of tariff or export control, the tariff rates, the countries, components and materials to which such tariffs apply, and the existence and applicability of any exemptions, refunds or credits.

Current wording

Although tariffs did not have a material impact on our gross profit in the first six months of 2026, the tariff and trade landscape continues to evolve, including with respect to the type of tariff or export control, the tariff rates, the countries, components and materials to which such tariffs apply, and the existence and applicability of any credits, refunds or exemptions. In particular, in April 2025, with revisions in October 2025, the U.S. administration implemented a policy allowing U.S. automotive manufacturers to offset a portion of the tariffs imposed under Section 232 of the Trade Expansion Act of 1962 ("auto parts tariffs") through government-provided import adjustment offset amounts ("tariff offset credits"). In addition, the U.S. tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") became subject to refund after the U.S. Supreme Court issued an opinion on February 20, 2026, invalidating such tariffs. In 2025, we paid approximately $110 million of auto parts tariffs, for which we were allocated tariff offset credits by our customers in the first six months of 2026, and $85 million of IEEPA tariffs, nearly all of which were recovered from our customers and are now subject to refund from the government.

Previous wording

On February 20, 2026, the U.S. Supreme Court issued an opinion invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"). After the U.S. Supreme Court opinion, the Court of International Trade ordered U.S. Customs and Border Protection to develop a process to refund tariffs imposed under IEEPA. In 2025, we paid approximately $80 million of IEEPA tariffs, nearly all of which were recovered from our customers. Following the U.S. Supreme Court opinion, the U.S. administration imposed a temporary 10% general tariff under Section 122 of the Trade Act of 1974 to replace the IEEPA tariffs, though the scope and duration of future tariffs remain uncertain. Further, in April 2025, and revised in October 2025, the U.S. administration implemented a policy allowing U.S. automotive manufacturers to offset a portion of the cost related to tariffs imposed under Section 232 of the Trade Expansion Act of 1962 ("Section 232") through government-provided import adjustment offset amounts ("tariff offset credits"). In the first quarter of 2026, certain of our customers allocated a portion of their Section 232 tariff offset credits to us, allowing us to recover a portion of our 2025 and 2026 Section 232 tariff costs from the government (for those tariff costs already paid) and avoid a portion of our Section 232 tariff costs going forward. In 2025, we paid approximately $100 million of Section 232 tariffs, for which we were allocated Section 232 tariff offset credits by our customers in the first quarter of 2026. As a result of the U.S. Supreme Court opinion and the allocation of Section 232 tariff offset credits by our customers, certain 2025 tariff amounts are now recoverable from the government and no longer due from our customers, which resulted in lower first quarter 2026 sales and cost of sales corresponding to our 2025 IEEPA and certain Section 232 tariff costs.

Current wording

As a result of the allocation of tariff offset credits by our customers and the U.S. Supreme Court opinion, certain 2025 tariff amounts are now recoverable from the government and no longer due from our customers, which resulted in lower first half 2026 sales and cost of sales corresponding to certain of our 2025 auto parts and all of our 2025 IEEPA tariff costs.

Previous wording

In addition to tariffs in the United States and other countries, the United States-Mexico-Canada Agreement ("USMCA") is subject to trilateral review and renewal in 2026. There can be no assurances that the USMCA will be renewed or, if renewed, any newly negotiated terms in the USMCA will not adversely affect our business. Also, China presents unique risks to U.S. automotive manufacturers due to the strain in U.S.-China relations and the level of integration with key components in our global supply chain. It remains unclear what additional actions the current U.S. administration may take with respect to trade issues involving China and other countries.

Current wording

In addition to tariffs, during the mandatory joint review on the six-year anniversary of the United States-Mexico-Canada Agreement ("USMCA") on July 1, 2026, the United States declined to extend the USMCA for another 16-year term in its current form. This decision triggered rolling annual reviews that could lead to the agreement's expiration in 2036 if extensions are not ultimately agreed upon. While the USMCA currently remains in force, there are no assurances that the USMCA will continue to be renewed or, if renewed, any newly negotiated terms in the USMCA will not adversely affect our business. Also, the strain in U.S.-China relations presents unique risks to U.S. automotive manufacturers due to the level of integration with key components in our global supply chain. It remains unclear what additional actions the current U.S. administration may take with respect to trade issues involving China and other countries.

