Good morning and welcome to the Lear Corporation third quarter 2026 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. This time I'd like to turn the floor over to Tim Brumbaugh, Vice President, Investor Relations.

Please go ahead. Thanks, Jamie. Good morning, everyone. And thank you for joining us for Lear's third quarter 2026 earnings call. Presenting today are Ray Scott, Lear President and CEO, Jason Cardew, Senior Vice President and CFO, and Jared Fideli. Vice President of Finance for Seeding and E-Systems, who will succeed Jason as CFO starting in March. Other members of Lear's senior management team have also joined us on the call. Following the 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 10K and other periodic reports. I also wanna 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. First, Ray will review highlights from the quarter and provide a business update. Jason will then review our third quarter results and Jared will provide an update on our full year guidance. 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, Tim. Before I begin, I want to touch on the upcoming important change to the leadership of our finance organization. After more than 34 years of dedicated service to Lear, Jason Cardew has elected to retire. I want to thank Jason for his leadership, his commitment, and his many contributions to Lear. Jason and I have worked closely together for many years. and not only has he been a trusted partner, but he is also a dear friend. Jason, your next chapter is incredibly well deserved and I wish you and your family all the best. Jared Fideli will succeed Jason as the CFO effective March 1st. Jared has been with Lear for 23 years and has a broad global financial and operational experience. He has been working closely with Jason and me for many years and is more than ready to assume the role. Jared, congratulations. I look forward to continuing to work closely with you and I know you will continue to execute our strategy to deliver improved financial performance and value to our shareholders. Okay, with that, please turn to slide five, which highlights our key financial metrics for the third quarter. They're continued delivering meaningful year over year improvements across all metrics in the third quarter. Sales increased 2% to $5.8 billion despite global industry production declining by 2% on a linear weighted basis. Core operating earnings were $256 million, a 6% increase, in the fourth straight quarter of year over year improvement. Adjusted earnings per share reached $3.71, a 33% increase from the third quarter of 2025, accelerated by our robust share repurchases this quarter. We generated operating cash flow of $329 million and free cash flow of $158 million in the quarter. Slide six summarizes our key business and financial highlights for the quarter. Our four strategic priorities continue to drive our focused execution, extending our global leadership and seeding, expanding each system's margins, growing our competitive advantage and operational excellence through idea by layer, and supporting sustainable value creation with disciplined capital allocation. During the quarter, we continued our momentum of winning key awards in both segments, generating approximately $3.9 billion of net business awards year to date, with approximately $3.1 billion in seating and approximately $800 million in eSystems. This represents an increase of $1 billion during the quarter, with eSystems on track for another year of over $1 billion of business awards. These seating wins in the quarter include the complete seat, foam, and heat for two programs with a North American automaker. One award is the replacement of a program we currently supply, and the second is a new award for a future program to support this customer's expansion of their product portfolio for the North American market. Our idea by Lear capabilities were instrumental in winning these awards. Lear is the number one seat supplier in India. During the quarter, we were awarded the largest complete seat program in our long history with Mahindra Mahindra. The award includes both replacement and incremental new business. Our new awards for Comfort Flex, Comfort Max, and Flex Air applications this quarter bring our modular and innovative seat product total to 47. The program with Mercedes is a conquest award, replacing current lumbar and massage components with a Flex with a ComfortFlex modular solution. Awards with Jag Land Rover include a FlexAir application as well as a ComfortMax solution integrating heat into the trim cover. Five modular projects launched during the third quarter and seven additional programs will be launching during the fourth quarter, accelerating the adoption of our modular solutions in the marketplace. Our momentum with the Chinese automakers continued in both segments. In seeding, we are awarded an upcoming program with a Chinese luxury EV automaker projected to launch in 2028. This program is currently projected to be sold in China and exported to other markets. BYD also awarded us two key programs as they expand their production in Thailand and Indonesia. We currently supply those programs in China. In these systems, we won a conquest award with JMC Ford Joint Venture, New Wiring Business with FAWBW, and two non-consolidated wire awards with BAIC, all in China. We continue to drive growth in our core eSystems products by securing electronics and wire conquest awards. The electronics awards is for power distribution box on a commercial and passenger van in Europe with a North American automaker. An additional Conquest Wire Award is with Honda in China. As we continue to grow with Japanese customers, we also retain an important wire program with Jag Land Rover in Europe. During the quarter, we released our annual sustainability report, providing an update on our Idea by Lear initiatives, as well as progress towards achieving our environmental stewardship, social responsibility, and governance goals. Our strategic focus continues to drive improved financial performance despite challenging industry conditions. Total company revenue increased 2% compared to the third quarter of 2025, reflecting growth over market of approximately 4 percentage points. Both segments outperformed the market despite headwinds from the roll-off of programs such as the Escape and Corsair and the wind-down of our non-core eSystems products. with seeding growing approximately four percentage points above market and East Systems approximately two percentage points above market, excluding the impact of the wind down business, East Systems growth over market was five percentage points. Operating margins expanded 20 basis points year over year for the total company, with East Systems margins expanding 60 basis points, driven by another strong quarter of 120 basis points of net performance. Seeding margins grew 20 basis points, driven by 40 basis points of net performance, keeping us on track to deliver our full year target. Our strong free cash flow generation allowed us to further accelerate our share repurchases. We repurchased $175 million of shares in the third quarter, completing our full year repurchase target of $350 million. As a result of our strong earnings growth and accelerated share repurchases, Our third quarter EPS increased 33% year-over-year. With our current authorization set to expire in three months, we increased our share repurchase authorization to $1.5 billion and extended it through 2029, reinforcing our commitment to returning capital to shareholders. Slide 7 provides a further breakdown of our progress on delivering long-term revenue growth and