Thanks, Jamie. Good morning, everyone and thank you for joining us for Lear's Third Quarter 2023 Earnings Call. Presenting today are Ray Scott, Lear's President and CEO; and Jason Cardew Senior Vice President and CFO. Other members of Lear's senior management team have also joined us on the call. Following prepared remarks, we will open the call for Q&A. You can find a copy of the presentation that accompanies these remarks at ir.lear.com. Before we begin, I'd like to take this opportunity to remind you that as we conduct this call, we will be making forward-looking statements to assist you in understanding Lear's expectations for the future. As detailed in our safe harbor statement on Slide 2, our actual results could differ materially from these forward-looking statements due to many factors discussed in our latest 10-Q and other periodic reports. I also want to remind you that during today's presentation we will refer to non-GAAP financial metrics. You are directed to the slides in the appendix of our presentation for the reconciliation of non-GAAP items to the most directly comparable GAAP measures. The agenda for today's call is on Slide 3. First, Ray will review highlights from the quarter and provide a business update. Jason will then review our third quarter financial results and provide an update on our full year outlook. Finally, Ray will offer some concluding remarks. Following the formal presentation, we would be happy to take your questions. Now I'd like to invite Ray to begin.

Thanks, Ed. Please turn to Slide 5, which highlights key financial metrics for the third quarter. We had another strong quarter with double-digit increases in sales and operating earnings. Total company revenue was $5.8 billion, a 10% increase compared to last year. Core operating earnings increased by 14% from last year to $267 million. Adjusted earnings per share rose 23%, and operating cash flow improved significantly to $404 million for the quarter. Slide 6 summarizes key highlights from the quarter. The third quarter marked our fifth consecutive quarter of year-over-year improvements in both revenue and operating income. Our Seating team showcased their industry-leading capabilities by launching the Wagoneer and Grand Wagoneer just-in-time programs. This was an important win and an unprecedented mid-cycle transition of a very complex luxury Seating program. Our thermal comfort integration and innovation continues to gain traction. During the quarter, we strengthened our relationship with General Motors and were awarded our first ventilation program. The response from customers regarding our expanded thermal comfort capabilities has been tremendous, and we will continue collaborating with both existing and new customers to enhance Lear content. Key third parties continue to recognize our leadership in quality and innovation. Lear received more than twice as many J.D. Power Seat Quality awards as any other supplier, including first-place awards in both luxury categories. ReNewKnit, our fully recyclable suede alternative that will start production next year, has been named an Automotive News PACE Award finalist. In E-Systems, we continue to diversify our customer base with new wiring awards from Renault and Geely. Our strong performance enabled us to accelerate share repurchases. In the quarter, we repurchased approximately $75 million worth of stock, surpassing the total from the first and second quarters combined. I am extremely proud of the Lear team. They not only executed well during the quarter but also actively supported the communities where they live and work. The team in Morocco established a special fund to assist those affected by the recent devastating earthquake. Slide 7 provides more detail on our progress in Seating. In addition to the Wagoneer and Grand Wagoneer launches, we introduced the seats for the BMW 5 Series in Europe. Both vehicle launches were significant wins over competitors. We continue to develop our partnership with BYD, with several current and upcoming launches, including seat assembly for the BYD Seal and component sales like leather for the BYD Denza D9. Our quality and operational excellence were recognized again by J.D. Power, with four best-in-segment and nine total top-three awards, more than any other seat supplier. We are leading in both luxury categories. The seats for the Porsche 718 won in the luxury car category, while the seats for the Range Rover Sports claimed victory in the luxury SUV category. In total, Lear secured four of the seven awards across these two luxury sectors, reinforcing our leadership. ReNewKnit is gaining traction with our customers and third parties alike. Production will begin next year on three programs with three different OEMs, and we are discussing expanding ReNewKnit to additional vehicle lines, receiving increasing interest from other customers. Momentum is accelerating, and we see great potential for more awards in the coming months. The innovation behind ReNewKnit earned it a place as a PACE Award finalist for 2023, with winners to be announced later next year. Slide 8, provides an update of the significant progress we are making in all phases of our Thermal Comfort strategy. We continue to optimize our manufacturing footprint and Thermal Comfort Systems organization. Our new facility in North Africa provides a low-cost alternative to our current locations. To date, we have conducted technical reviews with our thermal comfort capabilities with 14 OEMs. Positive feedback from these reviews affirms our confidence in our strategy. The strong relationships we have built with our customers make it easier to drive growth opportunities for our thermal comfort components. During the quarter, we won a ventilation award with General Motors. This breakthrough win for Lear opens the door for additional growth opportunities for ventilation and other thermal comfort products, with our largest seat customer. Once validated, our components can be sourced across an OEM's entire vehicle portfolio. Having sourcing control for the Thermal Comfort components allows us for quicker proliferation particularly for programs that we are just in time supplying. The interest level of our modular innovation has accelerated. Our timing is perfect, as our customers are looking for solutions to reduce part complexity and cost, while also offsetting the impact of elevated wage inflation. Today, we have 21 development contracts for component modularity and FlexAir solutions. We previously announced that we are on track to launch our first production application for FlexAir during the first quarter of next year. Working with a premium European OEM, we combine pneumatic, lumbar, massage, heat and ventilation into a single modular solution. We estimate this module will reduce part complexity by 50% and in the just-in-time plant while lowering costs and improving performance for the end consumer. We are on track to have this module fully validated by our customer by the middle of next year. The response for our complete seat modularity has been overwhelmingly positive. As a result, we are accelerating the timeline, we expect to deliver this solution from 2027 to 2026. The initial results from the seven development projects in process for existing customers have been outstanding. Our complete seat module has significantly improved the thermal comfort performance when compared to individual components. The airflow from our ventilation systems increased by up to 55%. The heat solution increases the temperature by up to 85%, more than the current solution after only one minute improving the time to sensation. And we've increased the intensity of the massage system by up to 150% compared to the current component solution, allowing the module to provide a much more therapeutic experience. Our customers are looking for these solutions. We have been meeting with the customers, at the top levels within the organizations. And the feedback has been extremely positive. The momentum has shifted from Lear pushing these concepts, to our customers really pulling us and asking us to move faster and driving their internal organizations to implement our complete seat solution. Lear's module solutions will provide a cost savings opportunity to our customers while expanding seating margins. Turning to Slide 9. I will provide an E-Systems update. The third quarter marked our fifth consecutive quarter of year-over-year margin improvement in E-Systems. The increase in industry volume combined with our efficiency improvements and margin-accretive backlog allowed us to achieve our highest operating margins in E-Systems, in more than two years. Based on the midpoint of our current outlook, the second half margin this year is on track to be more than 100 basis points better than last year. The new connection systems plant in North Africa is currently producing preproduction components. This facility is key to expanding our engineering component capabilities and will support our new vertical integration opportunities in Europe. An important driver of our margin expansion plan. We continue to win new business in both wiring and connection systems. Key awards include our conquest award with Renault and an award with a new EV with Geely. These awards along with the opportunities we are pursuing in the fourth quarter keep us on track to achieve our third straight year of a $1 billion three-year backlog in E-Systems. The improvement over the last several quarters is a result of the strategy we developed in 2019, and implemented over the past three years, by streamlining our portfolio to focus on high-growth and high-return products. And deemphasizing noncore product lines, we have optimized our resources and continue to win new business in our key product areas. There's still a lot of work to be done, but we continue to make meaningful progress towards our margin targets. Now, I'd like to turn the call over to Jason for a financial review.

