Good morning, everyone, and welcome to the Lear Corporation Fourth Quarter and Full Year 2021 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the Star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Ed Lowenfeld, Vice President, Investor Relations. Please go ahead. Thanks, Jamie. Good morning, everyone, and thanks for joining us for Lear's fourth quarter and full year 2021 earnings call. Presenting today are Ray Scott, President and CEO, and Jason Cardew, Senior Vice President and CFO. Other members of Lear's 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 Ray begins, 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 two, 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 three. Ray will begin with the business update, including 2021 highlights, key upcoming launches, and a review of our 2022 to 2024 backlog. Jason will then review our financial results and full year 2022 outlook. Finally, Ray will offer some concluding remarks. Following the formal presentation, we'd be happy to take your questions. Now I'd like to invite Ray to begin. Thanks, Ed, and good morning, everyone. Please turn to slide 5. I'm gonna provide a brief overview of our full year financial results. 2021 was an extremely challenging year as global vehicle production was significantly impacted by the semiconductor shortages in the COVID-19 pandemic. Commodity cost pressure and low visibility from our customers resulting in short-term production shutdowns led to very difficult operating environment. Despite these challenges, we reported sales of $19.3 billion and core operating earnings of $826 million, both of which reflect significant improvements compared to the prior year. I'm extremely proud of the Lear team for their performance in 2021. We delivered solid financial results, increased our backlog, and announced key strategic acquisitions and partnerships that will position the company for long-term success. Slide 6 summarizes some business highlights from the year. Our sales growth outpaced the market by 8 percentage points in 2021, with strong growth over market in both Seating and E-Systems. In Seating, we increased our market share to 25%. Nice job, Frank. Thank you. Reflecting new business wins and our leadership position in luxury Seating. We also announced the Kongsberg acquisition, which by adding capabilities in massage, lumbar, heating, and ventilation systems, will further separate Lear as a Seating supplier with the most complete component capabilities. We continue to identify additional opportunities to extend our leadership position in Seating, to increase market share and improve our industry-leading margins. On the E-Systems side, we completed multiple transactions to increase our capabilities in connection systems. These actions and other opportunities that we have identified and are pursuing will improve our competitive position in electrical distribution and support our plan to improve margins in E-Systems. We're honored to be recently featured on the 2022 list of America's Most Responsible Companies by Newsweek. Lear was ranked in the top 5% of all companies evaluated. This ranking is based on a holistic view of corporate responsibility across 14 different industries and is a testament to our industry-leading ESG initiatives at Lear. We also received multiple awards in 2021 from our customers in various industry publications. Highlights including receiving the most J.D. Power quality awards in Seating and three Automotive News PACE Awards for innovation in E-Systems and Seating. During 2021, we took several actions to improve our financial flexibility. In addition to increasing our revolver credit facility to $2 billion, we issued new lower cost debt and extended our debt maturities. We also returned $207 million of cash to shareholders through dividends and share repurchases in 2021. Slide 7 highlights some of our key product launches in Seating this year. In addition to the just-in-time assembly for each of these programs, we also are delivering multiple components for these launches, including leather, fabric, structures, cut and sew seat covers, and foam. We believe that our position as the most vertically integrated seat supplier provides a competitive advantage by improving the quality of our products and offering a better value proposition for our customers. Our pending acquisition of Kongsberg Interior Comfort Systems business is consistent with other acquisitions we've made over the past decade to expand our seat component capabilities and add innovative technologies to further differentiate our product offerings. By adding priceable features like thermal comfort capabilities to our portfolio, we believe the Kongsberg acquisition will enhance both top-line growth and margins over time. This slide also highlights Lear's position as the leader in luxury seating, with 6 of the 8 key launches on both new vehicles and key replacement vehicles for Mercedes, BMW, and Land Rover. Also highlighted on the slide are new EV launches and conquest wins. We have won over $1 billion in net conquest wins since 2019, and 4 of those programs are launching this year, including the BMW X5 in China, the Chevrolet Colorado, the GMC Canyon in North America, and the BMW 7 Series in Europe. Turning to Slide 8, I will highlight key upcoming product launches in E-Systems. We had a great year of business wins in E-Systems in 2021, with $1.3 billion of new business awards. This was our best year of new business wins since 2014, and it represents a 45% increase from our awards in 2020. Carl, nice job. Thank you. The industry outlook for electric vehicles continues to grow, and Lear is benefiting, as about half of this, the new awards in E-Systems represent content on electric vehicles, including high voltage wiring and connection systems, as well as power electronics. This trend is also apparent in our upcoming launches for this year, with 6 of our 8 key launches, which will include content in new electric vehicles. Key wire launches include our first high voltage and low voltage wiring products with a major global EV manufacturer. Late this year, we also will be providing high and low voltage products on the most sophisticated and largest wiring harness Lear has ever produced. This award for an autonomous and electric passenger vehicle is a reflection of the trust that our OEM partner has in Lear's design and manufacturing capabilities in wiring. Working on this program, we have learned a tremendous amount about high, complex, data-rich architectures, and that experience will prove invaluable as we design and develop more sophisticated electrical distribution systems in the future. As a frame of reference, this wire harness has 2 times-3 times the number of circuits as a typical wire harness program. Key electronic launches include our award-winning Battery Disconnect Unit on the GMC Hummer EV pickup, the first of many derivatives on GM's battery electric truck platform, and a 5G telecommunications unit for Great Wall that will eventually be used on multiple models as we move forward. Now please turn to slide nine, which shows our 2022-2024 backlog of approximately $3.3 billion. As a reminder, our sales backlog includes only awarded programs, net of any lost business and programs rolling off, and excludes pursued business and net new business in our non-consolidated joint ventures. The backlog increased $475 million compared to last year, despite lower industry volume assumptions for 2022 and 2023. From a segment perspective, our backlog is split roughly 70% in Seating and 30% in E-Systems. The $2.3 billion Seating backlog reflects over $1 billion of net conquest awards, as well as new electric vehicle programs for Volvo, Mercedes-Benz, General