margin expansion. providing confidence we will achieve our full year targets. Over half of our year to date seeding awards have been for new or conquest programs, providing a strong foundation of future growth. In the quarter, we were awarded conquest programs with Stellantis in Europe and with Honda in Thailand, as we continue to build our relationships with Japanese customers. In these systems, approximately 70% of our year to date business awards have been for new or conquest programs. Continuing the trend from the first half of the year. During the quarter, wire conquest awards included programs in China with JMC Ford and Honda. The rollout of our thermal comfort modular solutions continues to gain momentum with the modularity and flex air winds in the quarter. The pace of business awards with Chinese automakers continues to accelerate. In seeding, our year-to-date awards are estimated to generate over $600 million of average annual revenue, up almost 90% from where we were tracking at the end of the second quarter. This reflects the growing momentum of our global wins with Chinese automakers, including with BYD in Thailand and Indonesia, following our second quarter award with Leap Motor in South America. In these systems, approximately 25% of our year-to-date awards are with Chinese domestic automakers, up significantly from 2025. We remain on track to deliver $75 million of ideal savings this year, with approximately $55 million achieved year-to-date accelerating through the end of the year, and are on track to significantly exceed our targeted restructuring savings. Our net performance continues to drive increased adjusted operating margins in both segments. Despite rising commodity and other input costs, seeding has generated 30 basis points of net performance through the first three quarters. And we expect a step up in the fourth quarter to deliver our full year target of 40 basis points. In these systems, we delivered a very strong 105 basis points of net performance through the first three quarters. We expect these systems to deliver positive net performance in the fourth quarter despite increasing copper and launch costs. A testament to our team's ability to execute. I want to spend a moment on slide eight, which provides an overview of our Orion, Michigan facility that will support three of GM's most important nameplates. The Cadillac Escalade, Chevrolet Silverado, and the GMC Sierra. The Orient facility, which represents a critical milestone in the execution of Idea by Lear technology roadmap, is the most tangible demonstration of how our strategy is redefining jet seat assembly, reinforcing Lear's position as the clear leader in seating and creating a path to future market share gains and sustainable profitable growth. Idea by Lear is our framework for reimagining how we operate, embedding innovation Digital tools, engineering, and automation into every layer of the processes. We've been building towards this facility, which integrates the technology and talent we have compiled through our targeted acquisitions and significant internal development to deliver something that, quite frankly, doesn't exist in the seating world outside of Lyric. Production in the state-of-the-art just-in-time seating facility begins next year. This facility is designed from the ground up with a digital foundation and automation embedded throughout from day one, not retrofitted. The financial impact is meaningful and immediate. We expect automation to reduce the conversion cost requirements by 10 to 15%. The more important story is what this represents strategically. Orion is the blueprint We intend to scale across our global seeding footprint to support our future key programs such as the Ford Super Duty. Each of the key technologies we are developing reflects a deliberate capability we've built or acquired and together they tell the story of what idea by layer looks like in practice. The first is what we call integrated inter-logistics. I want to be precise about the term because it goes well beyond traditional automated warehousing. Intelligent inter-logistics is the connected intelligence layer of the entire factory. It ties together inventory, material management, storage, and real-time decision making. From the moment a component arrives at our dock to the moment a finished seat leaves our facility. We really think about it across three dimensions. The first one is connected. This is about end-to-end visibility and control. Nothing moves without us knowing about it. At Orion, that means our overhead suspended material storage and delivery system is fully integrated into the production floor to track parts in real time. Our automated guided vehicles, or AGVs, keep the lines continuously fed with complete traceability. Our automated trailer loading sequencing closes the loop, connecting finished goods all the way through to the customer's shipment with precision and without manual intervention. From inbound components to outbound delivery, we see everything. The second dimension is intelligent. Visibility alone isn't enough. The system has to think and react. Advanced analytics are continuously driving decisions around inventory positioning, replenishment, and flow. Our 4D four directional storage system utilizes autonomous mobile robots or AMRs that navigate dynamically within the racking structure itself to optimize in real time based on production demand. Our raw component automated storage and retrieval systems or ASRS manage foam and trim storage. while our finished goods ASRS are both continuously informed by analytics and anticipating needs before they become disruptions. Both of these ASRS systems were developed internally by our ASI team, which is the company we acquired. We own the IP, we control the roadmap, and we can scale it across our global footprint. That is a genuine competitive advantage that cannot be easily replicated. Not only is our material handling intelligent, but so is our balancing of human capital. We are utilizing proprietary tools like cycle time deviation and dynamic line scheduling to make real-time adjustments to optimize the efficiency of our employees. The last one is autonomous. This is where the financial impact becomes most tangible. We are moving towards automated execution, meaning our people are focused on solving problems, not performing routine tasks. Robotic part loading is actively in production today, beating our lines and installing components with a level of consistency and repeatability that manual processes simply cannot match. Our AGV network operates without human direction. Our ASRS systems retrieve the position material without manual intervention. The factory increasingly runs itself, allowing our teams to focus on more value-added adjustments. Our automated smart ovens, robotic finesse, and end-of-line testing improve our process consistency, cycle time, and quality. They also improve the job satisfaction of our team. Interconnectedness is what the what is new at Auriem. We've been adding independent systems in our existing location, but the interconnectedness across multiple processes driven off demand will improve efficiency and inventory management due to real-time monitoring, analysis, and adjustments. Built by Lear's team and leveraging historical knowledge, our systems don't just reduce costs. They create a factory that sees everything, decides intelligently, and executes autonomously. What we built at Orion will become the blueprint for scaling productivity across our complete seating footprint. And with that, I'm going to turn the call over to Jason and Jared for the financial review.