Thanks, Ray. Slide 11 shows, vehicle production and key exchange rates for the third quarter. Global production increased 4% compared to the same period last year and was up 8% on a Lear's sales weighted basis. Production volumes increased by 9% in North America and by 6% in Europe, while volumes in China were down 1%. From a currency standpoint, the US dollar weakened against the euro but strengthened against the RMB compared to 2022. Slide 12 highlights Lear's growth compared to the market. Total company revenue growth lagged the market by one percentage point, primarily driven by unfavorable platform mix and several key programs in North America. The largest driver of the unfavorable platform mix reflected downtime in seating at General Motors full-size truck plants. Excluding the impact of the downtime, total company sales growth would have been in line with the overall market. The UAW strike at GM's Wentzville facility and Ford Chicago facility also had a modest negative impact on seating revenue. In E-Systems growth of the market of three percentage points was driven by our backlog in all regions, as well as favorable platform mix in Europe. Europe sales outperformed industry production by eight points with both business segments benefiting from higher volumes on the Land Rover Range Rover, Range Rover Sports and Defender. New conquest programs such as the BMW 5 and 7 Series in Seating and new business with a global OEM as well as BMW, Mercedes and Fisker and E-Systems contributed to the strong growth in the region as well. Through the first three quarters, total company growth over market was two percentage points with Seating growing one point above market and E-Systems growing five points above market. Turning to slide 13 I will highlight our financial results for the third quarter of 2023. Sales increased 10% year-over-year to $5.8 billion. Excluding the impact of foreign exchange, commodities and acquisitions sales were up 7%, reflecting increased production on key Lear platforms and the addition of new business in both segments. Core operating earnings were $267 million compared to $235 million last year. The increase in earnings resulted from the impact of higher production at Lear platforms and the addition of new business. Adjusted earnings per share increased 23% to $2.87 as compared to $2.33 a year ago. In addition to higher core earnings our adjusted EPS benefited from higher equity earnings and a lower share count reflecting the benefit of our share repurchase program. Operating cash flow generated in the quarter was $404 million, compared to $252 million in 2022. The increase in operating cash flow was due to an improvement in working capital and higher earnings relative to last year. Slide 14 explains the variance in sales and adjusted operating margins in the Seating segment. Sales for the third quarter were $4.3 billion, an increase of $397 million or 10% from 2022 driven primarily by an increase in volumes on Lear platforms and our strong backlog. Key backlog programs include the BMW 5 and 7 series and Batch Hornet in Europe; the Chevrolet Colorado, GMC Canyon, and Mercedes EQE SUV in North America, as well as the leather sales for the BYD Denza D9 program in China. Excluding the impact of commodities, foreign exchange and acquisitions, sales were up 6%. Core operating earnings improved to $275 million, up $20 million or 8% from 2022 with adjusted operating margins of 6.4%. As expected, operating margins were modestly lower due to the impact of higher engineering spending and launch costs to support new business awards. This was partially offset by the benefit from higher volumes on their platforms and our margin accretive backlog. Seating margins in the third quarter were negatively impacted by production disruptions related to the UAW strike, GM full-size truck downtime and volume reductions and premium costs related to shipping delays at the Mexican border. Slide 15 explains the variance in sales and adjusted operating margins in the E-Systems segment. Sales for the third quarter were $1.5 billion, an increase of $143 million or 11% from 2022. Excluding the impact of foreign exchange and commodities, sales were up 9% driven primarily by our strong backlog and higher volumes on key platforms. Key backlog platforms include new programs with a global EV OEM and Fisker in North America and Europe, as well as the Ford Super Duty trucks in GM Hummer EV and Silverado EV in North America. Core operating earnings improved to $79 million or 5.3% of sales compared to $53 million and 3.9% of sales in 2022. The improvement in margins reflected higher volumes on Lear platforms and our margin-accretive backlog and improvement in commodity costs and strong net operating performance. The positive net performance was driven primarily by efficiency improvements at our