Motors, BMW, Geely, and Renault. In E-Systems, the $1 billion backlog is split roughly equal between electrical distribution, which includes connection systems and electronics. Approximately 50% of the backlog in E-Systems reflects products that support electric vehicles. The E-Systems backlog is well-balanced by customer and by region and will support continued diversification of our customer base. While not shown on this slide, the 2022 to 2024 sales backlog for our non-consolidated joint ventures is an additional $570 million. Total backlog, including these non-consolidated joint ventures, is approximately $3.9 billion, which is roughly equal to the highest total backlog in our history. Consistent with historical experience, we expect the third year of our backlog to continue to grow, as there are several programs that we are pursuing that will launch in 2024. Hold on, Jason, I want to pause for a moment. I'm gonna go off script. I just wanna say a few words. It's tough for me to get through that slide and not thank Carl, Frank for all the hard work. Your teams did incredible job. To all the Lear employees on the phone, I talk about it all the time. It's been a tough 18 months, 2 years. To have this type of recognition, I say the only rewards that are important are the rewards that we get in backlog. Profitable backlog to this company gives me extreme confidence that we're doing all the right things, and we're gonna have a great future. I wanna pause, say thank you to all the Lear employees on the team. This was one heck of an accomplishment. I couldn't be more proud of what you have achieved. To have record backlog is something special. Jason, I'm gonna turn it over to you for a quick financial overview. Thanks, Ray. Slide 11 shows vehicle production and key exchange rates for the fourth quarter. The ongoing component shortages significantly reduced global industry production for the third consecutive quarter, particularly in our two largest markets, North America and Europe. As a result, global vehicle production in the fourth quarter decreased by 13% compared to the strong fourth quarter in 2020. On a Lear sales-weighted basis, global production declined by approximately 16%. From a currency standpoint, the US dollar continued to weaken against the RMB, but strengthened against the euro compared to 2020. Slide 12 highlights Lear's growth over market for the full year as well as the fourth quarter. For the fourth quarter, total company growth over market was 6 percentage points, with Seating growing 7 points above market and E-Systems growing 5 points above market. For the full year, total company growth over market was a strong 8 percentage points, with Seating growing 9 points above market and E-Systems growing 5 points above market. Growth over market in North America of 11 points for the year reflected the benefit of new business in both segments from Ford, Hyundai, and Volkswagen, and strong production in Seating on GM's full-size SUVs and pickups, as well as Mercedes and BMW SUVs. In Europe, growth over market of 6 points was driven primarily by new business, as well as strong performance in the luxury segment in Seating, as well as new business in E-Systems across multiple OEMs, such as JLR, Audi, Volvo, and Renault. In China, growth over market of 2 points resulted primarily from new business with Ford at Seating and new business with Geely, Volvo, Great Wall, and Nissan in E-Systems. Slide 13 highlights our financial results for the fourth quarter of 2021 compared to 2020. Our sales declined 7% year-over-year to $4.9 billion. Excluding the impact of foreign exchange, commodities, and acquisitions, sales were down by 10%, primarily reflecting lower production on Lear platforms, partially offset by the addition of new business. Core operating earnings were $158 million compared to $330 million last year. The reduction in earnings resulted from the impact of lower production volumes and higher commodity costs, partially offset by positive operating performance and the addition of new business. Adjusted earnings per share were $1.22 as compared to $3.66 a year ago. Fourth quarter free cash flow was a use of $13 million compared to a source of $234 million in 2020. Free cash flow was negatively impacted by lower earnings, increased working capital, and higher capital expenditures. Slide 14 highlights our full year financial results for 2021 compared to 2020. Our sales increased 13% year-over-year to $19.3 billion, primarily reflecting the addition of new business, increased production on Lear platforms, the impact of foreign exchange and commodity pass-through. Excluding the impact of foreign exchange, commodities and acquisition, sales were up 8%. Core operating earnings were $826 million compared to $614 million last year. The increase in earnings resulted from positive operating performance, the addition of new business, and the impact of higher production volumes, partially offset by higher commodity costs. Adjusted earnings per share were $7.94 as compared to $5.33 a year ago. Free cash flow generated for the year was $85 million compared to $211 million in 2020. Free cash flow was negatively impacted by increased working capital and higher capital expenditures, partially offset by higher earnings. Although we were able to significantly reduce inventory levels from the third quarter to the fourth quarter, working capital was higher than anticipated for the full year as a result of continued production disruptions at our customers. We anticipate an unwinding of the elevated working capital to take place throughout 2022. Slide 15 explains the full-year variance in sales and adjusted operating margins in the Seating segment. Sales for 2021 were $14.4 billion, an increase of $1.7 billion or 13% from 2020. Excluding the impact of foreign exchange, acquisitions, and commodities, sales were up 10%, reflecting higher production and the benefit of new business. Core operating earnings were $912 million, up $231 million from 2020, and adjusted operating margins improved by 90 basis points to 6.3%. The improvement in margins reflected primarily higher volumes on Lear platforms, margin accretive backlog, and positive net operating performance, partially offset by higher commodity costs. While steel costs increased throughout the year and reached record levels in 2021 before recently beginning to moderate, other commodity costs have continued to rise, such as foam chemicals and leather hides. Slide 16 explains the full year variance in sales and adjusted operating margins in the E-Systems segment. Sales for the year were $4.9 billion, an increase of 12% from 2020. Excluding the impact of foreign exchange, acquisitions, and commodities, sales were up 5%, driven primarily by a strong backlog, partially offset by lower volumes on key car platforms. Core operating earnings were $197 million or 4.1% of sales compared to $157 million and 3.6% of sales in 2020. Margins improved primarily reflecting significant positive net operating performance, which more than offset the negative impact of higher commodity costs, and the margin benefit of the backlog largely offset the impact of lower production volumes. Now please turn to slide 17, where I will briefly talk about our balance sheet and liquidity. During the year, our treasury team took advantage of favorable market conditions and our strong financial position to further strengthen our capital structure and improve our debt maturity profile. We renegotiated our credit agreement to increase the revolver to $2 billion and extend its maturity by more than 2 years. We also completed a $700 million bond financing, the proceeds of which were used to repurchase $200 million