Earnings jump as Lear (NYSE: LEA) more than doubles quarterly profit
Filing Impact
Filing Sentiment
Form Type
10-Q
Rhea-AI Filing Summary
Lear Corporation reported stronger results for the quarter ended April 4, 2026. Net sales rose to $5.82 billion from $5.56 billion, while net income attributable to Lear more than doubled to $172.3 million, or basic EPS of $3.38 versus $1.50 a year earlier. The effective tax rate declined to 17.7% from 33.4%, helping profitability.
Operating cash flow improved to $98.1 million from a use of $127.7 million, and cash and cash equivalents were $881.9 million. Lear continued restructuring, recording $42.1 million of charges, and returned capital through $75.0 million of share repurchases and dividends of $0.77 per share, while maintaining long-term debt around $2.72 billion.
Positive
- Profit and cash flow improvement: Net income attributable to Lear rose to $172.3 million from $80.7 million, with operating cash flow improving to $98.1 million from a prior-period outflow, indicating a significantly stronger earnings and cash generation profile.
Negative
- None.
Insights
Lear delivered a sharp profit and cash flow rebound, with disciplined capital returns.
Lear Corporation grew quarterly net sales to $5.82 billion while expanding profitability. Net income attributable to Lear rose to $172.3 million, and basic EPS climbed to $3.38, aided by higher segment earnings and a lower effective tax rate of 17.7%.
Operating cash flow swung to a positive $98.1 million from a prior-period outflow, despite ongoing restructuring charges of $42.1 million. Cash and cash equivalents of $881.9 million alongside long-term debt of about $2.72 billion support continued investment and shareholder returns.
Lear repurchased $75.0 million of stock, buying 630,804 shares at an average $118.91, and paid a quarterly dividend of $0.77 per share. Future disclosures in company reports will show how restructuring, automation investments and evolving tariff policies influence margins in upcoming periods.
Key Figures
Net sales: $5,822.8 million
Net income attributable to Lear: $172.3 million
Basic EPS: $3.38 per share
+5 more
8 metrics
Net sales
$5,822.8 million
Three months ended April 4, 2026
Net income attributable to Lear
$172.3 million
Three months ended April 4, 2026
Basic EPS
$3.38 per share
Three months ended April 4, 2026
Operating cash flow
$98.1 million
Net cash provided by operating activities, Q1 2026
Cash and cash equivalents
$881.9 million
As of April 4, 2026
Restructuring charges
$42.1 million
Three months ended April 4, 2026
Share repurchases
$75.0 million (630,804 shares)
Three months ended April 4, 2026, avg price $118.91
Effective tax rate
17.7%
Three months ended April 4, 2026
Key Terms
segment earnings, accumulated other comprehensive loss, net investment hedge, share repurchase program, +1 more
5 terms
segment earnings financial
"The CODM evaluates the performance of its operating segments based primarily on (i) revenues from external customers, (ii) pretax income before equity in net income of affiliates, interest expense, net and other expense, net ("segment earnings")"
Segment earnings are the profit or loss reported for one specific part of a business—such as a product line, geographic region, or division—separated from the company’s overall results. Investors use them like slices of a pie to see which parts are making money, which are dragging performance down, and where management should invest or cut back, helping assess growth prospects and risk more precisely than looking at the company as a whole.
accumulated other comprehensive loss financial
"Accumulated other comprehensive loss | ( 549.9 ) | ( 544.3 ) Lear Corporation shareholders' equity"
Accumulated other comprehensive loss is the running negative total of certain gains and losses that companies record outside their regular profit-and-loss statement, such as changes in the value of some investments, pension adjustments, or currency translation effects. It matters to investors because it reduces shareholders’ equity and reveals economic swings that haven’t affected reported net income yet — like a side ledger showing pending ups and downs that could influence future cash flow or balance-sheet strength.
net investment hedge financial
"The Company uses cross-currency interest rate swaps, which are designated as net investment hedges of the foreign currency rate exposure of its investment in certain Euro-denominated subsidiaries."
effective tax rate financial
"Effective tax rate | 17.7 | % | 33.4 | %"
The effective tax rate is the percentage of a company's profits that it pays in taxes. It shows how much of its earnings go to taxes after all deductions and credits are considered. For investors, it indicates how much of the company's income is taken by taxes, impacting overall profitability and financial health.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended April 4, 2026 .
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to .
Commission file number: 001-11311
(Exact name of registrant as specified in its charter)
_______________________________________
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices)
(248 ) 447-1500
(Registrant's telephone number, including area code)
_______________________________________
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| x | Accelerated filer | ☐ | |||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||||||||
| Emerging growth company | |||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
As of April 28, 2026, the number of shares outstanding of the registrant's common stock was 50,095,099 shares.
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED APRIL 4, 2026
INDEX
| Page No. | |||||
Part I – Financial Information | |||||
Item 1 - Condensed Consolidated Financial Statements | 3 | ||||
Introduction to the Condensed Consolidated Financial Statements | 3 | ||||
Condensed Consolidated Balance Sheets - April 4, 2026 (Unaudited) and December 31, 2025 | 4 | ||||
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - Three Months Ended April 4, 2026 and March 29, 2025 | 5 | ||||
Condensed Consolidated Statements of Equity (Unaudited) - Three Months Ended April 4, 2026 and March 29, 2025 | 6 | ||||
Condensed Consolidated Statements of Cash Flows (Unaudited) - Three Months Ended April 4, 2026 and March 29, 2025 | 10 | ||||
Notes to the Condensed Consolidated Financial Statements (Unaudited) | 11 | ||||
Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations | 33 | ||||
Item 3 – Quantitative and Qualitative Disclosures about Market Risk | 47 | ||||
Item 4 – Controls and Procedures | 48 | ||||
Part II – Other Information | |||||
Item 1 – Legal Proceedings | 49 | ||||
Item 1A – Risk Factors | 49 | ||||
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds | 49 | ||||
Item 5 – Other Information | 49 | ||||
Item 6 – Exhibits | 50 | ||||
Signatures | 51 | ||||
2
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION
ITEM 1 — CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
INTRODUCTION TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
We have prepared the unaudited condensed consolidated financial statements of Lear Corporation and subsidiaries pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("GAAP") have been condensed or omitted pursuant to such rules and regulations. We believe that the disclosures are adequate to make the information presented not misleading when read in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, for the year ended December 31, 2025.
The financial information presented reflects all adjustments (consisting of normal recurring adjustments) which are, in our opinion, necessary for a fair presentation of the results of operations, cash flows and financial position for the interim periods presented. These results are not necessarily indicative of a full year's results of operations.
3
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
April 4, 2026 (1) | December 31, 2025 | ||||||||||
| ASSETS | |||||||||||
| CURRENT ASSETS: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable | |||||||||||
| Inventories | |||||||||||
| Other | |||||||||||
| Total current assets | |||||||||||
| LONG-TERM ASSETS: | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Other | |||||||||||
| Total long-term assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND EQUITY | |||||||||||
| CURRENT LIABILITIES: | |||||||||||
| Short-term borrowings | $ | $ | |||||||||
| Accounts payable and drafts | |||||||||||
| Accrued liabilities | |||||||||||
| Current portion of long-term debt | |||||||||||
| Total current liabilities | |||||||||||
| LONG-TERM LIABILITIES: | |||||||||||
| Long-term debt | |||||||||||
| Other | |||||||||||
| Total long-term liabilities | |||||||||||
| EQUITY: | |||||||||||
Preferred stock, | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
Common stock held in treasury, | ( | ( | |||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Lear Corporation shareholders' equity | |||||||||||
| Noncontrolling interests | |||||||||||
| Equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
(1) Unaudited
The accompanying notes are an integral part of these condensed consolidated balance sheets.
4
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited; in millions, except share and per share data)
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Net sales | $ | $ | |||||||||
| Cost of sales | |||||||||||
| Selling, general and administrative expenses | |||||||||||
| Amortization of intangible assets | |||||||||||
| Interest expense, net | |||||||||||
| Other expense, net | |||||||||||
| Consolidated income before provision for income taxes and equity in net income of affiliates | |||||||||||
| Provision for income taxes | |||||||||||
| Equity in net income of affiliates | ( | ( | |||||||||
| Consolidated net income | |||||||||||
| Less: Net income attributable to noncontrolling interests | |||||||||||
| Net income attributable to Lear | $ | $ | |||||||||
Basic net income per share attributable to Lear (Note 13) | $ | $ | |||||||||
Diluted net income per share attributable to Lear (Note 13) | $ | $ | |||||||||
| Cash dividends declared per share | $ | $ | |||||||||
| Average common shares outstanding | |||||||||||
| Average diluted shares outstanding | |||||||||||
| Consolidated comprehensive income (Condensed Consolidated Statements of Equity) | $ | $ | |||||||||
| Less: Comprehensive income attributable to noncontrolling interests | |||||||||||
| Comprehensive income attributable to Lear | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated statements.
5
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited; in millions, except share and per share data)
| Three Months Ended April 4, 2026 | |||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Common Stock Held in Treasury | Retained Earnings | Accumulated Other Comprehensive Loss, Net of Tax | Lear Corporation Shareholders' Equity | ||||||||||||||||||||||||||||||
| Balance at January 1, 2026 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Comprehensive income (loss): | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Total comprehensive income (loss) | — | — | — | ( | |||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Net issuance of | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||
Repurchase of | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Dividends declared to Lear Corporation shareholders | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Balance at April 4, 2026 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated statements.
6
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited; in millions, except share and per share data)
| Three Months Ended April 4, 2026 | |||||||||||||||||
| Lear Corporation Shareholders' Equity | Non-controlling Interests | Equity | |||||||||||||||
| Balance at January 1, 2026 | $ | $ | $ | ||||||||||||||
| Comprehensive income (loss): | |||||||||||||||||
| Net income | |||||||||||||||||
| Other comprehensive income (loss) | ( | ( | |||||||||||||||
| Total comprehensive income (loss) | |||||||||||||||||
| Stock-based compensation | — | ||||||||||||||||
Net issuance of | ( | — | ( | ||||||||||||||
Repurchase of $ | ( | — | ( | ||||||||||||||
| Dividends declared to Lear Corporation shareholders | ( | — | ( | ||||||||||||||
| Balance at April 4, 2026 | $ | $ | $ | ||||||||||||||
7
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited; in millions, except share and per share data)
| Three Months Ended March 29, 2025 | |||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Common Stock Held in Treasury | Retained Earnings | Accumulated Other Comprehensive Loss, Net of Tax | Lear Corporation Shareholders' Equity | ||||||||||||||||||||||||||||||
| Balance at January 1, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Comprehensive income: | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
| Total comprehensive income | — | — | — | ||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Net issuance of | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||
Repurchase of | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Dividends declared to Lear Corporation shareholders | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Dividends declared to noncontrolling interest holders | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Balance at March 29, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated statements.
8
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited; in millions, except share and per share data)
| Three Months Ended March 29, 2025 | |||||||||||||||||
| Lear Corporation Shareholders' Equity | Non-controlling Interests | Equity | |||||||||||||||
| Balance at January 1, 2025 | $ | $ | $ | ||||||||||||||
| Comprehensive income: | |||||||||||||||||
| Net income | |||||||||||||||||
| Other comprehensive income | |||||||||||||||||
| Total comprehensive income | |||||||||||||||||
| Stock-based compensation | — | ||||||||||||||||
Net issuance of | ( | — | ( | ||||||||||||||
Repurchase of $ | ( | — | ( | ||||||||||||||
| Dividends declared to Lear Corporation shareholders | ( | — | ( | ||||||||||||||
| Dividends declared to noncontrolling interest holders | — | ( | ( | ||||||||||||||
| Balance at March 29, 2025 | $ | $ | $ | ||||||||||||||
The accompanying notes are an integral part of these condensed consolidated statements.
