What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-13 compared with 2025-02-14 · 157 added, 129 removed, 417 unchanged (41% of the section changed)

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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"), low-voltage power distribution products and electronic controllers to all of the world's major automotive manufacturers.

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 include continuing to deliver profitable growth 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 consistently returning capital to our shareholders.

These 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.

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seat mechanisms;

seat cushioning;

and thermal comfort systems such as seat heating, ventilation, active cooling, pneumatic lumbar and massage products.

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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, high-speed data cables and flat wiring to connect networks and 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.

• 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 connection systems.

High-voltage power distribution products control the flow and distribution of high-voltage power throughout electrified vehicles and include BDUs which control all electrical energy flowing into and out of high-voltage batteries in electrified vehicles.

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 low-voltage and high-voltage power distribution modules.

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.

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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 quickly, and a unique, customer-focused culture.

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 health and safety, logistics, quality, supply chain management and all major administrative functions, such as corporate finance, executive administration, human resources, information technology and legal.

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.

It involves the integration of new technologies, such as Industrial Internet of Things (IIoT), cloud computing, artificial intelligence (AI), machine learning and advanced automation, into production facilities and business operations.

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 Lear TM - Innovative.

- reflects our commitment to continue to strengthen our competitive position in both of our business segments and to enhance the efficiency of our administrative functions.

IDEA by Lear TM supports our strategy to drive growth and improve profitability through the development of innovative products and the utilization of advanced technologies and process automation that increase efficiency and extend our leadership position in operational excellence.

We are leveraging our internal capabilities through strategic partnerships (e.g., Palantir Technologies, Inc.

("Palantir")) and acquisitions to rapidly develop and deploy automation and AI solutions.

Our strategic acquisitions of ASI Automation, InTouch Automation, StoneShield Engineering, Thagora Technology SRL and WIP Industrial Automation are further enhancing our automation system integration expertise.

Our new facility in Rochester Hills, Michigan is an industry first site, capable of fully automated manufacturing of ComfortFlex by Lear TM and ComfortMax Seat by Lear TM 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.

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• Extend our market leadership position in Seating with priceable features, including modularity and thermal comfort systems;

• Transform our E-Systems business through accelerated growth in connection systems and vehicle architecture evolution and electrification;

• Build on our reputation for operational excellence through organic and inorganic investments in automation and digital technologies;

• Prioritize people and the planet through our sustainability initiatives to drive business growth, cost reductions and improved employee retention.

IDEA by Lear - Innovative.

- supports our strategy to drive growth and improve profitability.

IDEA reflects our commitment to continue to strengthen our competitive position in both of our business segments through the development of innovative products and the utilization of advanced technologies and process automation that improve our profitability through increased efficiency and extend our leadership position in operational excellence.

For further information related to our strategy, see Part 1 — Item 1, "Business — Industry" and "— Strategy."

• 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;

• Prioritize our employee and s ustainability initiatives that drive business growth, cost reductions and improved workforce retention.

For further information related to our strategy, see Part 1 — Item 1, "Business — Industry" and "— Strategy," included in this Report.

Industry Overview

We supply all vehicle segments of the automotive light vehicle original equipment market in every major automotive producing region in the world.

W e 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.

Although 2023 industry production returned to pre-pandemic levels, 2024 industry production remained approximately 6% below 2017 peak levels (based on January 2025 S&P Global Mobility projections), and 2024 industry production in North America and Europe, our two largest markets, remained approximately 9% and 24% , respectively, below prior peak levels (based on January 2025 S&P Global Mobility projections).

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 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.

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 increases in tariffs, a customer cybersecurity incident, 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.

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This will allow us to enhance operational efficiencies, improve the utilization of existing facilities and equipment to reduce future expenditures, and streamline administrative functions.

For a description of risks related to macroeconomic events, see Item 1A, "Risk Factors."

Global automotive industry production volumes in 2024, as compared to 2023, are shown below (in thousands of units):

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 China, Mexico and Canada, 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 operating performance in 2025, the policies relating to these tariffs continue 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.

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 and restrictions may have on consumer demand and global automotive production volumes, the duration of such tariffs and restrictions, future changes in the amounts and scope of tariffs, the potential withdrawal of such tariffs and restrictions in whole or in part, the scope and effective date of any exemptions to such tariffs or restrictions, any modification to existing exemptions to such tariffs or restrictions, countermeasures that target countries may take in response to such tariffs and restrictions, the impact such tariffs and restrictions may have on our customers and our supply chain, and whether and to what extent such tariffs are impacted by judicial review.