of 2027 notes, repay the term loan that was scheduled to mature in 2022, and fund the pending Kongsberg acquisition. As a result of these actions, Lear has no outstanding debt maturities until 2027. We have a strong balance sheet and ample liquidity to make additional organic and inorganic investments that will strengthen both of our business segments. At the same time, we remain fully committed to returning excess cash to shareholders. During the fourth quarter, we increased our quarterly cash dividend to the pre-pandemic level of $0.77 per share. For the full year, we returned over $200 million of cash to shareholders through dividends and share repurchases. Now shifting to the outlook for this year. Slide 18 provides global vehicle production volumes and currency assumptions that form the basis of our 2022 full year outlook. We based our production assumption on several sources, including internal estimates, customer production schedules, and IHS forecasts. Though we expect the impact of supply chain disruptions on industry vehicle production to improve versus 2021, we do expect some additional downtime in 2022, particularly in the first half. At the midpoint of our guidance, we are assuming global industry production of 78.8 million units, which is about 2.4 million units lower than the IHS January forecast. From a currency perspective, our 2022 outlook assumes an average euro exchange rate of $1.12 per euro and an average Chinese RMB exchange rate of 6.35 RMB to the dollar. On slide 19, we outlined the broader industry factors as well as Lear-specific items we considered while developing our 2022 outlook. The chart is intended to highlight the implications of each of these issues on both our 2022 financial outlook as well as 2023 and beyond. While industry production volumes are continuing to recover, significant uncertainty around the pace of the recovery, combined with accelerating inflationary cost pressures, led us to issue a wider than normal full-year financial guidance range. I will start by discussing the key macroeconomic factors. We see incremental improvement in industry production levels this year, but we still significantly constrained relative to demand. As a result, we expect a gradual but sustained recovery stretching into 2023 and well beyond. On the cost side, we will see an impact from elevated commodity prices, primarily in the first half of the year when compared to last year. While we are seeing prices softening from peak levels, particularly with steel, those costs remain well above historical levels. For steel, we ordinarily lock in 6 months-12 months requirement contracts before the beginning of each year. This year, we have entered into contracts that protect our requirements while capturing the benefit of expected softening prices in subsequent quarters. In general, we expect that the first quarter reflects the peak margin headwinds for higher commodity prices, net of commercial recoveries, with margins improving in the second quarter and then again into the second half of the year. We expect wage inflation, labor shortages, and other inflationary pressures in the supply chain to impact both material costs as well as labor and overhead costs in our manufacturing facilities, where we are seeing higher utility costs, for example, as well as elevated logistics costs. As Ray highlighted earlier, there are a significant number of EV launches in 2022, which are important drivers of our strong new business backlog. This business is launching with strong margins in line with our segment averages, and as the number of EVs coming to market grows and penetration and volumes increase, this trend provides a CPV opportunity for both of our business segments. From a Lear perspective, we are taking actions to capitalize on the industry tailwinds and mitigate the impact of the headwinds. Ray discussed our very strong three-year backlog, and we have a substantial pipeline of new opportunities the team is bidding on in 2022. While we do see a bit of a reversal from the favorable platform mix we experienced in 2021, particularly in Seating, our estimated growth over market over a four-year period, 2019 through 2022, remains very strong, with total company growth over market of more than 5 percentage points, including E-Systems at nearly 6% and Seating at 5%. Specific to 2022, there are key program changeovers that are negatively impacting growth over market, such as Ford Super Duty pickup in E-Systems. We are taking proactive steps to manage our capacity and cost structure and anticipate a second consecutive year of strong net operating performance. We plan to invest approximately $125 million in restructuring in 2022 to continue aligning our product portfolio and manufacturing footprint to current volume levels while improving flexibility to increase capacity and generate strong financial returns as the industry recovers further. Ray will talk more about that in a moment. Lastly, we are working closely with our customers to negotiate recoveries or work collaboratively on offsets to higher commodity prices and inflationary cost pressures. Over the last 10 years or so, we have worked to de-risk our business by developing contractual pass-through agreements on key commodities. These agreements cover the vast majority, but not all, of our steel, copper, leather hide, and chemical cost exposure. We continue to work closely with our customers on value-added value engineering ideas, cost technology optimization, and other means of helping offset significant inflationary pressures, as well as the impact of suboptimal production schedules. Our 2022 financial outlook ranges for revenue and earnings remain wide to appropriately reflect the uncertainty outlined on this slide. Slide 20 walks our 2021 actual results to the midpoint of our 2022 outlook for sales and adjusted margins. Year-over-year revenue is expected to grow by approximately $2.3 billion, and adjusted margins are expected to improve by 60 basis points, due primarily to the increase in global volumes and our margin accretive backlog. Commodity costs and non-labor inflation driven by component, freight, and logistics cost increases are expected to negatively impact margins by 80 basis points. Slide 21 provides more details on our 2022 outlook. Our revenue outlook is expected to be in the $20.8 billion-$22.3 billion range, with a midpoint of approximately $21.55 billion. Core operating earnings are expected to be in the range of $900 million-$1.2 billion. Adjusted net income is expected to be in the range of $525 million-$755 million. At the midpoint, this would imply an increase of 33% over 2021. Restructuring costs are expected to be approximately $125 million, and we are increasing our capital spending by $90 million to $675 million at the midpoint in order to support upcoming launches and growing backlog. Our outlook for free cash flow for the year is expected to be in the range of $300 million-$600 million. Now I'll turn it back to Ray for some closing thoughts. Thanks, Jason. Turning now to slide 23. As we enter a new year, we continue to make investments to grow and strengthen our core businesses, extend our advantage in operational excellence, and develop and support our people. As always, we will continue to analyze our product portfolio to ensure we are making investments that will create the most value for our shareholders. In Seating, we're going to integrate the Kongsberg acquisition, which will further solidify our position as the leader in seating while bringing additional priceable content to our offerings. We believe this will enable Lear to improve overall seat system performance by offering more efficient, lower weight, and flexible packaging