9
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Consolidated net income | $ | $ | |||||||||
| Adjustments to reconcile consolidated net income to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Net change in recoverable customer engineering, development and tooling | ( | ( | |||||||||
| Net change in working capital items (see below) | ( | ( | |||||||||
| Other, net | ( | ||||||||||
| Net cash provided by (used in) operating activities | ( | ||||||||||
| Cash Flows from Investing Activities: | |||||||||||
| Additions to property, plant and equipment | ( | ( | |||||||||
| Other, net | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash Flows from Financing Activities: | |||||||||||
| Repurchases of common stock | ( | ( | |||||||||
| Dividends paid to Lear Corporation shareholders | ( | ( | |||||||||
| Dividends paid to noncontrolling interests | ( | ||||||||||
| Other, net | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Effect of foreign currency translation | |||||||||||
| Net Change in Cash, Cash Equivalents and Restricted Cash | ( | ( | |||||||||
| Cash, Cash Equivalents and Restricted Cash as of Beginning of Period | |||||||||||
| Cash, Cash Equivalents and Restricted Cash as of End of Period | $ | $ | |||||||||
| Changes in Working Capital Items: | |||||||||||
| Accounts receivable | $ | ( | $ | ( | |||||||
| Inventories | ( | ( | |||||||||
| Accounts payable | |||||||||||
| Accrued liabilities and other | ( | ( | |||||||||
| Net change in working capital items | $ | ( | $ | ( | |||||||
| Supplementary Disclosure: | |||||||||||
| Cash paid for interest | $ | $ | |||||||||
| Cash paid for income taxes, net of refunds received | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated statements.
10
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
Lear Corporation ("Lear," and together with its consolidated subsidiaries, the "Company") and its affiliates design, develop, engineer and manufacture complete seat systems, key seat components, complete electrical distribution and connection systems, high-voltage power distribution products, including battery disconnect units ("BDUs"), and low-voltage power distribution products and electronic controllers. The Company's main customers are major automotive manufacturers. The Company operates facilities worldwide.
The accompanying condensed consolidated financial statements include the accounts of Lear, a Delaware corporation, and the wholly-owned and less than wholly-owned subsidiaries controlled by Lear. In addition, Lear consolidates all entities in which it has a controlling financial interest. Investments in affiliates in which Lear does not have control, but does have the ability to exercise significant influence over operating and financial policies, are accounted for under the equity method.
The Company's annual financial results are reported on a calendar year basis, and quarterly interim results are reported using a thirteen week reporting calendar.
(2) Restructuring
Restructuring costs include employee termination benefits, asset impairment charges and contract termination costs, as well as other incremental net costs resulting from the restructuring actions. Employee termination benefits are recorded based on existing union and employee contracts, statutory requirements, completed negotiations and Company policy. Other incremental net costs principally include equipment and personnel relocation costs and gains and losses on the sales of facilities. In addition to restructuring costs, the Company also incurs incremental manufacturing inefficiency and other charges at the operating locations impacted by the restructuring actions during the related restructuring implementation period. Restructuring costs are recognized in the Company's condensed consolidated financial statements in accordance with GAAP. Generally, charges are recorded as restructuring actions are approved, communicated and/or implemented.
A summary of the changes in the Company's restructuring reserves is shown below (in millions):
| Balance at January 1, 2026 | $ | ||||
| Provision for employee termination benefits | |||||
| Payments, utilizations and foreign currency | ( | ||||
| Balance at April 4, 2026 | $ | ||||
Charges recorded in connection with the Company's restructuring actions are shown below (in millions):
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Employee termination benefits | $ | $ | |||||||||
| Asset impairments: | |||||||||||
| Property, plant and equipment | |||||||||||
| Right-of-use assets | |||||||||||
| Contract termination costs | |||||||||||
| Other related costs | |||||||||||
| $ | $ | ||||||||||
11
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Restructuring charges by income statement account are shown below (in millions):
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Cost of sales | $ | $ | |||||||||
| Selling, general and administrative expenses | |||||||||||
| Other expense, net | |||||||||||
| $ | $ | ||||||||||
Restructuring charges by operating segment are shown below (in millions):
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Seating | $ | $ | |||||||||
| E-Systems | |||||||||||
| Other | |||||||||||
| $ | $ | ||||||||||
The Company expects to incur approximately $31 million and approximately $14 million of additional restructuring charges in its Seating and E-Systems segments, respectively, related to activities initiated as of April 4, 2026, and expects that the components of such costs will be consistent with its historical experience.
(3) Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined using standard costing, which approximates actual cost on a first-in, first-out method. Finished goods and work-in-process inventories include material, labor and manufacturing overhead costs. The Company records reserves for inventory in excess of production and/or forecasted requirements and for obsolete inventory in production and service inventories.
A summary of inventories is shown below (in millions):
| April 4, 2026 | December 31, 2025 | ||||||||||
| Raw materials | $ | $ | |||||||||
| Work-in-process | |||||||||||
| Finished goods | |||||||||||
| Reserves | ( | ( | |||||||||
| Inventories | $ | $ | |||||||||
(4) Pre-Production Costs Related to Long-Term Supply Agreements
The Company incurs pre-production engineering and development ("E&D") and tooling costs related to the products produced for its customers under long-term supply agreements. The Company expenses all pre-production E&D costs for which reimbursement is not contractually guaranteed by the customer. In addition, the Company expenses all pre-production tooling costs related to customer-owned tools for which reimbursement is not contractually guaranteed by the customer or for which the Company does not have a non-cancelable right to use the tooling.
During the first three months of 2026 and 2025, the Company capitalized $83.4 million and $75.8 million, respectively, of pre-production E&D costs for which reimbursement is contractually guaranteed by the customer. During the first three months of 2026 and 2025, the Company also capitalized $28.3 million and $35.7 million, respectively, of pre-production tooling costs related to customer-owned tools for which reimbursement is contractually guaranteed by the customer or for which the Company has a non-cancelable right to use the tooling.
12
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
During the first three months of 2026 and 2025, the Company collected $87.4 million and $104.2 million, respectively, of cash related to E&D and tooling costs.
The classification of recoverable customer E&D and tooling costs related to long-term supply agreements included in the accompanying condensed consolidated balance sheets is shown below (in millions):
| April 4, 2026 | December 31, 2025 | ||||||||||
| Other current assets | $ | $ | |||||||||
| Other long-term assets | |||||||||||
| Recoverable customer E&D and tooling | $ | $ | |||||||||
(5) Long-Lived Assets
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Costs associated with the repair and maintenance of the Company's property, plant and equipment are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency or safety of the Company's property, plant and equipment are capitalized and depreciated over the remaining useful life of the related asset. Depreciable property is depreciated over the estimated useful lives of the assets, using principally the straight-line method.
A summary of property, plant and equipment is shown below (in millions):
| April 4, 2026 | December 31, 2025 | ||||||||||
| Land | $ | $ | |||||||||
| Buildings and improvements | |||||||||||
| Machinery and equipment | |||||||||||
| Construction in progress | |||||||||||
| Total property, plant and equipment | |||||||||||
| Less – accumulated depreciation | ( | ( | |||||||||
| Property, plant and equipment, net | $ | $ | |||||||||
In the three months ended April 4, 2026 and March 29, 2025, depreciation expense was $144.9 million and $142.5 million, respectively.
In the first three months of 2026 and 2025, the Company recognized property, plant and equipment impairment charges of $2.1 million and $2.7 million, respectively, in conjunction with its restructuring actions (Note 2, "Restructuring"). In the first three months of 2026, the Company recognized additional property, plant and equipment impairment charges of $0.6 million. The impairment charges are included in cost of sales in the accompanying condensed consolidated statements of comprehensive income.
13
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(6) Goodwill
A summary of the changes in the carrying amount of goodwill, by operating segment, in the three months ended April 4, 2026, is shown below (in millions):
| Seating | E-Systems | Total | |||||||||||||||
| Balance at January 1, 2026 | $ | $ | $ | ||||||||||||||
| Foreign currency translation and other | ( | ( | |||||||||||||||
| Balance at April 4, 2026 | $ | $ | $ | ||||||||||||||
There was no
(7) Debt
Short-Term Borrowings
The Company utilizes uncommitted lines of credit as needed for its short-term working capital fluctuations. As of April 4, 2026 and December 31, 2025, the Company had lines of credit from banks totaling $377.6 million and $382.5 million, respectively. As of April 4, 2026 and December 31, 2025, the Company had short-term debt balances outstanding related to draws on its lines of credit of $28.3 million and $27.9 million, respectively.
Long-Term Debt
A summary of long-term debt, net of unamortized debt issuance costs and unamortized original issue premium (discount), and the related weighted average interest rates is shown below (in millions):
| April 4, 2026 | ||||||||||||||||||||||||||||||||
| Debt Instrument | Long-Term Debt | Unamortized Debt Issuance Costs | Unamortized Original Issue Premium (Discount) | Long-Term Debt, Net | Weighted Average Interest Rate | |||||||||||||||||||||||||||
| Delayed-Draw Term Loan Facility (the "Term Loan") | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| ( | ( | |||||||||||||||||||||||||||||||
| ( | ( | |||||||||||||||||||||||||||||||
| ( | ( | |||||||||||||||||||||||||||||||
| ( | ( | |||||||||||||||||||||||||||||||
| ( | ||||||||||||||||||||||||||||||||
| ( | ( | |||||||||||||||||||||||||||||||
| Other | — | — | N/A | |||||||||||||||||||||||||||||
| $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Less — Current portion | ( | |||||||||||||||||||||||||||||||
| Long-term debt | $ | |||||||||||||||||||||||||||||||
14
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Debt Instrument | Long-Term Debt | Unamortized Debt Issuance Costs | Unamortized Original Issue Premium (Discount) | Long-Term Debt, Net | Weighted Average Interest Rate | |||||||||||||||||||||||||||
| Term Loan | $ | $ | $ | $ | ||||||||||||||||||||||||||||
2027 Notes | ( | ( | ||||||||||||||||||||||||||||||
| 2029 Notes | ( | ( | ||||||||||||||||||||||||||||||
| 2030 Notes | ( | ( | ||||||||||||||||||||||||||||||
2032 Notes | ( | ( | ||||||||||||||||||||||||||||||
2049 Notes | ( | |||||||||||||||||||||||||||||||
| 2052 Notes | ( | ( | ||||||||||||||||||||||||||||||
| Other | — | — | N/A | |||||||||||||||||||||||||||||
| $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Less — Current portion | ( | |||||||||||||||||||||||||||||||
| Long-term debt | $ | |||||||||||||||||||||||||||||||
Senior Notes
The issuance, maturity and interest payment dates of the Company's senior unsecured 2027 Notes, 2029 Notes, 2030 Notes, 2032 Notes, 2049 Notes and 2052 Notes (collectively, the "Notes") are shown below:
| Note | Issuance Date(s) | Maturity Date | Interest Payment Dates | |||||||||||||||||
| 2027 Notes | August 2017 | September 15, 2027 | March 15 and September 15 | |||||||||||||||||
| 2029 Notes | May 2019 | May 15, 2029 | May 15 and November 15 | |||||||||||||||||
| 2030 Notes | February 2020 | May 30, 2030 | May 30 and November 30 | |||||||||||||||||
| 2032 Notes | November 2021 | January 15, 2032 | January 15 and July 15 | |||||||||||||||||
| 2049 Notes | May 2019 and February 2020 | May 15, 2049 | May 15 and November 15 | |||||||||||||||||
| 2052 Notes | November 2021 | January 15, 2052 | January 15 and July 15 | |||||||||||||||||
Subject to certain exceptions, the indentures governing the Notes contain restrictive covenants that, among other things, limit the ability of the Company to: (i) create or permit certain liens and (ii) consolidate, merge or sell all or substantially all of the Company's assets. The indentures governing the Notes also provide for customary events of default.
As of April 4, 2026, the Company was in compliance with all covenants under the indentures governing the Notes.
Credit Agreement
The Company's amended and restated $2.0 billion unsecured revolving credit agreement (the "Credit Agreement") matures July 24, 2030.
In the three months ended April 4, 2026 and March 29, 2025, there were no no
Advances under the Credit Agreement generally bear interest based on (i) Term Benchmark, Central Bank Rate and Risk Free Rate ("RFR") (in each case, as defined in the Credit Agreement) or (ii) Alternate Base Rate ("ABR") and Canadian Prime Rate (in each case, as defined in the Credit Agreement). As of April 4, 2026, the ranges and rates are as follows (in percentages):
| Term Benchmark, Central Bank Rate and RFR Loans | ABR and Canadian Prime Rate Loans | |||||||||||||||||||||||||||||||||||||
| Minimum | Maximum | Rate as of April 4, 2026 | Minimum | Maximum | Rate as of April 4, 2026 | |||||||||||||||||||||||||||||||||
| Credit Agreement | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||
A facility fee, which ranges from 0.075 % to 0.20 % of the total amount committed under the Credit Agreement, is payable quarterly.
15
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The Credit Agreement contains various customary representations, warranties and covenants by the Company, including, without limitation, (i) covenants regarding maximum leverage, (ii) limitations on fundamental changes involving the Company or its subsidiaries and (iii) limitations on indebtedness and liens.
As of April 4, 2026, the Company was in compliance with all covenants under the Credit Agreement.