North American manufacturing facilities, resolution of key commercial negotiations with customers, facilitating recovery of costs due to the commodities and wage inflation and restructuring savings. Moving to slide 16, we highlight our strong balance sheet and liquidity profile, a major competitive advantage for Lear in today's higher interest rate environment. We do not have any near-term debt maturities. Our earliest bond maturity is in 2027 and our debt structure has a weighted average life of approximately 13.5 years. Our cost of debt is low, averaging approximately 4%. In addition, we have $3 billion of available liquidity. We are on track to meet or exceed our target of 80% free cash flow conversion for the year. We remain committed to returning excess cash to our shareholders and accelerated our share repurchases in the third quarter. During the quarter, we repurchased $75 million of stock which was more than the first and second quarters combined. Our current share repurchase authorization has approximately $1.1 billion remaining, which allows us to repurchase shares through December 31, 2024. Now shifting to our 2023 outlook. Slide 17 provides global vehicle production volumes and currency assumptions that form the basis of our full year outlook. We base our production assumptions on several sources, including internal estimates, customer production schedules and S&P forecasts. At the midpoint of our guidance range, we assume that global industry production will be 7% higher than in 2022, an increase of 3 percentage points or two points on a Lear sales weighted basis from our prior guidance reflecting higher production in Europe and China. Our global production assumptions are generally aligned with the latest S&P forecast. From a currency perspective, our 2023 outlook assumes an average euro exchange rate of $1.08 per euro and an average Chinese RMB exchange rate of RMB 7.02 to the dollar. Slide 18 provides more detail on our current outlook. We are increasing our 2023 outlook for net sales, core operating earnings and free cash flow from the midpoint of our prior outlook. We are increasing our outlook for restructuring costs by $25 million to fund investments that will optimize the manufacturing footprint of our new thermal comfort segment and to reduce capacity in Europe to better align with current and future customer production plans. At the same time, we are reducing our outlook for capital spending by $25 million, primarily as a result of slower customer ramp-up plans on various new electric vehicles. In the third quarter, we lost approximately $25 million of revenue due to the UAW strike. Based on the plants that are on strike as of today, we are losing approximately $60 million of revenue per week. Based on the late news from last night the revenue impacts will drop to $35 million per week once Ford resumes production. Consistent with our prior guidance, the full year financial outlook assumes a $350 million revenue impact from industry disruptions related to the ongoing UAW strike, including approximately $325 million in the fourth quarter. Through the end of this week, the cumulative revenue impact of the UAW strike is approximately $170 million. This leaves approximately $180 million of revenue contingency for the remainder of the fourth quarter. Slide 19 highlights our fourth quarter outlook for sales and core operating earnings in Seating and E-systems as well as the outlook excluding the assumed impact of the ongoing UAW labor strike. In Seating, the midpoint of our fourth quarter revenue outlook includes approximately $230 million of assumed loss revenue from industry disruptions related to the UAW strike. The midpoint of our fourth quarter operating income outlook is 6.8% including negative margin impact of approximately 70 basis points due to the assumed strike impact. In E-Systems, the midpoint of our fourth quarter revenue outlook includes approximately $95 million of assumed loss revenue related to the UAW strike. The midpoint of our fourth quarter operating income outlook for E-Systems is 5.5%, including negative margin impact of approximately 90 basis points due to the assumed strike impact. In the appendix of the presentation, we included a summary of our current full year outlook for Seating and E-Systems revenue and operating margins as well as a full year outlook that removes the assumed impact of the UAW strike. At the midpoint of our guidance, our full year Seating margins are forecasted at 6.8% our E-Systems margins at 4.6% and total company margins at 4.8%. This is an improvement of 10 basis points from the prior outlook for Seating and total company margins. Excluding the impact of the strike full year margins would be 7% in Seating 4.9% in E-Systems and 5% for the total company. Now, I'll turn it back to Ray for some closing thoughts.