Previous wording

Further, the U.S. and other governments could impose additional sanctions, export controls or other trade restrictions that could restrict us from doing business directly or indirectly in or with certain countries or parties, which could include affiliates (e.g., China has imposed tariffs and taken other retaliatory actions). The current trade environment could impact the status of other trade agreements between the United States and countries other than Canada and Mexico.

Current wording

Further, the U.S. and other governments could impose additional sanctions, export controls or other trade restrictions that could restrict us from doing business directly or indirectly in or with certain countries or parties, which could include affiliates (e.g., China has imposed tariffs and taken other retaliatory actions). The current trade environment could impact the status of other trade agreements between the United States and countries other than Mexico, Canada or China.

Previous wording

In addition to the above, the ongoing conflict in Iran and geopolitical tensions in the region could lead to significant disruption of global energy supplies and increases in global energy prices, adversely affect global supply chains, and heighten inflationary pressures on our costs and supply chain. We are continuing to evaluate the evolving macroeconomic environment; however, at this time, these factors have not had a material impact on our operations, our financial condition or our operating results. Any of the above factors could impact our supply chain, as well as our operations, and adversely affect our financial condition and operating results.

Current wording

In addition to the above, the ongoing war in Iran and geopolitical tensions in the region could lead to significant disruption of global energy supplies and increases in global energy prices, adversely affect global supply chains, and heighten inflationary pressures on our costs and supply chain. We are continuing to evaluate the evolving macroeconomic environment; however, at this time, these factors have not had a material impact on our operations, our financial condition or our operating results. Any of the above factors could impact our supply chain, as well as our operations, and adversely affect our financial condition and operating results.

Previous wording

Although industry production returned to pre-pandemic levels in 2023, industry production in 2025 remained approximately 2% below 2017 peak levels, and 2025 industry production levels in North America and Europe, our two largest markets, remained approximately 11% and 24%, respectively, below prior peak levels. Industry production in 2026 is expected to decrease approximately 2% as compared to 2025 (based on April 2026 S&P Global Mobility projections). On a Lear sales-weighted basis(1), industry production in 2026 is expected to decrease approximately 2% as compared to 2025.

Current wording

Although industry production returned to pre-pandemic levels in 2023, industry production in 2025 remained approximately 2% below 2017 peak levels, and 2025 industry production levels in North America and Europe, our two largest markets, remained approximately 11% and 24%, respectively, below prior peak levels. Industry production in 2026 is expected to decrease approximately 2% as compared to 2025 (based on July 2026 Mobility Global projections). On a Lear sales-weighted basis(1), industry production in 2026 is expected to decrease approximately 2% as compared to 2025.

Previous wording

Global automotive industry production volumes in certain key regions in the first three months of 2026, as compared to the first three months of 2025, are shown below (in thousands of units):

Current wording

Global automotive industry production volumes in certain key regions in the first six months of 2026, as compared to the first six months of 2025, are shown below (in thousands of units):

Previous wording

(1)Production data based on S&P Global Mobility.

Current wording

(1)Production data based on Mobility Global.

Previous wording

(2)Production data for 2025 has been updated from our first quarter 2025 Quarterly Report on Form 10-Q to reflect actual production levels.

Current wording

(2)Production data for 2025 has been updated from our second quarter 2025 Quarterly Report on Form 10-Q to reflect actual production levels.

Previous wording

Automotive sales and production can also be affected by the age of the vehicle fleet and related scrappage rates, labor relations issues, labor shortages, fuel prices, regulatory requirements, government initiatives and incentives, trade agreements, tariffs and other non-tariff trade barriers (including recent U.S. tariffs imposed or threatened to be imposed on Mexico, Canada and China, as well as other countries and any retaliatory actions taken by such countries), the availability and cost of raw materials and critical components, logistics issues, cybersecurity incidents, and the availability and cost of credit, as well as vehicle affordability and consumer preferences regarding vehicle powertrains (including preferences regarding electric and hybrid vehicles), size, configuration and features, among other factors. The impact of potential tariffs on our business and financial condition, if any, is subject to a number of factors that are not yet known or are subject to change, including the effective date and duration of such tariffs, the scope and nature of any tariffs, the amount of any tariffs, any countermeasures that the target countries may take in response to such tariffs. In light of these uncertainties, we can provide no assurances that any mitigating actions that may become available to us, such as our ability to pass along some or all of the costs of any tariffs to some or all of our customers, will continue to be successful. Our sales and production may be further affected by new entrants to the industry, as well as various automakers and suppliers entering or expanding in certain regions, and the restructuring actions, including facility closures, of our customers and suppliers. Our operating results are also significantly impacted by the overall commercial success of the vehicle platforms for which we supply particular products, as well as the profitability of the products that we supply for these platforms, which is determined, in part, by the level of vertical integration. The loss of business with respect to any vehicle model for which we are a significant supplier, or a decrease in the production levels of any such models, could adversely affect our operating results. In addition, larger cars and light trucks, as well as vehicle platforms that offer more features and functionality, such as luxury, sport utility and crossover vehicles, typically have more content and, therefore, tend to have a more significant impact on our operating results.