Term Loan
As of April 4, 2026 and December 31, 2025, the Company had $50.0
Advances under the Term Loan generally bear interest based on the Daily or Term SOFR (as defined in the Term Loan agreement) plus a margin determined in accordance with a pricing grid that ranges from 0.875 % to 1.375 %. As of April 4, 2026, the interest rate was 4.676 %. The Term Loan contains the same covenants as the Credit Agreement.
As of April 4, 2026, the Company was in compliance with all covenants under the Term Loan.
Other
As of April 4, 2026 and December 31, 2025, other long-term debt, including the current portion, consisted of amounts outstanding under unsecured working capital loans and finance lease agreements.
For further information related to the Company's debt, see Note 5, "Debt," to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
(8) Leases
The Company has operating leases for production, office and warehouse facilities, manufacturing and office equipment and vehicles. Operating lease assets and obligations included in the accompanying condensed consolidated balance sheets are shown below (in millions):
| April 4, 2026 | December 31, 2025 | ||||||||||
| Right-of-use assets under operating leases: | |||||||||||
| $ | $ | ||||||||||
| Lease obligations under operating leases: | |||||||||||
| $ | $ | ||||||||||
| $ | $ | ||||||||||
Maturities of lease obligations are shown below (in millions):
| April 4, 2026 | |||||
2026 (1) | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total undiscounted cash flows | |||||
| Less: Imputed interest | ( | ||||
| Lease obligations under operating leases | $ | ||||
(1) For the remaining nine months.
In 2025, the Company entered into an operating lease with a lease term of fifteen years that is expected to commence in the fourth quarter of 2026. The right-of-use asset and related lease obligation are expected to be approximately $11 million.
16
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Cash flow information related to operating leases is shown below (in millions):
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Non-cash activity: | |||||||||||
| Right-of-use assets obtained in exchange for operating lease obligations | $ | $ | |||||||||
| Operating cash flows: | |||||||||||
| Cash paid related to operating lease obligations | $ | $ | |||||||||
Lease expense included in the accompanying condensed consolidated statements of comprehensive income is shown below (in millions):
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Operating lease expense | $ | $ | |||||||||
| Short-term lease expense | |||||||||||
| Variable lease expense | |||||||||||
| Total lease expense | $ | $ | |||||||||
In the three months ended April 4, 2026, the Company incurred $10.1 million related to usage-based employee transportation costs.
In the three months ended March 29, 2025, the Company recognized impairment charges of $0.1 million related to its right-of-use assets in conjunction with its restructuring actions (Note 2, "Restructuring"). The impairment charges are included in cost of sales in the accompanying condensed consolidated statement of comprehensive income.
The weighted average lease term and discount rate for operating leases are shown below:
| April 4, 2026 | |||||
| Weighted average remaining lease term | |||||
| Weighted average discount rate | % | ||||
The Company is party to finance lease agreements, which are not material to the accompanying condensed consolidated financial statements (Note 7, "Debt").
For further information related to the Company's leases, see Note 6, "Leases," to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
(9) Pension and Other Postretirement Benefit Plans
The Company has noncontributory defined benefit pension plans covering certain domestic employees and certain employees in foreign countries, principally Canada. The Company also has postretirement benefit plans covering certain domestic and Canadian retirees. The Company's postretirement benefit plans generally provide for the continuation of medical benefits for eligible retirees.
17
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Net Periodic Pension Benefit Cost and Other Postretirement Benefit (Credit) Cost
The components of the Company's net periodic pension benefit cost are shown below (in millions):
| Three Months Ended | |||||||||||||||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||||||||||||||
| U.S. | Foreign | U.S. | Foreign | ||||||||||||||||||||
| Service cost | $ | $ | $ | $ | |||||||||||||||||||
| Interest cost | |||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | |||||||||||||||||||
| Amortization of actuarial loss | |||||||||||||||||||||||
| Settlement gain | ( | ( | |||||||||||||||||||||
| Net periodic benefit cost | $ | $ | $ | $ | |||||||||||||||||||
The components of the Company's net periodic other postretirement benefit (credit) cost are shown below (in millions):
| Three Months Ended | |||||||||||||||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||||||||||||||
| U.S. | Foreign | U.S. | Foreign | ||||||||||||||||||||
| Interest cost | $ | $ | $ | $ | |||||||||||||||||||
| Amortization of actuarial gain | ( | ( | ( | ||||||||||||||||||||
| Net periodic benefit (credit) cost | $ | ( | $ | $ | ( | $ | |||||||||||||||||
For further information related to the Company's pension and other postretirement benefit plans, see Note 8, "Pension and Other Postretirement Benefit Plans," to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.
(10) Revenue Recognition
The Company enters into contracts with its customers to provide production parts generally at the beginning of a vehicle's life cycle. Typically, these contracts do not provide for a specified quantity of products, but once entered into, the Company is often expected to fulfill its customers' purchasing requirements for the production life of the vehicle. Many of these contracts may be terminated by the Company's customers at any time. Historically, terminations of these contracts have been infrequent. The Company receives purchase orders from its customers, which provide the commercial terms for a particular production part, including price (but not quantities). Contracts may also provide for annual price reductions over the production life of the vehicle, and prices may be adjusted on an ongoing basis to reflect changes in product content/cost and other commercial factors.
Revenue is recognized at a point in time when control of the product is transferred to the customer under standard commercial terms, as the Company does not have an enforceable right to payment prior to such transfer. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to in exchange for those products based on the current purchase orders, annual price reductions and ongoing price adjustments. In the first three months of 2026 and 2025, revenue recognized related to prior years represented approximately 1 % and 2 %, respectively, of consolidated net sales (excluding the reversal of certain 2025 tariff recoveries in the first quarter of 2026). The Company's customers pay for products received in accordance with payment terms that are customary within the industry. The Company's contracts with its customers do not have significant financing components.
The Company records a contract liability for advances received from its customers. As of April 4, 2026 and December 31, 2025, there were no no
Amounts billed to customers related to shipping and handling costs are included in net sales in the condensed consolidated statements of comprehensive income. Shipping and handling costs are accounted for as fulfillment costs and are included in cost of sales in the condensed consolidated statements of comprehensive income.
Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that are collected by the Company from a customer are excluded from revenue.
18
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
A summary of the Company's revenue by reportable operating segment and geography is shown below (in millions):
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||||||||||||||||||||||||||
| Seating | E-Systems | Total | Seating | E-Systems | Total | ||||||||||||||||||||||||||||||
| North America | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Europe and Africa | |||||||||||||||||||||||||||||||||||
| Asia | |||||||||||||||||||||||||||||||||||
| South America | |||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
(11) Other Expense, Net
Other expense, net 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.
A summary of other expense, net is shown below (in millions):
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Other expense | $ | $ | |||||||||
| Other income | ( | ||||||||||
| Other expense, net | $ | $ | |||||||||
In the three months ended April 4, 2026, other expense includes net foreign currency transaction losses of $4.9 million, including gains of $0.2 million related to the hyper-inflationary environment in Argentina.
In the three months ended March 29, 2025, other expense includes net foreign currency transaction losses of $10.0 million, including losses of $1.5 million related to the hyper-inflationary environment in Argentina. In the three months ended March 29, 2025, other expense also includes a loss of $3.3 million related to the disposal of a non-core business.
(12) Income Taxes
A summary of the provision for income taxes and the corresponding effective tax rate for the three months ended April 4, 2026 and March 29, 2025, is shown below (in millions, except effective tax rates):
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Provision for income taxes | $ | $ | |||||||||
| Pretax income before equity in net income of affiliates | $ | $ | |||||||||
| Effective tax rate | % | % | |||||||||
19
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The Company's provision for income taxes is impacted by the level and mix of earnings among tax jurisdictions. In addition, the Company recognized discrete tax benefits (expense) on the significant items shown below (in millions):
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Restructuring charges and various other items | $ | $ | |||||||||
| Share-based compensation | ( | ||||||||||
| $ | $ | ||||||||||
Excluding the items above, the effective tax rate for the first three 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.
The Company's current and future provision for income taxes is impacted by the initial recognition of and changes in valuation allowances in certain countries. The Company intends to maintain these allowances until it is more likely than not that the deferred tax assets will be realized. The Company's future provision for income taxes will include no tax benefit with respect to losses incurred and, except for certain jurisdictions, no tax expense with respect to income generated in these countries until the respective valuation allowances are eliminated. Accordingly, income taxes are impacted by changes in valuation allowances and the mix of earnings among jurisdictions. The Company evaluates the realizability of its deferred tax assets on a quarterly basis. In completing this evaluation, the Company considers all available evidence in order to determine whether, based on the weight of the evidence, a valuation allowance for its deferred tax assets is necessary. Such evidence includes historical results, future reversals of existing taxable temporary differences and expectations for future taxable income (exclusive of the reversal of temporary differences and carryforwards), as well as the implementation of feasible and prudent tax planning strategies. If, based on the weight of the evidence, it is more likely than not that all or a portion of the Company's deferred tax assets will not be realized, a valuation allowance is recorded. If operating results improve or decline on a continual basis in a particular jurisdiction, the Company's decision regarding the need for a valuation allowance could change, resulting in either the initial recognition or reversal of a valuation allowance in that jurisdiction, which could have a significant impact on income tax expense in the period recognized and subsequent periods. In determining the provision for income taxes for financial statement purposes, the Company makes certain estimates and judgments, which affect its evaluation of the carrying value of its deferred tax assets, as well as its calculation of certain tax liabilities.
(13) Net Income Per Share Attributable to Lear
Basic net income per share attributable to Lear is computed by dividing net income attributable to Lear by the average number of common shares outstanding during the period. Common shares issuable upon the satisfaction of certain conditions pursuant to a contractual agreement are considered common shares outstanding and are included in the computation of basic net income per share attributable to Lear.
Diluted net income per share attributable to Lear is computed using the treasury stock method by dividing net income attributable to Lear by the average number of common shares outstanding, including the dilutive effect of common stock equivalents using the average share price during the period.
20
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
A summary of information used to compute basic and diluted net income per share attributable to Lear is shown below (in millions, except share and per share data):
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Net income attributable to Lear | $ | $ | |||||||||
| Average common shares outstanding | |||||||||||
| Dilutive effect of common stock equivalents | |||||||||||
| Average diluted shares outstanding | |||||||||||
| Basic net income per share attributable to Lear | $ | $ | |||||||||
| Diluted net income per share attributable to Lear | $ | $ | |||||||||
(14) Comprehensive Income and Equity
Comprehensive Income
Comprehensive income is defined as all changes in the Company's net assets except changes resulting from transactions with shareholders. It differs from net income in that certain items recorded in equity are included in comprehensive income.
Accumulated Other Comprehensive Loss
A summary of changes in accumulated other comprehensive loss, net of tax, in the three months ended April 4, 2026, is shown below (in millions):
| Three Months Ended April 4, 2026 | |||||
| Defined benefit plans: | |||||
| Balance at beginning of period | $ | ( | |||
| Reclassification adjustments | ( | ||||
| Other comprehensive income recognized during the period | |||||
| Balance at end of period | $ | ( | |||
| Derivative instruments and hedging: | |||||
| Balance at beginning of period | $ | ||||
Reclassification adjustments (net of tax benefit of $ | ( | ||||
Other comprehensive income recognized during the period (net of tax expense of $ | |||||
| Balance at end of period | $ | ||||
| Foreign currency translation: | |||||
| Balance at beginning of period | $ | ( | |||
Other comprehensive loss recognized during the period (net of tax benefit of $ | ( | ||||
| Balance at end of period | $ | ( | |||
| Total accumulated other comprehensive loss | $ | ( | |||
In the three months ended April 4, 2026, foreign currency translation adjustments are primarily related to the strengthening of Chinese renminbi and the Brazilian real, offset by the weakening of the Euro, relative to the U.S. dollar and include pretax losses of $0.1 6.7 million.
21
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
A summary of changes in accumulated other comprehensive loss, net of tax, in the three months ended March 29, 2025, is shown below (in millions):
| Three Months Ended March 29, 2025 | |||||
| Defined benefit plans: | |||||
| Balance at beginning of period | $ | ( | |||
Reclassification adjustments (net of tax benefit of $ | ( | ||||
| Other comprehensive loss recognized during the period | ( | ||||
| Balance at end of period | $ | ( | |||
| Derivative instruments and hedging: | |||||
| Balance at beginning of period | $ | ( | |||
Reclassification adjustments (net of tax expense of $ | |||||
Other comprehensive income recognized during the period (net of tax expense of $ | |||||
| Balance at end of period | $ | ( | |||
| Foreign currency translation: | |||||
| Balance at beginning of period | $ | ( | |||
Other comprehensive income recognized during the period (net of tax benefit of $ | |||||
| Balance at end of period | $ | ( | |||
| Total accumulated other comprehensive loss | $ | ( | |||
In the three months ended March 29, 2025, foreign currency translation adjustments are primarily related to the strengthening of the Euro and, to a lesser extent, the Brazilian real, relative to the U.S. dollar and include net investment hedge losses of $6.1 million.