Thanks, Jason. Please turn to Slide 21. Our third quarter results provided another clear example of our ability to deliver strong performance in a very volatile industry environment. In Seating, we are accelerating the pace of innovation for thermal comfort systems. The response from our customers and the demand for our modular solutions has been overwhelmingly positive. In E-Systems, our execution and focus on efficiencies continues to drive margin improvement. We are on pace to improve margins again in the fourth quarter. Our Lear Forward initiatives have yielded savings in excess of our goal for this year by streamlining processes and changing plant layouts to optimize plant capacity and accelerate automation to address labor shortages and improve efficiencies. These results put us on track to achieve our target cash conversion, allowing us to continue to return capital to shareholders. And now, we'd be happy to take your questions.

Ladies and gentlemen, we will now begin the question-and-answer session. Our first question today comes from Rod Lache from Wolfe Research. Please go ahead with your question.

Good morning everybody. I wanted to ask you about the E-Systems performance, obviously, came in better than expected. I presume that that was partly related to recoveries but it looks like as well you've got a pretty strong exit rate 6.4% in the fourth quarter excluding the strike. Could you maybe just speak to whether we should be looking at that level of profitability as a reasonable launching point for modeling 2024? And then just to the extent that some of that improvement look going forward is going to be driven by recoveries. Just characterize how those discussions are going just particularly in light of the pressures that some of the OEMs are seeing on labor and other areas?

There's a lot to unpack there Rod. I'll start maybe with the third quarter E-Systems performance when we issued kind of a mid-quarter update on what we're expecting in E-Systems. We talked about 4.75% operating margins. So, primary improvement from that point until the end of the quarter was really a lesser impact from the strike and slightly stronger volumes. The commercial recoveries and the operating performance was directly in line with the targets we had established and was meaningful in terms of both sequential improvement in performance and year-over-year improvement in performance. As we think about what that may mean for the business as we look out to next year, I think the right way to model these systems is to look at the second half forecast for both third quarter actuals and our outlook for the fourth quarter, which right now sits at 5.4%. Now, that does include the impact of the labor strike. It also includes some out-of-period benefit from the commercial negotiations that happened in the third quarter and that we anticipate happening in the fourth quarter. If you sort of normalize for all of that, the real run rate in the second half of the year in E-Systems is about 5.5%. So, I think that's the right launching point as you look out into 2024 for that business. I would say overall we're quite pleased with the progress we've made both operationally, particularly in North America where we were struggling with efficiencies that we talked about earlier in the year, but also in our commercial negotiations. We completed some really important negotiations in the quarter that I think established a nice precedent going forward for us give us a little more predictability. That said we do anticipate there will be challenges with that as we look out to next year but we're very happy with the performance thus far in E-Systems.

Yes. When we simplified our portfolio, we recognized that trying to cater to everyone was not sustainable in the long term due to the investment required. This shift is yielding positive results. The simplification of our product lineup has allowed us to grow profitably, and we're seeing that growth. I'm particularly excited about our three consecutive years of $1 billion in backlog, which gives us confidence that we are focusing in the right areas and can achieve good returns. Customer diversification has been a crucial aspect of our strategy, and we are effectively diversifying across companies like Geely, Jaguar, Land Rover, and Volkswagen, which is enhancing our customer base. In these times when customers are seeking solutions, they are beginning to see the various possibilities we offer, not just from a terms and conditions standpoint but also with engineered components. We recently had a fruitful discussion with a major customer about how we can help reduce their overall costs while also boosting our margins with new systems. Many elements of our strategy are starting to bear fruit, reinforcing our confidence in continuing this trajectory. However, we acknowledge the need for ongoing work in improving efficiencies and handling commercial negotiations. Nonetheless, we feel positive about our current position.

Yes, many people view E-Systems as a success story. I believe we are demonstrating that the plan Ray outlined is effective. Our operating margins for the second half of the year are 200 basis points higher than last year's full-year margins and 160 basis points higher than the first half of this year. The third quarter marks a significant turning point and further evidence with the fifth consecutive quarter of year-over-year margin growth in E-Systems. We have made substantial progress.

Yes. It sounds like you've got a lot of momentum there on the margins as well as the wins. I was just hoping to lastly you can address just one thing you can't control is just the timing of launches in EVs which has been obviously a good part of the backlog. Can you maybe just give us some color on what you're seeing and how we might want to just calibrate the backlog that we've been seeing just to the reality of pushouts here or there? How significant is that?

Yes, we will provide a formal update on our three-year backlog during our fourth quarter earnings call at the start of next year. We are winning new business at a rate that supports a three-year backlog for 2024 to 2026 similar to our most recent backlog. We reported $2.85 billion overall, with $1.8 billion in Seating and $1.05 billion in E-Systems based on our wins this year. Our plan for 2024, which we announced earlier this year, called for a $1.5 billion backlog, which would have been our largest year ever. However, announcements from customers like GM regarding delays in launches and reduced near-term volumes, as well as similar actions from Ford and others, are expected to negatively impact the first year of the backlog in 2024. Despite this, we remain confident that the overall three-year backlog will be strong. Our electrification revenue in E-Systems is maintaining the $1.3 billion target we set for 2025, showing solid growth from new wins that are helping to offset some of the volume changes. Specifically, regarding our 2024 backlog, approximately 75% of our new business wins in Seating are on electric vehicle platforms. Considering the recent announcements, we might anticipate a reduction of about 20% in the first year, with much of that being made up in the second and third years of the backlog. So, while there is an expected impact, we still have a positive growth outlook over the three-year period.