Current wording

Automotive sales and production can also be affected by the age of the vehicle fleet and related scrappage rates, labor relations issues, labor shortages, fuel prices, regulatory requirements, government initiatives and incentives, trade agreements, tariffs and other non-tariff trade barriers (including recent U.S. tariffs imposed or threatened to be imposed on Mexico, Canada and China, as well as other countries and any retaliatory actions taken by such countries), the availability and cost of raw materials and critical components, logistics issues, cybersecurity incidents, and the availability and cost of credit, as well as vehicle affordability and consumer preferences regarding vehicle powertrains (including preferences regarding electric and hybrid vehicles), size, configuration and features, among other factors. In light of these uncertainties, we can provide no assurances that any mitigating actions that may become available to us. Our sales and production may be further affected by new entrants to the industry, as well as various automakers and suppliers entering or expanding in certain regions, and the restructuring actions, including facility closures, of our customers and suppliers. Our operating results are also significantly impacted by the overall commercial success of the vehicle platforms for which we supply particular products, as well as the profitability of the products that we supply for these platforms, which is determined, in part, by the level of vertical integration. The loss of business with respect to any vehicle model for which we are a significant supplier, or a decrease in the production levels of any such models, could adversely affect our operating results. In addition, larger cars and light trucks, as well as vehicle platforms that offer more features and functionality, such as luxury, sport utility and crossover vehicles, typically have more content and, therefore, tend to have a more significant impact on our operating results.

Previous wording

Our percentage of consolidated net sales by region in the first three months of 2026 and 2025 is shown below:

Current wording

Our percentage of consolidated net sales by region in the first six months of 2026 and 2025 is shown below:

Previous wording

The automotive industry, and our business, continue to be shaped by the broad trend of electrification. The adoption of electrified vehicles has been slower than anticipated, particularly in the United States. Demand for, and regulatory developments related to, improved energy efficiency and sustainability (e.g., government mandates related to fuel economy and carbon emissions) have also had a significant impact on this trend.

Current wording

The automotive industry, and our business, continue to be shaped by the broad trend of electrification. The adoption of electrified vehicles has been slower than anticipated, particularly in the United States. Demand for, and regulatory developments related to, energy efficiency and sustainability (e.g., government mandates related to fuel economy and carbon emissions) have also had a significant impact on this trend.

Previous wording

Our material cost as a percentage of net sales was 62.8% in the first three months of 2026, as compared to 63.5% in the first three months of 2025. Raw material, energy, commodity and product component costs can be volatile, reflecting, among other things, changes in supply and demand, logistics issues, global trade and tariff policies (including recent U.S. tariffs imposed or threatened to be imposed on Mexico, Canada and China, as well as other countries and any retaliatory actions taken by such countries), and geopolitical issues. We have commodity price risk with respect to purchases of certain raw materials, including steel, copper, diesel fuel, chemicals, resins and leather. Our primary commodity cost exposures relate to steel, copper and leather. Our exposure to changes in steel prices is primarily indirect, through purchased components, and a significant portion of our copper, leather and direct steel purchases are subject to price index agreements with our customers and suppliers. We have developed and implemented additional strategies to mitigate the impact of any such cost increases, including the selective in-sourcing of components, the continued consolidation of our supply base, longer-term purchase commitments, commercial recovery mechanisms and the selective expansion of low-cost country sourcing and engineering, as well as value engineering and product benchmarking. Certain of these strategies may limit our opportunities in a declining commodity price environment. In the current environment of elevated raw material, energy, commodity and product component costs, these strategies, together with commercial negotiations with our customers and suppliers and improved manufacturing productivity through automation and other advanced technologies, have more than offset the adverse impact. In addition, the availability of raw materials, energy, commodities and product components fluctuates from time to time due to factors outside of our control. If these costs increase further or availability is restricted, it could have an adverse impact on our operating results in the foreseeable future. See "— Forward-Looking Statements" below and Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2025.