For further information regarding reclassification adjustments related to the Company's defined benefit plans, see Note 9, "Pension and Other Postretirement Benefit Plans." For further information regarding reclassification adjustments related to the Company's derivative and hedging activities, see Note 17, "Financial Instruments."
Lear Corporation Shareholders' Equity
Common Stock Share Repurchase Program
The Company may implement share repurchases through a variety of methods, including, but not limited to, open market purchases, accelerated stock repurchase programs and structured repurchase transactions. The extent to which the Company may repurchase its outstanding common stock and the timing of such repurchases will depend upon its financial condition, results of operations, capital requirements, prevailing market conditions, alternative uses of capital and other factors.
The Company has a common stock share repurchase program (the "Repurchase Program") which permits the discretionary repurchase of its common stock. Since the inception of the Repurchase Program in the first quarter of 2011, the Company's Board of Directors (the "Board") has authorized $6.7 billion in share repurchases. As of April 4, 2026, the Company has repurchased, in aggregate, $6.0 billion of its outstanding common stock, at an average price of $95.25 per share, excluding commissions and related fees, and has a remaining repurchase authorization of $699.7 million, which expires on December 31, 2026.
Share repurchases and the remaining repurchase authorization are shown below (in millions, except for share and per share amounts):
| Three Months Ended April 4, 2026 | As of April 4, 2026 | |||||||||||||||||||||||||
Aggregate Repurchases (1) | Cash Paid for Repurchases (1) | Number of Shares | Average Price per Share (1) | Remaining Purchase Authorization | ||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
(1) Excludes excise tax and commissions.
22
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
In addition to shares repurchased under the Repurchase Program described above, the Company classifies shares withheld from the settlement of the Company's restricted stock unit and performance share awards to cover tax withholding requirements as common stock held in treasury in the condensed consolidated balance sheets.
Quarterly Dividend
The Board declared a quarterly cash dividend of $0.77
Dividends declared and paid are shown below (in millions):
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Dividends declared | $ | $ | |||||||||
| Dividends paid | |||||||||||
Dividends payable on shares of common stock to be distributed under the Company's stock-based compensation program will be paid when such shares are distributed.
(15) Legal and Other Contingencies
As of April 4, 2026 and December 31, 2025, the Company had recorded reserves for pending legal disputes, including commercial disputes, product liability claims and other legal matters, of $13.9 million and $13.8 million, respectively. Such reserves reflect amounts recognized in accordance with GAAP and typically exclude the cost of legal representation. Reserves for warranty and recall matters are recorded separately from legal reserves, as described below.
Commercial Disputes
The Company is involved from time to time in legal proceedings and claims, including, without limitation, commercial or contractual disputes with its customers, suppliers and competitors. These disputes vary in nature and are usually resolved by negotiations between the parties.
Product Liability, Warranty and Recall Matters
In the event that use of the Company's products results in, or is alleged to result in, bodily injury and/or property damage or other losses, the Company may be subject to product liability lawsuits and other claims. Such lawsuits generally seek compensatory damages, punitive damages and attorneys' fees and costs. In addition, if any of the Company's products are, or are alleged to be, defective, the Company may be required or requested by its customers to support warranty costs or to participate in a recall or other corrective action involving such products. The Company is party to agreements with certain of its customers, whereby these customers may pursue claims against the Company for contribution of all or a portion of the amounts sought in connection with warranty and recall matters, and certain of the Company's customers have asserted such claims against the Company. The Company can provide no assurances that it will not experience material claims in the future or that it will not incur significant costs to defend such claims.
In certain instances, allegedly defective products may be supplied by the Company's suppliers. The Company may seek recovery from its suppliers of materials or services included within the Company's products that are associated with product liability claims or warranty and recall matters.
The Company carries insurance for certain legal matters, including product liability claims, but such coverage may be limited. The Company does not maintain insurance for warranty and recall matters.
The Company records reserves for warranty and recall matters when liability is probable and related amounts are reasonably estimable.
23
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
A summary of the changes in reserves for warranty and recall matters in the three months ended April 4, 2026, is shown below (in millions):
| Balance at January 1, 2026 | $ | ||||
| Expense, net (including changes in estimates) | |||||
| Settlements | ( | ||||
| Foreign currency translation and other | |||||
| Balance at April 4, 2026 | $ | ||||
Environmental Matters
The Company is subject to local, state, federal and foreign laws, regulations and ordinances which govern activities or operations that may have or have had adverse environmental effects. These regulations impose liability for clean-up costs resulting from past spills, disposals or other releases of hazardous wastes and environmental compliance. The Company's policy is to comply with all applicable environmental laws and to maintain an environmental management program based on ISO 14001 to ensure compliance with this standard. However, the Company currently is, has been and in the future may become, the subject of formal or informal enforcement actions or procedures.
As of April 4, 2026 and December 31, 2025, the Company had recorded environmental reserves of $4.8 million and $4.9 million, respectively. The Company does not believe that the environmental liabilities associated with its current and former properties will have a material adverse impact on its business, financial condition, results of operations or cash flows; however, no assurances can be given in this regard.
Other Matters
The Company is involved from time to time in various other legal proceedings and claims, including, without limitation, intellectual property matters, tax claims and employment matters. Although the outcome of any legal matter cannot be predicted with certainty, the Company does not believe that any of the other legal proceedings or claims in which the Company is currently involved, either individually or in the aggregate, will have a material adverse impact on its business, financial condition, results of operations or cash flows. However, no assurances can be given in this regard.
Although the Company records reserves for legal disputes, warranty and recall matters, and environmental and other matters in accordance with GAAP, the ultimate outcomes of these matters are inherently uncertain. Actual results may differ significantly from current estimates.
(16) Segment Reporting
The Company is organized under two reportable operating segments: Seating and E-Systems. Each of these segments has a varied product and technology portfolio across a number of component categories. Further, the Company continuously evaluates this portfolio, aligning it with industry trends while balancing risk-adjusted returns, which allows the Company to offer value-added solutions to its customers.
The Seating segment consists of the design, development, engineering and manufacture of complete seat systems and key seat components. The Company's capabilities in operations and supply chain management enable synchronized assembly and just-in-time delivery of complex complete seat systems at high volumes to its customers. Key seat component product offerings include seat trim covers; surface materials such as leather and fabric; seat mechanisms; seat cushioning; headrests; and thermal comfort systems such as seat heating, ventilation, active cooling, pneumatic lumbar and massage products. All of these products are compatible with traditional internal combustion engine ("ICE") architectures and electrified powertrains, including the full range of hybrid, plug-in hybrid and battery electric architectures. Thermal comfort systems are facilitated by the Company's seat system, component and integration capabilities, together with the Company's competencies in electronics, sensors, software and algorithms.
The E-Systems segment consists of the design, development, engineering and manufacture of complete electrical distribution and connection systems; high-voltage power distribution products, including BDUs; and low-voltage power distribution products and electronic controllers.
•Electrical distribution and connection systems utilize low-voltage and high-voltage wire and high-speed data cables to connect networks' electrical signals and manage electrical power within the vehicle for all types of powertrains – from
24
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
traditional ICE architectures to the full range of electrified powertrains that require management of higher voltage and power. Key components of the Company's electrical distribution and connection systems portfolio include wire harnesses, terminals and connectors, high-voltage battery connection systems and engineered components. High-voltage battery connection systems include intercell connect boards, bus bars and main battery interface connection systems.
•High-voltage power distribution products control the flow and distribution of high-voltage power throughout electric and hybrid vehicles and include BDUs, which control all electrical energy flowing into and out of high-voltage batteries in electrified vehicles.
•Low-voltage power distribution products and electronic controllers facilitate signal, data and/or power management within the vehicle and include the associated software required to facilitate these functions. Key components of this portfolio include zonal controllers, body domain control modules, and smart and passive power distribution modules. The Company's software offerings include embedded control, cybersecurity software and software to control hardware devices. The Company's customers traditionally have sourced the Company's electronic hardware together with the software that the Company integrates and embeds in it.
The other category includes unallocated costs related to corporate headquarters, regional headquarters and the elimination of intercompany activities, including intersegment revenues and cost of sales, none of which meets the requirements for being classified as an operating segment. Corporate and regional headquarters costs include various support functions, such as information technology, corporate finance, legal, executive administration and human resources. Such costs are reflected in the operating segment results to the extent they are directly attributable to an operating segment.
The Company's chief operating decision maker ("CODM") is Raymond E. Scott, President and Chief Executive Officer. Each of the Company's operating segments reports its results from operations and makes its requests for capital expenditures directly to the CODM. The CODM assesses the operating performance of each segment based on segment earnings (as defined below), which is driven primarily by automotive production volumes in the geographic regions in which it operates, as well as by the success of the vehicle platforms for which it supplies products. Also, each operating segment operates in the competitive Tier 1 automotive supplier environment and is continually working with its customers to manage costs and improve quality. The Company's production processes generally make use of an hourly workforce, dedicated facilities, sequential manufacturing and assembly processes and commodity raw materials.
The CODM evaluates the performance of its operating segments based primarily on (i) revenues from external customers, (ii) pretax income before equity in net income of affiliates, interest expense, net and other expense, net ("segment earnings") and (iii) cash flows, being defined as segment earnings less capital expenditures plus depreciation and amortization.
The accounting policies of the Company's operating segments are the same as those described in this note to the consolidated financial statements.
25
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
A reconciliation of segment earnings to consolidated income before provision for income taxes and equity in net income of affiliates is shown below (in millions):
| Three Months Ended April 4, 2026 | |||||||||||||||||||||||
| Seating | E-Systems | Other | Consolidated | ||||||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | |||||||||||||||||||
Intersegment revenues (1) | ( | — | |||||||||||||||||||||
Less (2): | |||||||||||||||||||||||
| Cost of sales | ( | ||||||||||||||||||||||
| Gross margin | ( | ||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||
| Amortization of intangibles | |||||||||||||||||||||||
| Intersegment support activities | ( | ||||||||||||||||||||||
Segment earnings (3) | $ | $ | $ | ( | |||||||||||||||||||
| Reconciliation of segment earnings: | |||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Other expense, net | |||||||||||||||||||||||
| Consolidated income before provision for income taxes and equity in net income of affiliates | $ | ||||||||||||||||||||||
| Three Months Ended March 29, 2025 | |||||||||||||||||||||||
| Seating | E-Systems | Other | Consolidated | ||||||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | |||||||||||||||||||
Intersegment revenues (1) | ( | — | |||||||||||||||||||||
Less (2): | |||||||||||||||||||||||
| Cost of sales | ( | ||||||||||||||||||||||
| Gross margin | ( | ||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||
| Amortization of intangibles | |||||||||||||||||||||||
| Intersegment support activities | ( | ||||||||||||||||||||||
Segment earnings (3) | $ | $ | $ | ( | |||||||||||||||||||
| Reconciliation of segment earnings: | |||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Other expense, net | |||||||||||||||||||||||
| Consolidated income before provision for income taxes and equity in net income of affiliates | $ | ||||||||||||||||||||||
(1) Intersegment transactions are accounted for at values comparable to unaffiliated third-party transactions.
(2) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. Intersegment expenses are included within the amounts shown.
(3) See definition above.
26
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Other segment related disclosures are shown below (in millions):
| Three Months Ended April 4, 2026 | |||||||||||||||||||||||
| Seating | E-Systems | Other | Consolidated | ||||||||||||||||||||
| Depreciation | $ | $ | $ | $ | |||||||||||||||||||
| Capital expenditures | |||||||||||||||||||||||
| Inventories | |||||||||||||||||||||||
| Total assets | |||||||||||||||||||||||
| Three Months Ended March 29, 2025 | |||||||||||||||||||||||
| Seating | E-Systems | Other | Consolidated | ||||||||||||||||||||
| Depreciation | $ | $ | $ | $ | |||||||||||||||||||
| Capital expenditures | |||||||||||||||||||||||
| Inventories | |||||||||||||||||||||||
| Total assets | |||||||||||||||||||||||
(17) Financial Instruments
Debt Instruments
| April 4, 2026 | December 31, 2025 | ||||||||||
Estimated aggregate fair value (1) | $ | $ | |||||||||
Aggregate carrying value (1) (2) | |||||||||||
(1) Excludes "other" debt.
