Gentherm Conference Call Summary Company Overview - Gentherm is a $1.5 billion global leader in thermal and pneumatic comfort solutions, primarily serving the automotive industry (97% of revenue) and a small portion in medical (3%) [6][8][21] - The company focuses on four core technology platforms: thermal devices, pneumatics, air moving devices, and valves [7][8] Strategic Growth Initiatives - Gentherm aims to scale its technology into adjacent markets such as construction vehicles, agricultural vehicles, two-wheelers, and motion furniture [9][10] - The company plans to leverage existing plant property and equipment for growth, avoiding bespoke solutions for unique markets [9][19] - Gentherm has engaged with approximately 30 different manufacturers in adjacent markets and won its first five awards in these areas [14][15] Financial Performance and Projections - The lumbar massage business is projected to grow from $175 million in 2024 to over $300 million by 2027, indicating a clear growth path in the light vehicle market [13] - Gentherm is confident in reaching $2 billion in revenue without significant new investments, as it plans to consolidate its footprint by 30% [18][19] - The company reported a 12.5% EBITDA margin and is focused on improving this to the mid-teens range [21][63] Market Dynamics - In North America and Europe, Gentherm has outperformed the market, with an eight-point growth advantage over the industry [27] - The company faces challenges in China, where the market has shifted towards domestic OEMs, but is actively working to realign its customer base [29][30] - Gentherm's strategy includes adapting products to meet local market demands in China, which has a fast development cycle [31][35] Competitive Landscape - Gentherm's commercial model allows it to engage directly with OEMs, which has helped maintain its market share despite competitors like Lear acquiring Kongsberg Automotive [73] Operational Excellence - The company is standardizing operating systems and key performance indicators across its global operations to drive efficiency and reduce working capital [17][60][62] - Gentherm is focused on cash conversion and aims to improve from a historical 30% of EBITDA to 50-70% [75] M&A Strategy - M&A is a key part of Gentherm's capital allocation strategy, with a focus on expanding into non-automotive markets and enhancing product offerings [51][55] - The company has a strong balance sheet, allowing for strategic acquisitions that are margin accretive [52][55] Future Outlook - Gentherm is optimistic about its growth trajectory, with aspirations to reduce its reliance on the automotive sector to less than 70% over the next five years [46][49] - The medical business is expected to grow significantly, with potential revenues exceeding $100 million [49][50] Key Takeaways - Gentherm is well-positioned for growth in both automotive and adjacent markets, leveraging existing technologies and operational efficiencies - The company is actively addressing challenges in the Chinese market while maintaining strong performance in North America and Europe - Strategic M&A and operational excellence initiatives are central to Gentherm's long-term growth strategy and financial performance improvement

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Financial Data and Key Metrics Changes - In Q2 2025, the company's sales were $1.54 billion, a decrease from $1.63 billion in Q2 2024 [17] - Adjusted EBITDA was $202.2 million with a margin of 13.2%, compared to $208.4 million and 12.8% in the previous year [19] - GAAP net income was $39.3 million or $0.32 per share, up from $18.2 million or $0.15 per share in Q2 2024 [23] - Adjusted earnings per share increased to $0.21 from $0.19 year-over-year [23] - Operating cash flow was $91.9 million, down from $142.8 million in Q2 2024 [24] Business Line Data and Key Metrics Changes - The driveline unit experienced a margin increase of approximately 30 basis points to 13.8%, while the metal forming margins increased by approximately 20 basis points to 8.9% [20] - R&D spending was reduced by $8 million year-over-year, reflecting optimization efforts [19] Market Data and Key Metrics Changes - The company anticipates North American production volumes to be between 14.6 million and 15.1 million units for 2025 [15] - The company noted that while overall industry volumes declined, key truck and SUV programs outperformed the industry [11] Company Strategy and Development Direction - The company is focused on operational excellence, cost control, and enhancing productivity, with a goal of continuous improvement [11] - The acquisition of Dolly is expected to create a leading global driveline and metal forming supplier, generating an estimated $300 million in cost synergies [8] - The company is preparing for electrification while also leveraging its