Okay. Great. Thank you.

Welcome, Rod.

Good morning, everyone. I have two quick follow-up questions regarding Rod's inquiry, plus one additional point. Regarding the backlog, if electric vehicles are delayed, it stands to reason that internal combustion engine vehicles are still being produced. Therefore, the overall backlog might not change significantly or could even improve. Is that a reasonable way to look at it?

Yes. I think, absolutely. And I think that coupled with what may happen with the strike the longer it were to continue this year on certain platforms that could benefit next year on ICE vehicles specifically. So I think that kind of real kind of broad base that's a reasonable assumption that we would also expect stronger ICE volumes apart from the offset.

Yes. And then on E-Systems margins. I mean can you just remind us the target and the time frame as to when you're what level and where you're trying to get?

Yes. Our target is 8% in 2025. And as we've said before it's not linear between this year and 2025, but we do expect to have a meaningful improvement in operating margins next year. With the run rate of 5.5% in the second half of the year, we would expect to continue improving that into next year. Now the backlog will benefit operating margins. There's a number of puts and takes. Obviously, too early to give guidance. But we'd be disappointed if we didn't have something with a 6% in front of it somewhere in the range next year in E-Systems.

Then just lastly on thermal, you're making great progress there $1 billion in 2027 10% margins it's really great to hear. But it seems like it might be a far larger opportunity over time. As you look at the way that thermal is set up in your seats versus the antiquated HVAC system that exists right now and ICE in EVs, is there a potential real content grab and efficiency gain that you could make yourselves and help out the automakers in saving money and then improving efficiency of powertrain in the entire vehicle in a big way because you didn't talk about that. And that seems like a really big deal that this thermal system could shift from antiquated running off the ICE engine to something all new in your seats?

Yes. And I think we've talked about a partnership and a project we're working on with Taleo that I think will help us more fully exploit that opportunity. I think you're right. Longer-term that does create additional growth potential on the Thermal Comfort components specifically. We've already embedded a $400 million roughly revenue increase in the Thermal Comfort Systems business over the next four years. So we've got a pretty aggressive target. I think longer term where we see even more growth opportunity is in modularity. And so sort of an extension of what we're doing in Thermal Comfort, but then incorporating our FlexAir products and seat covers on programs where we don't have the JIT necessarily. I see that as a path to increasing market share in our Seating business overall. We've talked about going from 26% to 29% market share in Seating by 2027. We also see having roughly one-third or 32% of the total seat market when you consider the component sales independent of JIT that we sell to our competitors that are directed by our customers. I don't see any reason why that number can't continue to grow three, four, five years down the road as well. And our target is certainly much more ambitious to maybe capture 35% or 40% of that total seat market over time. I think that's the real long-term growth driver for the business.

We had a positive review of our activities and I want to emphasize that we're taking a cautious approach to sales as we validate the fully modular concept mentioned by Jason. We implemented our strategy eight years ago, and we're gradually assembling the components necessary to evaluate manufacturing aspects and engineering designs for a modular system integrated into traditional form or FlexAir and the trim cover itself. All these elements contribute to our overall cost savings. Currently, there's significant pressure regarding costs, labor shortages, and other challenges in the manufacturing sector, making our timing optimal. During our recent review with a major customer, the conversation shifted from just a sell to a demand for faster delivery. We're establishing timelines based on the validation of modular systems, but our pace also depends on customer readiness. Our focus is on how we can incorporate this solution effectively. Once integrated into a platform, it can be applied across multiple vehicle models, leading to greater synergies and substantial benefits. Savings that could amount to $5 million or $10 million can multiply significantly when applied across various vehicle lines. We've received excellent feedback, and the timing aligns perfectly as customers are seeking assistance with cost management. We have a solid proposal highlighting that not only will they benefit from improved customer features, but also from labor efficiencies and reduced component costs. This creates consumer benefits, advantages for our customers, and allows us to enhance our margins.

And it's not an insignificant benefit. We can see savings up to 20% on the relevant components in a fully featured vehicle system. And in most programs 10% to 15%. So this is a meaningful opportunity. So not only does it improve the performance and sustainability of the seat it also lowers the cost for customers.

Yeah. Looking forward to hearing more about it over time. Thank you so much, guys.

Thank you.

Hey, good morning, everyone. It's great to see the early momentum in thermal comfort. I think as of last quarter right Lear had one source and control with seven OEMs. Now that number is 9. You now have 21 development contracts you were at 16 last quarter. Can you just speak to the strength in the pipeline here to sustain this type of quarterly buildup in momentum as we think about next year? Thanks.

Yeah. I think that the traction we have is as Ray mentioned, it's starting to become a pull from customers. And so the demand for customers wanting to learn more about the products has really been a positive surprise to us. And maybe Frank, if you want to elaborate on some of the things we're seeing and some of the interest we're seeing from customers in these technical reviews.

