Core Viewpoint - Gentherm, a leader in thermal management and comfort technologies, is actively engaging with investors through upcoming events in Q3 2025, highlighting its commitment to transparency and investor relations [1][2][3]. Company Overview - Gentherm (NASDAQ: THRM) specializes in innovative thermal management and pneumatic comfort technologies, with a diverse product range including Climate Control Seats (CCS®), Climate Control Interiors (CCI™), and medical temperature management systems [4]. - The company employs over 14,000 individuals across 13 countries and reported annual sales of approximately $1.5 billion in 2024, alongside securing $2.4 billion in new automotive business awards [4]. Upcoming Events - Gentherm will participate in the J.P. Morgan Auto Conference in New York City on August 12, 2025, featuring a fireside chat with key executives [2]. - A live audio webcast of the fireside chat will be available, with a replay accessible for 30 days on Gentherm's Investor Relations website [3]. - Additionally, Gentherm management will host investors at the Seaport Research Partners Annual Summer Investor Conference on August 19, 2025 [3].

Core Viewpoint - Gentherm (THRM) shows potential for further upside, with a mean price target of $40.6 indicating a 26.7% upside from its last trading price of $32.04 [1] Price Targets and Analyst Estimates - The mean estimate consists of five short-term price targets with a standard deviation of $6.91, suggesting variability in analyst predictions [2] - The lowest estimate of $35.00 indicates a 9.2% increase, while the highest estimate of $52.00 suggests a 62.3% increase [2] - A low standard deviation indicates a higher agreement among analysts regarding price movement [9] Earnings Estimates and Analyst Sentiment - Analysts have shown increasing optimism about THRM's earnings prospects, with a strong consensus in revising EPS estimates higher [11] - The Zacks Consensus Estimate for the current year has increased by 2.9% over the past month, with two estimates going higher and no negative revisions [12] - THRM holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] Caution on Price Targets - While price targets are often sought after, they can mislead investors, as empirical research shows they rarely indicate actual price movements [7][10] - Analysts may set overly optimistic price targets due to business incentives, which can inflate expectations [8]

Core Insights - The article emphasizes the importance of value investing as a successful strategy across various market conditions [2] - Zacks has developed a Style Scores system to identify stocks with specific traits, particularly focusing on the "Value" category for value investors [3] - Gentherm (THRM) is highlighted as a strong value stock, currently holding a Zacks Rank 2 (Buy) and an A for Value [4] Company Metrics - Gentherm's current P/E ratio is 14.03, significantly lower than the industry average P/E of 29.87 [4] - The company's P/B ratio stands at 1.5, compared to the industry's average P/B of 3.70, indicating a solid valuation [5] - Over the past year, THRM's Forward P/E has fluctuated between 8.71 and 16.93, with a median of 12.42, while its P/B has ranged from 1.11 to 2.70, with a median of 1.85 [4][5] Investment Outlook - The combination of Gentherm's strong earnings outlook and its current valuation metrics suggests that the stock is likely undervalued [6]

Core Insights - The article discusses the investment outlook for Gentherm Incorporated (THRM), previously rated as a hold when trading around $48.6, indicating modest upside potential and insufficient margin of safety [1] Investment Philosophy - The investment approach is based on fundamental analysis, focusing on companies with a strong competitive moat, consistent growth in free cash flow, and a robust financial performance track record [1] - The philosophy emphasizes long-term investing over short-term trading tactics, aiming to unlock value through informed and balanced market navigation [1] Contribution to Investment Community - The author aims to explore various investment topics, including uncovering undervalued stocks and identifying overvalued ones, providing actionable insights for investors [1] - Writing for Seeking Alpha is viewed as a way to contribute to a community that values deep analytical insights into the market, enhancing collective investor wisdom [1]

Core Insights - Gentherm reported Q2 FY2025 GAAP revenue of $375.1 million, exceeding analyst expectations by 3.2%, but adjusted EPS of $0.54 fell short of the $0.58 consensus [1][5][10] - The company experienced a significant decline in net income, dropping to $0.5 million, primarily due to unfavorable currency movements and increased input costs [1][6] Financial Performance - GAAP revenue for Q2 2025 was $375.1 million, a slight decrease of 0.2% year-over-year from $375.7 million in Q2 2024 [2][5] - Non-GAAP EPS decreased by 18.2% year-over-year from $0.66 in Q2 2024 to $0.54 in Q2 2025 [2] - Adjusted EBITDA was $45.9 million, down 8.0% from $49.9 million in the previous year, with an adjusted EBITDA margin of 12.2%, a decline from 13.3% [2][6] Business Segments - The automotive segment generated GAAP revenue of $308.0 million, reflecting a 3.8% year-over-year increase, driven by strong demand for lumbar and massage comfort solutions, which rose by 14.5%, and electronics, which increased by 42.1% [5][6] - The medical segment saw a revenue decline of 3.8% to $11.238 million, but the company aims to grow this segment by adapting core technologies for healthcare applications [8][9] Strategic Focus - Gentherm is focused on innovation and developing proprietary products, such as ClimateSense® and ComfortScale™, to enhance passenger comfort and energy efficiency in vehicles [4] - The company secured $620 million in new automotive business awards, contributing to a year-to-date total of over $1.0 billion in new business [7] Outlook - Full-year 2025 revenue guidance is now projected between $1.43 billion and $1.5 billion, with an adjusted EBITDA margin target of 11.7% to 12.5% [10] - Capital expenditures have been revised downward to $55–65 million from a previous estimate of $70–80 million [10]

Part I. [Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) This section presents Gentherm's financial statements, management's discussion, and market risk disclosures [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents Gentherm's unaudited consolidated financial statements for the period ended June 30, 2025, with detailed notes [Consolidated Condensed Balance Sheets](index=3&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) Provides a snapshot of Gentherm's financial position at June 30, 2025, and December 31, 2024 Consolidated Condensed Balance Sheets (in thousands) | ASSETS | | | | | :------------------------------------ | :------------ | :---------------- | :----- | | **June 30, 2025** | **December 31, 2024** | **Change** | | Total current assets | $758,815 | $684,015 | +$74,800 | | Total assets | $1,361,401 | $1,247,556 | +$113,845 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | Total current liabilities | $376,925 | $340,293 | +$36,632 | | Total liabilities | $661,656 | $630,609 | +$31,047 | | Total shareholders' equity | $699,745 | $616,947 | +$82,798 | | Total liabilities and shareholders' equity | $1,361,401 | $1,247,556 | +$113,845 | [Consolidated Condensed Statements of Income](index=4&type=section&id=Consolidated%20Condensed%20Statements%20of%20Income) Presents Gentherm's consolidated income statement for the three and six months ended June 30, 2025 and 2024 Consolidated Condensed Statements of Income (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Product revenues | $375,090 | $375,683 | $728,944 | $731,698 | | Gross margin | $89,762 | $96,701 | $176,227 | $185,454 | | Operating income | $24,009 | $32,988 | $41,070 | $51,037 | | Net income | $477 | $18,876 | $349 | $33,661 | | Basic earnings per share | $0.02 | $0.60 | $0.01 | $1.07 | | Diluted earnings per share | $0.02 | $0.60 | $0.01 | $1.06 | [Consolidated Condensed Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Condensed%20Statements%20of%20Comprehensive%20Income) Details Gentherm's consolidated comprehensive income for the three and six months ended June 30, 2025 and 2024 Consolidated Condensed Statements of Comprehensive Income (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $477 | $18,876 | $349 | $33,661 | | Other comprehensive income (loss), net of tax | $58,886 | $(10,504) | $87,198 | $(25,539) | | Comprehensive income | $59,363 | $8,372 | $87,547 | $8,122 | [Consolidated Condensed Statements of Cash Flows](index=6&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) Summarizes Gentherm's cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Consolidated Condensed Statements of Cash Flows (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $31,701 | $26,824 | | Net cash used in investing activities | $(19,829) | $(24,680) | | Net cash used in financing activities | $(22,329) | $(21,777) | | Net decrease in cash and cash equivalents | $(5,837) | $(26,207) | | Cash and cash equivalents at end of period | $128,297 | $123,466 | [Consolidated Condensed Statements of Changes in Shareholders' Equity](index=7&type=section&id=Consolidated%20Condensed%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Outlines changes in Gentherm's shareholders' equity from December 31, 2024, to June 30, 2025 Consolidated Condensed Statements of Changes in Shareholders' Equity (in thousands) | Metric | Balance at Dec 31, 2024 | Net Income/Loss | Other Comprehensive Income | Stock Based Compensation, net | Stock Repurchase | Balance at Jun 30, 2025 | | :------------------------- | :---------------------- | :-------------- | :------------------------- | :---------------------------- | :--------------- | :---------------------- | | Total Shareholders' Equity | $616,947 | $349 | $87,198 | $5,266 | $(10,015) | $699,745 | [Note 1 - Overview](index=8&type=section&id=Note%201%20-%20Overview) Provides an overview of Gentherm's business, including its automotive and medical product lines - Gentherm is a global market leader in innovative thermal management and pneumatic comfort technologies for automotive and medical sectors[22](index=22&type=chunk)[109](index=109&type=chunk) - Automotive products include Climate