Thanks, Ray. Slide 10 shows vehicle production and key exchange rates for the third quarter. Global production was down 2% compared to the same period last year. Production volumes declined by 5% in North America and 7% in China, While volumes in Europe were up 1%. U.S. dollars strengthened against the Euro, but weakened against the RMB. Turning to slide 11, I will highlight our financial results for the third quarter of 2026. Our sales increased 2% year over year to $5.8 billion. Organic sales were also up 2%, primarily reflecting the addition of new business and seeding. were operating earnings were $256 million compared to $241 million last year, driven primarily by strong net operating performance. Adjusted earnings per share were $3.71 as compared to $2.79 a year ago, reflecting higher earnings and the benefit of our share repurchase program. Third quarter operating cash flow was $329 million compared to $444 million last year, due to higher tooling and engineering investments and the timing of working capital. Year to date, operating cash flow is higher compared to 2025, driven by improvements in inventory management through our IDEA by LEER initiatives, as well as the timing of tariff payments and recoveries. Slide 12 explains the variance in sales and adjusted operating margins for the third quarter in the seeding segment. Sales for the third quarter were $4.3 billion, an increase of 76 million, or 2%, from 2025. Organic sales were also up 2%, reflecting the addition of new business, including the BMW iX3, Mercedes GLC EQ and Audi Q7 in Europe, the Series M6 in China, and the Jeep Cherokee in North America. and higher volumes on JLR platforms, which were negatively impacted by the cybersecurity attack during the third quarter last year, partially offset by lower volumes on leader platforms in China and North America. Adjusted earnings were $274 million, up 13 million or 5% compared to 2025, with adjusted operating margins of 6.3%. Higher operating margins were driven by strong net performance and a margin accretive backlog partially offset by lower volumes on Lear platforms. Slide 13 explains the variance in sales and adjusted operating margins for the third quarter in the eSystems segment. Sales for the third quarter was $1.4 billion, an increase of 17 million or 1% from 2025. Organic sales were up less than 1%, driven by higher volumes on Lear platforms, including several JLR programs in Europe, partially offset by the build out of the Ford Escape, Focus, and Lincoln Corsair reflected in our backlog as well as the wind down of discontinued product lines. Adjusted earnings were $69 million or 4.8% of sales compared to $60 million and 4.2% of sales in 2025. Higher operating margins were driven by strong net performance and higher volumes on their platforms partially offset by the build out of the programs in our backlog and the wind down of discontinued product lines. Jared will now provide an update on our full year outlook.