Yes absolutely. As both Ray and Jason had mentioned the reception from the customer has been really fantastic. And to Jason's point just now, James, we've had a lot of technical reviews on a global basis. We have a lot of customer engagements or tracking all of that as a team to make sure we understand. We're getting tremendous activity with not only our commercial discussions, but our technical discussions and validation development projects that we're working on. So we're extremely encouraged by the global reception to this product. We're working with Asian customers. We're working with customers in Europe and here in North America and it's really cross-sport. I guess, as we will continue through the quarters I believe the momentum is just going to continue to build.

We are still quoting individual components, but for every JIT program we have been awarded, we have sourcing control. This is a significant change, and those JIT suppliers lacking this capability do not have that flexibility. Currently, we are in the process of these development programs, and we are focused on executing them flawlessly. As we continue to expand across multiple car lines, independent of our JIT status, we are gaining momentum as clients are recognizing the benefits and requesting quotes for systems that are not currently being quoted.

Yeah. That's really helpful. And just a quick one on the commodity side. How should we be thinking about the earnings impact in the fourth quarter? And I know, it's early but just given current spot pricing and what you already have locked in on the metal side for Seating how could we start thinking about next year's setup on the commodities front? Thanks.

Yeah. There's been a modest softening in commodities in general. North America Europe steel prices have drifted down a bit. That benefited us a little bit in the third quarter. Fourth quarter, we had a pretty strong recovery quarter last year. And so year-over-year commodities may be a modest headwind just as a result of the level of recovery we received last year versus this year. As we look out to next year, I think we don't see a meaningful positive or negative at this stage. We do see steel as an opportunity and then kind of on the flip side and maybe a little bit outside of your question around commodities is wage inflation is something that we're very focused on in terms of maybe a bit of headwind and similar to what we experienced this year where we saw fairly significant increases in hourly wages in Mexico and Eastern Europe. Those pressures look to continue next year. We've got really good dialogue with our customers and there's a sharing mechanism and pass-through mechanism in most cases now on that, but that's another factor to think about as you start to model 2024 and beyond.

Thanks.

You’re welcome.

Great. Thanks for taking my questions. Sort of following up on that, any color on how cost recoveries are trending with customers since they're obviously going to be under a bit of cost pressure themselves. Has that changed at all? And the recoveries you've gotten this year, how much is piece price? You don't have to renegotiate versus sort of lump sum where I guess January 1 you'd probably have to have discussions again about getting recoveries?

Yes, I'll begin. The negotiations have been ongoing, and there hasn't been a major change in how we're pursuing recovery. Our customers are quite sophisticated and often use advanced models regarding labor economics and commodity costs related to our components. We're actively engaged in these discussions. In response to your question, we've noticed an increased emphasis on design changes and reductions in the product lines as customers face more pressure in that area. One of our key focuses has been to remain the most cost-competitive company globally, which positions us favorably during these challenging negotiations. We have created detailed evidence binders and analyses for various modeling scenarios, and we haven't noticed a slowdown in the negotiations from that perspective. The area where pricing is currently more impactful involves customers' willingness to consider alternative designs or what we refer to as DAB or product designs aimed at reducing costs. Some have adjusted their internal targets for next year to be more aggressive than this year, and we welcome that shift. Our entire culture is geared toward being cost-competitive, and we have initiatives like cost technology optimization and rigorous coliseum events where we generate a queue of ideas. There are many inefficiencies in the value chain that present opportunities, which we take pride in addressing. Recently, we had a significant coliseum event with a customer that yielded between $60 million and $70 million in opportunities for the year. Their positive reaction is encouraging, especially since they traditionally viewed such initiatives as risky and preferred to postpone decisions. However, they are now exploring various new ideas, allowing us to strengthen our vertical integration strategy. This approach focuses on engineering our components to deliver a strong value proposition. We’re seeing increased momentum in engineering our products, such as terminals, connectors, Lear components, and wiring, as well as modular solutions like FlexAir and foam. Overall, we feel optimistic about our ability to create mutual value for both our company and our customers.

And overall, the year kind of played out the way we expected. It's about a $25 million benefit from the full year basis on commodities between lower cost and recoveries. So it's solid improvement year-over-year.

And any color on the amount that are a piece price versus lump sum that need to be renegotiated?

Yes. I think we're seeing a trend towards piece price generally. And there may be agreements like in the third quarter, we had an agreement with the customer that had a lump sum and a piece price component to it because they went back to earlier in the year and the lump sum just covered the earlier part of the year, but the piece price has been adjusted going forward. And I think that there's an increased willingness in general for customers to do that particularly where it's sticky inflation or sticky commodity increases, where there isn't any reversal in sight over time. And if it's something that's more kind of transitory, then that would set itself up for more of a lump sum recovery. But where it's more permanent like wage inflation for example, you're seeing piece price adjustments.

And just lastly on FX as we think about into next year. I think you had some pretty good protection this year from some of your hedges. How should we think about sort of currency risk as those roll off or do they roll off into next year?