We have entered into contractual agreements with our customers to recover substantially all tariff costs incurred to date and 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, but we cannot provide any assurance 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.

In addition to potential increases in customs duties and 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, including, without limitation, the Dominican Republic-Central America-United States Free Trade Agreement.

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 10% and 24%, respectively, below prior peak levels.

Industry production in the second half of 2025 was impacted by production disruptions at Jaguar Land Rover due to a cybersecurity incident (the "JLR production disruption").

Industry production in 2025 increased 4% as compared to 2024 (based on January 2026 S&P Global Mobility projections).

On a Lear sales-weighted basis(1), industry production in 2025 increased 1% as compared to 2024.

(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 macroeconomic events and tariffs, sanctions, export controls and other trade restrictions, see Part I — Item 1A, "Risk Factors," included in this Report.

Global automotive industry production volumes in certain key regions for 2025, as compared to 2024, are shown below (in thousands of units):

North America 15,289.7 15,449.6 (1 %)

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Other 1,936.5 1,791.4 8 %

Global light vehicle production 88,133.9 89,073.7 (1 %)

Global automotive industry production 91,602.2 88,323.1 4 %

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

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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 credit, the availability and cost of raw materials and critical components, and logistics issues, as well as vehicle affordability and consumer preferences regarding vehicle powertrains (including preferences regarding hybrid and electric 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, 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 assurance 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 be successful.

Our sales and production may be further affected by new entrants to the industry, including domestic automakers in certain regions and non-traditional automakers, and the restructuring actions, including facility closures, of our customers and suppliers.

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.

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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.

Our percentage of consolidated net sales by region in 2024 and 2023 is shown below:

Our percentage of consolidated net sales by region for 2025 and 2024 is shown below:

North America 42 % 42 %

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The automotive industry, and our business, continue to be shaped by the broad trend of electrification.

Although the adoption of electrified vehicles has been slower than anticipated in certain regions, demand for, and regulatory developments related to, improved energy efficiency and sustainability (e.g., government mandates related to fuel economy and carbon emissions) remain significant drivers of this trend.

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 64.1% in 2025, as compared to 64.2% in 2024 and 65.2% in 2023.

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Our primary commodity cost exposures relate to steel, copper and leather.

We have developed and implemented strategies to mitigate the impact of increases in such costs through 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.

Further, 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.

Certain of these strategies also may limit our opportunities in a declining 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, have offset a significant portion of the adverse impact.

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 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 or availability is restricted, it could have an adverse impact on our operating results in the foreseeable future.

See Part I — 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" and "Risk Factors — International trade policies, including protectionist trade policies, such as tariffs and sanctions, could adversely affect our financial performance," as well as "— Forward-Looking Statements" below.

If these costs increase further or availability is restricted, it could have an adverse impact on our operating results in the foreseeable future.

See Part I — 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" and "Risk Factors — International trade policies, such as tariffs, sanctions, export controls and other trade restrictions, could adversely affect our financial performance," included in this Report, as well as "— Forward-Looking Statements" below.

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.

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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, including those aligned with the trend toward electrification.

We also have 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 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 and purchases.

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.

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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.

In February 2025, we completed the acquisition of StoneShield Engineering ("StoneShield"), a privately held system integrator based in Castelo Branco, Portugal.

StoneShield specializes in the design and development of automation technology for the wire harness industry with expertise in robotics, automated taping applications and high voltage harness assembly.

Our acquisition of StoneShield has accelerated the automation of our production processes throughout our electrical distribution business, further improving our efficiency and operational excellence.

In July 2024, we completed the acquisition of WIP Industrial Automation ("WIP"), a privately held company based in Valladolid, Spain.

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Our acquisition of WIP further strengthens our robotics and AI-based capabilities, which are important for production efficiency, quality and safety in a modern manufacturing environment.

In April 2023, we completed the acquisition of I.G.

Bauerhin ("IGB"), a privately held supplier of automotive seat heating, ventilation and active cooling, steering wheel heating, seat sensors and electronic control modules, headquartered in Grundau-Rothenbergen, Germany.

IGB has more than 4,600 employees at nine manufacturing plants in seven countries.

The acquisition furthers our comprehensive strategy to develop and integrate a complete portfolio of thermal comfort systems for automotive seating.