existing internal combustion engine (ICE) capabilities [12][58] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term demand for ICE and hybrid vehicles, citing consumer preferences and government policy changes [11][58] - The company is well-positioned to handle trade and tariff volatility, with 90% of products produced in North America being USMCA compliant [12][25] - Management updated the 2025 financial guidance, targeting sales of $5.75 billion to $5.95 billion and adjusted EBITDA of approximately $695 million to $745 million [15][30] Other Important Information - The company closed the divestiture of its India commercial axle business for approximately $65 million [10] - The company incurred incremental tariff costs of approximately $10 million in Q2 2025, with an expected full-year net impact of $10 million to $15 million after mitigation [28][29] Q&A Session Summary Question: Thoughts on T1 production levels for the year - Management confirmed a production range of 1.3 million to 1.4 million units, with a strong first half performance [36][37] Question: Impact of GM's onshoring production - Management indicated flexibility and capacity to support GM's production shifts, expecting content gains from the Dolly acquisition [40][42] Question: Status of additional plant due diligence for Dolly - Management is currently assessing manufacturing synergies and sees potential upside but cannot quantify it yet [46][47] Question: Specifics on tariff costs - The $10 million in Q2 primarily comes from rest of the world scenarios, with minimal exposure from USMCA compliant imports [49] Question: Changes in emissions regulations impact - Management noted a balanced approach to ICE, hybrid, and electrification, preparing for multiple propulsion systems [58][60] Question: Free cash flow generation in the second half - Management explained that working capital dynamics typically lead to stronger cash flow in the fourth quarter [84] Question: Balance sheet outlook post-acquisition - Management aims for leverage neutrality at close and plans to strengthen the balance sheet while generating strong cash flow [100][101]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher," contrasting with traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Characteristics - Momentum investing can be risky as stocks may lose momentum when their valuations exceed future growth potential, leading to potential losses for investors [2] - A safer approach may involve investing in bargain stocks that have recently shown price momentum, utilizing tools like the Zacks Momentum Style Score to identify such opportunities [3] Group 2: Gentherm (THRM) Analysis - Gentherm (THRM) has shown a price increase of 6.5% over the past four weeks, indicating growing investor interest [4] - Over the past 12 weeks, THRM's stock gained 18.2%, demonstrating its ability to deliver positive returns over a longer timeframe [5] - THRM has a beta of 1.45, suggesting it moves 45% more than the market in either direction, indicating fast-paced momentum [5] Group 3: Valuation and Earnings Estimates - THRM has a Momentum Score of B, suggesting it is an opportune time to invest in the stock [6] - The stock has a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which typically attract more investor interest [7] - THRM is trading at a Price-to-Sales ratio of 0.70, indicating it is relatively undervalued, as investors pay only 70 cents for each dollar of sales [7] Group 4: Additional Investment Opportunities - Besides THRM, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting additional investment opportunities [8] - The Zacks Premium Screens offer over 45 different strategies to help identify potential winning stocks based on various investing styles [9]

Financial Data and Key Metrics Changes - The company reported net sales of $107.9 million for Q2 2025, a decline of approximately $15.1 million compared to the previous year [29] - Adjusted EBITDA for the quarter was $13.2 million, with an adjusted EBITDA margin of 12.2%, reflecting an increase of 130 basis points year-over-year [29] - Adjusted operating income increased to $4.9 million, marking a strong increase of $2.8 million compared to the prior year [29] Business Line Data and Key Metrics Changes - In the Power Solutions segment, net sales were $44.6 million, down $5.5 million year-over-year, primarily due to the sale of the Lubbock operations [30] - The Mobile Solutions segment reported net sales of $63.4 million, a decrease from $72.9 million in the previous year, impacted by rationalized business and lower automotive volume [32] - Adjusted EBITDA in the Mobile Solutions segment was $8.6 million, reflecting a slight year-over-year growth due to cost control actions [33] Market Data and Key Metrics Changes - The automotive market accounted for 39% of the company's revenue, with