Thanks, Jason. Slide 14 provides global vehicle production volume and currency assumptions that form the basis of our 2026 full year outlook. Our production assumptions are based on several sources, including internal estimates, customer production schedules and mobility global forecasts. At the midpoint of our guidance range, we assume that global industry production will be down 1% on a linear sales-weighted basis compared to 2025, a slight improvement from down less than 2% in our prior outlook, primarily due to higher volumes in Europe, particularly offset by lower production assumptions for China. We have adjusted our currency estimate, which now assumes an average euro exchange rate of $1.15 per euro and an average Chinese RMB exchange rate of 680 RMB and more. Slide 15 provides an update to our full-year 2026 outlook. Our current outlook assumes no changes to current tariff policies or significant industry-wide disruptions. In recent weeks, we have seen reductions in production schedules across several customers, particularly in China. We have reduced our full-year 2026 outlook for net sales to reflect these changes. Our strong operational execution, savings from our additional restructuring actions, and anticipated resolution of ongoing commercial negotiations are expected to offset the impact of lower volumes as well as rising costs from commodities and other inputs. Therefore, we are maintaining our full-year outlook for core operating earnings. We increased our outlook for restructuring costs by $25 million, reflecting additional actions and many more. As we move through the remainder of the year, we will continue to monitor the China domestic market where consumer demand and production schedules continue to deteriorate. Slide 16 compares our October 2026 outlook to the midpoint of our prior 2026 outlook. We reduced our revenue midpoint by approximately $225 million, driven by lower production volumes on LEER programs, particularly in China, and the impact of foreign exchange, partially offset by increasing supplier pass-through due to the rise in commodity costs and commercial recoveries. Our core operating earnings outlook has savings from our restructuring actions and improved net performance is expected to offset the impact of lower production volumes on their platforms. Moving to slide 17, we highlighted our balance capital allocation strategy. Our balance sheet and liquidity profile continues to be a significant competitive advantage for us. Our cost of debt is low, averaging less than 4%, and our debt structure has a weighted average maturity of approximately 11 years. In addition, We have $2.9 billion of available liquidity. Our capital allocation priorities remain consistent. We are focused on generating strong cash flow, investing in the core business to drive profitable growth, and returning excess cash to shareholders. During the third quarter, our strong cash flow enabled us to take advantage of our undervalued share price and repurchase $175 million worth of stock. This brought year-to-date repurchases to $350 million Achieving our increased four-year target ahead of schedule. Since initiating the share repurchase program in 2011, we have repurchased $6.3 billion worth of shares and returned over 85% of free cash flow to shareholders through repurchases and dividends. In September, Lear's board increased the share repurchase authorization to $1.5 billion and extended the authorization period through December 31st, 2029, reinforcing our commitment to return cash to our shareholders. Now, I'll turn it back to Ray for some closing thoughts.

Great. Thank you. Q3 was another strong quarter, continuing our track record of consistent execution and progress. Despite a global production environment that contracted 2% on a linear weighted basis, our team delivered $5.8 billion in sales, expanded margins in both segments, and grew core operating earnings for the fourth consecutive quarter. Our resilience is the result of a focused strategy and a team that knows how to execute. The breadth of our business wins this quarter demonstrates our global reach and competitiveness. From our largest complete seed award in India to BYD programs in Thailand and Indonesia and modular seating solutions with Mercedes and Jag Land Rover, we're winning in the markets with the customers that matter the most for our long-term growth. Our year-to-date net business awards now stand at approximately $3.9 billion, and the pipeline of new opportunities remains very robust. In these systems, the transformation of our portfolio is evident, with approximately 70% of our year-to-date awards coming from new or conquest programs, and Q3 margins expanding 60 basis points year over year. We are demonstrating that our focused portfolio strategy is working. The wind down of our non-core products is nearly behind us. And what remains is a stronger business with a significant runway ahead. and perhaps the most exciting development this quarter is what we shared about our Orion facility. This is idea by Lear in action, not a pilot, not a concept, but a fully integrated purpose-built manufacturing environment that reduces the conversion cost requirements by approximately 10 to 15% and sets a new standard for what a seating facility can be. The technologies we are deploying at Orion from intelligent inter-logistics to autonomous material handling to AI-powered quality inspection are proprietary, scalable, and represent a genuine competitive mode that will be difficult for others to replicate. And we continue to return meaningful capital to our shareholders. Completing our $350 million repurchase target ahead of schedule and expanding our authorization to $1.5 billion through 2029 reflects both the strength of our cash generation and our conviction in the long-term value of this company. As we head into the fourth quarter, we recognize the challenges ahead, from commodity pressures to softness in the China market. These are dynamics we've successfully navigated throughout the year, and our team has the tools, talent, and track record to continue to execute. We are maintaining our full-year outlook for operating income and remain confident in our ability to finish the year strong. and now we'll go ahead and open up the call to questions.