Control Seats (CCS®), Climate Control Interiors (CCI™), Lumbar and Massage Comfort Solutions, Valve Systems, and electronic solutions, supplied to major OEMs in North America, Europe, and Asia[22](index=22&type=chunk)[109](index=109&type=chunk) - Medical products comprise patient temperature management systems used in hospitals worldwide, primarily in the U.S., China, Germany, and Brazil[22](index=22&type=chunk)[109](index=109&type=chunk) Capitalized Payments to Customers (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Total Capitalized Payments to Customers | $16,750 | $14,276 | Reductions of Revenue from Capitalized Payments (in thousands) | Period | 2025 | 2024 | | :------------------------- | :---- | :---- | | Three Months Ended June 30 | $208 | $113 | | Six Months Ended June 30 | $1,044 | $186 | [Note 2 - New Accounting Pronouncements](index=9&type=section&id=Note%202%20-%20New%20Accounting%20Pronouncements) Details new accounting pronouncements and their expected impact on Gentherm's financial reporting - ASU 2023-09, 'Income Taxes (Topic 740): Improvements to Income Tax Disclosures,' **effective** for fiscal years beginning after December 15, 2024, will enhance income tax disclosures but is not **expected** to **impact** results of operations, cash flow, or financial condition[32](index=32&type=chunk) - ASU 2024-03, 'Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40),' **effective** for annual periods beginning after December 15, 2026, requires retrospective adoption and will enhance disclosures around certain costs and expenses. The company is currently determining its **impact**[33](index=33&type=chunk) [Note 3 - Restructuring](index=9&type=section&id=Note%203%20-%20Restructuring) Describes Gentherm's restructuring plans in EMEA and Asia, including associated costs and liabilities - The 2025 EMEA Plan involves closing the Plzeň, Czech Republic facility and relocating manufacturing activities to other existing facilities in the region, with **expected** cash restructuring costs of **$4M-$6M** for severance and **$2M-$3M** for transition costs, plus **$1M-$2M** in capital expenditures, to be completed by end of 2026[36](index=36&type=chunk)[37](index=37&type=chunk) - The 2025 Asia Plan involves relocating manufacturing activities from Shanghai, China to a new facility in Tianjin, China, with **expected** cash restructuring costs of **$2M-$3M** for severance and **$1M** for transition costs, plus **$2M-$3M** in capital expenditures, to be substantially completed in the first half of 2026[39](index=39&type=chunk)[40](index=40&type=chunk) Restructuring Expenses, Net by Reporting Segment (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Automotive | $1,924 | $1,694 | $6,438 | $8,808 | | Medical | $156 | $— | $156 | $20 | | Corporate | $28 | $748 | $28 | $852 | | Total | $2,108 | $2,442 | $6,622 | $9,680 | Restructuring Liability (in thousands) | Metric | Balance at Dec 31, 2024 | Additions (charged to expenses) | Cash Payments | Change in Estimate | Currency Translation | Balance at Jun 30, 2025 | | :------------------------ | :---------------------- | :------------------------------ | :------------ | :----------------- | :------------------- | :---------------------- | | Employee Separation Costs | $3,288 | $5,945 | $(3,397) | $(266) | $463 | $6,033 | | Other Related Costs, Net | $— | $943 | $(943) | $— | $— | $— | | Total | $3,288 | $6,888 | $(4,340) | $(266) | $463 | $6,033 | [Note 4 - Details of Certain Balance Sheet Components](index=11&type=section&id=Note%204%20-%20Details%20of%20Certain%20Balance%20Sheet%20Components) Provides detailed breakdowns of selected current assets and liabilities on Gentherm's balance sheet Other Current Assets (in thousands) | Component | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Billable tooling | $24,085 | $19,740 | | Income tax and other tax receivable | $23,320 | $20,611 | | Prepaid expenses | $12,708 | $6,305 | | Notes receivable | $12,414 | $11,190 | | Short-term derivative financial instruments | $5,884 | $719 | | Other | $9,004 | $5,848 | | Total other current assets | $87,415 | $64,413 | Other Current Liabilities (in thousands) | Component | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Accrued employee liabilities | $38,644 | $42,277 | | Income tax and other taxes payable | $28,560 | $26,385 | | Liabilities from discounts and rebates | $23,978 | $20,501 | | Restructuring | $6,033 | $3,288 | | Accrued warranty | $5,475 | $3,507 | | Short-term derivative financial instruments | $699 | $2,037 | | Other | $9,344 | $7,829 | | Total other current liabilities | $112,733 | $105,824 | [Note 5 - Goodwill and Other Intangibles](index=11&type=section&id=Note%205%20-%20Goodwill%20and%20Other%20Intangibles) Details Gentherm's goodwill by segment and other intangible assets, net, as of June 30, 2025 Goodwill by Segment (in thousands) | Segment | Balance as of Dec 31, 2024 | Currency Translation | Balance as of Jun 30, 2025 | | :--------- | :------------------------- | :------------------- | :------------------------- | | Automotive | $72,754 | $8,456 | $81,210 | | Medical | $26,849 | $832 | $27,681 | | Total | $99,603 | $9,288 | $108,891 | Other Intangible Assets, Net (in thousands) | Asset Type | June 30, 2025 Net Carrying Value | December 31, 2024 Net Carrying Value | | :------------------------ | :------------------------------- | :----------------------------------- | | Customer relationships | $35,265 | $36,344 | | Technology | $13,447 | $13,458 | | Product development costs | $168 | $170 | | Software development | $705 | $806 | | Tradenames | $6,491 | $6,473 | | Total | $56,076 | $57,251 | [Note 6 - Debt](index=12&type=section&id=Note%206%20-%20Debt) Summarizes Gentherm's debt, including its revolving credit facility and scheduled principal maturities Summary of Debt (in thousands) | Debt Type | June 30, 2025 Principal Balance | December 31, 2024 Principal Balance | | :-------------------------- | :------------------------------ | :---------------------------------- | | Revolving Credit Facility | $209,000 | $220,000 | | Finance leases | $146 | $201 | | Total debt | $209,146 | $220,201 | - The Second Amended and Restated Credit Agreement provides a **$500 million** secured revolving credit facility, maturing on June 10, 2027[52](index=52&type=chunk)[51](index=51&type=chunk) - As of June 30, 2025, **$287.970 million** remained **available** for additional borrowings under the Revolving Credit Facility, and the Company was in compliance with all material terms of the agreement[54](index=54&type=chunk)[57](index=57&type=chunk) Scheduled Principal Maturities of Debt (in thousands) | Year | U.S. Revolving Note | Other Debt | Total | | :--- | :------------------ | :--------- | :---- | | 2025 | $— | $73 | $73 | | 2026 | $— | $73 | $73 | | 2027 | $209,000 | $— | $209,000 | | Total | $209,000 | $146 | $209,146 | [Note 7 - Commitments and Contingencies](index=13&type=section&id=Note%207%20-%20Commitments%20and%20Contingencies) Outlines Gentherm's legal actions, claims, and warranty accruals, including recent product recalls - The company is subject to various legal actions and claims in the ordinary course of business, establishing accruals for probable and estimable losses[58](index=58&type=chunk) - NHTSA announced a recall of **261,257** VW vehicles (model years 2015-2020) in February 2024 due to a suction jet pump seal issue, a product originally designed by Alfmeier (acquired by Gentherm). No litigation has been filed, and Gentherm has not accepted financial responsibility, but potential costs could be material, with insurance and indemnification provisions from the Alfmeier acquisition **expected** to apply[62](index=62&type=chunk) - NHTSA announced a recall of **13,508** VW and Porsche vehicles (model years 2022-2023) in April 2025 due to a passenger occupant detection system issue related to Gentherm-produced seat cushion heating mats. No litigation has been filed, and potential costs could be material, with insurance policies **expected** to apply[63](index=63&type=chunk) Accrued Warranty Costs Reconciliation (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Balance at beginning of period | $3,507 | $3,945 | | Warranty claims paid | $(3,620) | $(3,324) | | Warranty expense for current period products | $3,965 | $2,520 | | Adjustments to prior period estimates | $1,462 | $362 | | Adjustments due to currency translation | $161 | $(63) | | Balance at end of period | $5,475 | $3,440 | [Note 8 - Supplier Finance Program](index=14&type=section&id=Note%208%20-%20Supplier%20Finance%20Program) Describes Gentherm's supplier finance program and related obligations recorded in accounts payable - Gentherm has a supplier finance program where suppliers can voluntarily discount invoices for earlier payment from a third-party service provider, without affecting contractual payment terms with Gentherm[65](index=65&type=chunk)[66](index=66&type=chunk) - As of June 30, 2025, supplier obligations confirmed under these arrangements **totaled $24,769 thousand**, recorded in accounts payable[67](index=67&type=chunk) [Note 9 - Earnings Per Share](index=15&type=section&id=Note%209%20-%20Earnings%20Per%20Share) Presents Gentherm's basic and diluted earnings per share and weighted average shares outstanding Earnings Per Share and Weighted Average Shares Outstanding | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $477 | $18,876 | $349 | $33,661 | | Basic earnings per share | $0.02 | $0.60 | $0.01 | $1.07 | | Diluted earnings per share | $0.02 | $0.60 | $0.01 | $1.06 | | Basic weighted average shares outstanding | 30,600,168 | 31,534,382 | 30,687,384 | 31,538,802 | | Diluted weighted average shares outstanding | 30,651,728 | 31,709,501 | 30,781,468 | 31,714,425 | [Note 10 - Financial Instruments](index=15&type=section&id=Note%2010%20-%20Financial%20Instruments) Details Gentherm's use of derivative contracts to manage market risks and their fair value measurements - Gentherm uses derivative contracts to manage market risks from foreign currency exchange rates, interest rates, and commodity price fluctuations, not for speculative trading[70](index=70&type=chunk)[71](index=71&type=chunk) Fair Value Measurement of Derivative Instruments (in thousands) - June 30, 2025 | Derivative Type | Notional Amount | Fair Value (Asset) | Fair Value (Liability) | Net