overall light vehicle production remaining flat globally [12] - The U.S. GDP-linked businesses showed a rebound in the second quarter after a weak first half, although trade uncertainty continues to impact demand [14] - The medical equipment market is growing, with the company increasing its participation significantly above market growth [18] Company Strategy and Development Direction - The company aims to achieve approximately 20% gross margin as part of its long-term plan, with a focus on margin expansion and operational efficiency [22] - A commitment to increase personnel in specialized growth areas, including the hiring of a new Chief Commercial Officer, indicates a strategic focus on expanding into electrical and medical markets [38] - The company is actively pursuing M&A opportunities to enhance its growth strategy and improve its operational footprint [90] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth despite uncertainties in the automotive market, emphasizing the importance of new business launches [41] - The company is leaning towards the lower end of its revenue guidance due to macroeconomic uncertainties and customer feedback [41] - The outlook for the electrical market remains positive, with growth opportunities identified in power generation and distribution sectors [50] Other Important Information - The company plans to launch approximately 112 new programs in 2025, contributing an estimated $48 million in annual revenue at peak run rate [36] - The company is preparing for an Investor Day in December 2025 to provide further insights into its strategy and performance [42] Q&A Session Summary Question: Can you remind us about the incremental margin from new business wins? - New business wins are accretive by three to four points on the EBITDA line overall, with a focus on existing open capacity and strategic investments [46] Question: What are the growth opportunities in the electrical market? - The company is seeing growth in power generation, particularly with customers like Cummins, while residential distribution has been softer [50] Question: How does the company plan to achieve its revenue guidance? - The company expects to benefit from new business launches and a consistent performance from its base business, without relying on market rebounds [55] Question: What is the status of the Group of Five facilities? - All facilities are on track to be profitable this year, with expectations for run rate profitability by the end of the year [60] Question: Can you provide details on the M&A program? - The company is actively pursuing specific acquisitions that align with its strategy, focusing on synergies and operational improvements [90]

Core Insights - Adient reported revenue of $3.74 billion for the quarter ended June 2025, reflecting a year-over-year increase of 0.7% and a surprise of +5.08% over the Zacks Consensus Estimate of $3.56 billion [1] - The company's EPS for the quarter was $0.45, compared to $0.32 in the same quarter last year, although it fell short of the consensus estimate of $0.47, resulting in an EPS surprise of -4.26% [1] Company Performance Metrics - Adient's stock has returned -0.2% over the past month, while the Zacks S&P 500 composite has increased by +0.5%, indicating underperformance relative to the broader market [3] - The company holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the market in the near term [3] Light Vehicle Production Insights - Global light vehicle production reached 22.6 million, exceeding the two-analyst average estimate of 21.97 million [4] - North American light vehicle production was 4 million, surpassing the average estimate of 3.81 million [4] - Light vehicle production in Asia (excluding China) was 5.9 million, above the average estimate of 5.6 million [4] - EMEA light vehicle production was reported at 4.4 million, slightly above the average estimate of 4.35 million [4] - In China, light vehicle production was 7.6 million, exceeding the average estimate of 7.47 million [4] - South American light vehicle production was 0.7 million, slightly below the average estimate of 0.75 million [4] Net Sales Performance - Net sales in the Americas were $1.76 billion, exceeding the average estimate of $1.59 billion, with a year-over-year change of +1.3% [4] - Net sales from eliminations were reported at -$8 million, significantly better than the average estimate of -$25.92 million, representing a year-over-year change of -61.9% [4] - Net sales in Asia were $721 million, slightly below the average estimate of $739.34 million, with a year-over-year change of +1.3% [4] - EMEA net sales were $1.27 billion, above the average estimate of $1.22 billion, but showed a year-over-year decline of -1.6% [4]