IGB provides active cooling, as well as additional scale to our seat heating and ventilation capabilities and complements the lumbar and massage capabilities obtained with our acquisition of Kongsberg Automotive's Interior Comfort Systems business unit in February 2022.

Further, the vertical integration opportunities provided by this acquisition help support our goal of achieving global market share gains in seat systems.

We paid approximately $175 million, net of cash acquired, in connection with the acquisition.

On May 1, 2023, we borrowed $150 million under our delayed-draw term loan facility (the

"Term Loan") to finance, in part, the acquisition of IGB.

For further information, see Note 3, "Acquisition," to the consolidated financial statements included in this Report.

Operational Restructuring

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Financing Transactions

In May 2023, we borrowed $150 million under our Term Loan to finance, in part, the acquisition of IGB.

In December 2024, we made a principal payment of $50 million under the Term Loan.

In November 2023, we extended the maturity date of our revolving credit facility by one year to October 28, 2027.

For further information related to our acquisition of IGB, see Note 3, "Acquisition," to the consolidated financial statements included in this Report.

For further information related to our Term Loan and our revolving credit facility, see "— Liquidity and Capital Resources — Capitalization — Credit Agreement" and "— Term Loan" below and Note 6, "Debt," to the consolidated financial statements included in this Report.

In June 2025, we amended our unsecured delayed-draw term loan facility (the "Term Loan") to extend the maturity date to September 30, 2027, and reduce the pricing across the grid.

As of December 31, 2025, we had $50 million outstanding under the Term Loan.

In July 2025, we amended and restated our unsecured credit agreement (the "Credit Agreement") to extend the maturity date to July 24, 2030.

The Credit Agreement consists of a $2.0 billion revolving credit facility (the "Revolving Credit Facility").

For further information related to our Credit Agreement and Term Loan, see "— Liquidity and Capital Resources — Capitalization — Credit Agreement" and "— Term Loan" below and Note 5, "Debt," to the consolidated financial statements included in this Report.

Common Stock Share Repurchase Program and Quarterly Cash Dividends

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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, including an increase in our share repurchase authorization to $1.5 billion on February 16, 2024.

In 2024, we repurchased $400 million of shares.

As of December 31, 2024, we have a remaining repurchase authorization of $1.1 billion, which expires on December 31, 2026.

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 December 31, 2025, we have repurchased, in aggregate, $5.9 billion of our outstanding common stock, at an average price of $95.01 per share, excluding commissions and related fees, and have a remaining repurchase authorization of $775 million, which expires on December 31, 2026.

In 2025, we repurchased $325 million of our outstanding common stock.

In 2025, 2024 and 2023, our Board declared a quarterly cash dividend of $0.77 per share of common stock in all quarters.

For further information related to our common stock share repurchase program and our quarterly cash dividends, see Item 5, "Market for the Company's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities," "— Liquidity and Capital Resources — Capitalization" below and Note 11, "Capital Stock, Accumulated Other Comprehensive Loss and Equity," to the consolidated financial statements included in this Report.

For further information related to our Repurchase Program and our quarterly cash dividends, see Item 5, "Market for the Company's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities," included in this Report, "— Liquidity and Capital Resources — Capitalization" below and Note 10, "Capital Stock, Accumulated Other Comprehensive Loss and Equity," to the consolidated financial statements included in this Report.

Other Matters

In 2024, we recognized net tax benefits of $25 million related to restructuring charges, the release of tax reserves and audit settlements at foreign subsidiaries, the establishment of a valuation allowance on deferred tax assets of a foreign subsidiary and various other items.

In 2025 and 2024, we recognized net tax benefits of $34 million and $25 million, respectively, related to restructuring charges, the release of tax reserves and audit settlements at foreign subsidiaries, the establishment of a valuation allowance on deferred tax assets of a foreign subsidiary and various other items.

In 2023, we recognized net tax benefits of $35 million related to restructuring charges, the release of valuation allowances on deferred tax assets of foreign subsidiaries, the release of tax reserves at several foreign subsidiaries and various other items.

In 2022, we recognized net tax benefits of $34 million related to restructuring charges and various other items.

As discussed above, our results for the years ended December 31, 2025, 2024 and 2023, reflect the following items (in millions):

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Acquisition-related inventory fair value adjustment — — 2

Non-cash loss related to pending disposal of a non-core business 24 — —

Loss related to disposal of a non-core business 3 24 —

Disposal costs 1 — —

Debt refinancing 1 — —

Costs related to CrowdStrike Holdings, Inc.

