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GI

Gentherm Inc (THRM)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was broadly in line with internal expectations: product revenue was $353.9M (up ~1% ex-FX) as Lumbar & Massage grew 18.5% YoY and Automotive Climate & Comfort outperformed market production by >300 bps; adjusted EBITDA margin compressed to 11.1% amid higher freight, mix and footprint realignment costs .
  • Results vs consensus: revenue beat ($353.9M vs $345.3M*) and adjusted EPS beat ($0.51 vs $0.47*), while EBITDA (SPGI-defined) was modestly below ($36.7M vs $37.6M*) as non-GAAP adjustments (e.g., unrealized FX loss) drove differences versus “adjusted” EBITDA .
  • Guidance: FY25 revenue range maintained at $1.4–$1.5B; adjusted EBITDA margin range widened lower to 11.5–13% (from 12–13%) to reflect tariff pass-through timing and lower industry volumes; tax rate 26–29% and capex $70–$80M unchanged .
  • Catalysts: tariff policy clarity and pass-through timing; footprint optimization ramp (Morocco shipments commenced); commercial momentum (Volvo CCS conquest; first pneumatic Comfort Solutions award with a Japanese OEM) support medium-term margin expansion and growth optionality, incl. medical adjacencies .

What Went Well and What Went Wrong

  • What Went Well

    • Automotive Climate & Comfort Solutions revenue grew 3.8% YoY (5.3% ex-FX) and outperformed light vehicle production by >300 bps, driven by Lumbar & Massage growth and broader portfolio strength .
    • Commercial wins: $400M new awards incl. first lumbar/massage award with a Japanese OEM and CCS conquest with Volvo; China awards with Great Wall, Me Auto, Leap Motor; GM Supplier of the Year recognition .
    • Footprint execution: Morocco facility received PPAP approval and began shipping, supporting long-term margin expansion and cash generation; management is standardizing processes and deploying “plan for every part” to optimize inventory and operations .

  • What Went Wrong

    • Gross margin declined 50 bps YoY to 24.4% on higher freight, mix, and footprint realignment costs; adjusted EBITDA margin fell to 11.1% from 12.2% YoY .
    • GAAP bottom line impacted by non-operational items: net unrealized FX losses and loss on sale of the former HQ drove GAAP net loss of $(0.1)M despite adjusted net income of $15.6M .
    • Operating cash outflow of $(13.3)M (similar to prior year), reflecting receivables, inventory and other asset changes; capex investment continued as footprint optimizes .

Financial Results

MetricQ3 2024Q4 2024Q1 2025Q1 2025 Consensus
Product Revenues ($USD Millions)$371.512 $352.914 $353.854 $345.302*
GAAP Diluted EPS ($USD)$0.51 $0.49 $(0.00) N/A
Adjusted Diluted EPS ($USD)$0.75 $0.29 $0.51 $0.465*
Gross Margin %25.5% 24.4% 24.4% N/A
Adjusted EBITDA ($USD Millions)$48.103 $41.374 $39.341 $37.631*
Adjusted EBITDA Margin %12.9% 11.7% 11.1% N/A
Net (Loss) Income ($USD Millions)$15.965 $15.321 $(0.128) N/A
  • Values with asterisks are consensus from S&P Global; Values retrieved from S&P Global.

Segment/product breakdown (Q1 2025 vs Q1 2024):

CategoryQ1 2025 ($USD ‘000s)Q1 2024 ($USD ‘000s)YoY %
Climate Control Seats (CCS)$191,153 $192,049 (0.5)%
Climate Control Interiors (CCI)$45,341 $44,398 2.1%
Lumbar & Massage Comfort Solutions$45,313 $38,251 18.5%
Climate & Comfort Electronics$7,715 $4,226 82.6%
Automotive Climate & Comfort Solutions$289,522 $278,924 3.8%
Valve Systems$23,173 $26,625 (13.0)%
Other Automotive$29,179 $39,089 (25.4)%
Subtotal Automotive$341,874 $344,638 (0.8)%
Medical$11,980 $11,377 5.3%
Total Company$353,854 $356,015 (0.6)%
Total ex-FX$359,275 $356,015 0.9%

KPIs

KPIQ1 2025
Automotive new business awards$400M
Outperformance vs LVP>300 bps
Adjusted operating expenses$59.447M
Net leverage~0.5x
Liquidity$398.366M
Program launches17 programs across 11 OEMs
Morocco PPAP & shipmentsCommenced

Guidance Changes

MetricPeriodPrevious Guidance (Feb 19, 2025)Current Guidance (Apr 24, 2025)Change
Product RevenuesFY 2025$1.4B–$1.5B $1.4B–$1.5B Maintained
Adjusted EBITDA MarginFY 202512%–13% 11.5%–13% Lowered low-end
Effective Tax RateFY 202526%–29% 26%–29% Maintained
Capital ExpendituresFY 2025$70M–$80M $70M–$80M Maintained
FX Assumption (EUR/USD)FY 2025~$1.03 ~$1.10 Updated
Tariff AssumptionsFY 2025None included Tariffs in effect as of today Updated to include current tariffs

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3’24; Q-1: Q4’24)Current Period (Q1’25)Trend
Tariffs/macroNo tariff pass-through discussion; focus on operational excellence and footprint start-up costs Tariffs included in guidance; pass-through mechanisms in place; dilution “a couple of tens of bps”; uncertainty around volumes (NA ~40% of revenue) Elevated uncertainty; mitigation in place
Footprint realignmentStart-up costs in Monterrey and Tangier pressured margins Morocco PPAP achieved, shipments commenced; consolidation in CZ to North Macedonia/Morocco; Shanghai to Tianjin transfer underway Execution progressing; medium-term margin tailwind
Product performanceACCS outperformed production; growth in Lumbar & Massage; new launches: Cadillac Escalade IQ ClimateSense; ComfortScale wins Lumbar & Massage +18.5% YoY; ACCS +3.8% YoY (5.3% ex-FX); launch suite on Lincoln Navigator/Ford Expedition; Audi Q5 programs; China OEM wins Sustained outperformance, broadening
Regional mix/ChinaEmphasis on shifting mix toward domestic OEMs Awards with Great Wall, Me Auto, Leap Motor; launch with BYD components Progressing toward domestic mix
Medical adjacenciesNot highlighted Two proof-of-concept thermal solutions using existing automotive tech for medical; positive customer feedback; aim to scale medical revenue Emerging optionality
Operational excellenceFit-for-Growth initiatives; supplier cost reductions Standardized KPIs, plan-for-every-part, inventory control; focus on cash flow and capex discipline Intensifying process rigor

Management Commentary

  • “We are maintaining our revenue guidance while slightly adjusting our margin guidance to reflect these expected impacts [tariffs and volumes].” — CEO Bill Presley .
  • “We secured $400 million of automotive new business awards … first pneumatic Comfort Solutions award with a Japanese OEM … conquest CCS award from Volvo.” — CFO Jon Douyard .
  • “We received production part approval in our Morocco facility and began shipping … These investments … position us for long-term margin expansion and free cash flow.” — CEO Bill Presley .
  • “We believe we can largely mitigate the direct impact of tariffs … costs will be passed through … we have mapped out production and flow of goods to provide customers clear visibility.” — CEO Bill Presley .
  • “We are taking the exact same heating technology from automotive and redefining the usage … to create new systems in medical … without significant incremental investments.” — CEO Bill Presley .

Q&A Highlights

  • Tariff pass-through and margin impact: Management expects recovery of incremental costs; margin dilution of “a couple of tens of bps” on the low end; main uncertainty is industry volumes, especially NA (40% of revenue) .
  • Maintaining revenue guide despite weaker LVP: FX favorability and tariff pass-through support holding range; midpoint under pressure, likely near lower end if volumes fall as S&P Mobility indicates .
  • Booking dynamics: $400M awards were “right about where we expected”; full-year pipeline supports a robust awards year .
  • Inventory stockpiling ahead of tariffs: No meaningful pull-forward observed; variances within standard ranges .
  • Medical adjacencies approach: Focus on scaling existing platforms into new markets using same manufacturing assets; two proof-of-concepts underway with positive feedback .

Estimates Context

  • Revenue beat: $353.854M vs $345.302M*; Adjusted EPS beat: $0.51 vs $0.465* (5 estimates); EBITDA (SPGI-defined) slightly below: $36.702M actual vs $37.631M* (definition differs from company “adjusted EBITDA” of $39.341M) .
  • Post-quarter estimate implications: Street may raise revenue and EPS modestly; EBITDA definitions warrant caution given non-GAAP adjustments and FX impacts.
  • Values retrieved from S&P Global.

Key Takeaways for Investors

  • Mix and platform strength: ACCS and Lumbar & Massage continue to outgrow production, underpinning revenue resilience despite macro softness .
  • Margin path: Gross margin headwinds (freight, mix, footprint costs) pressured Q1; footprint optimization (Morocco/Europe consolidation) and process rigor should support medium-term margin recapture .
  • Tariff mitigation: Mechanisms in place to pass through tariffs; near-term EBITDA margin range widened lower to reflect timing impacts; watch policy developments and customer settlement timing .
  • Commercial momentum: $400M awards, Volvo CCS conquest, Japanese OEM entry in pneumatic comfort, China domestic OEM traction broaden the customer base and support future growth .
  • Medical optionality: Reapplication of automotive thermal tech to medical creates adjacencies with attractive capital efficiency; early customer feedback positive .
  • Cash and liquidity: Net leverage ~0.5x and ~$398M liquidity provide flexibility to invest through near-term noise .
  • FY25 setup: Revenue range intact ($1.4–$1.5B), margin range adjusted (11.5–13%); monitor LVP trajectory (S&P Mobility mid-April cut and NA down 10% across last 3 quarters) and FX tailwinds to gauge delivery vs the lower end .