Assets/(Liabilities) | | :------------------------------------ | :-------------- | :----------------- | :--------------------- | :----------------------- | | Foreign currency derivatives (Cash Flow Hedges) | $82,362 | $5,768 | $— | $5,768 | | Interest rate contracts (Cash Flow Hedges) | $100,000 | $— | $699 | $(699) | | Interest rate contracts (Not Designated) | $100,000 | $104 | $— | $104 | Effect of Derivative Instruments on Income and Comprehensive Income (in thousands) - Three Months Ended June 30, 2025 | Derivative Type | Location (Income/(Loss)) | 2025 | 2024 | | :------------------------------------ | :----------------------- | :--- | :--- | | Foreign currency derivatives (Cash Flow Hedges) | Cost of sales – (loss) income | $(766) | $2,896 | | | Other comprehensive income (loss) | $5,427 | $(7,560) | | Interest rate contracts (Cash Flow Hedges) | Other comprehensive income (loss) | $(699) | $— | | Interest rate contracts (Not Designated) | Interest expense, net | $(313) | $(308) | - The company's factoring agreements for accounts receivable expired or were terminated during the year ended December 31, 2024[75](index=75&type=chunk) [Note 11 - Fair Value Measurements](index=18&type=section&id=Note%2011%20-%20Fair%20Value%20Measurements) Explains Gentherm's fair value measurement classifications and valuation techniques for financial instruments - Fair value measurements are classified into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[77](index=77&type=chunk)[78](index=78&type=chunk) - Derivative instruments are valued using an income approach, analyzing quoted market prices and discounting forward values, classified as Level 2 inputs[79](index=79&type=chunk) - During the six months ended June 30, 2025, there was a **$1.294 million decrease** in the fair value of an equity investment (Level 2), recorded in other (**loss**) income[80](index=80&type=chunk) - The carrying values of the company's debt instruments are not materially different from their estimated fair values because interest rates on variable rate debt approximate current market rates[81](index=81&type=chunk) [Note 12 - Equity](index=19&type=section&id=Note%2012%20-%20Equity) Details Gentherm's stock repurchase program and related share repurchase activity - In June 2024, the Board authorized a new stock repurchase program (2024 Stock Repurchase Program) for up to **$150 million** of common stock over three years, expiring June 30, 2027[82](index=82&type=chunk) Share Repurchases and Related Activity (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total number of shares repurchased | 381,600 | 379,844 | 381,600 | 379,844 | | Average price paid per share | $26.24 | $52.65 | $26.24 | $52.65 | | Total repurchases | $10,015 | $20,000 | $10,015 | $20,000 | | Excise tax charged | $100 | $200 | $100 | $200 | - As of June 30, 2025, **$110.103 million** of share repurchase authorization **remained** under the 2024 Stock Repurchase Program[83](index=83&type=chunk) [Note 13 - Reclassifications Out of Accumulated Other Comprehensive Income (Loss)](index=19&type=section&id=Note%2013%20-%20Reclassifications%20Out%20of%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) Summarizes reclassification adjustments and activity within accumulated other comprehensive income (loss) Reclassification Adjustments and AOCI Activity (in thousands) - Six Months Ended June 30, 2025 | Component | Defined Benefit Pension Plans | Foreign Currency Translation Adjustments | Cash Flow Hedge Derivatives | Total | | :------------------------------------ | :---------------------------- | :--------------------------------------- | :-------------------------- | :---- | | Balance at Dec 31, 2024 | $(1,851) | $(80,096) | $(3,246) | $(85,193) | | Net current period other comprehensive income | $28 | $80,051 | $7,119 | $87,198 | | Balance at Jun 30, 2025 | $(1,823) | $(45) | $3,873 | $2,005 | - Amounts reclassified from accumulated other comprehensive income (**loss**) into **net income** were primarily included in cost of sales[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) - Substantially all existing gains and losses related to foreign currency derivatives reported in AOCI as of June 30, 2025, are **expected** to be reclassified into earnings within the next twelve months[88](index=88&type=chunk) [Note 14 - Income Taxes](index=20&type=section&id=Note%2014%20-%20Income%20Taxes) Presents Gentherm's income tax expense, effective tax rate, and factors influencing tax variations Income Tax Expense and Effective Tax Rate (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax expense | $2,057 | $9,544 | $4,269 | $13,086 | | Earnings before income tax | $2,534 | $28,420 | $4,618 | $46,747 | | Effective tax rate | 81.2% | 33.6% | 92.4% | 28.0% | - The **effective** tax rate for Q2 2025 (**81.2%**) and H1 2025 (**92.4%**) significantly **increased** from the prior year, primarily due to the **unfavorable impact** of GILTI, foreign earnings taxed at varying rates, **unfavorable** tax **effects** of equity vesting, and a U.S. capital **loss** carryforward valuation allowance[91](index=91&type=chunk)[93](index=93&type=chunk) - The company is evaluating the **impact** of the recently enacted One Big Beautiful Bill Act (OBBBA) in the U.S. and the Act for an Immediate Tax Investment Programme to Strengthen Germany's Business Location (German Tax Package) on its financial results[95](index=95&type=chunk)[97](index=97&type=chunk) [Note 15 - Segment Reporting](index=21&type=section&id=Note%2015%20-%20Segment%20Reporting) Provides financial information by Gentherm's Automotive and Medical reportable segments, including revenues - Gentherm has two reportable segments: Automotive and Medical. The Automotive segment includes climate and comfort solutions, valve systems, and other automotive products. The Medical segment focuses on patient temperature management[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) Product Revenues by Segment (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Automotive | $363,852 | $364,002 | $705,726 | $708,640 | | Medical | $11,238 | $11,681 | $23,218 | $23,058 | | Total | $375,090 | $375,683 | $728,944 | $731,698 | Automotive Product Revenues by Category (in thousands) | Product Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Climate Control Seats | $200,020 | $199,766 | $391,173 | $391,815 | | Lumbar and Massage Comfort Solutions | $52,530 | $45,869 | $97,843 | $84,120 | | Climate Control Interiors | $49,585 | $47,031 | $94,926 | $91,429 | | Climate and Comfort Electronics | $5,906 | $4,157 | $13,621 | $8,383 | | Valve Systems | $25,143 | $29,267 | $48,316 | $55,892 | | Other Automotive | $30,668 | $37,912 | $59,847 | $77,001 | Revenue by Geographic Area (in thousands) | Geographic Area | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $126,745 | $127,359 | $251,671 | $252,812 | | China | $54,600 | $53,209 | $103,535 | $107,685 | | Germany | $29,181 | $31,628 | $55,738 | $55,241 | | South Korea | $24,082 | $27,670 | $47,866 | $55,854 | | Czech Republic | $23,692 | $20,106 | $44,676 | $39,690 | | Mexico | $17,760 | $11,823 | $33,432 | $21,838 | | Slovakia | $14,571 | $14,722 | $28,293 | $27,900 | | Romania | $14,566 | $13,008 | $27,523 | $27,230 | | Japan | $11,679 | $14,737 | $23,778 | $27,192 | | United Kingdom | $9,775 | $10,482 | $19,151 | $21,806 | | Other | $48,439 | $50,939 | $93,281 | $94,450 | | Total Company | $375,090 | $375,683 | $728,944 | $731,698 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion and analysis of Gentherm's financial condition, operational results, and critical accounting estimates [Forward-Looking Statements](index=26&type=section&id=Forward-Looking%20Statements) Highlights forward-looking statements in the report, emphasizing inherent risks and uncertainties - The report contains forward-looking statements about future goals, beliefs, plans, and expectations, including light vehicle production, macroeconomic conditions, strategic plans, and liquidity[107](index=107&type=chunk) - These statements are based on management's reasonable expectations and beliefs but are subject to assumptions, risks, uncertainties, and other factors detailed in 'Item 1A. Risk Factors' of the Annual Report on Form 10-K[107](index=107&type=chunk) - The company disclaims any obligation to update forward-looking statements to reflect changes in expectations or events, except as required by law[107](index=107&type=chunk) [Overview](index=26&type=section&id=Overview) Provides a general overview of Gentherm's business as a global leader in thermal management technologies - Gentherm is a global market leader in innovative thermal management and pneumatic comfort technologies for automotive and medical applications[109](index=109&type=chunk) - Automotive sales are driven by light vehicle production, product content per vehicle, and macroeconomic factors such as interest rates, consumer confidence, and fuel prices[110](index=110&type=chunk) - The company's diversified OEM customer base, geographic revenue base, and flexible cost structure are intended to help withstand industry downturns and benefit from upturns[110](index=110&type=chunk) - Gentherm's products offer energy efficiency advantages for hybrid and electric vehicles, positioning the company well for the industry's shift towards human comfort, health, and wellness[111](index=111&type=chunk) [Recent Trends - Tariffs and Global Conditions](index=27&type=section&id=Recent%20Trends%20-%20Tariffs%20and%20Global%20Conditions) Discusses the impact of tariffs, global volatility, and supply chain disruptions on Gentherm's operations - The U.S. government has periodically announced additional significant tariffs on imported goods, with reciprocal tariffs from other countries, creating uncertainty in the global trade environment[112](index=112&type=chunk) - Gentherm's regional manufacturing model and ability to pass additional costs to customers help mitigate the direct **impact** of tariffs[112](index=112&type=chunk) - The global automotive industry faces significant volatility, inflationary pressures, and supply chain disruptions, leading to **increased** costs for materials, labor, equipment, and logistics[114](index=114&type=chunk) - Gentherm is exposed to foreign currency risk and geopolitical conflicts (e.g., Russia-Ukraine, Middle East, Red Sea), which could disrupt shipping and shift production, substantially