Current wording

Our material cost as a percentage of net sales was 63.4% in the first six months of 2026, as compared to 63.7% in the first six months of 2025. Raw material, energy, commodity and product component costs can be volatile, reflecting, among other things, changes in supply and demand, logistics issues, global trade and tariff policies, and geopolitical issues. We have commodity price risk with respect to purchases of certain raw materials, including steel, copper, diesel fuel, chemicals, resins and leather. Our primary commodity cost exposures relate to steel, copper and leather. Our exposure to changes in steel prices is primarily indirect, through purchased components, and a significant portion of our copper, leather and direct steel purchases are subject to price index agreements with our customers and suppliers. We have developed and implemented additional strategies to mitigate the impact of any such cost increases, including the selective in-sourcing of components, the continued consolidation of our supply base, longer-term purchase commitments, commercial recovery mechanisms and the selective expansion of low-cost country sourcing and engineering, as well as value engineering and product benchmarking. Certain of these strategies may limit our opportunities in a declining commodity price environment. In the current environment of elevated raw material, energy, commodity and product component costs, these strategies, together with commercial negotiations with our customers and suppliers and improved manufacturing productivity through automation and other advanced technologies, have more than offset the adverse impact. In addition, the availability of raw materials, energy, commodities and product components fluctuates from time to time due to factors outside of our control. If these costs increase further or availability is restricted, it could have an adverse impact on our operating results in the foreseeable future. See "— Forward-Looking Statements" below and Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

In the first three months of 2026, we incurred pretax restructuring costs of $42 million and related manufacturing inefficiency and other charges of approximately $1 million, as compared to pretax restructuring costs of $84 million and related manufacturing inefficiency and other charges of approximately $4 million in the first three months of 2025. None of the individual restructuring actions initiated in the first three months of 2026 were material. Further, there have been no changes in previously initiated restructuring actions that have resulted (or will result) in a material change to our restructuring costs.

Current wording

In the first six months of 2026, we incurred pretax restructuring costs of $69 million and related manufacturing inefficiency and other charges of approximately $4 million, as compared to pretax restructuring costs of $118 million and related manufacturing inefficiency and other charges of approximately $2 million in the first six months of 2025. None of the individual restructuring actions initiated in the first six months of 2026 were material. Further, there have been no changes in previously initiated restructuring actions that have resulted (or will result) in a material change to our restructuring costs.

Previous wording

Our restructuring actions include plant closures and workforce reductions and are initiated to maintain our competitive footprint or are in response to customer initiatives or changes in global and regional automotive markets. Our restructuring actions are designed to maintain or improve our operating results and profitability throughout the automotive industry cycles. Restructuring actions are generally funded within twelve months of initiation and are funded by cash flows from operating activities and existing cash balances. We expect to incur approximately $45 million of additional restructuring costs related to activities initiated as of April 4, 2026, all of which are expected to be incurred in the next twelve months. We plan to implement additional restructuring actions in order to align our manufacturing capacity and other costs with prevailing regional automotive production levels. Such future restructuring actions are dependent on market conditions, customer actions and other factors.

Current wording

Our restructuring actions include plant closures and workforce reductions and are initiated to maintain our competitive footprint or are in response to customer initiatives or changes in global and regional automotive markets. Our restructuring actions are designed to maintain or improve our operating results and profitability throughout the automotive industry cycles. Restructuring actions are generally funded within twelve months of initiation and are funded by cash flows from operating activities and existing cash balances. We expect to incur approximately $36 million of additional restructuring costs related to activities initiated as of July 4, 2026, all of which are expected to be incurred in the next twelve months. We plan to implement additional restructuring actions in order to align our manufacturing capacity and other costs with prevailing regional automotive production levels. Such future restructuring actions are dependent on market conditions, customer actions and other factors.

Previous wording

Since the first quarter of 2011, our Board of Directors (the "Board") has authorized $6.7 billion in share repurchases under our common stock share repurchase program (the "Repurchase Program"). As of April 4, 2026, we have repurchased, in aggregate, $6.0 billion of our outstanding common stock, at an average price of $95.25 per share, excluding commissions and related fees, and have a remaining repurchase authorization of $700 million, which expires on December 31, 2026. In the first three months of 2026, we repurchased $75 million of our outstanding common stock.

