Executive Summary

Q2 2025 revenue was $6.03B, flat year-over-year; adjusted EPS was $3.47. Results showed resilient margins amid volume headwinds and tariff dynamics . Versus consensus, LEA delivered a modest beat on revenue and adjusted EPS, but missed on EBITDA*.
Guidance restored and modestly recalibrated: 2025 net sales raised to $22.47–$23.07B; core operating earnings tightened to $955–$1,095M; adjusted EBITDA guided to $1.57–$1.71B; capex trimmed and restructuring increased .
Operating execution was a highlight: net performance contributed ≈45 bps to Seating and ≈70 bps to E‑Systems; tariff costs were largely recovered contractually; automation and restructuring savings accelerated .
Capital allocation and liquidity remained strong: $25M buybacks, $41M dividends in Q2; revolver refinanced to 2030; quarter-end liquidity ≈$2.9B .
Stock reaction catalysts: structural margin improvement from automation, tariff recovery visibility, and backlog wins (ComfortMax/Flex modular seats; conquest wire awards), partially offset by cautious H2 volume/mix assumptions and segment margin compression .

What Went Well and What Went Wrong

What Went Well

Operating execution drove margin resilience and savings: “Efficiency improvements and savings from our investments in restructuring and automation are driving durable operating performance in both segments… net performance… ≈45 bps in Seating and ≈70 bps in E‑Systems” .
Commercial wins and modular product momentum: “We won two ComfortFlex and one ComfortMax seat award… We now have 24 total awards… that will generate over $150M of average annual revenue” .
Tariff recovery and data-driven mitigation: “Contractual agreements… allowed us to recover substantially all of the $63M in tariff costs we incurred in the first half” and Foundry-enabled automation of tariff documentation sped invoicing and mitigation .

What Went Wrong

Segment margins compressed in E‑Systems: Adjusted segment margin fell to 4.9% from 5.3% YoY due to lower volumes and wind-down of discontinued products .
Volume/mix headwinds on key platforms: Seating and E‑Systems saw lower production on Lear platforms (Jeep Wagoneer, Audi Q5 changeover, Mercedes/BMW programs in China; Ford Escape, Audi/VW in China) .
Free cash flow timing headwinds: A lag in customer tariff recoveries reduced Q2 FCF and is assumed to impact FY FCF by ~$30M, moderating cash generation cadence into 2026 .

Financial Results

Consolidated Results vs Prior Periods

Metric	Q2 2024	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$6.012	$5.715	$5.560	$6.030
GAAP Diluted EPS ($)	$3.02	$1.61	$1.49	$3.06
Adjusted EPS ($)	$3.60	$2.94	$3.12	$3.47
Core Operating Earnings ($USD Millions)	$302.0	$257.7	$270.4	$291.8
Core Operating Margin (%)	5.0%	4.5%	4.9%	4.8%
Operating Cash Flow ($USD Millions)	$291.2	$680.8	$(127.7)	$296.2
Free Cash Flow ($USD Millions)	$170.4	$488.7	$(231.7)	$170.8

Notes: Adjusted metrics per company non-GAAP disclosures.

Segment Breakdown (Q2 2025 vs Q2 2024)

Segment	Net Sales ($USD Billions)	Segment Margin (%)	Adjusted Segment Margin (%)
Seating (Q2 2024)	$4.447	6.2%	6.8%
Seating (Q2 2025)	$4.474	6.4%	6.7%
E‑Systems (Q2 2024)	$1.565	4.4%	5.3%
E‑Systems (Q2 2025)	$1.557	3.5%	4.9%

KPIs

KPI	Q4 2024	Q1 2025	Q2 2025
Cash & Cash Equivalents ($USD Millions)	$1,052.9	$779.9	$887.9
Total Liquidity ($USD Billions)	$3.1	$2.8	$2.9
Weighted Avg Diluted Shares (Millions)	54.8	54.2	54.1
Share Repurchases ($USD Millions)	$101	$25	$25
Dividends Paid ($USD Millions)	$42	$43	$41

Margins (Company and Segment Trend)

Metric	Q2 2024	Q4 2024	Q1 2025	Q2 2025
Core Operating Margin (%)	5.0%	4.5%	4.9%	4.8%
Seating Adjusted Segment Margin (%)	6.8%	6.1%	6.7%	6.7%
E‑Systems Adjusted Segment Margin (%)	5.3%	5.0%	5.2%	4.9%

Guidance Changes

Metric	Period	Previous Guidance (Feb 6, 2025)	Current Guidance (Jul 25, 2025)	Change
Net Sales	FY 2025	$21,875–$22,875M	$22,470–$23,070M	Raised
Core Operating Earnings	FY 2025	$915–$1,175M	$955–$1,095M	Narrowed/Lower midpoint
Adjusted EBITDA	FY 2025	$1,535–$1,795M	$1,570–$1,710M	Tightened (slightly lower high)
Restructuring Costs	FY 2025	≈$175M	≈$215M	Raised
Operating Cash Flow	FY 2025	$1,055–$1,255M	$1,010–$1,110M	Lowered
Capital Spending	FY 2025	≈$625M	≈$590M	Lowered
Free Cash Flow	FY 2025	$430–$630M	$420–$520M	Lowered
FX Assumptions	FY 2025	$1.04/€; RMB 7.30/$	$1.11/€; RMB 7.23/$	Updated
Dividend	Next declared	$0.77/share (Aug 14, 2025)	$0.77/share	Maintained