We will now begin the question and answer session. To ask a question, you may press star and then one on your touch tone phones. If you are using a speakerphone, we do ask that you please pick up the handset before pressing the keys. To withdraw your questions, you may press star and two. Once again, that is star and then one to join the question queue. We'll pause momentarily to assemble the roster. and our first question today comes from Dan Levy from Barclays. Please go ahead with your question.

Hi, good morning. Thank you for taking the questions and Jason, congratulations. Jared, congratulations to you as well. Wanted to start with a question on the sales outlook and particularly with what's happening in China. You know, there's been a number of quarters now where You've underperformed, and I think this is similar to some of your other peers out there. But maybe you can give us a sense of, within China, what the path is to finally starting to see growth in line with the market. I know you're saying that you're targeting 50% domestic mix, but the issue is industry is at, call it, 75% plus. I know you talked about winning some programs here, but at what point do you finally start to have China be in line? And maybe you could just unpack the underperformance. Is it just this customer mix? Is it competition? What's going on in China and how is this fixed?

Thanks, Dan. I think, you know, First, I think it's important to point out that as we look out to next year and beyond, the strategy that we put in place over the last several years will really improve the profile of our business in China and with the Chinese OEMs globally. In terms of what happened in the third quarter, there's a couple of factors that weighed on that growth or growth under market in China. A significant portion of our revenue in China with the Chinese OEMs. It's in our non-consolidated joint ventures. And so if you account for that, that business actually grew in the quarter and that would eliminate more than half of the negative growth over market in the quarter. So there are parts of the business there that are performing in line or even better than the market. And I think the other point that's weighed on our business in the near term is the level of exports out of the China market as the domestic demand has weakened this year. And we've talked about this in the past, we're under indexed on exports. And that's primarily because the exports today have really focused on primarily the lower end of the market where we're underrepresented. We have a very strong business, particularly in luxury in China and the higher ends of the market. And I think over time as the export mix shifts to higher ends of the market, will better reflect the market overall in terms of the ratio of exports in our business. And I think that there's a lot of evidence that we've shared this year that, again, that our strategy for growing with the Chinese automakers in China and globally is working. We had $900 million of our $3.9 billion of new business awards this year 23% of the new business awards this year with the Chinese automakers. Only 8.5% of our revenue today, consolidated and non-consolidated, is with the Chinese OEM. So we are clearly seeing a growth inflection point with the Chinese automakers. that will benefit the business longer term. We've talked about this year and last year, our share of revenue within China that's with the Chinese OEMs, 44%. So yes, we're under index there. That grows to 50% or a little bit above that next year. We see a path to 55% and beyond if you look out two or three years and include the benefit of the new awards that we've announced this year. and so all signs point to our business more closely reflecting the mix that is represented in the market in China and I think that there are some regulatory changes that are coming over the next several years that will encourage more localization for the Chinese and we're seeing good performance in terms of our wins with with the Chinese OEMs as they localized. We had Leap Motor in South America we announced last quarter, and then we had the two wins with BYD this quarter. But Jared, why don't you talk about some of those regulatory changes that we think will change the composition of exports going forward.

Yeah, sure. Sure, Jason. Yeah, and you're correct. There are a few factors and potential regulations that have come up that we look at favorably from our standpoint. And first is a potential regulation. We've talked about it on the Industrial Accelerator Act. That's the IAA and something we've been monitoring closely. And this is that Made in Europe Act. And that's being discussed in the EU that would potentially put a threshold on local content rules. Second, there's that hybrid export cap in Europe where China and the EU are expected to agree to limit hybrid exports out of China up to 350,000 vehicles annually starting on December 1st of this year which could help aid in the acceleration of the localization with the COEMs in Europe and finally there's one more starting in April 1st of 2027 China's going to lower the value add tax export rebate for new energy vehicles to 9% down from The 13%. So in simple terms, you know, China's lowering the rebate in which they give to the OEMs for exporting NAVs. And so all these regulations, it plays to our favor and mixed with our strategy in China, winning with the COEMs and the relationships we've built over the last 30 years, it's going to be a positive as we continue to grow and gain market share within and now outside, as Jason mentioned, with Leap Motors and BYD already outside of China.

So just the net of that, do you feel confident that given, you know, everything that we're seeing in China, that eventually when your larger backlog comes online, that you can eventually return to more meaningful growth? I know 27, you've sort of talked that down, but in the 28, 29 period, I think you've given some upside numbers there.

Yeah, as we said at the last call, we see 2029, this business returning to Significant growth above market with both segments getting back to the historical targeted range, 3% to 4% in seeding and 4% to 6% in e-systems. And one of the updates we want to provide today is on the backlog. Just this continued progress we're making with new business awards is increasing the confidence level we have and the strength of that through your backlog. Jared, why don't you provide an update on that?

