Good morning. My name is Angel, and I'll be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. Joel Elsesser, of Investor Relations, you may begin your conference.

All right. Thanks, Angel. Good morning and thank you for joining us for our first quarter 2017 earnings call. Our press release was filed this morning with the Securities and Exchange Commission, and the presentation for our call is posted on our website, lear.com, through the Investor Relations link. Today's presenters are Matt Simoncini, President and CEO; and Jeff Vanneste, Chief Financial Officer. Also participating on the call are several other members of Lear's leadership team. Before we begin, I'd like to remind you that during the call, we will be making forward-looking statements that are subject to risks and uncertainties. Some of the factors that could impact our future results are described in the slide titled, Investor Information at the beginning of the presentation and also in our SEC filings. We will also be referring to certain non-GAAP financial measures. Additional information regarding these measures can be found in the slides labeled Non-GAAP Financial Information at the end of the presentation. Slide 3 shows the agenda for today's review. Following the formal presentation, we will be pleased to take your questions. Now, please turn to slide 5 and I'll turn it over to Jeff.

Thanks, Joel. We are off to a great start to the year. Both of our product segments are performing well, we're the most profitable seat maker, and both product segments are achieving returns well in excess of our cost of capital. We expect to close on the acquisition of Grupo Antolin's seating business in the next few days, funded by our existing cash balance and we are constantly improving our already best-in-class footprint. The recent meaningful increase in our quarterly cash dividend and the increase in our share repurchase authorization reflect the confidence we have in our ability to continue to generate positive cash flow. Since 2011 we have increased our dividend every year and we have repurchased nearly 40% of Lear shares outstanding. Slide 6 shows vehicle production for the first quarter with increases in all major auto producing markets. In the quarter, 23.9 million vehicles were produced globally, which was generally in line with the guidance we provided in January. The dollar strengthened against both the euro and the Chinese RMB compared to 2016, and overall, foreign exchange had the effect of reducing our sales by approximately $60 million during the quarter. Slide 7 shows our reported financial results for the first quarter 2017. Reported sales in the quarter increased by 7% from a year ago to $5 billion. Excluding the impact of foreign exchange, our sales increased by 9%, reflecting our strong sales backlog and increased production. Pre-tax income before equity income, interest and other expense was $417 million, up $43 million from a year ago. Other expense was $4 million in the first quarter, down $5 million from last year, with the decrease driven primarily by lower foreign exchange losses. Net income attributable to Lear was $306 million, up $57 million, driven by the increase in…

Great. Thanks, Jeff. Slide 15 shows our performance for several key financial metrics as well as our most recently announced three year sales backlog. I believe that this outstanding performance is the result of our balanced strategy of investing in the business, maintaining a strong and flexible balance sheet and returning cash to shareholders, all executed by the most experienced and stable management team of any auto supplier. I also believe that we're well positioned to take advantage of major industry trends such as safety, efficiency, connectivity and globalization. However, even with this profile, we trade at a discount to the peer group. I believe our track record of performance, our position to take advantage of these major trends, and our growth profile justifies a valuation well in excess of the average. In closing, we had our best quarter ever with record results of sales and earnings. The investments we've made in our cost structure and our product capabilities will drive another year of outstanding financial results. This year, as we celebrate our 100th anniversary, the company has never been in a stronger competitive position and I have never been more optimistic about our future. Now we'll be happy to take your questions.

Your first question comes from the line of Brett Hoselton with KeyBanc. Your line is open.

Good morning.

Good morning, Brett.

I was hoping to ask you a little bit about contribution margins. Seating, I calculated about 11%, that's over the 8.5% you reported this quarter. And then Electrical continues to really outperform, up 20% year-over-year, versus 14.9% quarter (13:22). My question is, is there any reason to believe that those contribution margins will change materially over the next few years, whether it be maybe some lower margin new business in your backlog or possibly some structural cost changes?

No, on average I think it'll be consistent. We benefited I think, from a pretty good mix. But you got to understand something, Brett, Lear Corporation believes in selling the product at a fair cost, and a fair price, I should say, that we expect a return on our backlog. We don't sell just for the sake of selling. Our management team is not incentivized just on sales growth. We're incentivized on earnings growth and return on investment. So we look at everything on a return on investment. So longer term it kind of depends on the product mix. Certain products don't require a higher margin to get the return on invested capital that we require. So you could see possibly some changes there. And other components quite frankly demand a higher margin to get the return in excess of our cost of capital but in general I think this is a pretty clean quarter.