Impairments related to Fisker Inc.

("Fisker") 15 — —

Impairments (recoveries) related to Russian operations (2) 2 19

Impairments (recoveries) related to Fisker Inc., net (1) 15 —

Impairments (recoveries) related to Russian operations, net (1) (2) 2

Intangible asset impairment — — 2

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Foreign exchange (gains) losses due to foreign exchange rate volatility related to Russia 3 (2) (2)

Gain on acquisition-related foreign exchange contracts — — (2)

Favorable indirect tax ruling in a foreign jurisdiction — — (1)

Loss related to affiliates — 7 —

Loss related to affiliates, net — — 7

Tax benefits, net (34) (25) (35)

For further information regarding these items, see Note 2, "Summary of Significant Accounting Policies," Note 3, "Acquisition," Note 4, "Restructuring, Note 7, "Leases," Note 8, "Income Taxes," Note 9, Pension and Other Postretirement Benefit Plans," Note 13, "Legal and Other Contingencies," and Note 15, "Financial Instruments," to the consolidated financial statements included in this Report.

For further information regarding these items, see Note 2, "Summary of Significant Accounting Policies," Note 3, "Restructuring," Note 5, "Debt," Note 7, "Income Taxes," Note 8, Pension and Other Postretirement Benefit Plans," Note 12, "Legal and Other Contingencies," and Note 14, "Financial Instruments," to the consolidated financial statements included in this Report.

This section 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 Part I — Item 1A, "Risk Factors," and "— Forward-Looking Statements" below.

Results of Operations

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Year Ended December 31, 2025, Compared With Year Ended December 31, 2024

Net sales for the year ended December 31, 2024 were $23.3 billion, as compared to $23.5 billion for the year ended December 31, 2023.

Lower production volumes on Lear platforms in North America, Europe and Africa, and Asia negatively impacted net sales by $1.1 billion.

This decrease was offset by new business in every region, which increased net sales by $0.9 billion.

Commercial recoveries were offset by the impact of selling price reductions and foreign exchange rate fluctuations.

Net sales were $23.3 billion in both 2025 and 2024.

Lower production volumes on Lear platforms in Europe/Africa, North America and Asia (including the JLR production disruption) and the winddown and divestiture of certain businesses reduced net sales by $923 million and $302 million, respectively.

These decreases were partially offset by new business in Asia and the impact of foreign exchange rate fluctuations, which increased net sales by $417 million and $223 million, respectively.

Commercial recoveries were partially offset by the impact of selling price reductions.

(in millions) Cost of Sales

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Cost of sales in 2025 was $21.8 billion, as compared to $21.7 billion in 2024.

Lower production volumes on Lear platforms reduced cost of sales.

This decrease was offset by new business, which increased cost of sales.

New business and the impact of foreign exchange rate fluctuations increased cost of sales.

These increases were largely offset by lower production volumes on Lear platforms (including the JLR production disruption) and the winddown and divestiture of certain businesses, which reduced cost of sales.

Gross profit and gross margin were $1.5 billion and 6.5% of net sales in 2025, as compared to $1.6 billion and 7.0% of net sales in 2024.

Lower production volumes on Lear platforms, net of new business, reduced gross profit by $106 million.

Higher restructuring costs and impairment charges related to Fisker also reduced gross profit by $23 million.

The impact of favorable operating performance, including the benefit of restructuring actions, was partially offset by selling price reductions and foreign exchange rate fluctuations.

Lower production volumes on Lear platforms (including the JLR production disruption), net of new business, reduced gross profit by $191 million.

The impact of favorable operating performance, including the benefit of restructuring actions, was largely offset by selling price reductions, higher restructuring costs, and the winddown and divestiture of certain businesses.

These factors had a corresponding impact on gross margin.

Selling, general and administrative expenses, including engineering and development expenses, were $703 million for the year ended December 31, 2024, as compared to $715 million for the year ended December 31, 2023, primarily reflecting lower compensation-related expenses.

As a percentage of net sales, selling, general and administrative expenses were 3.0% in 2024 and 2023.

Although customer recoveries largely offset the impact of tariff costs on gross profit, gross margin was negatively impacted by the dilutive effect of tariff recoveries, which increased net sales without a corresponding increase in gross profit.