Management attributed margin dilution from tariff recoveries and lower volumes, partially offset by FX and operating performance; capex reduction and higher restructuring accelerate footprint optimization .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Automation & IDEA by Lear	Introduced IDEA, acquired automation assets; improving wire harness efficiency	~$60M H1 savings from automation/restructuring; additional ~$90M expected in H2; new automated ComfortMax facility in Michigan	Improving
Tariffs & Recovery	Withdrew outlook in Q1 due to tariff uncertainty; largely prepared to mitigate	~$63M H1 tariff costs substantially recovered; gross direct exposure ≈$210M in 2025; lag impacts FCF by ~$30M; credit program could reduce cash exposure	Stabilizing with offsets
Volume/Mix & Program Launches	EV program delays; backlog impacted; cautious on industry volumes	Lower volumes on Jeep Wagoneer, Audi Q5 changeover, Mercedes/BMW programs in China; Ford Escape, Audi/VW in China; cautious H2 outlook	Deteriorating near-term
Modular Seating (ComfortMax/Flex)	ComfortFlex launched; ComfortMax validated	24 awards total across ComfortFlex/ComfortMax/FlexAir; scalable automation; expected accretive margins	Improving
Backlog & Conquest Wins	Two‑year backlog $1.3B; delays sourcing 2027	E‑Systems awards ~approaching $1B; conquest wire with global EV OEM adds ~$50M rev ramp into 2026‑27	Improving
FX	Headwinds in prior periods	Updated FX assumptions (weaker USD vs EUR); modest benefit to outlook	Mixed

Management Commentary

“Our investments in automation and restructuring will extend our industry leadership in operational excellence and drive sustainable margin improvement that will allow us to continue returning capital to shareholders” — Ray Scott, CEO .
“Contractual agreements with our customers allowed us to recover substantially all of the $63M in tariff costs we incurred in the first half of the year” — Jason Cardew, CFO .
“We are increasing our investment in restructuring to accelerate our footprint rationalization actions and reduce costs… purpose‑built capital… proprietary solutions… difficult for any competitor to replicate” — Ray Scott .
“We repurchased $25M of shares… completed the refinancing of our $2B revolver… extending its maturity… further strengthening our liquidity position” — Jason Cardew .

Q&A Highlights

Margin cadence and H2 decrementals: Management highlighted timing shifts of commercial settlements that pulled ~40 bps of Seating net performance into H1; normalized, H2 performance is similar in Seating; H2 margin contraction driven entirely by lower volumes/seasonality .
Backlog and awards: Seating components win at Ford (structures on F‑150/F‑250), quoting JIT; E‑Systems near ~$1B awards YTD; conquest wire adds ~$50M starting late 2025 with full run‑rate into 2026/27 .
Volume/mix assumptions: Discounted customer schedules ~2% for H2 due to tariff‑related import uncertainty (EU to US); specific programs (Audi Q5, JLR Range Rover/Defender) embedded as cautionary factors .
Tariff credit mechanics and FCF: Expected ~$30M timing lag for tariff cash recovery included in FCF outlook; potential improvement if credits finalized and applied to imports (duty‑free) .
Geographic footprint and competitiveness: Honduras wire harness operations remain competitive even at lower tariff rates; ongoing engagement with US administration to protect competitiveness of US auto manufacturing .

Estimates Context

Metric	Q2 2024 Consensus	Q2 2024 Actual	Q1 2025 Consensus	Q1 2025 Actual	Q2 2025 Consensus	Q2 2025 Actual
Revenue ($USD Billions)	$6.029*	$6.012	$5.509*	$5.560	$5.926*	$6.030
Primary EPS ($)	$3.393*	$3.60 (Adj)	$2.697*	$3.12 (Adj)	$3.302*	$3.47 (Adj)
EBITDA ($USD Millions)	$455.5*	$414.2*	$395.1*	$405.8*	$433.2*	$398.4*

Notes: Values marked with * retrieved from S&P Global. Primary EPS appears aligned to adjusted/normalized EPS vs reported GAAP in company materials. Q2 2025: Revenue and adjusted EPS beat; EBITDA missed relative to consensus.

Implication: Sell‑side models likely to tweak H2 volume/mix assumptions lower and incorporate tariff‑related FCF timing, while maintaining a constructive view on structural margin trajectory from automation, restructuring and modular product accretion .

Key Takeaways for Investors

Operational excellence is increasingly structural: automation and restructuring savings are scaling, underpinning margin sustainability despite near‑term volume/mix headwinds .
Tariff headwinds are mitigated: near full contractual recovery of direct tariffs and potential duty credits reduce cash exposure; residual FCF timing impacts are disclosed and manageable .
Product and commercial momentum: modular seating wins (ComfortMax/Flex) and conquest wire awards signal accretive backlog; E‑Systems awards nearing ~$1B YTD support medium‑term margin and growth .
Guidance recalibration is prudent: revenue raised on FX/tariff recovery/JV consolidation; margin midpoint trimmed on lower volumes; capex lowered; restructuring raised to accelerate footprint rationalization .
Segment watch: Seating margins stable at adjusted 6.7%; E‑Systems margins softened on wind‑downs and volume; expect medium‑term improvement as efficiency and backlog roll‑on offset wind‑downs .
Cash returns continue: repurchases reinstated; dividend maintained at $0.77; revolver extended to 2030; liquidity robust at ~$2.9B .
Trading implications: Near term, cautious H2 volume/mix and EBITDA miss vs consensus* may temper sentiment; medium term, structural cost advantages and backlog wins provide support for multiple stability and EPS normalization into 2026 as timing effects fade .

LEAR CORP (LEA)·Q2 2025 Earnings Summary