Gentherm Incorporated Q3 FY2025 earnings call

• Third quarter Automotive new business awards totaled $745 million, year-to-date at $1.8 billion, on track for over $2 billion full year. Secured a conquest win with Mercedes-Benz for lumbar and massage solutions on high-volume platforms, including Puls.A technology.
• Made progress in adjacent markets: $300 million commercial funnel in past 90 days, including furniture (preparing for Q1 2026 production) and commercial vehicles (fluid systems, steering wheel technology).
• Medical product development progressing, on track for year-end product announcement; rolling out standardized company operating system globally.
• Global strategic manufacturing footprint realignment plans on track to be substantially complete by end of 2026; significant progress in Tianjin, China and Tangier, Morocco.

In the third quarter, Automotive Climate and Comfort Solutions revenue was $387 million, up 4.1% compared to the same period last year, with 8.6% year-over-year growth or 7% excluding foreign currency. Medical revenue decreased 0.4% year-over-year or 1.6% excluding foreign currency.

• Increased midpoint of full-year revenue guidance to $1.47 billion to $1.49 billion, driven by improved second half light vehicle industry production.
• Narrowed adjusted EBITDA margin range to 11.9% to 12.3% for full year.
• Reduced CapEx guidance range from $45 million to $55 million to $45 million to $55 million, focusing on optimizing current plant and equipment.

• Supply chain issues: Novelis fire impacting aluminum supply (heavy for Ford, Stellantis); Nexperia component issues with uncertain industry impact; Jaguar Land Rover cyber issue with past Q3 impact and potential Q4 hangover, but no visibility on magnitude to include in guidance.

Q: Curious about factors behind conquest win with Mercedes.

A: Innovative edge, value proposition providing OEMs with an experience to pass to customers, strong commercial relationships with OEMs directly, and adoption of Puls.A technology.

Q: About adjacent market funnel and conversion to commercial wins.

A: $300 million pipeline includes roughly 1/3 furniture, 1/3 commercial vehicle, 1/3 other mobility; furniture has Q1 2026 production with $3-5 million opportunity in 2026, using existing installed capacity.

Q: On near-term production environment and guidance.

A: JLR cyber issue, Novelis fire, Nexperia issues impactful but no visibility on magnitude to include in guidance; supply chain teams mitigating impacts, no significant schedule shifts seen yet.

Q: On strategic footprint alignment plan and M&A pipeline.

A: Footprint transition savings expected later 2026 to 2027; M&A aimed at building resilient company, accessing markets, and broadening product portfolio to align with core strategy.