design solutions. We continue to identify additional opportunities to further strengthen our position in Seating. In E-Systems, our efforts will focus on continued growth in connection systems, which is a critical component to improving margins. We made good progress improving our connection systems business last year, and we will be looking to identify additional value accretive investments in these systems, both organic and inorganic, in 2022. Lear has a long history of aggressively managing its manufacturing capacity and cost structure, and we believe that semiconductor availability and other supply constraints will continue to impact industry volumes, while inflationary pressures throughout the supply chain will continue. Also, we don't believe all of these issues will dissipate in the near to medium term. We are increasing our restructuring spending to increase flexibility, reduce costs, and improve efficiencies in our operations going forward. These actions will ensure we are able to flex capacity with industry volumes and better position the company for future profitability. Now we'd be happy to take your questions. Ladies and gentlemen, we'll now begin the question-and-answer session. To ask a question, you may press star and then one on your touch-tone telephones. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys to ensure the best sound quality. To withdraw your questions, please press star and two. At this time, we'll pause momentarily to assemble the roster. Our first question today comes from Rod Lache from Wolfe Research. Please go ahead with your question. Good morning, everyone. Hey, Rod. A couple of questions. Your guidance for 2022, I just wanted to clarify a couple things. On the top line, you've got $767 from volume, it's about 4%. I'm guessing that corresponds with your 6% volume guide minus 2% for price. Most likely, your geographic mix is good, but customer mix is, or platform mix is not. Is that about right? Can you give us a sense of how to think about that, particularly the geographic and customer mix? Second, on the earnings bridge, you've got 70 basis points of margin, which if I'm I just wanna make sure I understand how you're portraying that margin bridge. If we were to include the $425 million of positive revenue, then to get that magnitude of dilution, there'd have to be, like, a - $130 million correspondingly on the EBIT. Maybe you could just elaborate on that. Yeah. I'll start with the second question, first. Yes, your math is pretty close. It's about $140 million between commodities. What we're calling non-labor-related inflationary impacts year-over-year. The recovery assumption embedded in there is that we would offset about 75% of the total year-over-year impact. The total impacts on a growth basis is about $575 million, Rod. In regards to your second question on the revenue bridge, yes, you're right. Volume mix other does include the effect of pricing, you know, price downs as well as our offsets to price downs. The net effect of that is less than 3%, but it is in that column of the bridge. Okay. Just to clarify, Jason, I thought you had commented on something like a $65 million commodity impact, maybe a little bit better than that. Maybe I misinterpreted that statement. More importantly, you know, if we think about the rate of margin improvement as we go forward, if it wasn't for this commodity impact, you'd be doing something like 130 basis points of margin improvement, not 60. Is that something we should be thinking about as we look forward to maybe 2023, assuming you get another increment of production and pretty good backlog? Are there other things that we need to think about vis-a-vis margins? Yeah. You may have to take a step back and just talk through commodities and what's happening there. You know, last year, we saw a $450 million gross impact. We recovered about 60% of that. The net impact is $185 million. It's a little more than 100 basis points for the company, you know, more in Seating, less in E-Systems. About 60% of that was steel and then 10% copper, 20% chemicals, and 10% on leather hides. As we look at 2022 and what we were talking about several months ago, mainly related to, you know, steel and copper and what we saw in those markets, and to maybe a lesser extent, chemicals and hides really haven't changed much. As we look at 2022, the outlook for steel is actually a little bit better than we had anticipated at that point in time. Again, the gross impact of roughly $575 million for this year and $140 million net, about only about 15% of that or $20 million is steel. We see the benefit of, you know, some additional pass-throughs from last year's increase, and better contractual terms, you know, on this year's steel exposure, coupled with what we believe is gonna be declining steel prices throughout the year, where the first quarter is sort of the peak impact, and then it works its way down throughout the balance of the year. You know, copper, chemicals, and hides are a similar exposure to the prior year. The big difference for us this year is what we're seeing on components and yarn, resins, other, you know, other components that we didn't see cost pressure on last year. What we're experiencing now is, you know, on components where we have contractual protection, we're seeing suppliers, you know, trying to break those contracts. You know, our response to that, you know, depends on the nature of the supply agreement. If it's a directed supplier, it's pretty straightforward. You're gonna work with the customer to pass that through. In other cases where, you know, there's a large amount of steel embedded in a component and they have, you know, contractual responsibility for the buy, if the supplier is going to be bankrupt, that doesn't do you much good. You have to protect supply and grant the increase. You know, that's kind of a new dynamic that we're experiencing this year. We don't normally call out utility costs and ocean freight and those types of things, but the level of increase is so significant that I thought it warranted highlighting as part of a, you know, headwind for this year. Now, you know, as you look at our history of net operating performance, we are able to offset much of this through our own performance improvement programs, whether that's restructuring or commercial performance in the teams or you know, our operating performance. Last year, we offset all but I think 13 basis points. This year, you know, it's roughly 35 basis points. You have about 50 basis points of margin headwinds between commodities and performance over a two-year period. I would expect to claw that back certainly in 2023, and likely more than that. You know, maybe I'll pause for a second and let Ray talk a little bit about the kinda commercial environment around this topic, 'cause I think it's really the most important point that we need to get across on this call. Yeah. I think Rod, Jason mentioned it, there has been a significant shift that we're seeing relative to the supply base. You know, as we've been in this and we've been working with our customers, working with our suppliers for the last several years, and a lot of that was negotiated, and the team did a remarkable job. I mean, I think our purchasing team has done an incredible job of protecting production at the same time, negotiating what would be more transitory or temporary deals to get through a particular period of time. That's what we were seeing from the supply base was more temporary, and that things would from a commodity inflationary cost perspective decrease over time. What we're seeing now is much more aggressive positions with the supply base looking for more fixed solutions, and to Jason's point, we