Yes. So, our largest exposure is the peso. And we do have a pretty aggressive hedge program in place, a 24-month rolling hedge program that largely insulated us from that issue this year. There's still a $20 million impact for us and much worse than we had anticipated when we set guidance at the beginning of the year we've had to sort of absorb that as the year has gone on. As we look out to next year, if you would have asked me that question three months ago, I probably would have felt worse about it than I do today with the peso at 18.30. It's a manageable issue for us, as I look out to next year. It's still a meaningful impact and a little bit worse than what we experienced this year, but manageable. And we've locked in 75% of our exposure for next year already. And by the end of this year, we'll have 85% or so locked in. So we're going to be in a pretty good position to continue to mitigate that risk.

Got it. Thanks for taking my question.

You’re welcome.

Hi. Good morning. Thanks for taking the question.

Good morning.

I would like to begin with a question about E-Systems. I recall you mentioned earlier that we should expect E-Systems margins to have a six handle for next year. You also provided some insights about aiming for 8% by 2025. It seems that a key aspect of this is the volume and backlog. Currently, we find ourselves in an LVP environment that is not significantly higher than what we expected six to nine months ago, and the schedule appears to be much more stable. Should we still consider the path to 8% as intact, particularly since LVP seems to be outperforming expectations for now?

Yes, I think that there really isn't anything that has changed from the time we set that target. I'd say maybe the only exception would be to the last question we had from Colin on foreign exchange a little bit of a headwind on transactional FX. And we have obviously wire is a labor-intensive business. So it's sort of a dual headwind of FX and wage inflation. Outside of that, I'd say that the story is intact. The performance that we can control has improved consistent with our expectations. The recoveries and commodities are in line with our expectations. Volumes are recovering sort of consistent with what we had anticipated. The backlog is rolling on with margins that we had based that outlook on. And so I think the last piece of that is maybe the stability of the production environment. And while we've seen meaningful improvement this year from last year there still have been disruptions that leads to some inefficiencies in the plants that are a little bit outside of our control. So that would be one other factor to think about. And I think the backlog in 2024 as I mentioned earlier will be negatively impacted by some of the customers revised wash plans and some of the key programs that were embedded in our backlog. As you know the GM BDU and Intercell Connect board for example is a big part the E-Systems backlog and those volumes are going to be lower in 2024 and probably in early 2025 given the current plans there. So that will have a little bit of an impact. But we've seen again just a really nice improvement from 2022 to 2023, 110 basis points full year-over-year; 200 basis points full year last year to the second half of this year; 160, 170 basis points first half to second half of this year. We really have a nice trajectory set up here going into next year and there's a lot of moving parts, and we're working through our plans for next year, but we do feel confident that we can continue that momentum into next year and continue working towards that target.

So we're just conceptually thinking about that bridge to 25%. Is it fair to say that better LDP slightly more stable LDP more than outweighs Mexican peso and some lighter EV volume on the backlog?

Yes, I think, Dan, it's probably a little bit early to get into that level of granularity. So I'd rather save that for the fourth quarter earnings call.

Got it. Okay. Thank you. And then as a follow-up I wanted to follow up on Seating and the TCS strategy. And I think one of the points you mentioned from the Seating day back in June was that by having the full vertical integration that you now could see more complete systems or saying this is obviously a bit of a shift from what OEMs have done in the past where much more of a direct sourcing model. In your conversations with customers are you seeing more data points that they are willing to change that sourcing model and sourcing more of a complete system?

Yes, that's exactly what we're seeing. On the programs we've been awarded from a competitive perspective we're in the contract itself the language reads we have the sourcing control over those components. And we'll in parallel path do the traditional system along with a much more technical system or innovative system with the modularity that we talked about. And now what we're doing is just taking that across multiple vehicle lines even in the case where we don't have a just-in-time award. And we're seeing that trend. And like I mentioned in my portion of the dialogue was, it went from us pushing to now them coming to us and pulling it and saying how quickly can you go across multiple vehicle lines, because they see the real savings when we could take it across significant volumes and so we're lining up our quotes in a particular way where it was individual to a Seat program. Now we say, listen, if you take this and extrapolate across multiple car lines, here is your savings and the benefits of what we are talking about with 50% part reductions much more efficient system just from a therapeutic standpoint, from a heat standpoint, from a time to sensation perspective or weight perspective you can then start plugging that into different alternative systems within the vehicle itself where it's been limited maybe not even offered in rear seats or in other vehicle options within the vehicle itself. And so, I mean that is the plan. That's exactly what we're doing. And the important part that we're focused on is executing the validation and getting that done. And we said sometime mid-year next year, we'll have the validation done and that's through our customers. And so that has been validated through their own internal specifications and requirements and that's a very important part of what we're focused on.

So, there's been nine customers as we highlighted in the prepared slides for today that have granted us sourcing control. So that's nearly all the JIT programs that we've been awarded since the acquisition of IGB have included sourcing control for us of Thermal Comfort components.

Great. Thanks and it’s very helpful.

Thanks.

Hi. Thank you very much. I have a couple of follow-up questions regarding the company's exposure to electric vehicles and the potential risks from the recent slowdown in automaker investments. Could you remind us or quantify your content exposure to Altium? If I'm correct, I believe you've secured a significant amount of business, including several parts of the vehicle. Could you provide some details on this? Specifically, what are you supplying for Altium and what is the approximate value per vehicle?