Current wording

Since the first quarter of 2011, our Board of Directors (the "Board") has authorized $6.7 billion in share repurchases under our common stock share repurchase program (the "Repurchase Program"). As of July 4, 2026, we have repurchased, in aggregate, $6.1 billion of our outstanding common stock, at an average price of $95.72 per share, excluding commissions and related fees, and have a remaining repurchase authorization of $600 million, which expires on December 31, 2026. In the first six months of 2026, we repurchased $175 million of our outstanding common stock.

Previous wording

Our Board declared a quarterly cash dividend of $0.77 per share of common stock in the first quarter of 2026.

Current wording

Our Board declared a quarterly cash dividend of $0.77 per share of common stock in the first and second quarters of 2026.

Previous wording

Our results for the three months ended April 4, 2026 and March 29, 2025, reflect the following items (in millions):

Current wording

Our results for the three and six months ended July 4, 2026 and June 28, 2025, reflect the following items (in millions):

Previous wording

This Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," includes forward-looking statements that are subject to risks and uncertainties. For further information regarding these and other factors that have had, or may have in the future, a significant impact on our business, financial condition or results of operations, see "— Forward-Looking Statements" below and Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2025.

Current wording

This Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," includes forward-looking statements that are subject to risks and uncertainties. For further information regarding these and other factors that have had, or may have in the future, a significant impact on our business, financial condition or results of operations, see "—

Previous wording

Net sales in the first quarter of 2026 were $5.8 billion, as compared to $5.6 billion in the first quarter of 2025, an increase of $263 million or 5%. The impact of foreign exchange rate fluctuations and higher production volumes on Lear platforms in North America and Europe/Africa increased net sales by $274 million and $250 million, respectively. These increases were partially offset by the reversal of certain 2025 tariff recoveries and the impact of selling price reductions.

Current wording

Cost of sales was $5.7 billion in the second quarter of 2026, as compared to $5.6 billion in the second quarter of 2025. The impact of foreign exchange rate fluctuations and new business increased costs of sales. These increases were partially offset by lower production volumes on Lear platforms, which reduced cost of sales.

Previous wording

Gross profit and gross margin were $450 million and 7.7% of net sales, respectively, in the first quarter of 2026, as compared to $359 million and 6.5% of net sales, respectively, in the first quarter of 2025. Higher production volumes on Lear platforms in North America and Europe/Africa and the impact of foreign exchange rate fluctuations increased gross profit by $41 million and $16 million, respectively. The impact of favorable operating performance, including the benefit of restructuring actions, and lower restructuring costs was partially offset by selling price reductions. These factors had a corresponding impact on gross margin. Although the reversal of certain 2025 tariff recoveries and tariff costs did not have a significant impact on gross profit, gross margin was positively impacted, as net sales decreased without a corresponding decrease in gross profit.

Current wording

Gross profit and gross margin were $470 million and 7.6% of net sales, respectively, in the second quarter of 2026, as compared to $439 million and 7.3% of net sales, respectively, in the second quarter of 2025. The impact of favorable operating performance, including the benefit of restructuring actions, net of selling price reductions, increased gross profit by $55 million. Gross profit also benefited from new business in Asia, Europe/Africa and South America and the impact of foreign exchange rate fluctuations by $10 million and $4 million, respectively. These increases were partially offset by lower production volumes on Lear platforms in Asia and North America, which reduced gross profit by $35 million. These factors had a corresponding impact on gross margin.

Previous wording

Amortization of intangible assets was $5 million in the first quarters of 2026 and 2025.

Current wording

Amortization of intangible assets was $5 million in the second quarters of 2026 and 2025.

Previous wording

In the first quarter of 2026, the provision for income taxes was $38 million, representing an effective tax rate of 17.7% on pretax income before equity in net income of affiliates of $217 million. In the first quarter of 2025, the provision for income taxes was $45 million, representing an effective tax rate of 33.4% on pretax income before equity in net income of affiliates of $135 million, for the reasons described below. For further information, see Note 12, "Income Taxes," to the condensed consolidated financial statements included in this Report.