Core Insights - The U.S. market experienced a slight decline as investors reacted to new earnings reports, economic data, and tariff announcements, particularly regarding semiconductor and pharmaceutical imports [1] - In the current environment characterized by geopolitical risks and policy changes, value investing is highlighted as a favorable strategy, focusing on purchasing undervalued stocks [1] Investment Strategy - Value investing involves buying stocks priced below their intrinsic value, capitalizing on market mispricing to achieve future profits [1] - Earnings yield is a key metric for value investors, calculated as (Annual Earnings per Share/Market Price) x 100, serving as a reverse indicator of the price-to-earnings (P/E) ratio [3] - A high earnings yield suggests a stock may be undervalued, while a low yield indicates potential overvaluation [3] Stock Selection Criteria - An earnings yield greater than 10% is set as a primary screening criterion, supplemented by additional parameters [5] - Estimated EPS growth for the next 12 months must be greater than or equal to the S&P 500, comparing forward EPS estimates with actual EPS [5] - Average daily trading volume over the past 20 days should be at least 100,000, indicating sufficient liquidity [6] - Current stock price must be $5 or higher, and stocks with a Zacks Rank of 1 (Strong Buy) or 2 (Buy) are expected to outperform peers [7] Highlighted Stocks - Barrick Mining Corporation is a leading gold mining company with projected earnings growth of 56% and 24% for 2025 and 2026, respectively, and a Zacks Rank of 1 [8] - Astrana Health, a tech-enabled healthcare provider, anticipates earnings growth of 77% and 49% for 2025 and 2026, respectively, also holding a Zacks Rank of 1 [9][10] - StoneCo Ltd., a fintech company, expects earnings growth of 10.4% and 16% for 2025 and 2026, with a Zacks Rank of 1 [11] - Plains GP Holdings, involved in crude oil transportation and marketing, projects earnings growth of 206% and 24% for 2025 and 2026, respectively, and has a Zacks Rank of 1 [12] - PHINIA Inc., a supplier for the mobility industry, forecasts earnings growth of 14% and 19.5% for 2025 and 2026, respectively, and holds a Zacks Rank of 1 [13]

Financial Performance & Guidance - Q2 2025 sales for continuing operations were $2.047 billion, compared to $1.935 billion in Q2 2024[25] - Q2 2025 adjusted EBITDA for continuing operations was $145 million, up from $110 million in Q2 2024, with a margin of 7.5%[25] - The company increased its full-year 2025 profit guidance by $35 million and free cash flow guidance by $50 million for continuing operations[12] - Full-year 2025 sales guidance for continuing operations is approximately $7.4 billion[21] - Full-year 2025 adjusted EBITDA guidance for continuing operations is approximately $575 million[21] - Full-year 2025 adjusted free cash flow guidance is approximately $275 million[21] Strategic Initiatives - The company announced a definitive agreement to sell its off-highway business[8] - The sale of the off-highway business is expected to close late in the fourth quarter of 2025, with net cash proceeds of $2.4 billion from a $2.7 billion purchase price[11] - The company announced a $1 billion capital return authorization and a $2 billion debt reduction plan[8] - The company repurchased 14.6 million shares in Q2, representing 10% of shares outstanding, returning $257 million to shareholders[11] - The company anticipates a $100 million to $150 million share repurchase in Q3[11]

Core Viewpoint - Cooper-Standard Holdings Inc. demonstrated resilience in its second-quarter 2025 results, showcasing improved profitability metrics despite a slight decline in revenues, leading to an upward revision of its full-year profit targets [16]. Financial Performance - Revenues for Q2 2025 were $706 million, a decrease of 0.3% from $708.4 million in Q2 2024, but exceeded analyst expectations by nearly $19 million [2]. - The company reported a net loss of $1.4 million, or 8 cents per diluted share, significantly improved from a loss of $76.2 million, or $4.34 per share, in the same quarter last year [3]. - Adjusted EBITDA increased by 23% to $62.8 million from $50.9 million year-over-year, with margins expanding by 170 basis points to 8.9% of sales [4]. Key Business Metrics - Gross profit rose by 12.2% year-over-year to $93.1 million, with gross margin increasing to 13.2% from 11.7% [5]. - The Sealing Systems segment achieved adjusted EBITDA of $40.3 million, up from $35 million, while Fluid Handling Systems saw adjusted EBITDA rise to $27 million from $16.3 million [6]. Cash Flow and Liquidity - Free cash flow for Q2 remained unchanged year-over-year at -$23.4 million, with total liquidity at $272.8 million, including $121.6 million in cash and cash equivalents [7]. Management Commentary - CEO Jeffrey Edwards highlighted the strong performance due to the global team's efforts, achieving 100% customer quality scorecards