Sure, and you're correct. We do feel good about the trajectory of our backlog. And now, obviously, we're not giving official backlog update on the call, but the recent wins we've communicated, it really reinforces our confidence in the long-term growth outlook. I'll shed some color on this. In seeding, the most notable awards include significant conquest awards. We've talked about Audi in Europe, North America with the Ford Super Duty, along with complete seat awards. We just mentioned Elite Motors in South America and additional wins with the COEMs and awards in India now with Mahindra. Over half of those year-to-date awards have been for newer conquest programs and seating, providing kind of that foundation for future growth. Then in these systems, we secured important new awards with Renault, Stellantis, BAIC, General Motors, and multiple Chinese automakers. More importantly, over 70% of our year-to-date eSystems award come from the conquest business, from newer conquest business. And based on what we know right now, knowing that the timing of launches can move, and more importantly, new awards can be sourced from now until when we report, our three-year core backlog is about $2.25 billion. The key is, with our backlog, we've been very, very selective on the profile and the quality of the business we're going after and winning. Every program has been scrutinized to make sure it's returning in excess of its cost of capital. We're not chasing business to win business. If you look at the Ford Super Duty JIT and wire business, the Audi JIT business, the T1SUV wire, the JIT and Orion, just these handful of programs taken together, Dan, between seating and e-systems, it makes up more than 70% of our backlog that's rolling on over the three years. So these are programs has a long history of success in the market. We have a high degree of confidence that those are going to launch on time at the volumes that we've embedded in our backlog. So the momentum is building and more importantly, the quality of the awards is there and the pipeline remains robust as we sit here today. So the team's doing a really good job. Let me weigh in on this, Dan, because this is important.

And I know we're focused on China, but we've laid out a plan and we've talked about it for some time now. We've been looking at the domestic Chinese and what you know what was going on with market share gains throughout the world but you know we said listen we can still win with the traditional OEMs as they're shrinking and we've done that I mean it's remarkable I sit here and I have an enormous amount of confidence when I hear from the team both Nick and Frank the conquest wins we're getting and to Jared's point, how we're being very selective after I'll say high quality wins. Programs that we have a high confidence in that they're going to run. They're not a one and done program that we've all experienced over the last several years but the high confidence that the OEs, the customers are putting a tremendous amount of effort and energy and money in and that's where we're betting and then putting our dollars. The second thing is I was just in China last week. You know, it was incredibly and remarkable different in respect of what's going on on the ground in China. They're looking for companies that are and have profitability, technology, innovation. They're taking the next step. They're concerned about some of the domestic Chinese around their profitability because they're not profitable. And so a strong company that has a global footprint like we have, man, was just really attractive. Every meeting that we had, every dinner that we had, every event that we went to was amazing. Another reassurance of our technology capabilities really mirror well as they increase into the upper ends of the luxury markets. And that's where we participate. That's where we play really nice. And the third leg of this thing that we've been talking about for years now is a continuation of the Japanese customers. We've been somewhat limited. I love to see that door opening. What we're talking about here is you have the traditional OEMs that we're gaining and conquesting and gaining market share, which is beautiful. the Chinese that now they're starting to get a luxury and technology focused type of components around these systems and seeding. You're seeing that accelerate. And then we have the Japanese growth that we mentioned on the call. So I'm very confident. I love where we're at. You know, it's all been about tracking net performance. The team's doing a remarkable job in net performance. That's important to really show the sustainability we have despite whatever challenges we have. But equally as important is how we look at that backlog. that's one of our strong points right now. I'm very, very confident in our backlog. I mean, I feel really good and I got Nick and Frank in here too and we got more work to do. We got a robust pipeline right now of quotes and we're gonna push through it and continue to gain more market share across those three different elements I mentioned. So I think it was a good question. I don't wanna overly focus on China because we're hitting it in all different cylinders when we talk about those three different areas.

Great, thanks, I'll pass it on, thank you.

Our next question comes from Joe Spock from UBS. Please go ahead with your question.

Thanks. Good morning. And I go to congrats to both Jason and Jared. Maybe one just shorter term and then one longer term. You know, you didn't really tighten your operating income range for this year. And if we sort of look like up versus down, it's like 22% for the fourth quarter. So just given that we've seen some changes to schedules recently here in the fourth quarter, I was wondering if you could try to hone in and sort of where you think you're tracking at least for the year within that range. And then on those, if we continue that into sort of like at least early 27, where we've also seen some maybe revisions to schedules, how you're thinking about 27 right now.