Okay. And then just secondly, as you think about your Seating business and the E-Systems business, is there any logical incremental steps, maybe some bolt-on acquisitions or some larger acquisitions – not suggesting you add another leg to the stool or anything along those lines. But is there potential to make, let's say a larger acquisition to extend the capabilities of maybe the E-Systems business?

The pickings are becoming very slim and very pricing – very pricey I should say. We are constantly looking at opportunities to extend E-Systems, and also to support the convergence of Seating and E-Systems. Seating, in many cases, are becoming software-driven. And we're seeing a convergence with our capabilities in software and electronics in many ways supporting our intelligent seating capabilities. And so we'd look for something that could possibly benefit both product segments. I don't see anything in the near-term horizon of size. But in the same token, we never expected to be able to pull off Eagle Ottawa until shortly before it became available. So the industry is fluid, the opportunities are fluid, and yes, we are looking for investments that would extend both those product segments and support the convergence of Seating and E-Systems.

Thank you very much, Matt.

You're welcome.

Your next question comes from the line of Ryan Brinkman with JPMorgan. Your line is open.

Great. Thanks for taking my question. Congrats on the quarter. Could you talk a little bit about the strategic benefit of the Grupo Antolin acquisition such as if it strengthens your position in certain desirable customers or geographies? And then is there anything you can say broadly at this point about the economics of the transaction, like the valuation looks to be something like one times sales versus Lear is maybe more like 0.5 times? And then, what type of margin do they have? And where could you take that, what kind of synergies? How you think – how should investors think about this?

Well, Scott, (sic) [Ryan], it's a perfect tuck-in acquisition for our seat business in that it comes in with sales that would help diversify our sales in Europe. Daimler; grows our business with Daimler and with PSA just to name a couple of them. It also has great capabilities in components and a pretty good footprint with manufacturing in Eastern Europe – I'm sorry in Eastern Europe and Northern Africa, to name two locations. So from that standpoint, I think it adds diversification, some nice product component capabilities as well as some nice manufacturing capabilities. I think from an economic standpoint, it's roughly on an annualized basis about $300 million in annual revenues and the margins are fairly consistent with our seat business as they stand today. We're still working through some of the purchase accounting issues and the overlays that may adjust that slightly. But on average, that's kind of how we're looking. From a multiple standpoint, the reality is, unfortunately, everything in this space is going to be slightly more – a higher multiple than Lear Corporation. Which speaks a little bit to the comments I was making at the end of the call, which there is no reason for Lear to be trading at a discount but if we use that as a guide, then I don't think we'd be buying anybody unfortunately. So overall, we think it was a great buy. We think there's a lot of opportunities with that segment, it comes with a really good management team and some great capabilities.

Okay. That's very helpful for us. Just last question is on E-Systems, organic revenue growth in the quarter, pretty strong, up, I think, what, 8%-or-so, at least the top line. Can you just kind of help us understand the driver of that? So as I think about kind of the product areas, you sort of got the wire harnesses, then you've got sort of like the terminals and connectors, you've got some of the electronics, including some higher value add stuff. Is there anything in particular that's driving this from a product perspective?

Well, I have Frank Orsini, our President of that segment here on the call today. Frank, why don't you explain how you're driving growth there?

It's very evenly spread out amongst all the product lines. We're seeing growth on all three areas, so electrical distribution, wire harnesses, we're seeing growth on the terminals and connectors side and we're seeing growth on the electronics side and that's coming in all the regions as well. It's pretty well balanced. You take a look at North America, we've won some business there and that's impacting our backlog and the results in Q1, but we've also seen growth in Europe and we're seeing growth in Asia as well. So it's really a very nice balance amongst all the product lines and the regions.

Okay. Thanks for all the color.

You're welcome.

Your next question comes from the line of Colin Langan with UBS. Your line is open.

Great. Thanks for taking my questions and congrats on a good quarter.

Thank you.

First question is one of your competitors is talking about entering airline seating or other adjacent markets. I mean, have you looked at sort of these adjacent markets? And what is your thought on potentially entering those kind of segments...?

