Lear Corporation

Second quarter sales increased 3% year over year to $6.2 billion. Core operating earnings were $313 million versus $292 million last year, and adjusted EPS was $4.28 versus $3.47 a year ago. Operating cash flow was $461 million, up from $296 million, and free cash flow was $288 million, up 69% year over year. Seating sales were $4.6 billion and adjusted operating earnings were $312 million with a 6.7% margin; E-Systems sales were $1.6 billion and adjusted operating earnings were $91 million with a 5.8% margin. For full-year 2026, Lear raised revenue guidance to approximately $23.8 billion, core operating earnings to approximately $1.14 billion, operating cash flow to approximately $1.3 billion, and free cash flow to approximately $640 million; operating margin guidance was 4.8%. Management also said third-quarter revenue should be $5.8 billion to $5.9 billion, with Seating margins in the low to mid-6s and E-Systems in the low 4s.

Raymond Scott said Lear is seeing momentum across all key metrics and strategic priorities, especially seating leadership, E-Systems margin expansion, and Idea by Lear automation. He emphasized the quality of recent awards, including Audi, Leapmotor, and multiple Chinese OEM wins, and said the company’s automation and digital tools are differentiating it with both traditional and Chinese automakers. His tone was confident and upbeat, repeatedly pointing to stronger backlog, better long-term growth visibility, and continued execution.

Jason Cardew tied the quarter’s performance to higher earnings, improved working capital, and inventory reductions aided by Idea by Lear, with operating cash flow at $461 million. He quantified the full-year guide raise as roughly $165 million more revenue at the midpoint, $25 million more core operating earnings, and $40 million more free cash flow, while keeping the outlook dependent on no major tariff or industry disruptions. He also noted the company repurchased $100 million of shares in Q2, $175 million in the first half, and raised the full-year buyback target to at least $350 million.

Analysts focused heavily on China, tariff impacts, and the shape of the 2027-2029 growth profile. Jason said the biggest change in guidance was weaker-than-expected China demand, with domestic China sales down 20% through the first half, and that the midpoint reflects continued weakness in the second half; he also said the downside of the range protects against macro weakness and the upside could come from China stimulus or stronger North America truck demand. On growth beyond 2026, management said 2027 should see limited growth despite more than $700 million of backlog, because of program wind-downs and some volume headwinds, but 2028 and especially 2029 should return the company to above-market growth.