(2) Excludes the impact of unamortized debt issuance costs and unamortized original issue premium (discount).
Cash, Cash Equivalents and Restricted Cash
The Company has cash on deposit that is legally restricted as to use or withdrawal. A reconciliation of cash and cash equivalents reported on the accompanying condensed consolidated balance sheets to cash, cash equivalents and restricted cash reported on the accompanying condensed consolidated statements of cash flows is shown below (in millions):
| April 4, 2026 | March 29, 2025 | ||||||||||
| Balance sheet: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash included in other current assets | |||||||||||
| Restricted cash included in other long-term assets | |||||||||||
| Statement of cash flows: | |||||||||||
| Cash, cash equivalents and restricted cash | $ | $ | |||||||||
Accounts Receivable
The Company's allowance for credit losses on financial assets measured at amortized cost, primarily accounts receivable, reflects management's estimate of credit losses over the remaining expected life of such assets, measured primarily using historical experience, as well as current conditions and forecasts that affect the collectability of the reported amount. Expected credit losses for newly recognized financial assets, as well as changes to expected credit losses during the period, are recognized
27
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Marketable Equity Securities
Marketable equity securities, which the Company accounts for under the fair value option, are included in the accompanying condensed consolidated balance sheets as shown below (in millions):
| April 4, 2026 | December 31, 2025 | ||||||||||
| Other current assets | $ | $ | |||||||||
| Other long-term assets | |||||||||||
| $ | $ | ||||||||||
Unrealized gains and losses arising from changes in the fair value of the marketable equity securities are recognized in other expense, net in the condensed consolidated statements of comprehensive income. The fair value of the marketable equity securities is determined by reference to quoted market prices in active markets (Level 1 input based on the GAAP fair value hierarchy).
Equity Securities Without Readily Determinable Fair Values
As of April 4, 2026 and December 31, 2025, investments in equity securities without readily determinable fair values of $8.7 19.6
Derivative Instruments and Hedging Activities
The Company has used derivative financial instruments, including forwards, futures, options, swaps and other derivative contracts, to reduce the effects of fluctuations in foreign exchange rates and interest rates and the resulting variability of the Company's operating results. The Company is not a party to leveraged derivatives. The Company's derivative financial instruments are subject to master arrangements that provide for the net settlement of contracts, by counterparty, in the event of default or termination. On the date that a derivative contract for a hedge instrument is entered into, the Company designates the derivative as either (1) a hedge of the exposure to changes in the fair value of a recognized asset or liability or of an unrecognized firm commitment (a fair value hedge), (2) a hedge of the exposure of a forecasted transaction or of the variability in the cash flows of a recognized asset or liability (a cash flow hedge), (3) a hedge of a net investment in a foreign operation (a net investment hedge) or (4) a contract not designated as a hedge instrument.
For a fair value hedge, the change in the fair value of the derivative is recorded in earnings and reflected in the condensed consolidated statements of comprehensive income on the same line as the gain or loss on the hedged item attributable to the hedged risk. For a cash flow hedge, the change in the fair value of the derivative is recorded in accumulated other comprehensive loss in the condensed consolidated balance sheets. When the underlying hedged transaction is realized, the gain or loss included in accumulated other comprehensive loss is recorded in earnings and reflected in the condensed consolidated statements of comprehensive income on the same line as the gain or loss on the hedged item attributable to the hedged risk. For a net investment hedge, the change in the fair value of the derivative is recorded in cumulative translation adjustment, which is a component of accumulated other comprehensive loss in the condensed consolidated balance sheets. When the related currency translation adjustment is required to be reclassified, usually upon the sale or liquidation of the investment, the gain or loss included in accumulated other comprehensive loss is recorded in earnings and reflected in other expense, net in the condensed consolidated statements of comprehensive income. Changes in the fair value of contracts not designated as hedge instruments are recorded in earnings and reflected in other expense, net in the condensed consolidated statements of comprehensive income. Cash flows attributable to derivatives used to manage foreign currency risks are classified on the same line as the hedged item attributable to the hedged risk in the condensed consolidated statements of cash flows. Upon settlement, cash flows attributable to derivatives designated as net investment hedges are classified as investing activities in the condensed consolidated statements of cash flows. Cash flows attributable to forward starting interest rate swaps are classified as financing activities in the condensed consolidated statements of cash flows.
The Company formally documents its hedge relationships, including the identification of the hedge instruments and the related hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction. Derivatives are
28
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
recorded at fair value in other current and long-term assets and other current and long-term liabilities in the condensed consolidated balance sheets. The Company also formally assesses whether a derivative used in a hedge transaction is highly effective in offsetting changes in either the fair value or the cash flows of the hedged item. When it is determined that a hedged transaction is no longer probable to occur, the Company discontinues hedge accounting.
Foreign Exchange
The Company uses forwards, swaps and other derivative contracts to reduce the effects of fluctuations in foreign exchange rates on known foreign currency exposures. Gains and losses on the derivative instruments are intended to offset gains and losses on the hedged transaction in an effort to reduce exposure to fluctuations in foreign exchange rates. The principal currencies hedged by the Company include the Mexican peso, various European currencies and the Moroccan dirham.
Foreign currency derivative contracts not designated as hedging instruments consist principally of hedges of cash transactions, intercompany loans and certain other balance sheet exposures.
Net Investment Hedges
The Company uses cross-currency interest rate swaps, which are designated as net investment hedges of the foreign currency rate exposure of its investment in certain Euro-denominated subsidiaries. In the three months ended April 4, 2026 and March 29, 2025, contra interest expense on net investment hedges of $0.8 million and $0.6 million, respectively, is included in interest expense, net in the accompanying condensed consolidated statements of comprehensive income.
Balance Sheet Classification
The notional amount, estimated aggregate fair value and related balance sheet classification of the Company's foreign currency and net investment hedge contracts are shown below (in millions, except for maturities):
| April 4, 2026 | December 31, 2025 | ||||||||||
| Fair value of foreign currency contracts designated as cash flow hedges: | |||||||||||
| Other current assets | $ | $ | |||||||||
| Other long-term assets | |||||||||||
| Other current liabilities | ( | ( | |||||||||
| Other long-term liabilities | ( | ( | |||||||||
| Notional amount | $ | $ | |||||||||
| Outstanding maturities in months, not to exceed | |||||||||||
| Fair value of derivatives designated as net investment hedges: | |||||||||||
| Other current liabilities | $ | ( | $ | ( | |||||||
| Other long-term liabilities | $ | ( | $ | ( | |||||||
| ( | ( | ||||||||||
| Notional amount | $ | $ | |||||||||
| Outstanding maturities in months, not to exceed | |||||||||||
| Fair value of foreign currency contracts not designated as hedge instruments: | |||||||||||
| Other current assets | $ | $ | |||||||||
| Other current liabilities | ( | ( | |||||||||
| ( | |||||||||||
| Notional amount | $ | $ | |||||||||
| Outstanding maturities in months, not to exceed | |||||||||||
| Total fair value | $ | $ | |||||||||
| Total notional amount | $ | $ | |||||||||
29
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Accumulated Other Comprehensive Loss — Derivative Instruments and Hedge Activities
Pretax amounts related to foreign currency and net investment hedge contracts that were recognized in and reclassified from accumulated other comprehensive loss are shown below (in millions):
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Gains (losses) recognized in accumulated other comprehensive loss: | |||||||||||
| Foreign currency contracts | $ | $ | |||||||||
| Net investment hedge contracts | ( | ||||||||||
| (Gains) losses reclassified from accumulated other comprehensive loss to: | |||||||||||
| Net sales | ( | ( | |||||||||
| Cost of sales | ( | ||||||||||
| Interest expense, net | |||||||||||
| ( | |||||||||||
| Comprehensive income | $ | $ | |||||||||
As of April 4, 2026 and December 31, 2025, pretax net gains of $200.4 million and $192.3 million, respectively, related to the Company's derivative instruments and hedge activities were recorded in accumulated other comprehensive loss.
During the next twelve-month period, net gains (losses) expected to be reclassified into earnings are shown below (in millions):
| Foreign currency contracts | $ | ||||
| Interest rate swap contracts | ( | ||||
| Total | $ | ||||
Such gains (losses) will be reclassified at the time that the underlying hedged transactions are realized.
Fair Value Measurements
GAAP provides that fair value is an exit price, defined as a market-based measurement that represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value measurements are based on one or more of the following three valuation techniques:
| Market: | This approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. | |||||||
Income: | This approach uses valuation techniques to convert future amounts to a single present value amount based on current market expectations. | |||||||
| Cost: | This approach is based on the amount that would be required to replace the service capacity of an asset (replacement cost). | |||||||
Further, GAAP prioritizes the inputs and assumptions used in the valuation techniques described above into a three-tier fair value hierarchy as follows:
| Level 1: | Observable inputs, such as quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date. | |||||||
| Level 2: | Inputs, other than quoted market prices included in Level 1, that are observable either directly or indirectly for the asset or liability. | |||||||
| Level 3: | Unobservable inputs that reflect the entity's own assumptions about the exit price of the asset or liability. Unobservable inputs may be used if there is little or no market data for the asset or liability at the measurement date. | |||||||
The Company discloses fair value measurements and the related valuation techniques and fair value hierarchy level for its assets and liabilities that are measured or disclosed at fair value.
30
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Items Measured at Fair Value on a Recurring Basis
Fair value measurements and the related valuation techniques and fair value hierarchy level for the Company's assets and liabilities measured at fair value on a recurring basis as of April 4, 2026 and December 31, 2025, are shown below (in millions):
| April 4, 2026 | |||||||||||||||||||||||||||||||||||
| Frequency | Asset (Liability) | Valuation Technique | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||
| Foreign currency contracts, net | Recurring | $ | Market/ Income | $ | $ | $ | |||||||||||||||||||||||||||||
| Net investment hedge contracts | Recurring | ( | Market/ Income | ( | |||||||||||||||||||||||||||||||
| Marketable equity securities | Recurring | Market | |||||||||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Frequency | Asset (Liability) | Valuation Technique | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||
| Foreign currency contracts, net | Recurring | $ | Market/ Income | $ | $ | $ | |||||||||||||||||||||||||||||
| Net investment hedge contracts | Recurring | ( | Market/ Income | ( | |||||||||||||||||||||||||||||||
| Marketable equity securities | Recurring | Market | |||||||||||||||||||||||||||||||||
Items Measured at Fair Value on a Non-Recurring Basis
The Company measures certain assets and liabilities at fair value on a non-recurring basis, which are not included in the table above. As these non-recurring fair value measurements are generally determined using unobservable inputs, these fair value measurements are classified within Level 3 of the fair value hierarchy.
In the three months ended April 4, 2026, the Company completed impairment assessments and recorded related impairment charges of $2.7 million related to its property, plant and equipment.
In the three months ended March 29, 2025, the Company completed impairment assessments and recorded impairment charges of $2.7 million and $0.1 million, respectively, related to its property, plant and equipment and right-of-use assets.
The fair value estimates of the related assets were based on management's estimates using a discounted cash flow method.
As of April 4, 2026, there were no additional significant assets or liabilities measured at fair value on a non-recurring basis.
(18) Accounting Pronouncements
Accounting Standards Updates ("ASU") Issued But Not Yet Adopted:
ASU 2024-03 (issued November 2024), "Disaggregation of Income Statement Expenses." The ASU requires the disaggregation of certain expenses presented on the face of the income statement in a tabular footnote disclosure. The expense categories include purchases of inventory, employee compensation, depreciation and amortization. It also requires the definition and disclosure of selling expense, a qualitative description of expense amounts not disaggregated and inclusion of existing expense disclosures within the same tabular footnote disclosure. The update is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The update is to be adopted prospectively; however, retrospective application is permitted. The ASU will modify the Company's financial statement disclosures but is not expected to have a significant impact on its consolidated financial statements.
31
Table of Contents
LEAR CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
ASU 2025-06 (issued September 2025), "Targeted Improvements to the Accounting for Internal-Use Software." The ASU removes all references to project development stages and provides new guidance on evaluating whether the recognition threshold to capitalize software costs has been met. The update is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. The update may be adopted prospectively, retrospectively or using a modified transition approach. The ASU will not have a significant impact on the Company's consolidated financial statements.
ASU 2025-09 (issued November 2025), "Hedge Accounting Improvements." The ASU makes five targeted changes to the hedge accounting model including providing detailed guidance on how the analysis to demonstrate that individual transactions have a similar risk exposure is to be performed. The update is effective for fiscal years beginning after December 15, 2026, with early adoption permitted, and is to be adopted prospectively. The ASU will not have a significant impact on the Company's consolidated financial statements.