affecting financial results due to high fixed structural costs[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) [Recent Trends - Light Vehicle Production Volumes](index=28&type=section&id=Recent%20Trends%20-%20Light%20Vehicle%20Production%20Volumes) Presents global light vehicle production volumes in key markets and future forecasts Global Light Vehicle Production Volumes in Key Markets (in millions of units) | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change (QoQ) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change (YoY) | | :------------------ | :------------------------------- | :------------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | North America | 4.0 | 4.1 | (3.0)% | 7.7 | 8.1 | (4.1)% | | Europe | 4.4 | 4.5 | (1.7)% | 8.8 | 9.1 | (3.3)% | | Greater China | 7.6 | 7.0 | 9.0% | 14.8 | 13.3 | 11.7% | | Japan / South Korea | 3.0 | 3.0 | 0.0% | 6.1 | 5.9 | 3.4% | | Total | 19.0 | 18.6 | 2.3% | 37.4 | 36.3 | 3.1% | - S&P Global Mobility forecasts global light vehicle production volume in key markets for full year 2025 to remain consistent at **74.7 million units**, in line with full year 2024 volumes[118](index=118&type=chunk) [Recent Trends - Automotive New Business Awards](index=28&type=section&id=Recent%20Trends%20-%20Automotive%20New%20Business%20Awards) Details Gentherm's automotive new business awards, representing projected lifetime revenue - Gentherm secured **$620 million** in automotive new business awards during the second quarter of 2025[119](index=119&type=chunk) - These awards represent aggregate projected lifetime revenue based on customer price and volume projections at the award date, serving as an indicator of future revenue, but are not firm orders and are subject to change and risks[119](index=119&type=chunk) [Recent Trends - Stock Repurchase Program](index=28&type=section&id=Recent%20Trends%20-%20Stock%20Repurchase%20Program) Summarizes Gentherm's stock repurchase program and recent repurchase activity - In June 2024, the Board of Directors authorized a **$150 million** stock repurchase program, expiring June 30, 2027[120](index=120&type=chunk) Stock Repurchase Activity (in millions, except per share data) | Period | Total Repurchased | Average Price Per Share | Remaining Authorization | | :------------------------------- | :---------------- | :---------------------- | :---------------------- | | Three Months Ended June 30, 2025 | $10.0 | $26.24 | N/A | | Six Months Ended June 30, 2025 | $10.0 | $26.24 | $110.1 | [Reportable Segments](index=29&type=section&id=Reportable%20Segments) Identifies Gentherm's two reportable segments: Automotive and Medical - Gentherm has two reportable segments: Automotive and Medical[122](index=122&type=chunk) - The Automotive segment includes design, development, manufacturing, and sales of automotive climate and comfort solutions, valve systems, and other automotive products[99](index=99&type=chunk) - The Medical segment comprises patient temperature management business, addressing hyper-hypothermia therapy and normothermia in various care settings[100](index=100&type=chunk) [Consolidated Results of Operations - Product Revenues](index=29&type=section&id=Consolidated%20Results%20of%20Operations%20-%20Product%20Revenues) Analyzes Gentherm's product revenues, including factors contributing to changes in revenue Consolidated Results of Operations (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Product revenues | $375,090 | $375,683 | $728,944 | $731,698 | | Cost of sales | $285,328 | $278,982 | $552,717 | $546,244 | | Gross margin | $89,762 | $96,701 | $176,227 | $185,454 | | Total operating expenses | $65,753 | $63,713 | $135,157 | $134,417 | | Operating income | $24,009 | $32,988 | $41,070 | $51,037 | | Net income | $477 | $18,876 | $349 | $33,661 | Product Revenues (in thousands) | Period | 2025 | 2024 | $ Change | % Change | | :------------------------- | :--- | :--- | :------- | :------- | | Three Months Ended June 30 | $375,090 | $375,683 | $(593) | (0.2)% | | Six Months Ended June 30 | $728,944 | $731,698 | $(2,754) | (0.4)% | - The **decrease** in product revenues for Q2 2025 was due to **unfavorable** pricing, **unfavorable** automotive volumes, and **unfavorable** foreign currency **impacts** (Chinese Renminbi, Korean Won), partially offset by **favorable** Euro **impacts**[125](index=125&type=chunk) - The **decrease** in product revenues for H1 2025 was due to **unfavorable** pricing and **unfavorable** foreign currency **impacts** (Korean Won, Chinese Renminbi), partially offset by **favorable** automotive volumes and **favorable** Euro **impacts**[126](index=126&type=chunk) [Consolidated Results of Operations - Cost of Sales](index=31&type=section&id=Consolidated%20Results%20of%20Operations%20-%20Cost%20of%20Sales) Examines Gentherm's cost of sales and gross margin, detailing factors influencing changes Cost of Sales and Gross Margin (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of sales | $285,328 | $278,982 | $552,717 | $546,244 | | Gross margin | $89,762 | $96,701 | $176,227 | $185,454 | | Gross margin - Percentage of product revenues | 23.9% | 25.7% | 24.2% | 25.3% | - The **increase** in cost of sales for Q2 2025 was primarily due to higher labor costs, **unfavorable** foreign currency **impacts** (Euro), and higher quality costs, partially offset by lower automotive volumes, material purchasing savings, and **favorable** foreign currency **impacts** (Mexican Peso)[127](index=127&type=chunk) - The **increase** in cost of sales for H1 2025 was primarily due to higher labor costs, higher automotive volumes, **unfavorable** foreign currency **impacts** (Euro), and higher quality costs, partially offset by material purchasing savings and **favorable** foreign currency **impacts** (Mexican Peso)[129](index=129&type=chunk) [Consolidated Results of Operations - Net Research and Development Expenses](index=32&type=section&id=Consolidated%20Results%20of%20Operations%20-%20Net%20Research%20and%20Development%20Expenses) Reviews Gentherm's net research and development expenses and their percentage of product revenues Net Research and Development Expenses (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net research and development expenses | $22,558 | $21,861 | $46,774 | $44,606 | | Percentage of product revenues | 6.0% | 5.8% | 6.4% | 6.1% | - The **increase** in **net** R&D expenses for both periods was primarily related to higher employee compensation expenses[130](index=130&type=chunk)[131](index=131&type=chunk) [Consolidated Results of Operations - Selling, General and Administrative Expenses](index=32&type=section&id=Consolidated%20Results%20of%20Operations%20-%20Selling,%20General%20and%20Administrative%20Expenses) Analyzes Gentherm's selling, general and administrative expenses and their drivers Selling, General and Administrative Expenses (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Selling, general and administrative expenses | $41,087 | $39,410 | $79,565 | $80,131 | | Percentage of product revenues | 11.0% | 10.5% | 10.9% | 11.0% | - The Q2 2025 **increase** in SG&A was primarily due to higher expenses for leadership transition, leases, and information technology, partially offset by lower employee compensation[132](index=132&type=chunk) - The H1 2025 **decrease** in SG&A was primarily due to lower employee compensation expenses and **favorable** foreign currency **impacts**, partially offset by higher expenses for leadership transition, leases, and information technology[133](index=133&type=chunk) [Consolidated Results of Operations - Restructuring Expenses, net](index=33&type=section&id=Consolidated%20Results%20of%20Operations%20-%20Restructuring%20Expenses,%20net) Details Gentherm's restructuring expenses, net, for the periods presented Restructuring Expenses, Net (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Restructuring expenses, net | $2,108 | $2,442 | $6,622 | $9,680 | - For the three months ended June 30, 2025, expenses included **$1.5 million** for employee separation costs and **$0.7 million** for other costs[134](index=134&type=chunk) - For the six months ended June 30, 2025, expenses included **$5.7 million** for employee separation costs and **$1.0 million** for other costs[135](index=135&type=chunk) [Consolidated Results of Operations - Loss on Sale of Land and Building, net](index=33&type=section&id=Consolidated%20Results%20of%20Operations%20-%20Loss%20on%20Sale%20of%20Land%20and%20Building,%20net) Reports the net loss incurred from the sale of land and building, primarily the former headquarters Loss on Sale of Land and Building, net (in thousands) | Period | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Loss on sale of land and building, net | $2,196 | $— | - The **loss** is primarily related to the sale of the former headquarters building in Northville, Michigan, in January 2025[138](index=138&type=chunk) [Consolidated Results of Operations - Interest Expense, net](index=34&type=section&id=Consolidated%20Results%20of%20Operations%20-%20Interest%20Expense,%20net) Analyzes Gentherm's net interest expense and factors contributing to its changes Interest Expense, net (in thousands) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest expense, net | $(4,043) | $(4,002) | $(7,598) | $(7,246) | - The **increase** in interest expense, **net** for the six months ended June 30, 2025, was primarily related to the change in fair value of an interest rate swap derivative[140](index=140&type=chunk) [Consolidated Results of Operations - Foreign Currency (Loss) Gain](index=34&type=section&id=Consolidated%20Results%20of%20Operations%20-%20Foreign%20Currency%20(Loss)%20Gain) Examines Gentherm's foreign currency loss or gain, primarily from unrealized foreign currency losses Foreign Currency (Loss) Gain (in thousands) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Foreign currency (loss) gain | $(17,432) | $(282) | $(27,730) | $2,267 | - The foreign currency **loss** for both periods in 2025 was primarily due to **net** unrealized foreign currency losses, mainly related to a non-current intercompany U.S. dollar receivable at a foreign subsidiary[141](index=141&type=chunk)[142](index=142&type=chunk) [Consolidated Results of Operations - Other (Loss) Income](index=35&type=section&id=Consolidated%20Results%20of%20Operations%20-%20Other%20(Loss)%20Income) Details Gentherm's other (loss) income, including changes in fair value of equity investments Other (Loss) Income (in thousands) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Other (loss) income | $— | $(284) | $(1,124) | $689 | - The **unfavorable change** in other (**loss**) income for the six months ended June 30, 2025, was primarily due to a **$1.3 million decrease** in the fair value of an equity investment in the current year, compared to a **$1.1 million increase** in the prior year[145](index=145&type=chunk) [Consolidated Results of Operations - Income Tax Expense](index=35&type=section&id=Consolidated%20Results%20of%20Operations%20-%20Income%20Tax%20Expense) Analyzes Gentherm's income tax expense and effective tax rate, highlighting key influencing factors Income Tax Expense and Effective Tax Rate (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax expense | $2,057 | $9,544 | $4,269 | $13,086 | | Earnings before income tax | $2,534 | $28,420 | $4,618 | $46,747 | | Effective tax rate | 81.2% | 33.6% | 92.4% | 28.0% | - The **effective** tax rates for Q2 2025 (**81.2%**) and H1 2025 (**92.4%**) were significantly higher than the U.S. Federal statutory rate of **21.0%**, primarily due to the **unfavorable impact** of GILTI, foreign earnings taxed at varying rates, **unfavorable** tax **effects** of equity vesting, and a U.S. capital **loss** carryforward valuation allowance[146](index=146&type=chunk)[148](index=148&type=chunk) [Liquidity and Capital Resources - Overview](index=36&type=section&id=Liquidity%20and%20Capital%20Resources%20-%20Overview) Provides an overview of Gentherm's liquidity sources and ability to meet future cash requirements - Primary liquidity sources are cash flows from operations and borrowings **available** under the Second Amended and Restated Credit Agreement[150](index=150&type=chunk) - As of June 30, 2025, the company had **$128.3 million** in cash and cash equivalents and **$288.0 million** of availability under its credit facility[151](index=151&type=chunk) - The company believes its current liquidity sources will be adequate to meet anticipated cash requirements for at least the next twelve months and the foreseeable future[153](index=153&type=chunk) - The company **expects** to move funds globally without material adverse tax **implications** and does not anticipate needing to accrue withholding taxes for non-U.S. cash distributions to the U.S[152](index=152&type=chunk) [Liquidity and Capital Resources - Cash and Cash Flows](index=36&type=section&id=Liquidity%20and%20Capital%20Resources%20-%20Cash%20and%20Cash%20Flows) Summarizes Gentherm's cash and cash equivalents and cash flows from operating, investing, and financing activities Cash and Cash Equivalents (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Cash and cash equivalents at beginning of period | $134,134 | $149,673 | | Net cash provided by operating activities | $31,701 | $26,824 | | Net cash used in investing activities | $(19,829) | $(24,680) | | Net cash used in financing activities | $(22,329) | $(21,777) | | Foreign currency effect on cash and cash equivalents | $4,620 | $(6,574) | | Cash and cash equivalents at end of period | $128,297 | $123,466 | - **Net** cash provided by operating activities **totaled $31.7 million** for H1 2025, reflecting **net income**, non-cash charges (depreciation, amortization, stock-based compensation, unrealized foreign currency **loss**), and changes in accounts payable, partially offset by changes in accounts receivable, inventory, and deferred **income** taxes[155](index=155&type=chunk) - **Net** cash used in investing activities was **$19.8 million** for H1 2025, primarily for purchases of property and equipment (**$23.7 million**) and technology investments (**$0.6 million**), partially offset by proceeds from asset sales (**$3.7 million**)[156](index=156&type=chunk) - **Net** cash used in financing activities was **$22.3 million** for H1 2025, reflecting debt repayments (**$63.1 million**), stock repurchases (**$10.0 million**), and taxes on stock-based compensation (**$1.2 million**), partially offset by debt borrowings (**$52.0 million**)[157](index=157&type=chunk) [Liquidity and Capital Resources - Debt](index=37&type=section&id=Liquidity%20and%20Capital%20Resources%20-%20Debt) Details Gentherm's debt, including its revolving credit facility and compliance with terms Summary of Debt (in thousands) | Debt Type | June 30, 2025 Principal Balance | December 31, 2024 Principal Balance | | :-------------------------- | :------------------------------ | :---------------------------------- | | Revolving Credit Facility | $209,000 | $220,000 | | Finance leases | $146 | $201 | | Total debt | $209,146 | $220,201 | - The company maintains a **$500 million** Revolving Credit Facility under its Second Amended and Restated Credit Agreement, maturing on June 10, 2027[159](index=159&type=chunk) - As of June 30, 2025, Gentherm was in compliance, in all material respects, with the terms of the Second Amended and Restated Credit Agreement[159](index=159&type=chunk) [Liquidity and Capital Resources - Material Cash Requirements](index=37&type=section&id=Liquidity%20and%20Capital%20Resources%20-%20Material%20Cash%20Requirements) Outlines Gentherm's material cash requirements, primarily related to restructuring plans - The 2025 EMEA Plan is **expected** to incur cash restructuring costs of **$4-6 million** for employee severance and retention, **$2-3 million** for other transition costs, and **$1-2 million** in capital expenditures[161](index=161&type=chunk) - The 2025 Asia Plan is **expected** to incur cash restructuring costs of **$2-3 million** for employee severance and retention, **$1 million** for other transition costs, and **$2-3 million** in capital expenditures[162](index=162&type=chunk) [Liquidity and Capital Resources - Effects of Inflation](index=38&type=section&id=Liquidity%20and%20Capital%20Resources%20-%20Effects%20of%20Inflation) Discusses the impact of inflationary pressures on Gentherm's operating costs and financial results - The automotive component supply industry is subject to inflationary pressures on materials, labor, and transportation costs, which have adversely **impacted** Gentherm's operating costs and results[165](index=165&type=chunk) - Despite mitigation strategies like sourcing efficiencies and commercial negotiations, the company has not fully offset these cost **increases**, which may require a material amount of additional cash to fund operations[165](index=165&type=chunk) [Critical Accounting Estimates](index=38&type=section&id=Critical%20Accounting%20Estimates) Confirms no significant changes in critical accounting policies or estimates for the period - No significant changes occurred in critical accounting policies or estimates during the three months ended June 30, 2025[166](index=166&type=chunk) - The company is not aware of any events or circumstances requiring an update to estimates or revision of asset/liability carrying values, but actual results may differ significantly from estimates[166](index=166&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Details Gentherm's exposure to market risks, including foreign currency and interest rates, and its hedging strategies - Gentherm is exposed to market risks from changes in foreign currency exchange rates (Euro, Mexican Peso, Chinese Renminbi, etc.), interest rates, and commodity prices (e.g., copper)[167](index=167&type=chunk) - The company uses derivative contracts (foreign currency exchange agreements, interest rate swaps) to manage these financial and operational exposures, not for speculative or trading purposes[168](index=168&type=chunk) - Hedge relationships are formally documented and must be highly **effective**; the **effective** portion of fair value changes for cash flow hedges is recorded in accumulated other comprehensive **income** (**loss**)[169](index=169&type=chunk) [Interest Rate Sensitivity](index=39&type=section&id=Interest%20Rate%20Sensitivity) Analyzes Gentherm's interest rate sensitivity and its use of interest rate swap agreements Long-Term Debt by Expected Maturity Date (in thousands) | Liabilities | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | Total | Fair Value | | :------------------------------------ | :--- | :--- | :--- | :--- | :--- | :--- | :---- | :--------- | | Variable rate | $— | $— | $209,000 | $— | $— | $— | $209,000 | $209,000 | | Variable interest rate as of June 30, 2025 | N/A | N/A | 5.80% | N/A | N/A | N/A | 5.80% | N/A | - A hypothetical **100 basis point change** (**increase** or **decrease**) in interest rates would **impact** annual interest expense by **$2.1 million**[172](index=172&type=chunk) - The company uses floating-to-fixed interest rate swap agreements with notional amounts **totaling $100.0 million** to hedge interest payment fluctuations[172](index=172&type=chunk) [Exchange Rate Sensitivity](index=40&type=section&id=Exchange%20Rate%20Sensitivity) Examines Gentherm's exposure to foreign currency exchange rate fluctuations and hedging strategies Foreign Currency Exchange Agreements (Notional Amounts in thousands) | Agreement Type | 2025 | 2026 | Total Contract Amount | Average Contract Rate | Fair Value | | :-------------------------- | :--- | :--- | :-------------------- | :-------------------- | :--------- | | Receive MXN / Pay USD | $40,493 | $35,122 | $75,615 | 20.43 | $5,514 | | Receive HUF / Pay EUR | $6,747 | $— | $6,747 | 418.89 | $254 | Exchange Rate Sensitivity (Potential Gain/Loss from 10% Change, in thousands) | Exchange Agreement | June 30, 2025 Potential Loss | June 30, 2025 Potential Gain | | :----------------- | :--------------------------- | :--------------------------- | | Receive MXN / Pay USD | $5,040 | $7,807 | | Receive HUF / Pay EUR | $637 | $779 | [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management's evaluation of disclosure controls and internal control over financial reporting effectiveness - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2025[177](index=177&type=chunk) - There were **no material changes** in internal control over financial reporting during the three months ended June 30, 2025[178](index=178&type=chunk) Part II. [Other Information](index=41&type=section&id=Part%20II.