THRM

• Core Automotive Business Performance and Pipeline: Secured $690 million in new automotive business awards in Q2 2026, bringing year-to-date awards to over $1 billion, in line with management expectations. The new business pursuit pipeline remains healthy, positioning 2026 for another robust year of awards. Automotive revenue continues to outpace overall light vehicle production, with broad-based growth across all regions and product categories. China delivered strong performance driven by domestic OEM program launches and higher take rates from global OEM customers.

• New Market Expansion: Successfully expanded core automotive thermal technology to new end markets: secured design wins with two leading North American home and office furniture brands, bringing total new customers in this segment to five in less than one year, with projected revenue of $50-100 million by 2028. Received FDA 510(k) clearance for Thermafix, a new patient warming/securement device for robotic surgery that leverages existing automotive IP; commercialization is underway with initial sales expected in Q3 2026. Completed the strategic bolt-on acquisition of Innovative Medical Equipment (IME) on July 1, 2026, a provider of non-opioid ThermoZone hot/cold pain management therapy devices that complements Gen Therm's medical portfolio and adds access to 200+ Veterans Administration hospitals and clinics, creating significant cross-selling opportunities.

• Modine Performance Technologies Merger Progress: The planned combination with Modine Performance Technologies is on track to close in early Q4 2026, with all key closing deliverables nearly complete. Post-merger, light vehicle revenue will decrease from 97% to ~63% of total revenue, diversifying end-market exposure into faster growing commercial vehicle, off-highway, and power generation markets. The combined company is projected to exceed $3.5 billion in revenue by 2030 with expanding margins, strong cash flow, and a more resilient business profile. Integration planning is progressing well, with Modine positioned to operate as a standalone division of Gen Therm on day one of closing.

• Operational and Capital Structure Improvements: Operational initiatives focused on improving labor efficiency, equipment utilization, and inventory management are delivering measurable results, and a new company-wide operating system is improving organizational rigor and accountability, laying the foundation for future margin expansion and higher cash flow conversion. Secured $800 million in committed financing to support the Modine transaction, consisting of a $550 million 5-year revolving credit facility and a $250 million term loan. Post-closing net leverage is expected to be ~1.0x, with a long-term target leverage range of 1.0x to 1.5x. Announced a new 3-year $400 million share repurchase authorization, nearly three times the size of the previous program, with share repurchases expected to begin after the Modine transaction closes.

• Capital Allocation Priorities: 1) Prioritize organic return-driven investments to support profitable growth and margin expansion, as demonstrated by new market entries; 2) Return capital to shareholders opportunistically via share repurchases, particularly during periods of value dislocation; 3) Pursue strategically aligned bolt-on M&A to accelerate expansion into non-light vehicle growth markets, aligned with the company's core thermal technology platforms.

• Full-year 2026 guidance is raised across all key metrics, and excludes any impact from the pending Modine Performance Technologies transaction. Management now expects full-year 2026 revenue of $1.6 billion at the midpoint, representing ~5% full-year growth, which translates to mid-to-high single-digit outperformance relative to the forecast 3% decline in industry light vehicle production.
• Adjusted EBITDA guidance is raised to a range of $185 million to $200 million, with a midpoint margin of approximately 12%. Margins are expected to remain lower in Q3 2026 before rebounding in Q4 2026.
• Adjusted free cash flow guidance is raised to a range of $85 million to $100 million, with capital expenditures expected to be $45 million to $55 million (approximately 3% of sales).
• Management reaffirms confidence that full-year 2027 revenue will reach at least $1.7 billion, but declines to provide an updated formal 2027 guidance range at this time.
• The combined company post-Modine merger is projected to generate over $1 billion of cumulative unlevered free cash flow through 2030, and is expected to exceed $3.5 billion in total annual revenue by 2030.

Total company product revenue hit a quarterly record of $416 million in Q2 2026, an 11% increase year-over-year (9.5% increase excluding foreign currency translation). The only product segment with disclosed specific performance is Automotive Climate and Comfort Solutions, which grew revenue 14.1% year-over-year (12.7% excluding foreign currency translation), representing the vast majority of total revenue at ~97% of current revenue prior to the Modine merger. Within the automotive segment, Lumbar and Massage Comfort Solutions delivered 38% year-over-year revenue growth. The newly acquired IME medical device business is projected to generate $17 million in full-year 2026 revenue, with 20% EBITDA margins, and contributes a small portion of current revenue. The home/office furniture and medical new market segments have not yet generated meaningful revenue, with 2028 projected revenue of $50-100 million for the home/office segment.

• Macroeconomic and geopolitical uncertainty remains, and ongoing inflationary pressures require ongoing proactive management via commercial and operational discipline.
• Actual results may differ materially from management's forward-looking statements due to inherent risks and uncertainties associated with strategic transactions, new market expansion, and industry operating conditions, as detailed in the company's SEC filings.
• The company has ongoing run-off of legacy product programs that creates a headwind to growth in the second half of 2026.
• The company recorded a one-time increased warranty accrual for a specific automotive product related to historical higher claims stemming from unaddressed mechanical robustness issues; management does not expect this to impact future operating run rates, but unforeseen quality issues could create future margin pressure.
• The Modine merger transaction is subject to remaining closing conditions, although management expects it to close in early Q4 2026.

Q: Can you share details on the purchase price and terms of the IME acquisition, and what cross-selling synergies does IME enable with your new Thermafix product? / A: The total purchase price for IME is $34 million. IME is a $17 million revenue business in 2026 with 20% EBITDA margins, and management projects it will double its revenue by 2030. IME has existing access to over 200 Veterans Administration hospitals and clinics, a market Gen Therm has never entered, while Gen Therm has existing distributor and GPO channel access to non-VA hospitals that IME lacks, creating significant immediate cross-selling opportunities for the combined medical portfolio. Thermafix has completed FDA clearance and is currently in clinical trials with 50 hospitals, with early demand indicating strong market interest for the product's unique value proposition.

Q: Your automotive business is outperforming even your own outperformance targets relative to industry production. What is driving this, how sustainable is it, and what is the trajectory of your new home/office furniture market? / A: The automotive outperformance is broad-based across regions and product lines, with China being a particularly strong contributor from new program launches and higher content take rates. Management continues to expect sustained mid-single-digit outperformance relative to industry production over the long-term, though results may vary slightly quarter-to-quarter. For the home/office market, the two new North American customer wins are larger than the initial Chinese win with KUKA, with more content pulled forward faster. Management reaffirms its prior target of $50-100 million in revenue for this segment by 2028 and confirms the total addressable market for this segment exceeds $500 billion.

Q: Is there conservatism baked into the new raised full-year guidance, and have updates to Modine merger synergy estimates changed as integration planning has progressed? / A: Management confirms there is some built-in conservatism in the guidance to account for ongoing macro uncertainty and headwinds from legacy product program run-offs in the second half. Management reaffirms prior expectations for over $100 million in annual cross-selling and synergy opportunities by 2030 from the Modine combination, with more than half of these synergy opportunities coming from Modine's Valves business, which remains highly attractive. Management declines to update 2027 guidance at this time but reaffirms confidence that 2027 revenue will hit at least $1.7 billion.

Q: You recorded higher warranty accruals in the quarter. Is this driven by higher incident rates, and will this impact future results? / A: The increased warranty accrual relates to one specific automotive product with design robustness issues dating back to 2020. After identifying trends in new operational KPIs, the company made design improvements in late 2025 and saw increased claims in the first half of 2026, leading management to take the one-time accrual to resolve the issue entirely. Management does not expect this one-time charge to impact future operating run rates.