Starting with the outlook for the fourth quarter, it is a little bit wider range than we ordinarily would have, and we just decided to leave it intact from the prior guidance at this stage. The factors that will determine where we fall within that range and what we're focused on really continued flawless execution operationally as we've seen over the last really two years in bull seeding in these systems. Very strong operating performance. We have a number of commercial negotiations as you might imagine that could swing the number one way or the other and that's another reason for the range. And the deterioration in the demand in the China market is the other key factor and really that change in our production outlook on our platforms in the China market is what drove the revision of our revenue guidance. 90% of the 256 million shown on the slide is in China. And then there's a little bit in Europe. So it is a dynamic market. There has been very weak domestic demand in China throughout the year. It's accelerated a bit over the last several months and we try to protect for that with that wider range. As we sit here today, our best estimate is right at the midpoint. But the factors I outlined will ultimately determine where we fall within that range. And then we have an investor conference in December where we'll provide an update on how the quarter's tracking at that point. In terms of 27, we provided a lot of color on the last earnings call. We were probably a little bit early relative to others, and I know others have provided updates in this reporting cycle. And the building blocks that we outlined in terms of what would drive revenue growth and what some of the challenges were on specific platforms, nothing has changed. Nothing in the outlook for this year really has an impact on our view on 27 on the revenue side. And on the earnings side, the 40 and 80 basis points and net performance that we articulated and proceeding in these systems respectively are still right on track. We do expect to do a little bit better than that in both segments this year. We did a little better than that last year. So the momentum is clearly there operationally. and we're increasingly confident in being able to deliver that net performance next year as well. So between now and February, we'll work through the final assumptions around production volumes and the timing of launches and solidify guidance and provide that in February.

Thank you. And Ray, the Orion commentary is super interesting and you mentioned it's a blueprint for Global Seeding. So maybe just some commentary on how easy or how long you think you could sort of scale that across the enterprise. And is there are there any parts of the world where there might be something structural that would actually prevent you from accomplishing what you're what you're doing in or in or in?

I think I'm glad you're asking this question because it is, I think, one of the most significant part of our strategy that we've been developing over 10 years to have that footprint. And we're obviously learning along the journey. But how we can scale that. We have been, you know, through idea by layer implementing in production environments, you know, changes to our manufacturing plants. So we have been getting at some of it, but to have a full scale, you know, ground up facility, like what we're doing in Orion is very unique. And I think as we set up the next plants, like we talk about with the heavy duty with Ford Motor Company will be, you know, exactly, but probably at another level. And so I focused when I say scaling, particularly around the brand new plants on the new plants that we're putting out for our customers. There are elements that we continue to learn that we are going to continue to improve our net performance. I think the foundation of what we talk about with sustainable margin and how we're offsetting some of these external costs is through what we're doing. And so some of them are very easily replicatable cycle time deviation, for example. we were able to scale that across the majority of our manufacturing plants and get at a significant opportunity and savings within our plants globally. So there's some that are very easy and there's no, I think you mentioned a roadblock or an ability for us to get at. Some of them are more, I think, around the ability to get at it because production's running and having the downtime to get in and make the capital adjustments. And so they're all somewhat different in how we look at it, The majority of them we can get at. We already have plans to get at. That's all part of our, how we're looking at capital, how we're looking at investments, the payback time frame, those type of things. But, you know, one thing that I mentioned, what's great about this is when we acquired these companies, for example, like ASI and the others, you know, we're manufacturing, becoming a manufacturing integrator leader. And We can control our own destiny when it comes to capital. So we manufacture our own capital, which is very unique. And we can design it just like we design products with a cost savings intent. And so we're seeing significant reductions in how we, you know, look at our capital and invest in our capital and how we get a much better cost of our capital. So I said a lot there, but you know, I'm glad you brought up the Orion facility and why we want to get that out there because we have been differentiating ourselves. It is very unique. No one has it. In my narrative, it says hard to replicate. I think it's almost near impossible to replicate unless you go buy the companies we bought. And that's been a 10 year. Jason, we've been at this for 10 years. And so it's great to see what's going. I was just out at the Orion facility a couple of weeks ago. I can't wait to have you out there and others because you're going to see a game-changing event when it comes to how you think about just-in-time and how we think about modularity. You have to buy the companies, particularly as you vertically integrate, you have to own the lumbar company. Well, our acquisitions have been intentional, and now we're starting to see it. 47 contracts when we talk about Comfort Flex, Comfort Max, Flex Air. It's not where I want to be. I'm never happy. I want to sell more. Frank's sitting here. You know, and some of it's been delayed programs, things that are going on with our customers. But man, this thing started to take off. And I remember two years ago, three years ago, when investors, analysts were saying, man, you're going to have to change the whole model. And that's exactly what we're doing. We're changing the model around how you think about sourcing a seat system and how you manufacture the seat system. So, yeah, I could talk about this for hours, but I'll leave it at that.

Thank you.

Our next question comes from James Piccirillo from BNP Paribas. Please go ahead with your question.