%20Other%20Information) This section provides other information not included in the financial statements, such as legal proceedings and equity sales [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) Gentherm is subject to routine litigation, with no material pending or resolved legal proceedings in Q2 2025 - No material pending litigation or resolved legal proceedings occurred during the three months ended June 30, 2025[181](index=181&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) Refers to risk factors from prior reports, with no new material risks identified for the current period - Readers should consider risk factors disclosed in the Annual Report on Form 10-K for December 31, 2024, and the Quarterly Report on Form 10-Q for March 31, 2025[182](index=182&type=chunk) - No additional material risks or uncertainties have been identified by the company[182](index=182&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details common stock repurchases during Q2 2025 and remaining authorization under the stock repurchase program Issuer Purchases of Equity Securities During Second Quarter 2025 | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | | :------------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :--------------------------------------------------------------------------------------- | | April 1, 2025 to April 30, 2025 | 156,000 | $26.00 | 156,000 | $116,061,894 | | May 1, 2025 to May 31, 2025 | 225,600 | $26.42 | 225,600 | $110,102,528 | | June 1, 2025 to June 30, 2025 | — | $— | — | $110,102,528 | [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) No directors or Section 16 officers adopted or terminated Rule 10b5-1 trading plans in Q2 2025 - No directors or Section 16 officers adopted or terminated Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[184](index=184&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the report, including corporate documents and CEO/CFO certifications Exhibits to the Report | Exhibit Number | Exhibit Description | Filed/Furnished Herewith | | :------------- | :------------------------------------------------------------------------------- | :----------------------- | | 3.1 | Second Amended and Restated Articles of Incorporation of Gentherm Incorporated | No | | 3.2 | Amended and Restated Bylaws of Gentherm Incorporated | No | | 31.1 | Section 302 Certification – CEO | Yes | | 31.2 | Section 302 Certification – CFO | Yes | | 32.1* | Section 906 Certification – CEO | Yes | | 32.2* | Section 906 Certification – CFO | Yes | | 101.INS | Inline XBRL Instance Document – The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | Yes | | 101.SCH | Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents | Yes | | 104 | Cover Page Interactive Date File – the cover page XBRL tags are embedded within the Inline XBRL document | Yes | [Signatures](index=43&type=section&id=Signatures) The report was duly signed by Gentherm's President and CEO, and EVP, CFO, and Treasurer on July 24, 2025 - The report was signed by William Presley, President and CEO, and Jonathan Douyard, EVP, CFO, and Treasurer, on July 24, 2025[188](index=188&type=chunk)

Financial Data and Key Metrics Changes - Gentherm's second quarter revenue decreased by 0.2% year over year, with foreign exchange adjusted revenues down by 1.6% [16] - Adjusted EBITDA for the quarter was $45.9 million, representing 12.2% of sales, down from 13.3% in the same quarter last year, primarily due to higher material and labor costs [17] - Adjusted diluted earnings per share were $0.54, compared to $0.66 in the second quarter of the previous year [18] - Operating cash flow year to date was $32 million, with net debt standing at $81 million and a net leverage ratio of 0.5 turns [18] Business Line Data and Key Metrics Changes - Automotive Climate and Comfort Solutions revenue increased by 3.8% year over year, or 2.5% excluding foreign exchange effects, partially offsetting planned revenue decreases from strategic exits [17] - Medical revenue decreased by 3.8% year over year, or 4.8% excluding foreign exchange [17] - The lumbar and massage product line is projected to grow from approximately $175 million in 2024 to over $300 million by 2027, driven by increasing adoption and recent awards [11] Market Data and Key Metrics Changes - Automotive climate and coverage solutions outperformed actual light vehicle production in key markets by 10 basis points, with strong performance in North America and Europe, but underperformance in Asia [8] - 70% of Gentherm's awards year to date in China were with domestic OEMs, compared to 50% over the last two years, indicating a strategic shift in customer mix [9] Company Strategy and Development Direction - Gentherm is focused on driving strategic profitable growth and expanding into adjacent markets, having engaged with over 30 customers across various end markets [12] - The company aims to shift its customer mix in China towards domestic OEMs to align more closely with the overall market [10] - M&A is a key component of Gentherm's capital allocation strategy, with ongoing evaluations of opportunities aligned with strategic priorities [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory of the core automotive business and the acceleration of pneumatic, lumbar, and massage adoption rates [10] - The company expects third quarter results to be similar to the second quarter, despite industry reports suggesting a mid-single-digit decrease in light vehicle production [20] - Overall sentiment has improved since April, leading to an updated revenue guidance range of $1.43 billion to $1.5 billion [20] Other Important Information - Gentherm secured $620 million in automotive new business awards in the second quarter, including significant wins with Ford and other OEMs [14] - The company is executing on its strategy to expand into near-adjacent markets, with positive feedback from customers expecting similar comfort solutions as in the light vehicle market [12] Q&A Session Summary Question: Guidance for Q3 results - Management indicated that Q3 results are expected to be similar to Q2 due to new launches and stable customer production schedules [26] Question: Comparison of new F Series content - The new F Series program is a continuation of existing content, reinforcing customer demand for Gentherm's features [27] Question: Details on adjacent market awards - Gentherm has secured awards in powersports and commercial vehicles, with specific thermal solutions for heavy trucks and delivery vans [35] Question: EBITDA margin guidance - Management expects EBITDA margins in Q3 to be similar to Q2, with improvements anticipated in Q4 [46] Question: Performance in the Chinese market - The company aims to achieve a 60-40 customer split between global and domestic OEMs in China by next year, with faster development cycles for domestic OEMs [48]

Company Performance - Gentherm reported quarterly earnings of $0.54 per share, missing the Zacks Consensus Estimate of $0.59 per share, and down from $0.66 per share a year ago, representing an earnings surprise of -8.47% [1] - The company posted revenues of $375.09 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.78%, but down from $375.68 million year-over-year [2] - Over the last four quarters, Gentherm has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance - Gentherm shares have lost about 19.9% since the beginning of the year, while the S&P 500 has gained 8.1% [3] - The current Zacks Rank for Gentherm is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the coming quarter is $0.61 on revenues of $366.45 million, and for the current fiscal year, it is $2.21 on revenues of $1.43 billion [7] - The outlook for the automotive industry, where Gentherm operates, is currently in the top 39% of Zacks industries, suggesting a favorable environment for performance [8]

Financial Performance - Second quarter product revenues reached $375.09 million [20], a slight decrease compared to $375.68 million in the same period of the previous year [20] - Adjusted EBITDA for the second quarter was $45.9 million, representing a 12.2% margin [11], compared to $49.9 million and a 13.3% margin in the second quarter of the previous year [11] - The company repurchased $10 million of its shares [5, 11] - Liquidity stands at $416 million [11] Automotive Sector - Automotive new business awards totaled $620 million [5, 9], including a full comfort solutions portfolio on Ford F-Series [5] - Automotive Climate and Comfort Solutions experienced growth exceeding the market by 10 basis points, with strong performance in North America and Europe (+8%), offset by a decline in Asia (-12%) [5] Strategic Initiatives and Outlook - The company is progressing with strategic footprint realignment [8] - Full year revenue guidance is narrowed to $1.43 billion - $1.5 billion [13] - Adjusted EBITDA margin guidance for the full year is revised to 11.7% - 12.5% [13] - Capital expenditures are now projected to be $55 million - $65 million [13]