Sometimes it's really great to go in adjacent markets when you can't make money in seating, in the automotive seating. I think, in many cases, that our capabilities play into non-automotive with fabric and leather and sewing and precision assembly and we actually do have a growing non-automotive fabric business that's been very profitable for us and we're looking for opportunities to use some of what we do in non-automotive whether it's airline seats, good luck with that.

Okay. So you're not actively pursuing anything outside of auto at this point?

I think there are certain capabilities at Lear Corporation that lends itself to non-automotive applications. The AccuMED acquisition, for instance, really extended what we're doing in non-automotive into certain applications in medical. I think that would be one example of what we're doing there, extending kind of our product capabilities into other outlets for sales. I'm not so sure aviation seating is the way to go, in fact, we're not pursuing it. We don't think it's the right thing for Lear Corporation, the product liability and the limited amount of seats that are available in that market really doesn't make financial sense.

Got it. And any color, why, given the strong start to Q1, why didn't you change guidance? Are there hiccups or mix issues as we go through the rest of the year that we should be thinking about or just the uncertainty? Any thoughts on the...?

It's still early. It's still early in the year. It's four months in. We've had a great start. If the macros hold the way we think and that we project, we'd expect to do significantly better than the $1.6 billion in NOI which has been our history. But a bit little early in the year, let's see how it plays out. And then with Grupo Antolin, what I wanted to do is get through the acquisition, close it, be able to dig through their numbers and then give a comprehensive update on guidance and we'll do that a little bit later in the year.

Great. All right, thank you very much.

Your next question comes from the line of David Tamberrino with Goldman Sachs. Your line is open. David Tamberrino - Goldman Sachs & Co.: Thank you. Good morning, gentlemen, congrats on the quarter. I want to follow-up kind of on a couple of the threads that we've been talking about so far, Grupo Antolin, not raising the guidance right now. If we think about where we are, at least in North America and in China at the end of March from an inventory perspective, it seems like we're a little bit misaligned with where sales have been. Is there anything that you're seeing in the near-term expectations for production schedules in those regions from your customers that would point to any bit of softness? And then on the back of that, so think about the 2H 2017 for you at least in North America, GM is one of your larger customers. How much of that 10 weeks of shutdown that they've announced is fully baked into your current guidance right now and possibly helping keep that flat at least in the near-term?

Starting with the back half. Yeah, the GM announced shutdowns and changeovers on the K2XX as they start the running change of that platform is all factored into our guidance. We're seeing some chop in Asia and some rotations in product and mix. Specifically we're seeing a little bit of weakness I think in the Ford brand. Specifically, I think, the Kuga car line is one that we've seeing some recent pullback in production schedules. But all-in-all, the year has shaken out pretty much as we expected when we gave guidance back in January. David Tamberrino - Goldman Sachs & Co.: Okay. That's helpful and then just from a competitive environment standpoint, I know we're a little bit longer in the tooth here, at least in North America and OEMs have to continue to layer on incremental incentives to really hold this 17 million pace. Have you seen any additional pressure, any quick savings if you will, in order to win RFPs for the longer-term from the near-term? And then on that, one of your competitors again, still out there looking to build a backlog of business, you've said in the past you've seen a little bit more pricing actions from them, just wondering if that competitive environment has increased or maintained or decreased?

No. It's about the same. I mean, part of the benefit of being Lear Corporation is with our vertical integration and product capabilities and footprint, we don't have to compete on in many cases on just giving the product away in order to penetrate sales. So the environment really hasn't changed and the fact that there's irrational pricing in a space at times is nothing new. We've seen it in the past, whether it was Boshoku or Faurecia when they're trying to penetrate or diversify their sales in North America. So it's not a new game. It's not a sustainable game. It's not one that you can continue for more than a couple years without greatly damaging the profitability of a business or hurting a customer by coming in and raising pricing later. So it's not something that we do. We've been able to grow our sales all through this, again, driven by our unique product capabilities and I think our industry-leading footprint. So the environment is tough, it always is. We choose to compete on capabilities and our cost structure as opposed to subsidizing customer programs. David Tamberrino - Goldman Sachs & Co.: Understood. Thank you.