ASU 2025-10 (issued December 2025), "Accounting for Government Grants Received by Business Entities." The ASU leverages guidance in International Accounting Standard ("IAS") 20, "Accounting for Government Grants and Disclosure of Government Assistance," which is largely followed in the absence of current GAAP guidance. The update provides recognition, measurement and presentation guidance related to government grants depending on whether the grant is related to an asset or to income. The update also explicitly excludes certain items from government grant accounting not addressed by IAS 20. The update is effective for fiscal years beginning after December 15, 2028, with early adoption permitted. The update may be adopted using a modified prospective, modified retrospective or full retrospective approach. The ASU will not have a significant impact on the Company's consolidated financial statements.
The Company considers the applicability and impact of all ASUs issued by the Financial Accounting Standards Board. Other recently issued accounting pronouncements are not expected to have a significant impact or are not relevant to the Company's condensed consolidated financial statements.
32
Table of Contents
ITEM 2 — MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
EXECUTIVE OVERVIEW
Lear Corporation is a global automotive technology leader in Seating and E-Systems, enabling superior in-vehicle experiences for consumers around the world. We supply complete seat systems, key seat components, complete electrical distribution and connection systems, high-voltage power distribution products, including battery disconnect units ("BDUs"), and low-voltage power distribution products and electronic controllers to all of the world's major automotive manufacturers.
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 betterTM by providing technology for safer, smarter and more comfortable journeys, while adhering to our values — Be Inclusive. Be Inventive. Get Results the Right Way.
Our business is organized under two reporting segments: Seating and E-Systems. Each of these segments has a varied product and technology portfolio across a number of component categories. Further, we continuously evaluate this portfolio, aligning it with industry trends while balancing risk-adjusted returns, which allows us to offer value-added solutions to our customers.
Our Seating business consists of the design, development, engineering and manufacture of complete seat systems and key seat components. Our capabilities in operations and supply chain management enable synchronized assembly and just-in-time delivery of complex complete seat systems at high volumes to our customers. As the most vertically integrated global seat supplier, our key seat component product offerings include seat trim covers; surface materials such as leather and fabric; seat mechanisms; seat cushioning; headrests; and thermal comfort systems such as seat heating, ventilation, active cooling, pneumatic lumbar and massage products. All of these products are compatible with traditional internal combustion engine ("ICE") architectures and electrified powertrains, including the full range of hybrid, plug-in hybrid and battery electric architectures. Our thermal comfort systems are facilitated by our seat system, component and integration capabilities, together with our competencies in electronics, sensors, software and algorithms.
Our E-Systems business consists of the design, development, engineering and manufacture of complete electrical distribution and connection systems; high-voltage power distribution products, including BDUs; and low-voltage power distribution products and electronic controllers. These capabilities enable us to provide our customers with customizable solutions with optimized designs at competitive costs for both low-voltage and high-voltage vehicle architectures.
•Electrical distribution and connection systems utilize low-voltage and high-voltage wire and high-speed data cables to connect networks' electrical signals and manage electrical power within the vehicle for all types of powertrains – from traditional ICE architectures to the full range of electrified powertrains that require management of higher voltage and power. Key components of our electrical distribution and connection systems portfolio include wire harnesses, terminals and connectors, high-voltage battery connection systems and engineered components. High-voltage battery connection systems include intercell connect boards, bus bars and main battery interface connection systems.
•High-voltage power distribution products control the flow and distribution of high-voltage power throughout electric and hybrid vehicles and include BDUs, which control all electrical energy flowing into and out of high-voltage batteries in electrified vehicles.
•Low-voltage power distribution products and electronic controllers facilitate signal, data and/or power management within the vehicle and include the associated software required to facilitate these functions. Key components of this portfolio include zonal controllers, body domain control modules, and smart and passive power distribution modules. Our software offerings include embedded control, cybersecurity software and software to control hardware devices. Our customers traditionally have sourced our electronic hardware together with the software that we integrate and embed in it.
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.
Our businesses benefit globally from leveraging common operating standards and disciplines, including world-class product development and manufacturing processes, as well as common customer support and regional infrastructures, all of which
33
Table of Contents
contribute to our reputation for operational excellence. Our core capabilities are shared across component categories and include high-precision manufacturing and assembly with short lead times, complex, global supply chain management, global engineering and program management, the agility to establish and/or transfer production between facilities, and a unique, customer-focused culture. In select instances, we are able to manufacture both Seating and E-Systems components in the same facility. Our businesses also utilize proprietary, industry-specific processes and standards, leverage common low-cost engineering centers and share centralized operating support functions. These functions include logistics, as well as all major administrative functions, such as corporate finance, executive administration, health and safety, human resources, information technology and legal.
We continue to build on our reputation for operational excellence through organic and inorganic investments in automation and other advanced manufacturing technologies and the digital transformation of both our operations and administrative functions. These investments and transformation involve the integration of new technologies, such as artificial intelligence ("AI"), machine learning and advanced automation, into production facilities and business operations. These technologies enable smart and automated machines and smart factories to communicate, analyze and optimize products and processes, resulting in higher efficiency, quality and responsiveness to customers.
IDEA by LearTM - 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 LearTM 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 LearTM and ComfortMax Seat by LearTM seating systems. These strategic initiatives further advance our leadership in automotive technology and enable greater efficiency, superior quality and faster execution.
Through our products, processes, technology and strategic initiatives, we are well-positioned to capitalize on business growth opportunities. We are focused on profitably growing our businesses and have implemented a strategy designed to deliver industry-leading, long-term financial returns. This strategy is based on the following four pillars designed to drive growth and profitability in both of our business segments:
•Extend our market leadership position in Seating through differentiated product offerings and industry-leading vertical integration capabilities;
•Expand margins in E-Systems through a focused portfolio that leverages our strong operating capabilities and customer relationships;
•Build on our reputation for operational excellence through organic and inorganic investments, including partnerships, in automation and digital technologies; and
•Prioritize our employee and sustainability initiatives that drive business growth, cost reductions and improved workforce retention.
For further information related to our strategy, see Item 1, "Business," in our Annual Report on Form 10-K for the year ended December 31, 2025.
Industry Overview
We supply all vehicle segments of the automotive light vehicle original equipment market in every major automotive producing region in the world. Our sales are driven by the number of vehicles produced by the automotive manufacturers and our content per vehicle.
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.
34
Table of Contents
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.
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.
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.
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.
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.
We are monitoring the evolving trade landscape, as the actual impacts of tariffs and other trade restrictions on our business, financial condition and results of operations continue to be subject to a number of factors that are not yet known or are subject to change, including the effect such tariffs or restrictions may have on consumer demand and global automotive production volumes, the duration of such tariffs or trade restrictions, future changes in the amounts and scope of tariffs, the potential withdrawal of such tariffs or restrictions, in whole or in part, the scope and effective date of any exemptions or credits with respect to such tariffs, countermeasures that target countries may take in response to such tariffs, the impact such tariffs may have on our customers and our supply chain, and whether and to what extent such tariffs are impacted by judicial review. To mitigate the impact of tariffs, we have entered into contractual agreements with our customers to recover substantially all tariff costs incurred to date; however, no assurance can be provided that our customers will continue to provide such recovery. In addition, we have implemented certain actions, and continue to consider others, to counter the potential impact of such tariffs on our business, financial condition and results of operations, including, without limitation, participating in efforts to inform the U.S. and certain foreign administrations and legislatures of the impact of current trade and tariff policies on the automotive industry and evaluating our production footprint and alternatives in our supply chain. To date, our mitigation efforts have been successful; however, no assurance can be given that future government actions will not adversely impact our customers' production or undermine our mitigation efforts, which could in turn adversely impact our business, financial condition and results of operations.
35
Table of Contents
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.
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.
(1) The production change on a Lear sales-weighted basis is calculated using Lear's prior year regional sales mix. Management believes this provides a more meaningful comparison of our global revenue growth relative to global vehicle production.
For a description of risks related to tariffs and other trade restrictions, see Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2025.
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):
| Three Months Ended | |||||||||||||||||
April 4, 2026 (1) | March 29, 2025 (1) (2) | % Change | |||||||||||||||
| North America | 3,691.6 | 3,767.3 | (2) | % | |||||||||||||
| Europe and Africa | 4,422.6 | 4,471.1 | (1) | % | |||||||||||||
| Asia | 12,022.0 | 12,482.3 | (4) | % | |||||||||||||
| South America | 697.3 | 674.6 | 3 | % | |||||||||||||
| Other | 344.6 | 528.5 | (35) | % | |||||||||||||
| Global automotive industry production | 21,178.1 | 21,923.8 | (3) | % | |||||||||||||
(1) Production data based on S&P Global Mobility.
(2) Production data for 2025 has been updated from our first quarter 2025 Quarterly Report on Form 10-Q to reflect actual production levels.
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.
36
Table of Contents
Our percentage of consolidated net sales by region in the first three months of 2026 and 2025 is shown below:
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| North America | 38 | % | 40 | % | |||||||
| Europe and Africa | 40 | % | 37 | % | |||||||
| Asia | 19 | % | 20 | % | |||||||
| South America | 3 | % | 3 | % | |||||||
| Total | 100 | % | 100 | % | |||||||
Our ability to reduce the risks inherent in certain concentrations of our business, and thereby maintain our financial performance in the future, will depend, in part, on our ability to continue to diversify our sales on a customer, product, platform and geographic basis to better reflect the market overall.
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.
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.
Our customers typically require us to reduce our prices over the life of a vehicle model and, at the same time, assume significant responsibility for the design, development and engineering of our products. Our financial performance is largely dependent on our ability to offset these price reductions with product cost reductions through product design enhancements, supply chain management, manufacturing efficiencies and restructuring actions. We also seek to enhance our financial performance by investing in product development, design capabilities and new product initiatives that respond to and anticipate the needs of our customers and consumers. We continually evaluate operational and strategic alternatives to improve our business structure and align our business with the changing needs of our customers and major industry trends affecting our business.
Financial Measures
In evaluating our financial condition and operating performance, we focus primarily on earnings, operating margins, cash flows and return on invested capital. Our strategy includes expanding our business with new and existing customers globally through new products and our reputation for operational excellence and cost competitiveness. We have also increased our vertical integration capabilities globally, as well as expanded our component manufacturing capacity in Asia, Central America, Eastern Europe, Mexico and Northern Africa and our low-cost engineering capabilities in Asia, Eastern Europe and Northern Africa.
Our success in generating cash flow will depend, in part, on our ability to manage working capital effectively. Working capital can be significantly impacted by the timing of cash flows from sales, purchases, and tariff costs and recoveries. Historically, we generally have been successful in aligning our supplier payment terms with our customer payment terms. However, our ability to continue to do so may be impacted by adverse automotive industry conditions, including inconsistent production schedules
37
Table of Contents
due to supply shortages and lower consumer demand, changes to our customers' payment terms and the financial condition of our suppliers. In addition, our cash flow is impacted by our ability to manage our inventory and capital spending effectively. We utilize return on invested capital as a measure of the efficiency with which our assets generate earnings. Improvements in our return on invested capital will depend on our ability to maintain an appropriate asset base for our business and to increase productivity and operating efficiency.
Operational Restructuring
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.
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.
For further information, see Note 2, "Restructuring," to the condensed consolidated financial statements included in this Report.
Common Stock Share Repurchase Program and Quarterly Cash Dividends
We may implement share repurchases through a variety of methods, including, but not limited to, open market purchases, accelerated stock repurchase programs and structured repurchase transactions. The extent to which we may repurchase our outstanding common stock and the timing of such repurchases will depend upon our financial condition, results of operations, capital requirements, prevailing market conditions, alternative uses of capital and other factors. See "— Forward-Looking Statements" below.
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.
Our Board declared a quarterly cash dividend of $0.77 per share of common stock in the first quarter of 2026.
For further information related to our common stock share repurchase program and our quarterly cash dividends, see "— Liquidity and Capital Resources — Capitalization" below and Note 14, "Comprehensive Income and Equity," to the condensed consolidated financial statements included in this Report.
Other Matters
In the three months ended April 4, 2026 and March 29, 2025, we recognized net tax benefits of $17 million and $9 million, respectively, related to restructuring charges and various other items.