have a tremendous amount of detail within the cost structure and a tight network between engineering, our purchasing group, our commercial and logistics team that tie this together and really put it in front of the customer. You know, 75%, given whatever program, is directed material. So we're seeing the negotiations go on because we're in really three-way party negotiations to solve those issues. The aggressive behavior is getting to a point where it's stop ship threats with some of these directed suppliers. In E-Systems, albeit it's not as high, we still have 30%-40% of our purchase material is directed. Like Jason said, that will be passed through to our customer. There does seem to be the change where the tier twos and tier threes are in a position where it's financially, you know, they don't have the stability to really produce parts going forward. One is a solution to get them to produce parts. Two is a longer-term solution, which is more of a fixed price increase. I think the big shift or change over what we've seen in the last 18 months to really what we're seeing, and it started this year, maybe a little bit in the end of last year, was more of a longer-term fixed play on price solutions. Again, I don't think there's a You know, you can talk about the semiconductors or you can talk about inflationary costs, but it's across the board. If it's transportation and air, ocean, trucks, or if it's labor issues with labor increases or just the lack of labor support. I mean, we've had a number of situations where suppliers or customers have had to gone down because they don't have labor to produce parts. That's a more recent occurrence, and that is becoming increasingly you know, spread across the industry. What happens, obviously, you have intermittent shutdowns, which we're seeing again. I haven't seen a change. You know, I wish I could say that I've seen a change from last quarter, this quarter coming into this year, where, you know, customers are shutting down their facilities with zero or no time of notice. We're literally in plants building parts and getting notice that they're going down, which really creates that sticky labor situation, which again creates a commercial issue from our supply base into the customer. There's a number of different factors going on. We are handling it, I think, in a very specific way. It's very respectful to what's going on. But we're also. We've had some, you know, for the majority of the parts, success with our customers on getting recoveries, particularly 100% with the directed. In our situations where we have costs, we've got some really good negotiations going on with our customers to resolve these because these are gonna be much, what we believe, more fixed increases as opposed to temporary, which is what we were dealing with over the last 18 months. Just to clarify, Ray, it sounds like you're optimistic about the ability to negotiate a recovery on that, as you get it out to next year. What specifically in Seating are the categories? You know, you gave transportation, trucks, labor, things like that, but is it metals and mechanisms? Is it everything within the Seating business where there's that magnitude of inflation that's become more permanent? Yeah. Jason, do you wanna kind of talk about the- Yes. From a guidance perspective? Obviously, we put in our guidance what we anticipate both on the high and low end as far as how we're gonna get at it this year, Rod. You know, I'd say sticky labor is one of the big ones that we're dealing with right now with capacity with our JIT facilities. When you've like I mentioned, you have hundreds of people standing around trying to build parts. That's probably one of the most impactful from a cost perspective that we're negotiating with our customers when you've capacitized to a certain level, and then you have thousands of employees sitting around, and then you have to bring them back in in 24 hours or 48 hours to sit around again. That is probably one of the more, you know, costly issues that we have to encounter from a quarterly perspective. From a commodity perspective, we talked about steel. Fortunately, steel's gone down significantly, but across the board, like Jason mentioned, yarn, obviously leather was something that impacts us this year, particularly in the first half, and chemicals are issues. I wouldn't say it's significantly large as what we see just running our facilities in the JIT facilities. I'd say components that are made with steel and resins are where we're seeing the kind of stickier, more permanent price increase requests. Even with steel coming down, you know, 30% North America from that peak, it's still more than double its usual historical level. Smaller suppliers that have a high percentage of steel as a component in their part are where we're seeing probably the most significant distress on the Seating side. E-Systems, you know, parts that are made with copper and resins combined are where we're seeing pressure in addition to the obvious issues with microchip suppliers, which are more three-party discussions with our customers. Okay. Thank you. You're welcome. Thanks, Rod. Our next question comes from Joseph Spak from RBC Capital Markets. Please go ahead with your question. Thanks. Good morning. I guess I was wondering if you could give a little bit more color of the margins by segment that you expect. And then specifically in E-Systems, I know you've talked in the past about incrementals on that volume, but what's not really clear to me is sort of how much investment you're putting into E-Systems, and I'm wondering what that amount is for 2022 and how that plays into the margins for that segment. Yeah. The margin range for E-Systems is, you know, sort of mid-3s to a little less than 6% from the low end to the high end of the guidance range. It's the math is 4.7% at the midpoint. We're seeing good conversion on volume in E-Systems, you know, in the neighborhood of 27%. We're seeing good conversion on the backlog. It's converting at more than 10%. The biggest margin headwind again in E-Systems is going to be this, you know, the net effect of these component commodity increases, which is about, you know, a little more than 100 basis points of headwind. To a lesser extent, our continued investment in engineering in that segment. You know, that's much less significant in terms of the basis point impact. You know, if I kind of step back and look at, you know, reading through this year what E-Systems margins look like, out in a more normal volume environment, you know, I think so at 4.7%, if you, if you just add back, you know, volume at, say, 89 million units, that's 2023's, you know, IHS forecast, you know, that takes you to 7% by itself. You know, clawing back, you know, a third of the commodity impact and half of the premium costs that we're continuing to incur in that business, you're at 8%. With our continued growth in Connection Systems, over the next couple of years, there's a very clear path back to, you know, 8.5%. So I think what's really weighing on that segment is less about investment, and more about the net effect of the commodities and component cost increases. Okay. Thanks. In seating, sorry, the margin range? In Seating, the margin range is sort of mid-6% to just over 7%, you know, 6.8% at the midpoint. Okay. I guess the second question is just on within E-Systems on Xevo. We heard from Cerence yesterday there was a canceled program with Xevo. What's the update on Xevo from the Lear perspective? Yeah, I haven't heard about that. Not sure what Cerence is referring to. Let's get back to you on that, Joe. Yeah. Okay. Is there an update just on the progress for that business? How that's sort of contributing to