Selling, general and administrative expenses, including engineering and development expenses, were $708 million for the year ended December 31, 2025, as compared to $703 million for the year ended December 31, 2024.

As a percentage of net sales, selling, general and administrative expenses were 3.0% in both 2025 and 2024.

Amortization of intangible assets was $20 million in 2025, as compared to $49 million in 2024, as certain of our intangible assets became fully amortized in 2024.

Amortization of intangible assets also includes an impairment charge of $2 million in 2023.

Interest expense, net was $101 million in 2025, as compared to $106 million in 2024.

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 $51 million in 2025, as compared to $49 million in 2024.

In 2024, we recognized a non-cash loss of $24 million on the pending disposal of a non-core business, a non-cash settlement loss of $7 million related to our pension lump-sum payout and foreign exchange losses of $21 million, including $16 million related to the hyper-inflationary environment and significant currency devaluation in Argentina.

In 2025, we recognized foreign exchange losses of $40 million, including $10 million related to the hyper-inflationary environment and significant currency devaluation in Argentina, a loss of $3 million related to the disposal of a non-core business and a loss of $3 million related to the impairment of an affiliate.

In 2024, we recognized foreign exchange losses of $21 million, including $16 million related to the hyper-inflationary environment and significant currency devaluation in Argentina, a loss of $24 million related to the disposal of a non-core business and a settlement loss of $7 million related to a pension lump-sum payout.

In 2024, we also recognized a gain of $17 million related to sales of fixed assets.

In 2023, we recognized foreign exchange losses of $53 million, including $31 million related to the hyper-inflationary environment and significant currency devaluation in Argentina, and losses of $7 million related to impairments of affiliates.

In 2023, we also recognized a gain of $17 million related to the sales of fixed assets and a gain of $4 million related to insurance recoveries.

For information related to our pension lump-sum payout, see Note 9, "Pension and Other Postretirement Benefit Plans," to the consolidated financial statements included in this Report.

In 2025, the provision for income taxes was $150 million, representing an effective tax rate of 24.0% on pretax income before equity in net income of affiliates of $625 million.

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In 2025 and 2024, the provision for income taxes was primarily impacted by the level and mix of earnings among tax jurisdictions.

For information related to our valuation allowances, see "— Other Matters — Significant Accounting Policies and Critical Accounting Estimates — Income Taxes" below.

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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, advanced research and development, corporate finance, legal, executive administration and human resources.

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").

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Segment earnings (1)

988.5 1,066.9

Margin 5.5 % 5.7 %

(1) See definition above.

Seating net sales were $17.2 billion for the year ended December 31, 2024, as compared to $17.5 billion for the year ended December 31, 2023, a decrease of $327 million or 2%.

Lower production volumes on Lear platforms negatively impacted net sales by $922 million.

This decrease was offset by new business, which increased net sales by $544 million.

Commercial recoveries were offset by the impact of selling price reductions and foreign exchange rate fluctuations.

Segment earnings, including restructuring costs, and the related margin on net sales were $1.0 billion and 5.7% in 2024, as compared to $1.1 billion and 6.1% in 2023.

Lower production volumes on Lear platforms, net of new business, reduced segment earnings by $114 million.

The impact of favorable operating performance, including the benefit of operational restructuring actions, was partially offset by selling price reductions and foreign exchange rate fluctuations.

Seating net sales were $17.3 billion for the year ended December 31, 2025, as compared to $17.2 billion for the year ended December 31, 2024, an increase of $61 million.

New business and the impact of foreign exchange rate fluctuations increased net sales by $274 million and $157 million, respectively.

These increases were offset by lower production volumes on Lear platforms (including the JLR production disruption) and the divestiture of certain businesses, which negatively impacted net sales by $553 million and $106 million, respectively.

Commercial recoveries were partially offset by the impact of selling price reductions.

Segment earnings, including restructuring costs, and the related margin on net sales were $949 million and 5.5% in 2025, as compared to $989 million and 5.7% in 2024.

Lower production volumes on Lear platforms (including the JLR production disruption), net of new business, reduced segment earnings by $127 million.

The impact of favorable operating performance, including the benefit of operational restructuring actions, was partially offset by selling price reductions and higher restructuring costs.

A summary of financial measures for our E-Systems segment is shown below (dollar amounts in millions):

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(1) See definition above.