[Executive Summary & Q2 2025 Performance](index=1&type=section&id=Executive%20Summary%20%26%20Q2%202025%20Performance) This section provides an overview of Gentherm's Q2 2025 financial and operational performance, including key highlights and CEO commentary [Q2 2025 Highlights](index=1&type=section&id=Q2%202025%20Highlights) Gentherm reported Q2 2025 revenue of $375.1 million, a slight decrease year-over-year. Automotive Climate and Comfort Solutions revenue increased by 3.8%. Net income and adjusted EBITDA saw declines, primarily due to significant unrealized foreign currency losses and increased material/labor costs. The company secured $620 million in new automotive business awards during the quarter - Secured Automotive New Business Awards totaling **$620 million** in Q2 2025, including Ford's next-generation F-Series truck platform and multiple awards for Puls.A™; year-to-date awards reached over **$1 billion**[3](index=3&type=chunk)[5](index=5&type=chunk) Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :------------------------------------ | :---------- | :---------- | :----------- | | Product Revenues | $375.1 million | $375.7 million | -0.2% | | Product Revenues (excl. FX) | $369.6 million | $375.7 million | -1.6% | | Automotive Climate and Comfort Solutions Revenue | N/A | N/A | +3.8% (+2.5% excl. FX) | | Gross Margin | 23.9% | 25.7% | -180 bps | | Net Income | $0.5 million | $18.9 million | -97.4% | | Adjusted EBITDA | $45.9 million | $49.9 million | -8.0% | | Adjusted EBITDA Margin | 12.2% | 13.3% | -1.1 pp | | GAAP Diluted EPS | $0.02 | $0.60 | -96.7% | | Adjusted Diluted EPS | $0.54 | $0.66 | -18.2% | | Net Leverage | ~0.5x | ~0.5x | Flat | | Liquidity | $416 million | N/A | N/A | - Gross margin decreased primarily due to higher material costs, unfavorable product mix, higher labor costs, and expenses related to footprint realignment[5](index=5&type=chunk) - Net income decrease was primarily driven by net unrealized foreign currency losses of **$18.9 million**[5](index=5&type=chunk) - Repurchased **$10.0 million** of the Company's common stock[5](index=5&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Bill Presley noted that Q2 results met expectations, with sequential improvement in adjusted EBITDA and strong commercial performance. He highlighted the company's focus on strategic execution, operational efficiencies, and a cautious approach amidst macro uncertainties, while remaining on track for full-year goals - Q2 results were in line with expectations, with adjusted EBITDA improving sequentially and strong commercial performance[3](index=3&type=chunk) - Automotive New Business Awards reaching over **$1 billion** year-to-date reflect continued innovation, technology leadership, and strong customer relationships[3](index=3&type=chunk) - The company's focus remains on executing strategic priorities and driving operating efficiencies, while taking a measured approach due to macro environment uncertainty[5](index=5&type=chunk) [Financial Guidance](index=2&type=section&id=Financial%20Guidance) This section outlines Gentherm's updated full-year 2025 financial guidance, including revised projections for revenues, EBITDA margin, and capital expenditures [Full Year 2025 Guidance](index=2&type=section&id=Full%20Year%202025%20Guidance) Gentherm narrowed its full-year 2025 guidance ranges for Product Revenues and Adjusted EBITDA Margin Rate, reflecting updated expectations. Capital Expenditures guidance was also revised downwards, while the Adjusted Effective Tax Rate remained unchanged Full Year 2025 Guidance Metrics | Metric | Previous (April 24, 2025) | Revised (July 24, 2025) | | :-------------------------- | :------------------------ | :---------------------- | | Product Revenues | $1.4B – $1.5B | $1.43B – $1.5B | | Adjusted EBITDA Margin Rate | 11.5% – 13% | 11.7% – 12.5% | | Full-year Adjusted Effective Tax Rate | 26% – 29% | No change | | Capital Expenditures | $70M – $80M | $55M – $65M | - Guidance is based on current tariffs, customer orders, near-term conditions, flat to slightly decreasing light vehicle production in relevant markets for full year 2025 versus 2024, and a EUR to USD exchange rate of **$1.13/Euro**[6](index=6&type=chunk) [Company Information & Investor Relations](index=2&type=section&id=Company%20Information%20%26%20Investor%20Relations) This section provides essential company information, investor and media contact details, and specifics regarding the Q2 2025 earnings conference call [About Gentherm](index=2&type=section&id=About%20Gentherm) Gentherm is a global leader in innovative thermal management and pneumatic comfort technologies, serving both automotive and medical markets. In 2024, the company achieved approximately $1.5 billion in annual sales and secured $2.4 billion in automotive new business awards - Gentherm is a global market leader of innovative thermal management and pneumatic comfort technologies[11](index=11&type=chunk) - Automotive products include Climate Control Seats (CCS®), Climate Control Interiors (CCI™), Lumbar and Massage Comfort Solutions, and Valve Systems. Medical products include patient temperature management systems[11](index=11&type=chunk) - In 2024, the company recorded annual sales of approximately **$1.5 billion** and secured **$2.4 billion** in automotive new business awards[11](index=11&type=chunk) [Investor and Media Contacts](index=2&type=section&id=Investor%20and%20Media%20Contacts) Contact information for investor relations and media inquiries is provided for stakeholders seeking further information about Gentherm - Investor Contact: Gregory Blanchette, investors@gentherm.com, 248.308.1702[11](index=11&type=chunk) - Media Contact: Melissa Fischer, media@gentherm.com, 248.289.9702[11](index=11&type=chunk) [Conference Call Details](index=2&type=section&id=Conference%20Call%20Details) Gentherm hosted a conference call on July 24, 2025, to discuss its second-quarter results, with details provided for live participation and subsequent replay access - A conference call was held on July 24, 2025, at 8:00 am Eastern Time to review the results[8](index=8&type=chunk) - Dial-in numbers and a passcode were provided for the live call and a telephonic replay available until August 7, 2025[8](index=8&type=chunk)[10](index=10&type=chunk) - A live webcast and one-year archived replay, along with supplemental materials, are accessible on the Investor section of Gentherm's website[9](index=9&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section serves as a disclaimer, highlighting the inherent risks and uncertainties that could cause actual results to differ materially from forward-looking statements [Disclaimer and Risks](index=3&type=section&id=Disclaimer%20and%20Risks) This section serves as a disclaimer, indicating that statements in the release are forward-looking and subject to numerous significant risks and uncertainties. These factors, including macroeconomic conditions, industry shifts, supply chain issues, and regulatory changes, could cause actual results to differ materially from expectations - Statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995[13](index=13&type=chunk) - Such statements are subject to important assumptions, significant risks, and uncertainties (some beyond control) that may cause actual results or performance to differ materially[13](index=13&type=chunk) - Key risks include macroeconomic and geopolitical factors in the Automotive industry, global economic and trade policies, increasing competition, new product launch management, the evolution of the automotive industry (EVs, autonomous vehicles), supply chain constraints, production levels of major customers, and operational risks in China[13](index=13&type=chunk) - Additional risks cover product quality and safety, labor market conditions, ability to achieve cost reductions, M&A integration, cybersecurity, loss of key customers/suppliers, intellectual property protection, compliance with anti-corruption laws, legal proceedings, regulation of the patient temperature management business, climate change effects, and debt covenants[13](index=13&type=chunk)[19](index=19&type=chunk) - Readers are advised to review the 'Risk Factors' in the Company's most recent Annual Report on Form 10-K and subsequent SEC filings for a comprehensive discussion of these risks[15](index=15&type=chunk) - The Company disclaims any obligation to update forward-looking statements to reflect changes in strategies, expectations, events, conditions, or circumstances, except as required by law[16](index=16&type=chunk) [Use of Non-GAAP Financial Measures](index=4&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) This section defines Gentherm's non-GAAP financial measures, explaining their calculation, management's rationale for their use, and their limitations for investors [Non-GAAP Definitions and Usefulness](index=4&type=section&id=Non-GAAP%20Definitions%20and%20Usefulness) This section defines Gentherm's various non-GAAP financial measures, such as Adjusted EBITDA, Adjusted EPS, Free Cash Flow, and liquidity, explaining their calculation and management's rationale for their use. These measures are provided to offer investors supplemental insights into the company's operating performance and liquidity by excluding items not indicative of ongoing operations, thereby enhancing comparability - The Company provides non-GAAP financial measures including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EPS, Free Cash Flow, Net CAPEX, Net Debt, liquidity, net leverage ratio, revenue/segment revenue/product revenue excluding foreign currency translation, and adjusted operating expenses[17](index=17&type=chunk) - Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, deferred financing cost amortization, non-cash stock-based compensation, restructuring expenses, net, unrealized currency gain or loss, and other non-ongoing operational gains/losses and related tax effects[17](index=17&type=chunk) - Management uses these non-GAAP measures as supplemental indicators of liquidity and operating performance to assist investors in assessing performance on a period-over-period basis by excluding matters not indicative of ongoing results[21](index=21&type=chunk) - Non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for GAAP measures; they may also not be comparable to metrics used by other companies[21](index=21&type=chunk) - Forward-looking non-GAAP guidance (Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EPS) is not reconciled to the most directly comparable GAAP measures due to the variability and low visibility of taxes and non-recurring items[22](index=22&type=chunk) [Consolidated Financial Statements & Reconciliations](index=6&type=section&id=Consolidated%20Financial%20Statements%20%26%20Reconciliations) This section presents Gentherm's consolidated financial statements for Q2 2025, including income statements, balance sheets, cash flows, and reconciliations of non-GAAP measures [Consolidated Condensed Statements of Income](index=6&type=section&id=Consolidated%20Condensed%20Statements%20of%20Income) The consolidated income statement for Q2 2025 shows a significant decline in net income and diluted EPS, primarily driven by substantial unrealized foreign currency losses. Gross margin also decreased year-over-year, contributing to lower operating income Three Months Ended June 30 (Dollars in thousands, except per share data) | Metric | 2025 | 2024 | Change (YoY) | | :-------------------------- | :------- | :------- | :----------- | | Product revenues | $375,090 | $375,683 | (0.2%) | | Cost of sales | $285,328 | $278,982 | 2.3% | | Gross margin | $89,762 | $96,701 | (7.2%) | | Operating income | $24,009 | $32,988 | (27.3%) | | Foreign currency (loss) gain | $(17,432) | $(282) | (6081.6%) | | Net income | $477 | $18,876 | (97.5%) | | Diluted earnings per share | $0.02 | $0.60 | (96.7%) | Six Months Ended June 30 (Dollars in thousands, except per share data) | Metric | 2025 | 2024 | Change (YoY) | | :-------------------------- | :------- | :------- | :----------- | | Product revenues | $728,944 | $731,698 | (0.4%) | | Cost of sales | $552,717 | $546,244 | 1.2% | | Gross margin | $176,227 | $185,454 | (5.0%) | | Operating income | $41,070 | $51,037 | (19.6%) | | Foreign currency (loss) gain | $(27,730) | $2,267 | (13230.7%) | | Net income | $349 | $33,661 | (99.0%) | | Diluted earnings per share | $0.01 | $1.06 | (99.1%) | [Revenue by Product Category](index=7&type=section&id=Revenue%20by%20Product%20Category) Automotive Climate and Comfort Solutions revenue grew by 3.8% in Q2 2025, driven by strong performance in Lumbar and Massage Comfort Solutions and Climate and Comfort Electronics. Conversely, Valve Systems and Other Automotive segments experienced declines. The Medical segment saw a slight decrease in Q2 but a modest increase year-to-date Three Months Ended June 30 (Dollars in thousands) | Product Category | 2025 | 2024 | % Change | | :---------------------------------- | :------- | :------- | :------- | | Climate Control Seats | $200,020 | $199,766 | 0.1% | | Lumbar and Massage Comfort Solutions | $52,530 | $45,869 | 14.5% | | Climate Control Interiors | $49,585 | $47,031 | 5.4% | | Climate and Comfort Electronics | $5,906 | $4,157 | 42.1% | | **Automotive Climate and Comfort Solutions** | **$308,041** | **$296,823** | **3.8%** | | Valve Systems | $25,143 | $29,267 | (14.1%) | | Other Automotive | $30,668 | $37,912 | (19.1%) | | **Subtotal Automotive segment** | **$363,852** | **$364,002** | **(0.0%)** | | Medical segment | $11,238 | $11,681 | (3.8%) | | **Total Company** | **$375,090** | **$375,683** | **(0.2%)** | Six Months Ended June 30 (Dollars in thousands) | Product Category | 2025 | 2024 | % Change | | :---------------------------------- | :------- | :------- | :------- | | Climate Control Seats | $391,173 | $391,815 | (0.2%) | | Lumbar and Massage Comfort Solutions | $97,843 | $84,120 | 16.3% | | Climate Control Interiors | $94,926 | $91,429 | 3.8% | | Climate and Comfort Electronics | $13,621 | $8,383 | 62.5% | | **Automotive Climate and Comfort Solutions** | **$597,563** | **$575,747** | **3.8%** | | Valve Systems | $48,316 | $55,892 | (13.6%) | | Other Automotive | $59,847 | $77,001 | (22.3%) | | **Subtotal Automotive segment** | **$705,726** | **$708,640** | **(0.4%)** | | Medical segment | $23,218 | $23,058 | 0.7% | | **Total Company** | **$728,944** | **$731,698** | **(0.4%)** | - Total Company revenue, excluding foreign currency translation, decreased **1.6%** for the three months ended June 30, 2025, and **0.4%** for the six months ended June 30, 2025[28](index=28&type=chunk) [Reconciliation of Net Income to Adjusted EBITDA](index=8&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA) Adjusted EBITDA for Q2 2025 decreased by 8.0% year-over-year, with the Adjusted EBITDA margin falling to 12.2%. This decline was largely influenced by significant unrealized currency losses in the current period compared to a gain in the prior year Three Months Ended June 30 (Dollars in thousands) | Metric | 2025 | 2024 | Change (YoY) | | :-------------------------- | :------- | :------- | :----------- | | Net income | $477 | $18,876 | (97.5%) | | Unrealized currency loss (gain) | $18,877 | $(497) | (3900.0%) | | Adjusted EBITDA | $45,897 | $49,873 | (8.0%) | | Adjusted EBITDA margin | 12.2% | 13.3% | (1.1 pp) | Six Months Ended June 30 (Dollars in thousands) | Metric | 2025 | 2024 | Change (YoY) | | :-------------------------- | :------- | :------- | :----------- | | Net income | $349 | $33,661 | (99.0%) | | Unrealized currency loss (gain) | $28,484 | $(2,353) | (1310.7%) | | Adjusted EBITDA | $85,238 | $93,415 | (8.8%) | | Adjusted EBITDA margin | 11.7% | 12.8% | (1.1 pp) | [Reconciliation of Net Income to Adjusted Net Income and Adjusted EPS](index=9&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income%20and%20Adjusted%20EPS) Adjusted net income and adjusted diluted EPS both decreased significantly for Q2 and YTD 2025 compared to the prior year. This was primarily due to the impact of unrealized currency losses and other adjustments, despite excluding certain non-recurring items Three Months Ended June 30 (Dollars in thousands, except per share data) | Metric | 2025 | 2024 | Change (YoY) | | :-------------------------- | :------- | :------- | :----------- | | Net income | $477 | $18,876 | (97.5%) | | Unrealized currency loss (gain) | $18,877 | $(497) | (3900.0%) | | Adjusted net income | $16,676 | $21,036 | (20.7%) | | Adjusted earnings per share (Diluted) | $0.54 | $0.66 | (18.2%) | Six Months Ended June 30 (Dollars in thousands, except per share data) | Metric | 2025 | 2024 | Change (YoY) | | :-------------------------- | :------- | :------- | :----------- | | Net income | $349 | $33,661 | (99.0%) | | Unrealized currency loss (gain) | $28,484 | $(2,353) | (1310.7%) | | Adjusted net income | $32,293 | $40,623 | (20.5%) | | Adjusted earnings per share (Diluted) | $1.05 | $1.28 | (17.9%) | [Consolidated Condensed Balance Sheets](index=10&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) As of June 30, 2025, Gentherm's total assets increased by 9.1% from year-end 2024, driven by growth in current assets, property and equipment, and goodwill. Total liabilities also rose, primarily due to accounts payable and lease liabilities, while shareholders' equity saw a notable increase, largely from a positive shift in accumulated other comprehensive income (loss) As of June 30, 2025 vs. December 31, 2024 (Dollars in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | **ASSETS** | | | | | Cash and cash equivalents | $128,297 | $134,134 | (4.3%) | | Accounts receivable, net | $294,719 | $258,112 | 14.2% | | Inventory, net | $248,384 | $227,356 | 9.2% | | Total current assets | $758,815 | $684,015 | 10.9% | | Property and equipment, net | $262,419 | $252,970 | 3.7% | | Goodwill | $108,891 | $99,603 | 9.3% | | Total assets | **$1,361,401** | **$1,247,556** | **9.1%** | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | | Accounts payable | $254,133 | $226,815 | 12.0% | | Total current liabilities | $376,925 | $340,293 | 10.8% | | Long-term debt, less current maturities | $209,000 | $220,064 | (5.0%) | | Total liabilities | **$661,656** | **$630,609** | **4.9%** | | Accumulated other comprehensive income (loss) | $2,005 | $(85,193) | N/A | | Total shareholders' equity | **$699,745** | **$616,947** | **13.4%** | [Consolidated Condensed Statements of Cash Flows](index=11&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities increased by 18.2% year-over-year. Net cash used in investing activities decreased, while net cash used in financing activities saw a slight increase. The period concluded with a net decrease in cash and cash equivalents, though less pronounced than the prior year Six Months Ended June 30 (Dollars in thousands) | Activity | 2025 | 2024 | Change (YoY) | | :-------------------------------------- | :------- | :------- | :----------- | | Net cash provided by operating activities | $31,701 | $26,824 | 18.2% | | Net cash used in investing activities | $(19,829) | $(24,680) | 19.7% | | Net cash used in financing activities | $(22,329) | $(21,777) | (2.5%) | | Foreign currency effect | $4,620 | $(6,574) | 170.3% | | Net decrease in cash and cash equivalents | $(5,837) | $(26,207) | 77.7% | | Cash and cash equivalents at end of period | $128,297 | $123,466 | 3.9% | - Cash paid for taxes was **$12,843 thousand** in 2025, up from **$12,300 thousand** in 2024[39](index=39&type=chunk) - Cash paid for interest was **$6,757 thousand** in 2025, slightly up from **$6,723 thousand** in 2024[39](index=39&type=chunk) [Other Non-GAAP Reconciliations (Adjusted Operating Expenses, Liquidity)](index=12&type=section&id=Other%20Non-GAAP%20Reconciliations%20(Adjusted%20Operating%20Expenses%2C%20Liquidity)) This section provides reconciliations for adjusted operating expenses, which saw a slight increase in Q2 2025. It also details the company's total liquidity, which improved to $416.3 million as of June 30, 2025, reflecting an increase in both cash and revolving line of credit availability Adjusted Operating Expenses (Dollars in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total operating expenses | $65,753 | $63,713 | $135,157 | $134,417 | | Adjusted operating expenses | $58,502 | $57,752 | $117,949 | $116,888 | Total Liquidity (Dollars in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Cash and cash equivalents | $128,297 | $123,466 | | Revolving line of credit availability | $287,970 | $278,000 | | Total liquidity | **$416,267** | **$401,466** | [Revenue by Product Category Historical Recast](index=13&type=section&id=Revenue%20by%20Product%20Category%20Historical%20Recast) This section provides a historical recast of revenue by product category for 2023 and 2024, aligning prior-period amounts with the current presentation. It details the reclassification of various automotive product lines into new categories like Climate Control Seats and Climate Control Interiors, offering a consistent view of segment performance over time - Product categories have been modified, and prior-period amounts for 2023 and 2024 have been recast to conform with the current period presentation[44](index=44&type=chunk)[45](index=45&type=chunk) - New category definitions include: Climate Control Seats (CCS) now encompasses CCS Heat, CCS Vent/CCS Active Cool, and CCS Neck Conditioners. Climate Control Interiors (CCI) includes CCI Steering Wheel Heat and CCI Interior Heat. Other Automotive now includes Automotive Cables, Battery Performance Solutions, non-automotive electronics, and contract manufacturing electronics[44](index=44&type=chunk) Full Year 2024 Recast Revenue (Dollars in thousands) | Product Category | Full Year 2024 | | :---------------------------------- | :------------- | | Climate Control Seats | $771,310 | | Climate Control Interiors | $186,972 | | Lumbar and Massage Comfort Solutions | $178,584 | | Climate and Comfort Electronics | $17,363 | | **Automotive Climate and Comfort Solutions** | **$1,154,229** | | Valve Systems | $105,056 | | Other Automotive | $146,993 | | **Subtotal Automotive segment** | **$1,406,278** | | Medical segment | $49,846 | | **Total Company** | **$1,456,124** |