the go forward trend for E-Systems? Yeah. What we've done at this stage, Joe, is we've fully integrated that into E-Systems and into the electronics business. Essentially it's a little bit like some of the smaller acquisitions in electronics that we've had with Xevo, Arada, and others to just round out our software capability and that's embedded on the electronic modules that we're selling. You know, not much of an update to provide specifically for you on that in terms of independent revenue or anything like that. Okay. Thank you. Our next question comes from Dan Levy from Credit Suisse. Please go ahead with your question. Hi. Good morning, and thank you for taking questions. Good morning. I just want to go to your growth of the market, which I'm calculating over, you know, on a weighted basis versus year-end market expectations. It's like 1% growth of the market. You just did 8% growth of the market in 2021. Maybe you could just give us a sense of that 8% outgrowth. How much of that was unique, which would be subject to payback, so to speak? I think you mentioned some items on mix and changeover, mentioned Super Duty, but why only 1% outgrowth in 2022, and is the outlook beyond 2022 still for something in the mid-single-digit range? Yeah. I'll start with the second part of that question first. Our outlook longer term really hasn't changed in either segment. I think if you look back again, you know, 2019 through 2022, it gives you a better sense of the growth potential of both business segments with E-Systems at 6 points of growth over market and seating at 5. So this year, you know, it's a little bit lumpy because of changeovers and the benefit we had last year, particularly in seating with the very favorable mix sort of reversing course. I'll just give you a couple examples. Talked about the changeover in the prepared remarks in E-Systems on the Ford Super Duty. In addition to that, you know, Expedition and Navigator, another large platform in that segment, the volumes are expected to be lower in a North American market that we're projecting to grow at 12%-13%. In seating, we have Daimler changing over their SUVs in Tuscaloosa, not the GLE, GLS, but the new vehicles that they're introducing. There are three electric SUVs that will be launching at the tail end of this year. Their volumes are down year-over-year after a record year last year, again, in a North American market that is growing at 12% or 13%. There's just some, you know, it's just math at that point. In Europe, what we're seeing in terms of the IHS projections, which underpin a lot of our assumptions on volumes is flattish or even lower volumes on some luxury platforms, Porsche, Panamera, 911, Boxster, Cayman. Those platforms, the Audi Q3 is another one that comes to mind, again, in a region that is slated to grow 12% or 13%. What you're seeing is the rotation back to mainstream vehicles. Now, that's the assumption we've made in our guidance. If you were to fast forward 12 months, given the constraints due to the chip issue right now, I wouldn't be shocked to see our revenue come in at the midpoint and the industry volumes come in much lower. Because we're starting to see some of that already where, given the constraints, OEMs are focusing on specific platforms that they, you know, that have the highest margins or do best for them. It's really kind of an unusual situation, both last year and this year, in terms of the significant outgrowth we've seen last year and the flattish growth this year relative to the market. I would attribute more to the unusual nature of what's happening with the chip shortage more than anything. If you take a step back, the biggest driver of Seating growth is the conquest wins. You know, we have $1 billion in our backlog over the next three years of business that we have taken from competitors, whether that's the Colorado and Canyon here in North America that's launching at the tail end of this year, 7 Series and then the 5 Series BMW in Europe, X5 in China. We have Volvo, significant business with Volvo that's starting to roll on more next year and the year after, that are all conquest wins. We see significant opportunities to continue taking business from competitors, given our unique value proposition, which has only strengthened through the acquisition of Kongsberg. On E-Systems, you know, the underlying, you know, products that are in that segment are continuing to grow considerably faster than the market with the additional content, particularly on electric vehicles, which we've talked at length about in the past. Okay. Just to unpack one of the points there, just to be clear, does this contemplate? I mean, GM is your largest customer. I think they're something like 20% of your mix, and they're out there saying volume growth of 25%-30%. Does this contemplate, you know, an outlook like that from GM? At the high end of the range, we have something that resembles what GM's talking about on certain platforms like the full-size truck and SUVs. You know, we've been a little bit more cautious at the midpoint of our guidance range, and we're not reflecting the full customer projections at this point, just given what we experienced last year. On other platforms that had a lot of downtime last year, we've sort of assumed that that is going to continue again because of the constraints in the marketplace. You know, the answer is yes and no, and that depends on the platform, Dan. Okay, great. Thanks. A follow-up, I think you touched on it a little bit here, but you know, you mentioned in your deck that your Seating market share is now 25%, up from 23%. I think your long-term target is 27% or 28%. Maybe you could just unpack, you know, what is it that's driving continued market share gains in Seating? Is it just the vertical integration? Is it something on, you know, the cost side? You know, what's driving the market share wins? Well, you know, I think it's a combination of a number of things. We talk about this going back 10 years +. We obviously invested in the business to really be the most efficient, high-quality producer of seats in the world. We're very disciplined with our approach and still are very disciplined with our approach on how we look at business by customer, by region, by component, so that we get a fair return on invested capital and position that business for continued success. I think, you know, what we're seeing now is, one, we have an incredible reputation built on what I just mentioned, of the investments that were made a long time ago of operational excellence and the continuation of Industry 4.0 and technology within our manufacturing plants to really have a superior manufacturing plan. In addition to that, I think what you've seen over the most recent three to four years is our investment in innovation and technology. What we've done is we've been able to differentiate ourselves as just a pure JIT manufacturer, but bringing what we talk about as value solutions for our customers. Kongsberg is a great example. You know, we talk about intuitive seating, and really, we've had engineering teams working on value propositions and solutions with innovation to change thermal comfort. Those type of technologies or innovations allow us access into early development programs. You know, Frank Orsini sitting here is the President of the Seating group, and Frank and I have been in numerous meetings inside different customers' design studios talking about technology. For example, ConfigurE, where you have electrified power rails, which is a combination of E-Systems technology innovation, and Carl's here to help us really differentiate our capabilities. When you have those innovations and technologies, coupled with what we believe is the most efficient manufacturing processes and continuing to develop those technologies, as we move forward, it's allowed us to grow, and it's profitable growth too. I think that's another key element as you look at the business. We're growing on what is arguably the most profitable seat business in the world, and we do not take business that doesn't generate the same margins or is accretive to what we're looking at. We've been successful. We're gonna continue to invest. I think this Kongsberg acquisition is just another step in the right direction, and we're gonna continue to put investments organically or inorganically in areas where we can drive our manufacturing processes to be more efficient and/or create very unique innovation and technologies our customers are looking for. That combination has worked. I, you know, think back. Jason and I have talked about this. We've watched the margin expansion. We've looked at the investment we've made at 10+ years, and you can't just turn it on and think you're gonna be a world's supplier of just-in-time efficient seating systems without a long history. I'm proud of where we're at. 25% was a great number when we got to roll that out this year. You heard my comments on backlog. It is the greatest thank you from a customer given the circumstances we're up against to arguably, okay, volume adjusted, we had a record backlog. That is something that I just look at and tell the team that when they award us profitable business, it's the best thank you we can get. Got it. Thank you very much. Yep. Our next question comes from David Kelley from Jefferies. Please go ahead with your question. Hey, good morning, guys. Maybe a follow-up on the earlier E-Systems margin discussion, Jason. The 80 basis points of premium cost that weighed on Q4, I was just hoping to get a bit more color on kind of how you're thinking about that impact and trajectory into 2022, and specifically in light of those semi and electronics and inflationary costs in the market. I just also was hoping to get more color on some of the reception to potential pass-throughs from your customers. Yeah. Starting with premium costs, we're expecting that what we incurred last year to continue again this year. A similar level of disruption and resulting premium freights, as Ray said, sticky labor and other inefficiencies, impacting us sort of throughout this year. On the component side, you know, I think it depends on the nature of the supply arrangement and the component itself. So for example, with microchips, it's generally a three-party discussion between the customer, us, and the supplier. It's really based on the availability of parts. The price increase has to be absorbed really at the customer level just to protect production. In the case of other directed supplier parts like terminals and connectors, again, it's more of a three-party discussion. But beyond that, we are seeing, you know, inflationary pressures on other components where we control the sourcing, and that is having, you know, a fairly meaningful impact on E-Systems, you know, for the year. The commodity impact is about 107 basis points year-over-year. While the premium costs and those types of things haven't changed year-over-year, you know, the net effect of commodities after recovery has changed. Now, some of that, I think, will get passed through in subsequent years. Some of this takes time, and you're trying to balance your desire to grow the business and you're implementing cost reductions that maybe take time to fully offset the impact. I think it's reasonable if you look out to next year that, you know, roughly a third of what we've incurred over the last two years in commodities should be offset, and we'll continue to improve upon that as the, you know, years go by. Ultimately, you know, everything we're quoting today really has kind of these higher cost levels factored in. As new programs launch, we would expect that the margin profile would be in line with our typical margins depending on the underlying products going forward. Okay. Got it. That's really helpful. Maybe just a follow-up on your point at the timing of the pass-throughs. You know, if we take a step back, you know, E-Systems backlogs ramping nicely, you have solid mix there. Is there anything structural that has changed the path to the 10% margin target you talked about for 2024, assuming, of course, we're back to some normalized level of LVP? Yeah. I think it's the combination of, you know, running at normal production rates, you know, so you capacitize a plant for a certain volume, the customer has a planning volume, and then they adhere to it because they have availability of parts. You know, that coupled with some normalization on commodities and then also on premium costs, you know, those are the factors that are holding us back. The things that we can control, we're doing very well with in terms of the net performance in the business, the growth in connection systems. All of those things are continuing to grow margins in line with what we had laid out, you know, over the last couple of years in terms of our longer term plan to get to 10%. Nothing structurally is different than what we've talked about previously. Okay. Got it. That's helpful. Thank you. Our next question comes from Colin Langan from Wells Fargo. Please go ahead with your question. Oh, great. Thanks for taking my questions. You mentioned earlier, the potential to claw back or your expectation that next year you'll be able to claw back the commodity costs. I mean, are we talking the $185 last year and the $140 expected this year, or part of that? How should we think about the good news we should be thinking about, as you recover that? Yeah, I'd love to be able to give you that level of granularity. We've modeled some different things, and, you know, we're working hard to pass this through as quickly as possible and offset what we can't pass through through our own investments in restructuring and other performance drivers. As I start to think about sort of 2023, 2024, you know, what we're assuming is that roughly a half, a third to a half of that impact we would see unwinding itself in 2023. That's our target as we sit here today, but there's a lot of moving parts, Colin, so it's difficult to put a pinpoint number on it. Is that $185 and $140, we could add them together, or did you already start getting some of the $185 within this year too? I would look at those together. You know, the cumulative effect on our business of $325 million unwinding over multiple years. Part of that's got to come through, you know, some normalization of costs. Steel, for example, you know, after peaking at the end of September last year, it's down a third in North America. You know, suggestions are that it will, we will see more capacity coming online throughout this year and next year. Certainly over, I'd say, the next 24 months, you should see steel maybe not get back down to 2020 levels, but certainly somewhere much closer to that zip code. Okay. In terms of growth over market, some different numbers were, I think, discussed on the call. It's roughly about, you know, 10% growth, your assumption is 6% market. Your outlook is organically about 4% over market. One, is that right? Then two, when I look at the slides, that volume slide is up four, so the backlog is really driving that above market growth. I get the product mix, but, you know, why with geographies being higher in North America, Europe, those up 10%, wouldn't that overwhelm some of the product headwinds that you're highlighting? It seems to be underperforming. The volume seems surprising when North America, Europe are up 10, over 10. Yeah. When we talk about growth over