Hey, good morning, everybody. How can we start to think about the commodities bridge for next year, both from a top-line recovery and net EBIT perspective? I know it's early, but just curious on your prelim thoughts there regarding seedings, edibles, exposure, any systems, indexed copper. And then For this year's tariff reversal impacts to revenue, do you confirm the portion that was truly one time and represents an aesthetic tailwind to revenue next year? Thank you.

Yeah, I guess if you want to start with the last part of that question, I think we provided the non-recurring portion of the tariff revenue that's embedded in the guidance for this year, and it's $200 million or so. Correct.

That's correct.

So that would be non-recurring, the refunds from last year. and our go forward tariff costs are very modest because most of our tariffs are avoided through the customer offset credits. And so we don't see it as a significant issue going forward. In terms of commodities, it's been a significant issue for us this year in terms of the gross impact. But we have a long history of indexing and back-to-back agreements that we put in place going back six, seven, eight years. And so the vast majority of that has been passed through. We have over $300 million in gross impact this year, and the net impact is only about $10 million. Looking out to next year, certainly copper has run up continuously throughout the year, and we've benefited a little bit. in terms of the revaluation of our inventory as that has increased and that will be non-recurring. So that'll be a little bit of a headwind for next year. But all of those components that are embedded in commodities are part of the 40 and 80 basis points of net performance. So whatever we see in terms of leakage on commodities, we're offsetting through our performance activity. and we remain confident in meeting or exceeding the 40 and 80 basis points in net performance again next year and seeding these systems respectively.

That's really helpful, thank you. And then just as we think about restructuring savings that are clearly shown through this year, is there a sizing of what that restructuring savings number could be for next year? I know we already have the automation savings are all in place for 27. Thank you.

Yeah, I think we increased the level of savings we're going to achieve this year in restructuring, I think from 80 to 95 million in the guidance here. And the investments we're making here in the fourth quarter will continue to benefit next year. The paybacks continue into next year. If you just look at restructuring overall, There are projects that have no payback because a program has ended production and you're restructuring capacity out with no future benefit. And then there are projects where we're embarking on labor arbitrage or other cost reduction opportunities. And those typically have about a one and a half to two and a half year payback. And those are the projects that we're really focused on in the fourth quarter here and into next year. to ensure that we have the most competitive footprint for the long term. And in the meantime, it remains a key contributor to that net performance narrative that we've seen this year and expect to continue to see next year.

Thank you.

And our final question today comes from Rajat Gupta from JP Morgan. Please go ahead with your question.

Great, thanks for taking the question. Just wanted to touch on the 2027 outlook or just preliminary outlook. I know you've given a lot of color on the revenue dynamics, some of the China pressures, also some of the performance benefits that expect to remain on track. I'm just curious if there are any offsets we should think about, particularly from some of the wind down business that you're seeing. If you look at the E-systems bridge this quarter, The decrementals seemed pretty high on some of the backlog and the wind down. I'm just curious how we should think about those puts and takes in the 2027 margin bridge and have a quick follow up.

Yeah, again, Roger, we've provided a lot of color on our view on 27 on the last earnings call, and we'll wait till February to provide the full guidance. But what we typically see on the wind down is that's converting in the 20% range. It depends on the particular program within that. Backlog typically is converting in the 10% range and volume and mix on both C&E systems tend to be 15-25% in that rate of conversion depending on the level of vertical integration on the program, the underlying profitability of the program but that is the typical range and I think those ranges in terms of how we convert on the backlog growth into next year and the wind down impact for next year as well as the production changes on our platform should basically hold within that range.

Understood. And then, and just like, you know, anything we should keep in mind when it comes to, you know, you know, just available capital for return, you know, this year versus next, you know, you know, from a restructuring standpoint, I know CapEx is a bit heavy this year, you know, with Orion and the automation build. I'm curious, like any meaningful changes and many other changes we should expect as we head into 2027. Thanks.

Yeah, again, we'll save the pinpoint guidance for next year on that. But what I will say is that our priorities around capital allocation remain consistent. We're going to focus on investing in the business first through CapEx and tuck in acquisitions if they become available. We don't see anything of scale in terms of the on the M&A side. And we're going to continue returning are access cash to shareholders through share purchases and dividends. I think 80% of the free cash flow we generated this year will be returned to shareholders through share purchases and dividends. I see that level of capital return to shareholders continuing into next year. And we look forward to providing more color on the specific guidance on the fourth quarter earnings call.

Understood. Thanks for the color and good luck.

Yeah, just again, well, you're still around. We'll still be able to see you. So we'll get into this. I don't want to get emotional right now. But just to the team, I think probably the leader members are still on the phone. Just want to say thank you. Another outstanding quarter. And with that, we'll conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.