E-Systems net sales were $6.1 billion for the year ended December 31, 2024, as compared to $5.9 billion for the year ended December 31, 2023, an increase of $166 million or 3%.

New business favorably impacted net sales by $336 million.

This increase was offset by lower production volumes on Lear platforms, which decreased net sales by $167 million.

Commercial recoveries were offset by the impact of selling price reductions and foreign exchange rate fluctuations.

E-Systems net sales were $6.0 billion for the year ended December 31, 2025, as compared to $6.1 billion for the year ended December 31, 2024, a decrease of $108 million or 2%.

Lower production volumes on Lear platforms (including the JLR production disruption) and the winddown and divestiture of certain businesses reduced net sales by $347 million and $196 million, respectively.

These decreases were partially offset by new business and the impact of foreign exchange rate

fluctuations, which increased net sales by $148 million and $66 million, respectively.

Commercial recoveries were partially offset by the impact of selling price reductions.

Segment earnings, including restructuring costs, and the related margin on net sales were $186 million and 3.1% in 2025, as compared to $247 million and 4.1% in 2024.

New business, net of lower production volumes on Lear platforms, increased segment earnings by $8 million.

The impact of favorable operating performance, including the benefit of operational restructuring actions, was largely offset by selling price reductions and impairment charges related to Fisker.

Lower production volumes on Lear platforms (including the JLR production disruption), net of new business, reduced segment earnings by $64 million.

The impact of favorable operating performance, including the benefit of operational restructuring actions, was offset by selling price reductions, higher restructuring costs, and the winddown and divestiture of certain businesses.

A summary of financial measures for our other category, which is not an operating segment, is shown below (dollar amounts in millions):

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(1) See definition above.

Segment earnings related to our other category were ($348) million in 2024, as compared to ($363) million in 2023, reflecting lower compensation-related expenses.

Segment earnings related to our other category were ($358) million in 2025, as compared to ($348) million in 2024.

Year Ended December 31, 2024, Compared With Year Ended December 31, 2023

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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 authorized common stock share 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.

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 Part I — Item 1A, "Risk Factors," and "— Executive Overview" above and "— Forward-Looking Statements" below.

For further discussion of the risks and uncertainties affecting our cash flows from operations and our overall liquidity, see Part I

— Item 1A, "Risk Factors," included in this Report, "— Executive Overview" above and "— Forward-Looking Statements" below.

Year Ended December 31, 2025, Compared with Year Ended December 31, 2024

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Net cash used in financing activities $ (619) $ (694) $ 75

Net cash provided by operating activ ities was $1.1 billion i n 2024, as compared to $1.2 billion in 2023 .

The overall decrease in operating cash flow reflects incremental cash used related to accrued liabilities (reflecting higher cash restructuring costs and higher cash taxes) and accounts payable.

These decreases were partially offset by improvements in inventories and accounts receivable.

Net cash provided by operating activities was $1.1 billion in both 2025 and 2024.

Net cash used in investing activities was $517 million in 2025, as compared to $543 million in 2024.

In 2023, we paid $175 million for our IGB acquisition.

In 2025, we received proceeds of $37 million related to the sale of a non-core business.

In 2025, capital spending was $562 million, as compared to $559 million in 2024.

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Net cash used in financing activities was $619 million in 2025, as compared to $694 million in 2024.

In 2024, we made a principal payment under our Term Loan of $50 million and paid $417 million for repurchases of our common stock, $174 million in dividends to Lear shareholders and $75 million in dividends to noncontrolling interest holders.

In 2023, we borrowed $150 million under our Term Loan and paid $297 million for repurchases of our common stock, $182 million in dividends to Lear shareholders and $79 million in dividends to noncontrolling interest holders.

In both 2025 and 2024, we made principal payments under our Term Loan of $50 million.

In 2025, we paid $325 million for repurchases of our common stock, $165 million in dividends to Lear shareholders and $87 million in dividends to noncontrolling interest holders.

In 2024, we paid $417 million for repurchases of our common stock, $174 million in dividends to Lear shareholders and $75 million in dividends to noncontrolling interest holders.

For further information regarding our 2025 and 2024 financing transactions, see "— Capitalization" below and Note 5, "Debt," and Note 10, "Capital Stock, Accumulated Other Comprehensive Loss and Equity," to the consolidated financial statements included in this Report.

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Credit Agreement

Our amended and restated unsecured credit agreement (the "Credit Agreement") consists of a $2.0 billion revolving credit facility (the "Revolving Credit Facility") and matures on October 28, 2027.