Your next question comes from the line of Chris McNally with Evercore ISI. Your line is open.

Thanks so much, guys and congrats again on a great quarter. Just two quick questions, just a follow-on to the mix question that was previously asked. Last year, I think you called out Ford sedans as being one of the only areas of mix weakness. Can you just go into a little bit more detail about where we could – what's on your radar screen for platforms or areas of the market that you would be concerned about this year?

I just think there's a rotation away from pass cars in general. For us, we are on Ford pass cars, so we see it probably heavier with Ford pass cars because we have a big book of business in those vehicles, but I think general, North America, what we're seeing is a rotation to CUVs and SUVs, which in the long run I think, would benefit Lear Corporation because there's typically more content, more seat content in a CUV than there is in a pass car on average. So we're seeing that general trend. And then in Asia, what we're seeing is continued penetration of the domestic vehicles as more and more, the domestics are grabbing market share away from partner vehicles. And again, I think, in the long run that will benefit Lear Corporation since we have great relationships with pretty much every domestic automaker. Those are probably the two major trends out there. I mean, the sales rates are the sales rates. We're seeing it consistent with how IHS is and that's why we're using them to help guide on sales guidance.

Okay. That's perfect. And Matt, because essentially the same thing happened last year and even though there was some negative mix on the sedans, we didn't see it affect the margins. How should we think about seasonality, maybe a little bit this year, given that mix for trucks was actually strong? Or from a production standpoint in the first half and it's factored into guidance, should we expect less of the profit seasonality to occur in Q3 and Q4 because of the K2XX shutdown?

Yes. It's a – we're going to be – this year's go to be a little unique from a cadence or seasonality to pass. Normally, we would see a slightly higher second half even with the summer shutdowns, if you will. This year, we're going to see it slightly the other way, where the first half will be a little bit stronger than the second half, driven by kind of the changeover and the production cadence and the changeover of the large GM SUVs. From a margin standpoint, fairly consistent, it's very consistent first half, second half, maybe slightly weaker just because of the summer shutdown in the mix. But it will be slightly stronger through the first half, slightly weaker in the second half because of that changeover.

Perfect. Thanks so much, guys.

Your next question comes from the line of David Leiker with Baird. Your line is open. Joe D. Vruwink - Robert W. Baird & Co., Inc. (Broker): Hey, guys. This is Joe Vruwink for David.

Hi, Joe. Joe D. Vruwink - Robert W. Baird & Co., Inc. (Broker): I want to ask a slightly different question on business wins because I don't think seats is binary, where if Adiap (28:48) wins, it means well, Lear must be losing. It does seem like the bigger suppliers, so those with scale, Lear absolutely, but also Magna, Faurecia, et cetera, you're all growing faster than the market, so can you maybe speak to what automakers are ultimately demanding and why that favors a company like Lear?

Well, first and foremost, it demands the capabilities to design a complete system and all the components in it. Secondly, they demand that you have a global footprint to execute global programs. So I think both those trends speak to the larger suppliers. Then you take it a step further. I think it comes down to the ability to assemble a highly crafted seat at the highest possible quality with the lowest possible cost. You start looking then into things like the quality of your footprint and the quality of your capabilities and your ability to execute programs, taking one step further then ultimately, in many cases, you have to be the leader in each of the components that you provide, be it leather fabric, sewing the covers, the foam, the structures, the track technologies, I think these things drive sales, if not just in the total seat system then subcomponents that in many cases are sold directly. And I think that's why you're starting to see really a separation of the larger, more capable seat providers. Joe D. Vruwink - Robert W. Baird & Co., Inc. (Broker): And so just on that thought, are you going to be able to dramatically upscale Antolin's book of business? Or is there a customer relationship, I know you brought up Daimler and PSA. Has Lear lacked that relationship, but now you bring that relationship to your global footprint and it's just a much higher structural rate of growth for that business?

More the latter. We've always had a great relationship with Daimler. In fact, Daimler's been in our top five as far as the sales, but I think by bringing Grupo in that house, we'll always had a long and a very strong relationship with PSA on both sides of the house, both Electrical and Seating. So it's more just extending the relationship, adding different capability, additional capabilities and being able to leverage kind of the cost structure between the two companies. And so it's more just building on what is already a strong customer base. Joe D. Vruwink - Robert W. Baird & Co., Inc. (Broker): And then quick one. Any changes in your win rate when you looked at what was booked in the quarter relative to the recent trends?