38
Table of Contents
Our results for the three months ended April 4, 2026 and March 29, 2025, reflect the following items (in millions):
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
Costs related to restructuring actions, including manufacturing inefficiencies and other charges of $1 million and $4 million in the three months ended April 4, 2026 and March 29, 2025, respectively | $ | 43 | $ | 88 | |||||||
| Loss related to disposal of a non-core business | — | 3 | |||||||||
| Disposal costs | — | 1 | |||||||||
| Recoveries related to Russian operations, net | — | (1) | |||||||||
| Foreign exchange losses due to foreign exchange rate volatility related to Russia | 1 | — | |||||||||
| Tax benefit, net | (17) | (9) | |||||||||
For further information regarding these items, see Note 2, "Restructuring," Note 11, "Other Expense, Net," and Note 12, "Income Taxes," to the condensed consolidated financial statements included in this Report.
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.
39
Table of Contents
RESULTS OF OPERATIONS
A summary of our operating results in millions of dollars and as a percentage of net sales is shown below:
| Three Months Ended | |||||||||||||||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||||||||||||||
| Net sales | |||||||||||||||||||||||
| Seating | $ | 4,404.4 | 75.6 | % | $ | 4,151.1 | 74.7 | % | |||||||||||||||
| E-Systems | 1,418.4 | 24.4 | 1,409.2 | 25.3 | |||||||||||||||||||
| Net sales | 5,822.8 | 100.0 | 5,560.3 | 100.0 | |||||||||||||||||||
| Cost of sales | 5,372.5 | 92.3 | 5,201.1 | 93.5 | |||||||||||||||||||
| Gross profit | 450.3 | 7.7 | 359.2 | 6.5 | |||||||||||||||||||
| Selling, general and administrative expenses | 190.3 | 3.3 | 172.4 | 3.1 | |||||||||||||||||||
| Amortization of intangible assets | 5.0 | 0.1 | 5.2 | 0.1 | |||||||||||||||||||
| Interest expense, net | 25.6 | 0.4 | 25.8 | 0.4 | |||||||||||||||||||
| Other expense, net | 12.7 | 0.2 | 20.4 | 0.4 | |||||||||||||||||||
| Provision for income taxes | 38.4 | 0.7 | 45.2 | 0.8 | |||||||||||||||||||
| Equity in net income of affiliates | (14.4) | (0.3) | (12.3) | (0.2) | |||||||||||||||||||
| Net income attributable to noncontrolling interests | 20.4 | 0.3 | 21.8 | 0.4 | |||||||||||||||||||
| Net income attributable to Lear | $ | 172.3 | 3.0 | % | $ | 80.7 | 1.5 | % | |||||||||||||||
Three Months Ended April 4, 2026 vs. Three Months Ended March 29, 2025
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.
| (in millions) | Cost of Sales | |||||||
| First quarter 2025 | $ | 5,201.1 | ||||||
| Material cost | 126.3 | |||||||
| Labor cost | 92.7 | |||||||
| Depreciation | 2.9 | |||||||
| Other | (50.5) | |||||||
| First quarter 2026 | $ | 5,372.5 | ||||||
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.
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.
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.
Amortization of intangible assets was $5 million in the first quarters of 2026 and 2025.
Interest expense, net was $26 million in the first quarters of 2026 and 2025.
40
Table of Contents
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.
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.
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.
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.
Equity in net income of affiliates was $14 million in the first quarter of 2026, as compared to $12 million in the first quarter of 2025.
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.
Reportable Operating Segments
We have two reportable operating segments: Seating and E-Systems. For a description of our reportable operating segments, see "Executive Overview" above.
The financial information presented below is for our two reportable operating segments and our other category for the periods presented. The other category includes unallocated costs related to corporate headquarters, regional headquarters and the elimination of intercompany activities, none of which meets the requirements for being classified as an operating segment. Corporate and regional headquarters costs include various support functions, such as information technology, corporate finance, legal, executive administration and human resources. Financial measures regarding each segment's pretax income before equity in net income of affiliates, interest expense, net and other expense, net ("segment earnings") and segment earnings divided by net sales ("margin") are not measures of performance under accounting principles generally accepted in the United States ("GAAP"). Segment earnings and the related margin are used by management to evaluate the performance of our reportable operating segments. Segment earnings should not be considered in isolation or as a substitute for net income attributable to Lear, net cash provided by operating activities or other income statement or cash flow statement data prepared in accordance with GAAP or as measures of profitability or liquidity. In addition, segment earnings, as we determine it, may not be comparable to related or similarly titled measures reported by other companies.
For a reconciliation of consolidated segment earnings to consolidated income before provision for income taxes and equity in net income of affiliates, see Note 16, "Segment Reporting," to the condensed consolidated financial statements included in this Report.
Seating
A summary of the financial measures for our Seating segment is shown below (dollar amounts in millions):
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Net sales | $ | 4,404.4 | $ | 4,151.1 | |||||||
Segment earnings (1) | 277.4 | 215.7 | |||||||||
| Margin | 6.3 | % | 5.2 | % | |||||||
(1) See definition above.
41
Table of Contents
Seating net sales were $4.4 billion in the first quarter of 2026, as compared to $4.2 billion in the first quarter of 2025, an increase of $253 million or 6%. The impact of foreign exchange rate fluctuations, higher production volumes on Lear platforms and new business increased net sales by $194 million, $128 million and $59 million, respectively. These increases were partially offset by the reversal of certain 2025 tariff recoveries and the impact of selling price reductions.
Segment earnings, including restructuring costs, and the related margin on net sales were $277 million and 6.3% in the first quarter of 2026, as compared to $216 million and 5.2% in the first quarter of 2025. Higher production volumes on Lear platforms and the impact of foreign exchange rate fluctuations increased segment earnings by $24 million. The impact of favorable operating performance, including the benefit of operational restructuring actions, and lower restructuring costs was partially offset by selling price reductions.
E-Systems
A summary of financial measures for our E-Systems segment is shown below (dollar amounts in millions):
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Net sales | $ | 1,418.4 | $ | 1,409.2 | |||||||
Segment earnings (1) | 73.3 | 55.5 | |||||||||
| Margin | 5.2 | % | 3.9 | % | |||||||
(1) See definition above.
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.
Segment earnings, including restructuring costs, and the related margin on net sales were $73 million and 5.2% in the first quarter of 2026, as compared to $56 million and 3.9% in the first quarter of 2025. Higher production volumes on Lear platforms and the impact of foreign exchange rate fluctuations increased segment earnings by $18 million. The impact of favorable operating performance, including the benefit of operational restructuring actions, and lower restructuring costs was offset by selling price reductions.
A summary of financial measures for our other category, which is not an operating segment, is shown below (dollar amounts in millions):
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Net sales | $ | — | $ | — | |||||||
Segment earnings (1) | (95.7) | (89.6) | |||||||||
| Margin | N/A | N/A | |||||||||
(1) See definition above.
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.
LIQUIDITY AND CAPITAL RESOURCES
Our primary liquidity needs are to fund general business requirements, including working capital requirements, capital expenditures, operational restructuring actions and debt service requirements. Our principal sources of liquidity are cash flows from operating activities, borrowings under available credit facilities and our existing cash balance.
Cash Provided by Subsidiaries
A substantial portion of our operating income is generated by our subsidiaries. As a result, we are dependent on the earnings and cash flows of and the combination of dividends, royalties, intercompany loan repayments and other distributions and advances from our subsidiaries to provide the funds necessary to meet our obligations.
42
Table of Contents
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.
For further information related to potential dividends from our non-U.S. subsidiaries, see Note 7, "Income Taxes," to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.
Adequacy of Liquidity Sources
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.
Our future financial results and our ability to continue to meet our liquidity needs are subject to, and will be affected by, cash flows from operations, as well as restructuring activities, automotive industry conditions, the financial condition of our customers and suppliers, supply chain disruptions and other related factors. Additionally, an economic downturn or further reduction in production levels could negatively impact our financial condition.
For further discussion of the risks and uncertainties affecting our cash flows from operations and our overall liquidity, see "— Executive Overview" above, "— Forward-Looking Statements" below and Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2025.
Cash Flows
A summary of net cash provided by (used in) operating activities is shown below (in millions):
| Three Months Ended | |||||||||||||||||
| April 4, 2026 | March 29, 2025 | Increase (Decrease) in Cash Flow | |||||||||||||||
| Consolidated net income and depreciation and amortization | $ | 343 | $ | 250 | $ | 93 | |||||||||||
| Net change in working capital items: | |||||||||||||||||
| Accounts receivable | (292) | (566) | 274 | ||||||||||||||
| Inventories | (65) | (48) | (17) | ||||||||||||||
| Accounts payable | 369 | 324 | 45 | ||||||||||||||
| Accrued liabilities and other | (221) | (103) | (118) | ||||||||||||||
| Net change in working capital items | (209) | (393) | 184 | ||||||||||||||
| Other | (36) | 15 | (51) | ||||||||||||||
| Net cash provided by (used in) operating activities | $ | 98 | $ | (128) | $ | 226 | |||||||||||
| Net cash used in investing activities | $ | (119) | $ | (67) | $ | (52) | |||||||||||
| Net cash used in financing activities | $ | (138) | $ | (84) | $ | (54) | |||||||||||
Operating Activities
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.
43
Table of Contents
Investing Activities
Net cash used in investing activities was $119 million in the first three months of 2026, as compared to $67 million in the first three months of 2025. In the first three months of 2025, we received proceeds of $36 million related to the sale of a non-core business in the Company's Seating segment. Capital spending was $125 million in the first three months of 2026, as compared to $104 million in the first three months of 2025. Capital spending is estimated to be $660 million in 2026.
Financing Activities
Net cash used in financing activities was $138 million in the first three months of 2026, as compared to $84 million in the first three months of 2025. In the first three months of 2026, we paid $75 million for repurchases of our common stock and $43 million in dividends to Lear shareholders. In the first three months of 2025, we paid $25 million for repurchases of our common stock, $43 million in dividends to Lear shareholders and $6 million in dividends to noncontrolling interest holders.
Capitalization
Short-Term Borrowings
We utilize uncommitted lines of credit as needed for our short-term working capital fluctuations. As of April 4, 2026 and December 31, 2025, we had lines of credit from banks totaling $378 million and $383 million, respectively. As of April 4, 2026 and December 31, 2025, we had short-term debt balances outstanding related to draws on our lines of credit of $28 million.
Senior Notes and Credit Agreement
For further information related to our senior notes and credit agreement, see Note 7, "Debt," to the condensed consolidated financial statements included in this Report and Note 5, "Debt," to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.
Common Stock Share Repurchase Program and Quarterly Cash Dividends
For information related to our common stock share repurchase program and dividends, see "— Executive Overview — Share Repurchase Program and Quarterly Cash Dividends" above, Note 14, "Comprehensive Income and Equity," to the condensed consolidated financial statements included in this Report and Note 10, "Capital Stock, Accumulated Other Comprehensive Loss and Equity," to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.
Commodity Prices
Raw material, energy and commodity 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. The majority of the steel used in our products is comprised of fabricated components that are integrated into a seat system, such as seat frames, recliner mechanisms, seat tracks and other mechanical components. Therefore, our exposure to changes in steel prices is primarily indirect, through purchased components. Additionally, approximately 85% of our copper purchases and a significant portion of our 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 and commodity 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. However, no assurances can be provided that these costs will continue to be offset in the future. If these costs increase further, it could have an adverse impact on our operating results in the foreseeable future.
See "— Forward-Looking Statements" below and Item 1A, "Risk Factors — Increases in the costs and restrictions on the availability of raw materials, energy, commodities, product components and labor could adversely affect our financial performance," in our Annual Report on Form 10-K for the year ended December 31, 2025.
44
Table of Contents
For further information related to the financial instruments described above, see Note 17, "Financial Instruments," to the condensed consolidated financial statements included in this Report.
OTHER MATTERS
Legal and Environmental Matters
We are involved from time to time in various legal proceedings and claims, including, without limitation, commercial and contractual disputes, product liability claims, and environmental and other matters. As of April 4, 2026, we had recorded reserves for pending legal disputes, including commercial and contractual disputes, product liability claims and other legal matters of $14 million. In addition, as of April 4, 2026, we had recorded reserves for warranty and recall matters of $38 million and environmental matters of $5 million. We carry insurance for certain legal matters, including product liability claims, but such coverage may be limited. We do not maintain insurance for warranty and recall matters. Although these reserves were determined in accordance with GAAP, the ultimate outcomes of these matters are inherently uncertain, and actual results may differ significantly from current estimates. For a description of risks related to various legal proceedings and claims, see Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2025. For a more complete description of our outstanding material legal proceedings, see Note 15, "Legal and Other Contingencies," to the condensed consolidated financial statements included in this Report.
Critical Accounting Estimates
Certain of our accounting policies require management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are based on our historical experience, the terms of existing contracts, our evaluation of trends in the industry, information provided by our customers and suppliers and information available from other outside sources, as appropriate. However, these estimates and assumptions are subject to an inherent degree of uncertainty. Accordingly, actual results in these areas may differ significantly from our estimates.
For a discussion of our significant accounting policies and critical accounting estimates, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations — Other Matters — Critical Accounting Estimates," and Note 2, "Summary of Significant Accounting Policies," to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes in our significant accounting policies or critical accounting estimates during the first three months of 2026.
Recently Issued Accounting Pronouncements
For information on the impact of recently issued accounting pronouncements, see Note 18, "Accounting Pronouncements," to the condensed consolidated financial statements included in this Report.
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf. The words "may," "designed to," "outlook," "believes," "should," "anticipates," "plans," "expects," "intends," "estimates," "forecasts" and similar expressions identify certain of these forward-looking statements. We also may provide forward-looking statements in oral statements or other written materials released to the public. All such forward-looking statements contained or incorporated in this Report or in any other public statements which address operating performance, events or developments that we expect or anticipate may occur in the future, including, without limitation, statements related to business opportunities, awarded sales contracts, sales backlog and ongoing commercial arrangements, or statements expressing views about future operating results, are forward-looking statements. Actual results may differ materially from any or all forward-looking statements made by us. Important factors, risks and uncertainties that may cause actual results to differ materially from anticipated results include, but are not limited to:
•general economic conditions in the markets in which we operate, including changes in interest rates or currency exchange rates;
•the impact of administrative policy, including trade policies and tariffs, in the United States and related actions by countries in which we do business;
•changes in actual industry vehicle production levels from our current estimates;
•fluctuations in the production of vehicles or the loss of business with respect to, or the lack of commercial success of, a vehicle model for which we are a significant supplier;
•the outcome of customer negotiations and the impact of customer-imposed price reductions;
45
Table of Contents
•increases in the costs and restrictions on the availability of raw materials, energy, commodities, product components and labor and our ability to mitigate such costs and insufficient availability;
•disruptions in relationships with our customers and suppliers;
•the financial condition of and adverse developments affecting our customers and suppliers;
•risks associated with conducting business in foreign countries, including the risk of war (including the war with Iran) or other geopolitical conflicts;
•currency controls and the ability to economically hedge currencies;
•global sovereign fiscal matters and creditworthiness, including potential defaults and the related impacts on economic activity, including the possible effects on credit markets, currency values, monetary unions, international treaties and fiscal policies;
•competitive conditions impacting us and our key customers and suppliers;
•labor disputes, including disruptions, involving us or our significant customers or suppliers or that otherwise affect us or our significant customers or suppliers;
•the consequences of violations of law by our employees, agents or business partners, including violations related to anti-bribery, competition, export and import, trade sanctions, data privacy, environmental, human rights and other laws;
•the operational and financial success of our joint ventures;
•our ability to attract, develop, engage and retain qualified employees;
•our ability to respond to the evolution of the global transportation industry;
•the outcome of an increased emphasis on global climate change and other sustainability matters by stakeholders;
•the impact of global climate change;
•the impact of pandemics, epidemics, disease outbreaks and other public health crises on our business;
•the impact and timing of program launch costs and our management of new program launches;
•the impact of delayed program launches due to customer planning decisions;
•changes in discount rates and the actual return on pension assets;
•impairment charges initiated by adverse industry or market developments;
•our ability to execute our strategic objectives;
•limitations imposed by our existing indebtedness and our ability to access capital markets on commercially reasonable terms;
•disruptions to our information technology systems, or those of our customers or suppliers, including those related to cybersecurity;
•increases in our warranty, product liability or recall costs;
•the outcome of legal or regulatory proceedings to which we are or may become a party;
•the impact of pending legislation and regulations or changes in existing federal, state, local or foreign laws or regulations;
•the impact of regulations on our foreign operations;
•costs associated with compliance with environmental laws and regulations;
•developments or assertions by or against us relating to intellectual property rights;
•the impact of changes in our effective tax rate, the adoption of new tax legislation or exposure to additional income tax liabilities on our profitability; and
•other risks, described in Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2025, and in our other Securities and Exchange Commission filings.
The forward-looking statements in this Report are made as of the date hereof, and we do not assume any obligation to update, amend or clarify them to reflect events, new information or circumstances occurring after the date hereof.
46
Table of Contents
ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
MARKET RISK SENSITIVITY
In the normal course of business, we are exposed to market risks associated with fluctuations in foreign exchange rates, interest rates and commodity prices. We manage a portion of these risks through the use of derivative financial instruments in accordance with our policies. We enter into all hedging transactions for periods consistent with the underlying exposures. We do not enter into derivative instruments for trading purposes.
Foreign Exchange
Operating results may be impacted by our buying, selling and financing in currencies other than the functional currency of our operating companies ("transactional exposure"). Currently, our most significant foreign currency transactional exposures relate to the Mexican peso, various European currencies, the Moroccan dirham, the Chinese renminbi and the Honduran lempira. We may mitigate a portion of this risk by entering into forward foreign exchange, futures and option contracts. The foreign exchange contracts are executed with banks that we believe are creditworthy.
A summary of the notional amount and estimated aggregate fair value of our outstanding foreign exchange contracts is shown below (in millions):
| April 4, 2026 | December 31, 2025 | ||||||||||
Notional amount (contract maturities < 36 months) | $ | 3,286 | $ | 3,069 | |||||||
| Fair value | 201 | 202 | |||||||||
As of April 4, 2026 and December 31, 2025, the potential change in fair value of our outstanding foreign exchange contracts assuming a hypothetical 10% adverse move in foreign currency exchange rates would result in a loss of approximately $277 million and $292 million, respectively.
As of April 4, 2026 and December 31, 2025, the potential change in fair value of our outstanding foreign exchange contracts assuming a hypothetical 10% favorable move in foreign currency exchange rates would result in a gain of approximately $332 million and $351 million, respectively.
As foreign currency exchange rates typically do not all move in the same direction, the estimated impact from changes in foreign currency exchange rates on the net fair value of the Company's foreign exchange contracts may be overstated. Gains and losses related to foreign exchange contracts are deferred where appropriate and included in the measurement of the foreign currency transaction subject to the hedge. Gains and losses related to foreign exchange contracts are generally offset by the direct effects of foreign currency exchange rate movements on the underlying transactions.
In addition to the transactional exposure described above, our operating results are impacted by the translation of our foreign operating income into U.S. dollars ("translational exposure"). In 2025, net sales outside of the United States accounted for 77% of our consolidated net sales, although certain non-U.S. sales are U.S. dollar denominated. We do not enter into foreign exchange contracts to mitigate our translational exposure.
47
Table of Contents
ITEM 4 — CONTROLS AND PROCEDURES
(a)Disclosure Controls and Procedures
The Company has evaluated, under the supervision and with the participation of the Company's management, including the Company's President and Chief Executive Officer along with the Company's Senior Vice President and Chief Financial Officer, the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. The Company's disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Based on the evaluation described above, the Company's President and Chief Executive Officer along with the Company's Senior Vice President and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective to provide reasonable assurance that the desired control objectives were achieved as of the end of the period covered by this Report.
(b)Changes in Internal Control over Financial Reporting
There was no change in the Company's internal control over financial reporting that occurred during the fiscal quarter ended April 4, 2026, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
48
Table of Contents
PART II — OTHER INFORMATION
ITEM 1 — LEGAL PROCEEDINGS
We are involved from time to time in various legal proceedings and claims, including, without limitation, commercial or contractual disputes, product liability claims, and environmental and other matters. For a description of risks related to various legal proceedings and claims, see Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2025. For a description of our outstanding material legal proceedings, see Note 15, "Legal and Other Contingencies," to the condensed consolidated financial statements included in this Report.
ITEM 1A — RISK FACTORS
For a description of our risk factors, see Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2025.
ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
As discussed in Part I — Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations — Executive Overview — Share Repurchase Program and Quarterly Cash Dividends," and Note 14, "Comprehensive Income and Equity," to the condensed consolidated financial statements included in this Report, we have a remaining repurchase authorization of $699.7 million under our ongoing common stock share repurchase program.
A summary of the shares of our common stock repurchased during the quarter ended April 4, 2026, is shown below:
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions) | ||||||||||||||||||||||
| January 1, 2026 through January 31, 2026 | — | $— | — | $ | 774.7 | |||||||||||||||||||||
| February 1, 2026 through February 28, 2026 | — | $— | — | $ | 774.7 | |||||||||||||||||||||
| March 1, 2026 through April 4, 2026 | 630,804 | $118.91 | 630,804 | $ | 699.7 | |||||||||||||||||||||
| Total | 630,804 | $118.91 | 630,804 | $ | 699.7 | |||||||||||||||||||||
ITEM 5 — OTHER INFORMATION
RULE 10b5-1 TRADING PLAN
Insider Adoption or Termination of Trading Arrangements
During the three months ended April 4, 2026, no director or officer of the Company adopted or terminated
On March 2, 2026 , Jason M. Cardew , the Company's Senior Vice President and Chief Financial Officer , adopted a pre-arranged trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Securities Act of 1934, as amended. The trading plan provides for the sale of up to 12,000 shares of the Company's common stock during a period ending on December 31, 2026 , subject to the terms and conditions of the plan.
49
Table of Contents
ITEM 6 — EXHIBITS
Exhibit Index
| Exhibit Number | Exhibit Name | ||||||||||
| ** | 10.1 | * | Form of Restricted Stock Unit Terms and Conditions under the Lear Corporation 2019 Long-Term Stock Incentive Plan, as amended and restated on May 14, 2023. | ||||||||
| ** | 10.2 | * | Form of Performance Share Terms and Conditions under the Lear Corporation 2019 Long-Term Stock Incentive Plan, as amended and restated on May 14, 2023. | ||||||||
| ** | 31.1 | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer. | |||||||||
| ** | 31.2 | Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer. | |||||||||
| *** | 32.1 | Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||||
| *** | 32.2 | Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||||
| **** | 101.INS | XBRL Instance Document. | |||||||||
| ***** | 101.SCH | XBRL Taxonomy Extension Schema Document. | |||||||||
| ***** | 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||||
| ***** | 101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |||||||||
| ***** | 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||||
| ***** | 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |||||||||
| **** | 104 | Cover Page Interactive Data File. | |||||||||
| * | Compensatory plan or arrangement. | ||||||||||
| ** | Filed herewith. | ||||||||||
| *** | Furnished herewith. | ||||||||||
| **** | The XBRL Instance Document and Cover Page Interactive Data File do not appear in the Interactive Data File because their XBRL tags are embedded within the Inline XBRL document. | ||||||||||
| ***** | Submitted electronically with the Report. | ||||||||||
50
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
| LEAR CORPORATION | |||||||||||
| Dated: | May 1, 2026 | By: | /s/ Raymond E. Scott | ||||||||
| Raymond E. Scott | |||||||||||
| President and Chief Executive Officer | |||||||||||
| By: | /s/ Jason M. Cardew | ||||||||||
| Jason M. Cardew | |||||||||||
| Senior Vice President and Chief Financial Officer | |||||||||||
51
FAQ
How did Lear (LEA) perform financially in the first quarter of 2026?
Lear posted higher first-quarter 2026 results, with net sales of $5.82 billion and net income attributable to Lear of $172.3 million. Basic EPS reached $3.38, up from $1.50 a year earlier, reflecting stronger profitability and a lower effective tax rate.
What were Lear (LEA)'s cash flow and cash balance for Q1 2026?
Lear generated positive operating cash flow of $98.1 million in Q1 2026, compared with a prior-year cash outflow. Cash, cash equivalents and restricted cash totaled $884.5 million at quarter end, providing liquidity to fund operations, restructuring and shareholder returns.
What restructuring costs did Lear (LEA) record in the first quarter of 2026?
Lear recorded $42.1 million of restructuring charges in Q1 2026, primarily for employee termination benefits, asset impairments and related costs. These charges were mainly recognized in cost of sales and affected both the Seating and E-Systems segments as the company optimizes its footprint.
How did Lear (LEA)'s Seating and E-Systems segments contribute to Q1 2026 revenue?
In Q1 2026, the Seating segment generated $4.40 billion in external revenue, while E-Systems produced $1.42 billion. Both segments serve major global automakers, with Seating providing complete seat systems and E-Systems supplying electrical distribution, power products and electronic controllers.
What was Lear (LEA)'s effective tax rate for the first quarter of 2026?
Lear reported an effective tax rate of 17.7% for Q1 2026 on pretax income of $216.7 million. This compares with 33.4% in the prior-year quarter and reflects the mix of earnings across tax jurisdictions and discrete tax benefits related to restructuring and other items.