and a total incident rate of 0.26, below the world-class benchmark [8]. - CFO Jon Banas noted $25 million in lean manufacturing and purchasing savings, along with $4 million from restructuring initiatives, expressing confidence in achieving positive free cash flow for the year [9]. Factors Influencing Performance - The improvement in the bottom line was primarily due to internal execution, with manufacturing efficiencies contributing $25 million to adjusted EBITDA growth [10]. - Sealing Systems benefited from innovation and digital transformation, while Fluid Handling Systems gained from strategic expansion aligned with hybrid vehicle demand [11]. Guidance - The company raised its 2025 adjusted EBITDA guidance to $220-$250 million from $200-$235 million, while maintaining sales guidance at $2.7-$2.8 billion [12]. Other Developments - In Q2 2025, Cooper-Standard secured $77.1 million in net new business awards, totaling $132 million for the first half of 2025, primarily in battery-electric and hybrid vehicle platforms [14]. - Management indicated ongoing consideration of further inorganic growth opportunities, particularly within the Fluid Handling segment [15].

Financial Data and Key Metrics Changes - Second quarter 2025 sales were $706 million, a decrease of 0.3% compared to 2024, primarily due to unfavorable volume and mix, including net customer price adjustments, partially offset by favorable foreign exchange [11] - Adjusted EBITDA for the quarter was $62.8 million, an increase of over 23% from $50.9 million in the second quarter of last year, with margin expansion of 170 basis points despite lower sales and production volumes [12] - The company reported a small net loss of $1.4 million in the second quarter compared to a net loss of $76.2 million in 2024, with adjusted net income of $1 million or $0.06 per diluted share compared to an adjusted net loss of $11.3 million or $0.64 per diluted share in the previous year [12][13] Business Line Data and Key Metrics Changes - The sealing business is expected to drive revenue growth of about 6% on average over the next five years, with significant expansion of EBITDA margins and return on capital increasing to approximately 20% by 2030 [25] - The fluid handling business anticipates top-line growth averaging approximately 8% annually over the next five years, with EBITDA margins expected to increase to around 16% and return on invested capital approaching 30% [25] Market Data and Key Metrics Changes - The company was awarded $77 million in net new business awards during 2025, reflecting strong relationships with customers and operational excellence [9] - The company has successfully reached agreements with customers to pass through or recover the majority of direct tariff impacts on its business, allowing for a focus on operational excellence [28] Company Strategy and Development Direction - The company has established four strategic imperatives to drive significant improvements across its business, focusing on operational excellence, cost optimization, and leveraging digital tools for efficiency [20][21] - Long-term strategies for each business segment have been developed to achieve stated imperatives and enhance value creation over the next several years, with enthusiastic support from the board of directors [21][22] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive free cash flow for the full year, supported by improved results and solid future prospects recognized by stakeholders [19] - The company noted that while industry production forecasts for the second half of the year have improved slightly, they remain below earlier expectations due to trade and tariff policies [28] Other Important Information - The company ended the second quarter with a cash balance of approximately $122 million and total liquidity of approximately $273 million, which is deemed sufficient to support ongoing business plans [18] - The company is actively evaluating options to strengthen its balance sheet and improve cash flows, with optimism about refinancing first and third lien notes under more favorable terms [19] Q&A Session Summary Question: Clarification on incremental revenue and new business - The incremental revenue for sealing includes $300 million in net new business, with the remaining $100 million attributed to modest increases in production or pricing [36] Question: Margin expansion and optimization in a tariff environment - The company has a detailed quote process for new business, tracking variable contribution margins and managing pricing closely to ensure real improvements in margins [45][46] Question: Cash restructuring and working capital - Cash restructuring was less than $10 million, and the company expects working capital use to unwind completely in the second half of the year, contributing to positive cash flow [64][68]