No. We're continuing to gain share in both product segments, not inconsistent with what we've done over the last several years. Joe D. Vruwink - Robert W. Baird & Co., Inc. (Broker): Very good. Thank you.

Welcome.

Your next question comes from the line of Brian Johnson with Barclays. Your line is open.

Hi, this is Dan Levy on for Brian. Thanks for taking the question. I wanted to ask about commodities. We've seen a number of the key commodities that you're exposed to up quite significantly in the first quarter, and while I know that you're mostly indexed on those costs, I think there is an optical effect that in times where commodity prices are down, that leads to higher margins on the flipside. So I think that you probably benefit from that. So just wondering what the impact of commodities was to margins in the first quarter? I know there's a lag effect, if you could just remind us on the timing and how that would lead to changes in margins?

Well, we had cited in our guidance that we initially provided in January that on a year-over-year basis, I think pretty much across the board the commodity environment was going to be a little bit more challenging than it was last year. On the indexing side, on the steel, about 10% of the steel purchases we're exposed to, about 90% is either covered through an agreement with the customer-directed source suppliers or about 40% comes in a fabricated way. So we've got about 10% exposure there. On copper, about 90% of our copper buy is covered through an indexing agreement with the customer and then on the leather side, about 60% is covered and the other 40% generally is covered through commercial discussion, which includes productivity. What we've seen since the first quarter is nothing significantly different. The commodity environment really hasn't moved dramatically since the first quarter, and we've incorporated that same level of assumptions with respect to commodities in our guidance.

Okay. And just – if we're just thinking over a longer time period, commodities obviously have been some positive on the margins. Could you just quantify or give us a rough ballpark sense of how much they've contributed to margins in recent years from lower commodity prices?

Well, I guess I'll look at the first quarter and the impact on a year-over-year basis. I think we probably had an effect on margins in the quarter anywhere between 10 and 20 basis points on a year-over-year basis because of the higher commodity.

Okay. And over a longer time period, any ballparks on that?

I wouldn't say in the long term, Dan. Commodities provide chop more in the short term, meaning, 12, 18 months, maybe even 24. But if you're talking longer term, they usually get factored in either positively or negatively into the pricing discussions with the customers as we try to balance our annual productivity negotiations with them. And so I would say, they have a tendency to kind of work their way through the system, if you will, in an 18 to 24 month type timeframe. In the near-term, we've had some benefits. Now we're facing a little bit of headwinds, we've been able to I think offset them with other cost reductions through the quarter and we'd expect to do the same thing for the year.

Understood. Thank you.

You're welcome.

Your next question comes from the line of Adam Jonas with Morgan Stanley. Your line is open. Adam Michael Jonas - Morgan Stanley & Co. LLC: Hey, guys. So yesterday during Conti's Powertrain Capital Markets Day, they mentioned that consumer electronic companies are targeting more auto business and that OEMs are increasingly in-sourcing some key components, including some electronic components. I was wondering if you agree or whether you're seeing any of this.

Well I think a lot of what the car companies and the industry needs from a next round of development, quite frankly, is already existing in many consumer electronics type firms and high-tech startups. So I think as the industry moves forward, you're going to see more and more collaboration with those type of firms. That being said, the auto industry is very specific with its needs for the three-year prove out if it's a safety device, in many cases a safety product. And so going through that type of validation, through the front end of preproduction takes I think, automotive industry expertise. So what we're not seeing is a wholesale outsourcing of boxes and electronic modules and things of that nature to the consumer product or electronics or non-automotive players because I think the barriers to entry in the segment are one of the benefits of being in this segment. So we haven't seen it, but what we have seen and what we've participated in as well, is collaborating with non-traditional automotive suppliers, and I think that trend will continue. And I think ultimately, it's a positive trend for the industry and it's a very positive trend for Lear Corporation. Adam Michael Jonas - Morgan Stanley & Co. LLC: Okay. Well just to follow-up on that point you make. And I hear that what you say from a lot of your peers is that the auto – making something for an iPhone is one thing, you can just reboot the iPhone, no one dies. But in a car, the safety considerations are on a totally different level but haven't we seen this? I mean, the Chevrolet Bolt, with a B, not the Volt, I believe, LG Corp., as you're aware, it does over 50% of the purchase bill of materials on that car, the charger, the inverter, electric motor, electric architecture, wiring, clusters, they basically make half that car. So why would GM – what's GM thinking? And could that be a trend?

Well, I think right now we're looking for the low cost producer. LG has been in the space for a long time in the automotive space for a long time, and they're very proven not just in automotive but in other industry. So it's not like they're a new entry into the space. Frank, from your standpoint, where you've done the architecture for things like the Volt and some other battery chargers for other customers, what are you seeing in that marketplace?

Yes. I think it's exactly what you're saying, Matt. Where you see the consumer type involvement with some of the automotive space, it's where they're trying to gain capabilities where maybe it's more tied to consumer-related activities. And what we see right now is, especially in our area of expertise, where it's data and signal management, making sure that we're giving the customer electronics and the vehicle to allow them to process information in the vehicle. We haven't seen any of that impacted. LG has been around for years. They've done OnStar with GM for years, they've had a long partnership with GM. And I know they have a successful partnership with them but across the globe and with all of the customers, you see pockets of it where there is active engagement but for the most part in our particular product segments, we see traditional competitors on our quotes and business.

The other piece of this thing which is the ability for instance, to update software over the air, and I know there's been a lot of communications of that recently in this space, is nothing new. I mean, we've been updating software on your PC and your phones for years, right.

Yeah.

Even annoyingly so for an Apple phone. That being said, to update the software in an auto the technology is there but we need to make sure that we can do it in a cyberly secure – cyberly, did I just make up a new word...? Adam Michael Jonas - Morgan Stanley & Co. LLC: I like it.

Put it in the dictionary (39:29).

Cyber secured way...

Yeah.

So not only are we innovating as far as product, we're also innovating as it relates to the English language... Adam Michael Jonas - Morgan Stanley & Co. LLC: All right. Thank you. Keep innovating.

Thank you.

Innovate, elevate.

Your next question comes from the line of John Murphy with Bank of America Merrill Lynch. Your line is open.

Good morning, guys.

Hey, Murph.

Hey, just a first question on Grupo Antolin, and to beat a dead horse there but I mean it looks like you guys paid almost 10 times EBITDA on that just based on what you talked on about in the press release and the fact that you just kind of talked about EBITDA margins are margins be similar to what you got right now. Is that about correct, sort of 9 to 10 times EBITDA and is there something you're seeing there that is (40:24)?

No. It's significantly less than that. It's higher than Lear, but significantly less than 10 times. So split the difference and you'd be closer to it, Murph.

Okay.

On an EBITDA multiple.

Okay so the margins are higher that a 10.5 -

EBITDA, talking EBITDA, not necessarily EBIT.

Got it. Okay. Then just a second question. As you think about mix, I mean, obviously there's the shift from cars to crossovers which seems like it's pretty structural but within model lines are you seeing real significant upward shift to higher trim levels that you think is sustainable or is there some risk there on the mix side.

That's got – specifically I mean, we are absolutely seeing that in electrical because of the content gains in the higher features for – need for power, more circuits, so we've talked about that at length. As far as the Seating, I've got Ray Scott, the President of Seating here is on the front line of the market...

Yeah. Just I mean the same thing in seating I mean, you talk about the content adds are going into rear seats with recliner mechanisms, adjuster mechanisms, the customer preferences, customer features, both comfort and adjusting features as just continue to increase.

So the consumer tends to love that stuff once they get it and don't want to give it up. And sometimes will trade from sort of a mid-sized crossover to a small crossover might be the trade that happens as opposed to going back to cars. If the cycle turns and things get tougher. I mean, if you went from like an Edge to a to an Escape or something like that, would there be a big content differential on the seating side or I trying to just kind of using those sort of you know gross examples for a mid-size crossover to small crossover, would there be a big negative mix shift for you that in content?

No. There wouldn't be a major shift.

I think where you see the major shifts quite frankly, Murph, would be if you went to a full size or large size premium SUV to pass car, that's where the real gap is. Obviously three rows of fully powered leather seats have more content than a two row passenger vehicle.

But it sounds like the mix for you, the mix benefit is a lot stickier than it has been historically is what it sounds like.

Is a lot what, Murph?

A lot stickier than it has been in the past because the shift to crossovers has not changed?

No, I think I think we're well represented on all type of product segments. We have a good representation of the industry overall both in premium and also in type of vehicles and customer mix. I'd expect to benefit from it. Obviously you want the cars you're on to sell more than the market. But I don't really see it as a major headwind just like evolution of the product if that's what you're asking.

Yeah. No, that's great. And then just lastly, I mean, the margins are very impressive. I mean, are you getting any inbound calls from the automakers or seeing anything in the bidding process where they are pushing back a little bit on price because they see the fantastic margins you guys are putting up because they're – they seem to be spreading out and putting pressure on the dealers right now because they can more quickly and they are looking at other parts of the value chain apparently to try to gain some of the margins back that are being earned.

That's nothing new. Really what you do though is we work through what we can provide it at the capabilities that we can provide at, the footprint that we can provide the components that. The fact that the car companies are in a very price sensitive product and are competing very heavily with one another in a weird way supports Lear Corporation in that we have the ability through our design capabilities and our component footprint and in the variable – I'm sorry, the vertical integration to help them be successful in their product. Because what we want is the car companies to be able to sell their products more than other car lines that we're not on because that ultimately benefits us. And when they do that we're able to share some of the cost benefit that we get from higher volume. So the fact that it's a demanding price environment is nothing new, that's an old story that's been going out for many years here.

Great. That's very helpful. Thank you.

Your next question comes from the line of Rod Lache with Deutsche Bank. Your line is open.

Good morning, guys.

Hey, Rod.

How are you doing? Two questions. One is just a housekeeping item. You had very strong organic growth in both segments, and I was wondering if you happen to have offhand how much of that $1.25 billion of consolidated backlog you realized in the quarter? And is the E-Systems backlog tracking better than the $225 million that you were expecting for the year?

Well in the quarter, we had about, rough speak about $250 million of backlog, pretty much along the lines of the overall spread between Seating and Electrical in terms of, I think, it's – according to the overall book-of-business that we have or mix of the book-of-business currently between Seating and Electrical. I think your other question is, are we – is the current backlog a little bit greater than what we originally foresaw on Electrical, which was roughly $207 million? I think it's running maybe a little bit higher than that but pretty consistent with that, Rod.

Okay. And Matt, in North America now, we're obviously seeing some big picture macro trends with trade-in values moderating maybe around 7% which is maybe $1,300, $1,400 lower year-over-year on the average trade-in. We're seeing some tightening of credit terms, particularly in leasing, not a lot, but some signs of that. I guess the big question is whether that's going to affect mix. And it doesn't sound like you're seeing anything noteworthy in terms of the build forecast. But I was curious if you can share your perspective on how you think over the next two or three years, how do consumers and OEMs react to that? And if content is going up in areas like electronics and a few other areas, where is the content coming out in order to kind of keep affordability within a reasonable range?

Actually, I'm very optimistic on the industry overall. We may see some tightening and some changes in rotation, but I actually think the macros in North America are very strong when you look at employment rates and credit availability, even with the kind of tightening on the leasing terms and the trade-in values. I think overall, it would sustain a 17 million unit year in North America for the near future, which will be pretty good for us. I mean, I think it would be outstanding. And then if you look at what's happening on a global basis, I still think we're going to see expansions in the 2% to 3% range globally which is now on a very meaningful base. I mean, we're fast approaching 100 million units a year in the near term. So from that standpoint I'm positive. As far as the content, there's constantly ways to take cost out of a vehicle, anywhere from the metals and using alternate metals to feature content to consolidating feature content. From our standpoint, I believe that we have the ability to continue to take cost out of our product through design changing. I think by consolidating some of the components that they're sourcing separately, right now would be a huge opportunity to provide a better product at a lower overall cost to our customers. And that's part of the discussions that we're having right now is how we can do that, so provide basically more content at a lower cost at a margin consistent to what we are enjoying. So Rod, you know the game and how it's played, and that's how we do it.

Great. Thank you.

You're welcome.

Your final question comes from the line of Matt Stover with SIG. Your line is open.