In July 2025, we amended and restated our Credit Agreement to extend the maturity date to July 24, 2030.

The Credit Agreement consists of a $2.0 billion Revolving Credit Facility.

In connection with this transaction, we recognized a loss on the extinguishment of debt of less than $1 million and incurred related issuance costs of approximately $3 million.

In 2025, 2024 and 2023, there were no borrowings or repayments under the Revolving Credit Facility.

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As of December 31, 2025, we were in compliance with all covenants under the Credit Agreement .

For further information related to the Credit Agreement , including information on pricing, covenants and events of default, see Note 6, "Debt," to the consolidated financial statements included in this Report and the Credit Agreement , which has been incorporated by reference as an exhibit to this Report.

In 2023, we borrowed $150 million under our Term Loan to finance, in part, the acquisition of IGB.

In 2024, we made a principal payment under the Term Loan of $50 million.

For further information related to our Credit Agreement , including information on pricing, covenants and events of default, see Note 5, "Debt," to the consolidated financial statements included in this Report and the Credit Agreement , which has been incorporated by reference as an exhibit to this Report.

In June 2025, we amended our Term Loan to extend the maturity date to September 30, 2027, and reduce the pricing across the grid.

In connection with this transaction, we recognized a loss on the extinguishment of debt and incurred related issuance costs totaling $1 million.

In both 2025 and 2024, we made principal payments under the Term Loan of $50 million.

The Term Loan contains the same covenants as the Credit Agreement.

As of December 31, 2025, we were in compliance with all covenants under the Term Loan.

For further information related to our acquisition of IGB, see Note 3, "Acquisition," to the consolidated financial statements included in this Report.

For further information related to our Term Loan, see Note 5, "Debt," to the consolidated financial statements included in this Report.

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Our primary commodity cost exposures relate to steel, copper and leather.

Further, 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.

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 87% 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.

Certain of these strategies also 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, have offset a significant portion of the adverse impact.

If these costs increase, it could have an adverse impact on our operating results in the foreseeable future.

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.

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If the net book value of a reporting unit exceeds its fair value, an impairment loss is measured and recognized.

We utilize an income approach to estimate the fair value of each of our reporting units and a market valuation approach to further support this analysis.

We utilize an income approach to estimate the fair value of each of our reporting units and a market valuation approach, where applicable, to further support this analysis.

The income approach is based on projected debt-free cash flow which is discounted to the present value using discount factors that consider the timing and risk of cash flows.

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Other significant assumptions include terminal value growth rates, terminal value margin rates, future capital expenditures and changes in future working capital requirements.

While there are inherent uncertainties related to the assumptions used and to management's application of these assumptions to this analysis, we believe that the income approach provides a reasonable estimate of the fair

value of our reporting units.

The market valuation approach is used to further support our analysis and is based on recent transactions involving comparable companies.

While there are inherent uncertainties related to the assumptions used and to management's application of these assumptions to this analysis, we believe that the income approach

provides a reasonable estimate of the fair value of our reporting units.

The market valuation approach is used, where applicable, to further support our analysis and is based on recent transactions involving comparable companies.

The annual goodwill impairment assessment is completed as of the first day of our fourth quarter.

We performed a qualitative assessment for each reporting unit, except for one within the E-Systems operating segment and two within the Seating operating segment where quantitative analyses were performed.

We performed a qualitative assessment for each reporting unit, except for one reporting unit within the E-Systems operating segment and one reporting unit within the Seating operating segment where quantitative analyses were performed.

The qualitative assessments indicated that it was more likely than not that the fair value of each reporting unit exceeded its respective carrying value.

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We account for income taxes in accordance with GAAP.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax loss and credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income for the years in which those temporary differences are expected to be recovered or settled.

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• 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;

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• 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 suppliers;

• disruptions in relationships with our customers and suppliers;

• the financial condition of and adverse developments affecting our customers and suppliers;

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• 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;

• 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;

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• 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;

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• 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;

• the impact of administrative policy, including protectionist trade policies and tariffs, in the United States and related actions by countries in which we do business;

• other risks, described in Part I — Item 1A, "Risk Factors," as well as the risks and information provided from time to time in our other filings with the Securities and Exchange Commission.

• other risks, described in Part I — Item 1A, "Risk Factors," included in this Report 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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis