Gentherm(THRM) - 2025 Q3 - Quarterly Results

Executive Summary Q3 2025 Performance Overview Gentherm reported record quarterly revenue of $387 million in Q3 2025, alongside strong year-to-date operating cash flow of $88 million, secured $745 million in Automotive New Business Awards, and raised its full-year 2025 revenue guidance midpoint - Achieved Record Quarterly Revenue of $387 million[3] - Reported Strong Year to Date Operating Cash Flow of $88 million[3] - Secured $745 million of Automotive New Business Awards in the Quarter, on pace to deliver over $2 billion for the year[3][4] - Revenue Mid-point Raised in 2025 Full Year Guidance Update[3] Q3 2025 Key Highlights Gentherm achieved significant commercial momentum with new business awards, including a conquest lumbar and massage comfort solution for Mercedes-Benz, while product revenues increased 4.1% year-over-year, driven by Automotive Climate and Comfort Solutions - Secured Automotive New Business Awards totaling $745 million, highlighted by a conquest lumbar and massage comfort solutions award with Mercedes-Benz, including Puls.A™[6] - Selected by a leading global furniture brand to supply comfort solutions, with start of production expected in Q1 2026, reinforcing ability to scale core technologies[6] Q3 2025 Key Financial Highlights | Metric | Q3 2025 | Q3 2024 | Change (YoY) | | :-------------------------------- | :---------- | :---------- | :----------- | | Product Revenues | $386.9 million | $371.5 million | +4.1% | | Product Revenues (ex-FX) | $380.3 million | $371.5 million | +2.4% | | Automotive Climate and Comfort Solutions Revenue | | | +8.6% | | Automotive Climate and Comfort Solutions Revenue (ex-FX) | | | +7.0% | | Gross Margin | 24.6% | 25.5% | -0.9 pp | | Net Income | $14.9 million | $16.0 million | -6.9% | | Adjusted EBITDA | $49.0 million | $48.1 million | +1.9% | | Adjusted EBITDA Margin | 12.7% | 12.9% | -0.2 pp | | GAAP Diluted EPS | $0.49 | $0.51 | -3.9% | | Adjusted Diluted EPS | $0.73 | $0.75 | -2.7% | | YTD Operating Cash Flow | $87.8 million | $73.1 million | +20.1% | | Net Leverage | ~0.2x | | | | Liquidity | $462.2 million | | | About Gentherm Gentherm is a global market leader in innovative thermal management and pneumatic comfort technologies, serving automotive and medical sectors with over 14,000 employees across 13 countries - Gentherm (NASDAQ: THRM) is a global market leader of innovative thermal management and pneumatic comfort technologies[12] - Automotive products include Climate Control Seats (CCS®), Climate Control Interiors (CCI™), Lumbar and Massage Comfort Solutions, and Valve Systems, while Medical products include patient temperature management systems[12] - The Company has more than 14,000 employees in facilities across 13 countries[12] 2024 Annual Performance | Metric | Value | | :-------------------------- | :------------ | | Annual Sales (2024) | ~$1.5 billion | | Automotive New Business Awards (2024) | $2.4 billion | Financial Guidance 2025 Full Year Guidance Update Gentherm updated its full-year 2025 guidance, raising the midpoint for product revenues and slightly adjusting the Adjusted EBITDA Margin Rate, while also lowering capital expenditures guidance Full Year 2025 Guidance Update (as of Oct 23, 2025) | Metric | Previous (July 24, 2025) | Revised (Oct 23, 2025) | | :-------------------------- | :----------------------- | :----------------------- | | Product Revenues | $1.43 billion – $1.5 billion | $1.47 billion – $1.49 billion | | Adjusted EBITDA Margin Rate | 11.7% – 12.5% | 11.9% – 12.3% | | Full-year Adjusted Effective Tax Rate | 26% – 29% | No change | | Capital Expenditures | $55 million – $65 million | $45 million – $55 million | - Guidance is based on tariffs currently in effect, current forecast of customer orders, expectations of near-term conditions, flat to slightly increasing light vehicle production in relevant markets for full year 2025 versus 2024, and a EUR to USD exchange rate of $1.13/Euro[7] Financial Statements Consolidated Condensed Statements of Income For the three months ended September 30, 2025, Gentherm reported product revenues of $386.9 million, a 4.1% increase year-over-year, with gross margin slightly decreasing to 24.6% and net income declining to $14.9 million Consolidated Condensed Statements of Income (Q3 2025 vs Q3 2024) | Metric (in thousands) | Q3 2025 | Q3 2024 | Change (YoY) | | :-------------------------- | :------ | :------ | :----------- | | Product revenues | $386,870 | $371,512 | +4.1% | | Cost of sales | $291,722 | $276,639 | +5.5% | | Gross margin | $95,148 | $94,873 | +0.3% | | Operating income | $23,858 | $32,337 | -26.2% | | Earnings before income tax | $20,884 | $19,410 | +7.6% | | Net income | $14,949 | $15,965 | -6.4% | | Diluted earnings per share | $0.49 | $0.51 | -3.9% | Consolidated Condensed Statements of Income (YTD Sept 30, 2025 vs 2024) | Metric (in thousands) | YTD 2025 | YTD 2024 | Change (YoY) | | :-------------------------- | :------- | :------- | :----------- | | Product revenues | $1,115,814 | $1,103,210 | +1.1% | | Gross margin | $271,375 | $280,327 | -3.2% | | Operating income | $64,928 | $83,374 | -22.1% | | Net income | $15,298 | $49,626 | -69.2% | | Diluted earnings per share | $0.50 | $1.57 | -68.1% | Revenue by Product Category and Foreign Currency Impact Automotive Climate and Comfort Solutions revenue increased 8.6% year-over-year in Q3 2025, or 7.0% excluding foreign currency translation, outperforming light vehicle production, with Lumbar and Massage Comfort Solutions showing the strongest growth Revenue by Product Category (Q3 2025 vs Q3 2024) | Product Category (in thousands) | Q3 2025 | Q3 2024 | % Change | | :-------------------------------- | :------ | :------ | :------- | | Climate Control Seats | $201,275 | $189,898 | 6.0% | | Lumbar and Massage Comfort Solutions | $55,799 | $48,970 | 13.9% | | Climate Control Interiors | $52,638 | $49,283 | 6.8% | | Climate and Comfort Electronics | $8,599 | $4,883 | 76.1% | | Automotive Climate and Comfort Solutions | $318,311 | $293,034 | 8.6% | | Valve Systems | $24,487 | $26,082 | (6.1)% | | Other Automotive | $31,413 | $39,688 | (20.9)% | | Subtotal Automotive segment | $374,211 | $358,804 | 4.3% | | Medical segment | $12,659 | $12,708 | (0.4)% | | Total Company | $386,870 | $371,512 | 4.1% | Total Company Revenue Excluding Foreign Currency Translation | Metric (in thousands) | Q3 2025 (ex-FX) | Q3 2024 | % Change | | :-------------------------------- | :-------------- | :------ | :------- | | Total Company, excluding foreign currency translation impact | $380,255 | $371,512 | 2.4% | - Automotive Climate and Comfort Solutions revenue increased 7.0% year over year excluding foreign currency translation, outperforming S&P Global's mid-October light vehicle production report in relevant markets by 160 basis points[6] Reconciliation of Net Income to Adjusted EBITDA Adjusted EBITDA for Q3 2025 increased to $49.0 million from $48.1 million in Q3 2024, though the Adjusted EBITDA margin slightly decreased to 12.7% from 12.9%, reflecting adjustments for non-cash stock-based compensation and restructuring expenses Adjusted EBITDA Reconciliation (Q3 2025 vs Q3 2024) | Metric (in thousands) | Q3 2025 | Q3 2024 | | :-------------------------- | :------ | :------ | | Net income | $14,949 | $15,965 | | Depreciation and amortization | $13,274 | $12,351 | | Income tax expense | $5,935 | $3,445 | | Interest expense, net | $3,313 | $4,710 | | Non-cash stock based compensation | $3,980 | $2,927 | | Restructuring expenses, net | $3,986 | $2,662 | | Unrealized currency loss | $1,865 | $8,604 | | Adjusted EBITDA | $49,007 | $48,103 | | Adjusted EBITDA margin | 12.7% | 12.9% | Adjusted EBITDA Reconciliation (YTD Sept 30, 2025 vs 2024) | Metric (in thousands) | YTD 2025 | YTD 2024 | | :-------------------------- | :------- | :------- | | Net income | $15,298 | $49,626 | | Adjusted EBITDA | $134,245 | $141,518 | | Adjusted EBITDA margin | 12.0% | 12.8% | Reconciliation of Net Income to Adjusted Net Income and Adjusted EPS Adjusted net income for Q3 2025 was $22.6 million, down from $23.6 million in Q3 2024, with adjusted diluted EPS at $0.73, reflecting adjustments for items like amortization of intangibles, restructuring, and unrealized currency loss Adjusted Net Income and EPS Reconciliation (Q3 2025 vs Q3 2024) | Metric (in thousands, except per share) | Q3 2025 | Q3 2024 | | :-------------------------------------- | :------ | :------ | | Net income | $14,949 | $15,965 | | Amortization of acquisition related intangibles | $1,676 | $1,608 | | Restructuring expenses, net | $3,986 | $2,662 | | Unrealized currency loss | $1,865 | $8,604 | | Adjusted net income | $22,599 | $23,583 | | Diluted earnings per share, as reported | $0.49 | $0.51 | | Adjusted diluted earnings per share | $0.73 | $0.75 | Adjusted Net Income and EPS Reconciliation (YTD Sept 30, 2025 vs 2024) | Metric (in thousands, except per share) | YTD 2025 | YTD 2024 | | :-------------------------------------- | :------- | :------- | | Net income | $15,298 | $49,626 | | Adjusted net income | $54,892 | $64,206 | | Adjusted diluted earnings per share | $1.78 | $2.03 | Consolidated Condensed Balance Sheets As of September 30, 2025, total assets increased to $1.38 billion from $1.25 billion at December 31, 2024, driven by increases in cash, accounts receivable, and inventory, while total shareholders' equity grew significantly to $717.9 million Consolidated Condensed Balance Sheets (Sept 30, 2025 vs Dec 31, 2024) | Metric (in thousands) | Sep 30, 2025 | Dec 31, 2024 | Change | | :-------------------------- | :----------- | :----------- | :----- | | Cash and cash equivalents | $154,250 | $134,134 | +$20,116 | | Accounts receivable, net | $291,293 | $258,112 | +$33,181 | | Inventory, net | $253,253 | $227,356 | +$25,897 | | Total current assets | $785,892 | $684,015 | +$101,877 | | Total assets | $1,381,335 | $1,247,556 | +$133,779 | | Total current liabilities | $400,325 | $340,293 | +$60,032 | | Long-term debt, less current maturities | $189,000 | $220,064 | -$31,064 | | Total liabilities | $663,387 | $630,609 | +$32,778 | | Total shareholders' equity | $717,948 | $616,947 | +$101,001 | Consolidated Condensed Statements of Cash Flows Net cash provided by operating activities for the nine months ended September 30, 2025, significantly increased to $87.8 million from $73.1 million in the prior year, while net cash used in investing activities decreased Consolidated Condensed Statements of Cash Flows (YTD Sept 30, 2025 vs 2024) | Metric (in thousands) | YTD 2025 | YTD 2024 | Change | | :-------------------------------- | :------- | :------- | :----- | | Net cash provided by operating activities | $87,820 | $73,089 | +$14,731 | | Net cash used in investing activities | $(29,779) | $(33,141) | +$3,362 | | Net cash used in financing activities | $(42,433) | $(40,605) | -$1,828 | | Net increase in cash and cash equivalents | $20,116 | $908 | +$19,208 | | Cash and cash equivalents at end of period | $154,250 | $150,581 | +$3,669 | - Purchases of property and equipment decreased to $33.4 million in YTD 2025 from $50.4 million in YTD 2024[40] - Repayments of debt increased to $103.1 million in YTD 2025 from $53.5 million in YTD 2024[40] Non-GAAP Financial Measures Definitions and Use Gentherm provides several non-GAAP financial measures, including Adjusted EBITDA, Adjusted EPS, Free Cash Flow, Net Debt, and Liquidity, to offer investors supplemental insights into its operating performance and liquidity, as these measures are used by management to assess performance by excluding items not indicative of ongoing operations - The Company provides non-GAAP financial measures such as Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EPS, free cash flow, net capital expenditures, Net Debt, liquidity, net leverage ratio, and revenue/segment revenue/product revenue excluding foreign currency translation[18] - Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, deferred financing cost amortization, non-cash stock based compensation expenses, restructuring expenses, net, unrealized currency gain or loss and other gains and losses not reflective of the Company's ongoing operations and related tax effects[18] - Management provides non-GAAP financial measures to assist investors in properly assessing the Company's performance on a period-over-period basis by excluding matters not indicative of the Company's ongoing operating or liquidity results[22] Other Non-GAAP Reconciliations This section provides reconciliations for adjusted operating expenses, which were $61.6 million for Q3 2025, and total liquidity, which stood at $462.2 million as of September 30, 2025 Adjusted Operating Expenses Reconciliation (Q3 2025 vs Q3 2024) | Metric (in thousands) | Q3 2025 | Q3 2024 | | :-------------------------- | :------ | :------ | | Total operating expenses | $71,290 | $62,536 | | Restructuring expense, net | $(3,986) | $(2,662) | | Non-cash stock based compensation | $(3,979) | $(2,708) | | Adjusted operating expenses | $61,621 | $57,166 | Total Liquidity (Sept 30, 2025 vs Sept 30, 2024) | Metric (in thousands) | Sep 30, 2025 | Sep 30, 2024 | | :-------------------------- | :----------- | :----------- | | Cash and cash equivalents | $154,250 | $150,581 | | Revolving line of credit availability | $307,938 | $278,000 | | Total liquidity | $462,188 | $428,581 | Forward-Looking Statements Disclaimer and Risk Factors This section outlines forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995, based on management's expectations and beliefs, highlighting significant risks and uncertainties that could cause actual results to differ materially - Statements in this release are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, representing Gentherm's goals, beliefs, plans and expectations about its prospects for the future[14] - Such statements are subject to a number of important assumptions, significant risks and uncertainties (some of which are beyond our control) and other factors that may cause actual results or performance to differ materially[14] - Key risks include macroeconomic, geopolitical and global factors in the automotive industry; impact of global economic and trade policies; increasing U.S. and global competition; ability to manage new product launches; evolution of the automotive industry towards electric and autonomous vehicles; supply chain constraints; production levels of major customers; business in China; global operations and foreign currency risk; product quality and safety; ability to attract and retain employees; labor market issues; achievement of product cost reductions; optimization of global supply chain and manufacturing footprint; strategic acquisitions; security breaches; loss or insolvency of key customers/suppliers; intellectual property protection; and compliance with anti-corruption laws[14][20] - The Company expressly disclaims any obligation or undertaking to update any forward-looking statements to reflect any change in its strategies or expectations, except as required by law[17] Supplemental Information Conference Call Details Gentherm held a conference call on October 23, 2025, at 8:00 am Eastern Time to discuss the Q3 results, with details for live access, webcast, and telephonic replay provided - Gentherm conducted a conference call on October 23, 2025, at 8:00 am Eastern Time to review the Q3 results[9] - A live webcast and one-year archived replay of the call, along with supplemental materials, are accessible on the Events page of the Investor section of Gentherm's website[10] - A telephonic replay was available approximately two hours after the call until 11:59 pm Eastern Time on November 6, 2025[11] Investor and Media Contacts Contact information for investor relations (Gregory Blanchette) and media inquiries (Melissa Fischer) is provided - Investor Contact: Gregory Blanchette, investors@gentherm.com, 248.308.1702[12] - Media Contact: Melissa Fischer, media@gentherm.com, 248.289.9702[12] Revenue by Product Category Historical Recast This section provides a historical recast of revenue by product category for 2023 and 2024, reflecting modifications to product categories to conform with the current period presentation, including reclassifications within Climate Control Seats, Climate Control Interiors, and Other Automotive - Product categories have been modified, and prior-period amounts have been recast to conform with the current period presentation[45] - Recategorizations include Climate Control Seat (CCS®) now encompassing CCS® Heat, CCS® Vent/CCS® Active Cool, and CCS® Neck Conditioners; Climate Control Interiors (CCI™) now includes CCI™ Steering Wheel Heat and CCI™ Interior Heat; and Other Automotive now includes Automotive Cables, Battery Performance Solutions, non-automotive electronics, and contract manufacturing electronics[45] Total Company Revenue Historical Recast (2023 & 2024 Full Year) | Metric (in thousands) | 2023 Full Year | 2024 Full Year | | :-------------------------- | :------------- | :------------- | | Total Company Revenue | $1,469,076 | $1,456,124 |