Gentherm(THRM) - 2025 Q2 - Quarterly Results

Executive Summary & Q2 2025 Performance This section provides an overview of Gentherm's Q2 2025 financial and operational performance, including key highlights and CEO commentary Q2 2025 Highlights 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][5] 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] - Net income decrease was primarily driven by net unrealized foreign currency losses of $18.9 million[5] - Repurchased $10.0 million of the Company's common stock[5] CEO Commentary 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] - Automotive New Business Awards reaching over $1 billion year-to-date reflect continued innovation, technology leadership, and strong customer relationships[3] - The company's focus remains on executing strategic priorities and driving operating efficiencies, while taking a measured approach due to macro environment uncertainty[5] Financial Guidance 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 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] Company Information & Investor Relations This section provides essential company information, investor and media contact details, and specifics regarding the Q2 2025 earnings conference call About Gentherm 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] - 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] - In 2024, the company recorded annual sales of approximately $1.5 billion and secured $2.4 billion in automotive new business awards[11] Investor and Media Contacts 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] - Media Contact: Melissa Fischer, media@gentherm.com, 248.289.9702[11] Conference Call Details 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] - Dial-in numbers and a passcode were provided for the live call and a telephonic replay available until August 7, 2025[8][10] - A live webcast and one-year archived replay, along with supplemental materials, are accessible on the Investor section of Gentherm's website[9] Forward-Looking Statements 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 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] - 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] - 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] - 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][19] - 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] - 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] Use of Non-GAAP Financial Measures 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 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] - 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] - 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] - 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] - 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] Consolidated Financial Statements & Reconciliations 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 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 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] Reconciliation of Net Income to Adjusted EBITDA 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 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 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 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] - Cash paid for interest was $6,757 thousand in 2025, slightly up from $6,723 thousand in 2024[39] Other Non-GAAP Reconciliations (Adjusted Operating Expenses, Liquidity) 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 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][45] - 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] 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 |