In Altium, we have the battery electric truck platform the battery disconnect unit and we haven't quantified the CPV but we've talked about BDUs generally $600 to $800, it's content per vehicle. That saying that's the CPV on that program but just kind of holistically looking across the market. And then we also had the Intercell Connect Board, which is a much lower CPV than the BDU but that's on various Altium platforms. It's not 100% of the volume, it's dual source. And so, as I mentioned to an earlier question, we do expect to see lower revenue on the GM BDU in 2024 and probably 2025 given the announcement that they've made. But as we looked at our $1.3 billion revenue target for electrification products generally, we are in line with our previous expectations. So we've had new business awards with other customers since that target was established that have offset the impact of lower expected revenues on the BDU.

Okay. That's helpful. One quick follow-up. Do you supply wire harnesses also on Altium?

We do not. Well, we do have low-voltage wire for certain GM EV programs but not high voltage at this point.

Understood. And then just as a quick follow-up. So I appreciate the comments around being on track feel sort of like the mid-decade target on EV. But can you just go back over the math around the 2024 EV exposure, because as you mentioned before it's not just in E-Systems. It's also obviously some EV platform within Seating. So can you just go back over sort of like the exposure you have there?

Yes. And again, we'll provide a fuller update on the backlog as we always do in the fourth quarter earnings call, late January or early February. What I tried to do today is just highlight for the analyst modeling next year and for the investors listening to the call that obviously, the announcements by our customers would have an impact on the backlog that we had previously projected for 2024. It was previously estimated we have $1.5 billion of revenue. We don't have a precise update to that. But most of the Seating revenue in the backlog has been electric vehicles, because most of the new vehicles customers are launching are electric vehicles. And then in E-Systems we've already talked through the GM BDU specifically. And so I think it's reasonable for one to assume, based on all the comments that customers have made that the backlog for 2024 would be 20% or so less than what we expected. At the same time, we've continued to win business at a pace that would allow for the three-year backlog that we published in February to be similar to the three-year backlog we published in February of this year, which is $2.85 billion overall for the company $1.08 billion in Seating and $1.05 billion in E-Systems. There may be a little bit of mix between the two segments, but I think that's a reasonable expectation for the total backlog based on everything we're seeing including the revisions to the volumes they described for Electric Vehicles.

That's extremely helpful. Thank you.

You're welcome.

And ladies and gentlemen, our final question today will come from Joseph Spak from UBS. Please go ahead with your question.

Thank you everyone for accommodating me. Jason, I just wanted to follow up on the BEV units. I understand that the numbers are expected to be slightly lower in 2024 and 2025. However, if these figures remain consistently below what you initially projected for several years, do you have any options in the contract to either recover costs or increase the price for the units produced?

Yeah. Absolutely, Joe. The customers have been very cooperative collaborative with regards to changes in their production plan. They understand the investments that we've made. They've worked with us. That's part of what allowed us to reduce the capital spending this year push it out may eliminate it if the volumes don't materialize. So we're being much more deliberate in putting new capacity in. And then of course there are discussions around piece price tied to volume changes as well. So that's absolutely the case. And one point I also want to highlight, when we established our backlog and published that last year we weren't using customer planning volumes directly. We of course discount those. Even given that we believe that the volumes that they'll come out with in their plans for next year may still be lower even than what the discounted volumes we used in our backlog.

Perfect. And if I could sneak one in just on the strike as we sort of look like we were starting to get back to work and hopefully that expands. One of the things we've been hearing about is a little bit more sort of maybe pain in the Tier 2 or Tier 3 level. Like are you seeing any stress in your suppliers that would either add some costs or make a ramp-up a little bit slower?

Yeah. I think that we've seen pressure in the lower tiers over the last two years with commodities and inflation. And certainly, this didn't help. I wouldn't say that the strike has gone on long enough or have been deep enough to have a meaningful impact on that at this point. Maybe around the edges we're seeing some modest effects from that. And I think in Seating one thing that helps us too is the vertical integration capabilities across the whole seat. So where we do have the structure in the supply base, we also have that flexibility to bring products in-house. We've done that from time to time as well where you've had a distressed supplier on an important program. We've brought that in-house to solve the issue. So we have other ways to remedy that too.

Okay. Perfect. Thank you.

You're welcome.

Great job, everyone. It seems like the only ones left on the call are the Lear team, so I just want to take a moment to reflect on what a fantastic quarter we've had. Everyone has put in tremendous effort despite some external challenges, and I truly appreciate all your hard work. The recognition we've received from our customers, as well as from J.D. Power and other third parties, continues to validate the excellent job we're doing and our commitment to driving excellence. I also want to acknowledge the team that has relentlessly worked on the unprecedented launch of the Wagoneer and Grand Wagoneer. The team did an outstanding job with an industry-first launch, which is really special. Additionally, the overall performance in operating income and cash generation has been impressive. Let's finish this year strong with one more quarter to go; let's give it our all and wrap up this quarter successfully. Thank you, everyone.

Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.