Current wording

In the second quarter of 2026, the provision for income taxes was $49 million, representing an effective tax rate of 20.1% on pretax income before equity in net income of affiliates of $241 million. In the second quarter of 2025, the provision for income taxes was $42 million, representing an effective tax rate of 19.1% on pretax income before equity in net income of affiliates of $218 million, for the reasons described below. For further information, see Note 12, "Income Taxes," to the condensed consolidated financial statements included in this Report.

Previous wording

In the first quarters of 2026 and 2025, the provision for income taxes was primarily impacted by the level and mix of earnings among tax jurisdictions. In the first quarters of 2026 and 2025, we recognized net tax benefits of $17 million and $9 million, respectively, related to restructuring charges and various other items.

Current wording

In the second quarters of 2026 and 2025, the provision for income taxes was primarily impacted by the level and mix of earnings among tax jurisdictions. In the second quarters of 2026 and 2025, we recognized net tax benefits of $10 million and $16 million, respectively, related to the release of tax reserves at foreign subsidiaries, restructuring charges and various other items. Excluding these items, the effective tax rate for the second quarters of 2026 and 2025 approximated the U.S. federal statutory income tax rate of 21%, adjusted for income taxes on foreign earnings, losses and remittances, valuation allowances, tax credits, income tax incentives and other permanent items.

Previous wording

Net income attributable to Lear was $172 million, or $3.34 per diluted share, in the first quarter of 2026, as compared to $81 million, or $1.49 per diluted share, in the first quarter of 2025. Net income and diluted net income per share increased for the reasons described above.

Current wording

Net income attributable to Lear was $193 million, or $3.79 per diluted share, in the second quarter of 2026, as compared to $165 million, or $3.06 per diluted share, in the second quarter of 2025. Net income and diluted net income per share increased for the reasons described above. Diluted net income per share also benefited from a reduction in shares outstanding between periods.

Previous wording

Segment earnings related to our other category were ($96) million in the first quarter of 2026, as compared to ($90) million in the first quarter of 2025.

Current wording

Segment earnings related to our other category were ($103) million in the second quarter of 2026, as compared to ($92) million in the second quarter of 2025, primarily reflecting higher compensation-related costs.

Previous wording

Cost of sales was $5.4 billion in the first quarter of 2026, as compared to $5.2 billion in the first quarter of 2025. The impact of foreign exchange rate fluctuations and higher production volumes on Lear platforms increased costs of sales. These increases were partially offset by the reversal of certain 2025 tariff costs, which reduced cost of sales.

Current wording

Cost of sales was $11.1 billion in the first six months of 2026, as compared to $10.8 billion in the first six months of 2025. The impact of foreign exchange rate fluctuations, new business and higher production volumes on Lear platforms increased costs of sales. These increases were partially offset by the reversal of certain 2025 tariff costs, which reduced cost of sales.

Previous wording

Selling, general and administrative expenses, including engineering and development expenses, were $190 million in the first quarter of 2026, as compared to $172 million in the first quarter of 2025. As a percentage of net sales, selling, general and administrative expenses were 3.3% in the first quarter of 2026, as compared to 3.1% in the first quarter of 2025.

Current wording

Selling, general and administrative expenses, including engineering and development expenses, were $388 million in the first six months of 2026, as compared to $359 million in the first six months of 2025. As a percentage of net sales, selling, general and administrative expenses were 3.2% in the first six months of 2026, as compared to 3.1% in the first six months of 2025.

Previous wording

Other expense, net, which includes non-income related taxes, foreign exchange gains and losses, gains and losses related to certain derivative instruments and hedging activities, gains and losses on certain disposals of assets, the non-service cost components of net periodic benefit cost and other miscellaneous income and expense, was $13 million in the first quarter of 2026, as compared to $20 million in the first quarter of 2025. In the first quarters of 2026 and 2025, we recognized foreign exchange losses of $5 million and $10 million, respectively, including losses of $2 million in the first quarter of 2025 related to the hyper-inflationary environment and significant currency devaluation in Argentina. In the first quarter of 2025, we also recognized a loss of $3 million on the disposal of a non-core business.

Current wording

Other expense, net, which includes non-income related taxes, foreign exchange gains and losses, gains and losses related to certain derivative instruments and hedging activities, gains and losses on certain disposals of assets, the non-service cost components of net periodic benefit cost and other miscellaneous income and expense, was $16 million in the six months ended July 4, 2026, as compared to $26 million in the six months ended June 28, 2025. In the first six months of 2026 and 2025, we recognized foreign exchange losses of $14 million and $17 million, respectively, including losses of $1 million and $5 million, respectively, related to the hyper-inflationary environment in Argentina. In the first six months of 2025, we also recognized a loss of $3 million on the disposal of a non-core business.