Thanks very much. A lot of the questions have been addressed, but I did have two. I guess the first one is, electrification in all its forms is increasing in outlook and there's a whole wide range of forecasts. And it looks like we're seeing a lot more higher penetration among (49:43) hybrid, hybrid and EV. And I guess my point is – or question is, are you beginning to see a meaningful change in bid activity? If not, when do you expect to see a meaningful change in bid activity? And then the third piece of that would be, would that imply the need to ramp your R&D as a percent of sales, which is – it's been kind of running in the high 2%s for a little while here, to a higher level?

Let me start with the last part of that and turn it over to Frank Orsini, the President of E-Systems. In general, no. I think the financial template that we have both in capital and R&D is consistent with supporting that type of growth. Because we've been doing this for a while, everything from full electric to hybrid to higher voltage vehicles which we have programs in production in all sub segments. Frank, from a quoting standpoint, what are you seeing in the marketplace?

It's very active right now. Whether – if you just take high-power architectures, which covers everything from hybrid to full EV capabilities, all of our customers globally have a lot of active quotes going on. There's definitely a lot of interest in this area. And we're seeing a lot of success with our products, whether it be our onboard charging systems, our electrification of just the wire, the actual electrical distribution products as well. And 48-volt has been big for us in all three of our product categories, so, a lot of quoting activity going on. It's in every region of the world, it's with every customer, it's a very big opportunity for us and it's something that we're seeing very active right now.

The last question is sort of structurally on the valuation. Matt, you've addressed that in your opening comments, and I understand historically the argument and logic behind not splitting the company up, because of the symbiotic nature of the balance sheet. But I wonder if you have any thoughts about why you think Lear isn't getting the value that it deserves in the marketplace right now? And then I guess, two, is that causing you or anyone within the board or company to rethink the structure of the company?

I think there may be confusion over what the Company is and how we compete. I think there's a lot of misinformation in the marketplace about seating being a commodity product when in reality it's a key driver of connectivity since you're strapped to it. It's safety, because you're strapped to it. And also it's becoming a key driver, if it isn't already, in the consumer's purchase decision of a vehicle. Besides the exterior skin the first thing you look at typically is the seat and how the seat looks and how does it play and how does it feel, in your decision to buy a vehicle. So I think there's a misconception of the seat business. I think there is certain competitors that are misrepresenting kind of the marketplace for seating and the fact there's a profitably kind of template that's happening in seating. And I think people are confusing that misinformation with Lear Corporation's position there. I think they're confused a little bit about our Electrical business, what it is, what it can do, the sustainability of it. So from that standpoint, I think more and more, it's about continuing to perform and continuing to explain the proper way of how this business runs. I believe that there's a convergence in these two products and I believe in many cases, our capabilities in E-Systems and the 600 software engineers we have around the world will ultimately help us separate even further on the seat as we get into intelligent seat systems because we're very unique in that capability, so we see a convergence. And for us, as far as separating the business, it's not like we're in two different industries where, in many cases, you want to unlock that value. We have two product lines that are converging in the same industry. And I think every major auto supplier has at least two kind of product lines and we're no different in that regard, because I think ultimately it allows you to share costs, share structure and benefit both product organizations and the same time balancing kind of risk. So as far as the board, the board has studied this at length. They're constantly looking at ways to increase value for the shareholders, that's their role. We study it. And ultimately, we come back to the same conclusion time and time again, that Lear Corporation is better the way it's structured today than it would be by separating it. We think long-term that's the best thing for our shareholders. And quite frankly, it's proven to be true. So that's kind of our thoughts on it right now.

Appreciate it.

You're welcome.

So at this point, I think the only folks probably left on the call are Lear employees and I want to start by thanking the finance organization for all the work they do in preparation of this call. I want to thank the entire organization because results like this just don't happen. They come through hard work and teamwork. And I want to remind everybody that's on the call that we need to continue to focus on the fundamentals of teamwork. One Lear, the leadership model, working together as a team, communicating fully and transparently, and ultimately working hard at taking great effort to maintain our momentum and take care of the families that count on this corporation and take care of our shareholders. So thank you for all your hard work. Let's continue to kick ass and I'll see you at the second quarter. Bye.

This concludes today's conference call. You may now disconnect.