Gentherm(US:THRM)2020-11-01 11:10Financial Data and Key Metrics Changes - In Q3 2020, the company achieved its highest quarterly revenue in two years, with Automotive segment revenue reaching almost $250 million, a 9.4% increase year-over-year [7][23] - Product revenues increased by 8% compared to the same period last year, with adjusted figures also reflecting an 8% increase when accounting for foreign exchange and divested assets [23] - Gross margin rate for Q3 was 31.8%, the highest in three years, compared to 31.1% in the prior year [26] - Adjusted EBITDA reached $50.1 million, marking a 23% increase from the previous year, with an adjusted EBITDA rate of 19.3% [29] Business Line Data and Key Metrics Changes - Automotive segment revenue increased by approximately 8% when adjusted for foreign currency translation, outperforming light vehicle production by about 800 basis points [24] - Medical business saw a 17% year-over-year revenue growth, driven by increased demand for Stihler blood warming products and growth in Blanketrol and Hemotherm sales [17][26] - Steering Wheel Heaters revenue increased by 35% year-over-year, attributed to new product launches [24] Market Data and Key Metrics Changes - Light vehicle production in key markets was essentially flat compared to the prior year, highlighting the company's strong performance against a stagnant market [24] - The company secured approximately $80 million in new automotive business awards in Q3, although this was lower than anticipated due to conservative sourcing decisions by OEMs [10][14] Company Strategy and Development Direction - The company is focused on four pillars of growth: accelerating core automotive Climate and Comfort growth, introducing the ClimateSense solution, driving Battery Thermal Management, and expanding patient thermal solutions [20] - The company aims to maintain a strong balance sheet and liquidity while pursuing organic and inorganic growth opportunities, including potential M&A [60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fourth quarter, anticipating a strong pipeline of RFQs and potential bookings, despite some uncertainty in decision-making timing [52] - The company withdrew its guidance for 2020 due to macroeconomic uncertainties but expects Q4 product revenues to range between $240 million and $260 million [32] Other Important Information - The company achieved record quarterly operating income and adjusted EBITDA, reflecting successful execution of its strategic plan [9][21] - The balance sheet remains strong with total liquidity of nearly $450 million at quarter-end [10][31] Q&A Session Summary Question: What percentage of RFQs is the company winning? - The company reported winning over 80% of RFQs in the quarter [38] Question: Will there be a surge in decisions for new awards in Q4? - Management indicated a strong pipeline and a good path for Q4, with expectations for higher bookings compared to the first half [39][40] Question: What is the expected impact of operating expenses in a normalized environment? - Operating expenses are targeted to be between 15% and 17% of sales in the long term, with a slight increase expected in Q4 due to R&D expenses [42][44] Question: What is the outlook for the M&A pipeline? - The company is actively looking for acquisition opportunities that align with its focused growth strategy, particularly in technology and medical sectors [60]