Previous wording

Excluding these items, the effective tax rate for the first quarters of 2026 and 2025 approximated the U.S. federal statutory income tax rate of 21%, adjusted for income taxes on foreign earnings, losses and remittances, valuation allowances, tax credits, income tax incentives and other permanent items.

Current wording

In the first six months of 2026 and 2025, the provision for income taxes was primarily impacted by the level and mix of earnings among tax jurisdictions. In the first six months of 2026 and 2025, we recognized net tax benefits of $27 million and $24 million, respectively, related to the release of tax reserves at foreign subsidiaries, restructuring charges and various other items. Excluding these items, the effective tax rate for the first six months of 2026 and 2025 approximated the U.S. federal statutory income tax rate of 21%, adjusted for income taxes on foreign earnings, losses and remittances, valuation allowances, tax credits, income tax incentives and other permanent items.

Previous wording

E-Systems net sales in the first quarter of both 2026 and 2025 were $1.4 billion, an increase of $9 million or 1%. The impact of foreign exchange rate fluctuations, higher production volumes on Lear platforms increased net sales by $80 million and $61 million, respectively. These increases were largely offset by the reversal of certain 2025 tariff recoveries and the impact of selling price reductions.

Current wording

E-Systems net sales in both the six months ended July 4, 2026 and the six months ended June 28, 2025 were $3.0 billion, an increase of $38 million or 1%. The impact of foreign exchange rate fluctuations and higher production volumes on Lear platforms increased net sales by $109 million and $30 million, respectively. The reversal of certain 2025 tariff recoveries and the impact of selling price reductions were partially offset by commercial recoveries.

Previous wording

As of April 4, 2026 and December 31, 2025, cash and cash equivalents of $645 million and $741 million, respectively, were held in foreign subsidiaries and can be repatriated, primarily through the repayment of intercompany loans and the payment of dividends. There are no restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Lear that would have a material impact on Lear.

Current wording

As of July 4, 2026 and December 31, 2025, cash and cash equivalents of $630 million and $741 million, respectively, were held in foreign subsidiaries and can be repatriated, primarily through the repayment of intercompany loans and the payment of dividends. There are no restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Lear that would have a material impact on Lear.

Previous wording

As of April 4, 2026, we had $0.9 billion of cash and cash equivalents on hand and $2.0 billion in available borrowing capacity under our unsecured revolving credit agreement. Together with cash provided by operating activities, we believe that this will enable us to meet our liquidity needs for the foreseeable future and to satisfy ordinary course business obligations. In addition, we expect to continue to pay quarterly cash dividends and repurchase shares of our common stock pursuant to our Repurchase Program, although such actions are at the discretion of our Board and will depend upon our financial condition, results of operations, capital requirements, prevailing market conditions, alternative uses of capital and other factors that our Board may consider at its discretion.

Current wording

As of July 4, 2026, we had $1.0 billion of cash and cash equivalents on hand and $2.0 billion in available borrowing capacity under our unsecured revolving credit agreement. Together with cash provided by operating activities, we believe that this will enable us to meet our liquidity needs for the foreseeable future and to satisfy ordinary course business obligations. In addition, we expect to continue to pay quarterly cash dividends and repurchase shares of our common stock pursuant to our Repurchase Program, although such actions are at the discretion of our Board and will depend upon our financial condition, results of operations, capital requirements, prevailing market conditions, alternative uses of capital and other factors that our Board may consider at its discretion.

Previous wording

A summary of net cash provided by (used in) operating activities is shown below (in millions):

Current wording

A summary of our cash flows is shown below (in millions):

Previous wording

Operating cash flow was a source of $98 million of cash in the first three months of 2026, as compared to a use of $128 million of cash in the first three months of 2025. The increase in operating cash flow reflects higher earnings and a decrease in working capital cash usage in the first three months of 2026, as compared to the first three months of 2025.

Current wording

Net cash provided by operating activities was $559 million in the first six months of 2026, as compared to $169 million in the first six months of 2025. The increase in operating cash flow between periods reflects higher earnings and a decrease in working capital cash usage in the first six months of 2026, as compared to the first six months of 2025.