market, we do it on a sales-weighted basis. It the market we're talking about is growing faster than, you know, the 6% that the industry is growing, because as you point out, our two largest markets are growing at 12% and 13%. You know, the roughly, call it a point of growth over market is relative to that sales-weighted basis, not the industry volume itself. Okay. Okay. Got it. All right. Thanks for taking my question. You're welcome. Ladies and gentlemen, our final question this morning comes from Brian Johnson from Barclays. Please go ahead with your question. Thank you. Just a couple of questions and, you know, again, around the top of the call in inflation and margins. I was, and I apologize, a bit confused, in the discussion earlier about your relations with the tier twos and the tier threes. You know, it's well known that you're less vertically integrated than the other competitor in seating. You know, you mentioned some of those suppliers are struggling, but then how does that get reflected in the prices you paid? And in particular, you talked about moving to fixed price contracts. It would seem like more indexing that's directly tied to what the OEM paid would be the solution there. Just wondering how that plays out and how, again, kind of thinking of 2022, 2023 margins, where that winds up. Yeah. I think Ray's reference to fixed versus temporary is just a reflection of kind of the underlying inflation rates you're seeing in the U.S., you know, at 7%. It's you know, because labor is the biggest input to that. Eventually, that works its way, you know, through to the price of all products, as you're seeing in the broader inflation rate. In terms of our level of vertical integration, I think our level of vertical integration, if you look beyond structures, is beyond what others have in the space. A lot of what we're seeing is on that tier three level, you know, components into our seat component plants. That could be, you know, wire and hog rings. It could be yarn that's an input in fabric, and you know, even chemicals that are used to top coat leather. Things that ordinarily don't move around much, we're starting to see price increases on where we have contracts, but the suppliers are trying to break them. It's ultimately a negotiation with the supplier and then a negotiation back-to-back with our customers to try and pass through what we can. We've tried to put a balanced view of that into our outlook, which at the same time, you know, includes stretch on our end to perform and restructure the business to offset what we can't pass through. You know, it's difficult to say, you know, what the impact is going to be kind of quarter to quarter throughout this year. We know on balance it's a challenging environment, and we've captured what we think is a fair view of that in the outlook, and we would expect to see unwinding of that as we look out to next year and beyond. Okay. Just a quick follow-up. If you think about the performance improvement walk, you know, typically that's a Lear strong point. In fact, in the past, I know you know, sometimes projects start at low margins, and they get worked up. Is there any way to separate how much of that is the ongoing productivity and other re-engineering improvements versus the offset from inflationary wages and how that balance is working out? Yeah, I'm not gonna get into that level of detail, Brian, on the components of our performance, but they are generally a combination of plant efficiencies, negotiated price downs from our suppliers through purchasing, CPO and VAVE on the commercial side, working with our engineering group and our customers to drive cost out and capture some margin benefit associated with that. You know, those are the primary drivers. We are seeing to your, I think maybe the underlying point of your question, we are seeing an elevated level of labor economics in our plants, which is lessening maybe that net performance beyond what it ordinarily would be. You know, I don't have that, you know, that specific detail in front of me to break out. Okay. Are the OEMs receptive to recovery of inflationary labor costs, whether yours or the sub-suppliers? Yeah. We're having some good discussions with the customers and, you know, for the most part. Again, I think to Jason's point, there's a number of ways, and you're right, we are very good at this, and this is something we take a lot of pride in, is that we have a number of different actions. One, getting at the sticky labor. We're looking at how we can flex our different facilities. We have a very unique position, and we talk about getting at our facilities. In South America, we're able to combine different product offerings like wiring really fits well with the sequencing of wiring in just in time or trim. We've done a nice job of consolidating some of our plants to flex them as we're seeing this persist, and we don't believe it's gonna evaporate or go away in the near term. We're gonna take some of the actions on ourselves and lower our costs. From a CTO cost technology optimization, we've queued up, you know, hundreds of millions of ideas, and those ideas are in front of the customer. We obviously validate them. We make sure that they understand what we're trying to do and what we're trying to achieve. Those are great, you know, commercial solutions for us to offset costs. Then we have this just negotiation that we talked about. We have incredible transparency. Our teams, both teams in purchasing and E-Systems and Seating are doing a remarkable job. You know, when Jason's talking about, we're talking about more of a fixed cost going forward as opposed to solutions that are more temporary in the price. We do have an enormous amount of transparency into the details when suppliers are bringing forward cost changes or cost price increases. That's when we get into tier twos and threes and et cetera, because we really go through and audit every single position from if it's directed or not directed. We have a great process in place. I think that also helps when we are able to negotiate a settlement with our customers. Last year, I think the teams did a remarkable job. I couldn't be more impressed. A lot of that was thinking that this might be temporary. Some of the solutions with the suppliers and our customers were under a temporary resolution or proposal or settlement. Now we're into a more longer term solution or what I say is fixed. Those conversations are going extremely well. Again, I think it's how you bring the information forward. I also think it's how you're flexible in solving your own problems first. We're not gonna be a victim here. We have things that we can do, and we are doing those, like we announced with even our restructuring plan. We've been very successful with the plans we did in South America. We've been working on that CTO, VAVE list for some time, and that is actually working to our advantage too, because the customers are willing to work with us on solutions that lower cost. You know, we got work to do like always, but we're very optimistic 'cause we're very good at it. Okay. Thank you, Rick. Yep. Thanks. Okay, I think that's the last call. I just wanna conclude the call and again say thanks to all the Lear employees. It was one heck of a year last year. Everyone did a great job. Very optimistic about the future. Like I said, I think the backlog is just another indicator barometer target of what we're trying to achieve. Profitable backlog is exactly the best accomplishment and thank you from our customers. Thank you to the teams on the phone and look forward to seeing you soon. Ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for attending today's presentation. You may now disconnect your lines.