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Gentherm Inc (THRM)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue declined 3.8% year over year to $352.9M, with GAAP diluted EPS of $0.49 and Adjusted EPS of $0.29; gross margin compressed to 24.4% due to mix, higher freight, FX, and startup costs at new plants in Mexico and Morocco .
  • Automotive Climate & Comfort Solutions grew 1.7% ex-FX in Q4 despite softer CCS and seat heater volumes at Hyundai and Stellantis; Medical revenue rose 8.4% YoY (9% ex-FX) .
  • Full-year highlights: record Adjusted EBITDA $182.9M, automotive new business awards $2.4B, net leverage ~0.5x, and $50M in buybacks; 2025 guidance initiated: revenue $1.4–$1.5B, Adjusted EBITDA margin 12–13%, tax rate 26–29%, capex $70–80M .
  • Strategic footprint actions (facility consolidations in Monterrey, closure in Czech Republic, Shanghai-to-Tianjin transfer) will reduce footprint ~30%; near-term margin headwind (~50+ bps) but core driver to mid- to high-teens EBITDA over time .

What Went Well and What Went Wrong

  • What Went Well
    • Automotive Climate & Comfort Solutions revenue +1.7% ex-FX in Q4, with strong growth in lumbar/massage (+29% ex-FX) and steering wheel heaters (+11% ex-FX) .
    • Medical delivered record financial results for FY and Q4 revenue +8.4% YoY (9% ex-FX), with sequential margin improvement .
    • Commercial momentum: $640M Q4 awards and $2.4B FY, including ComfortScale on GM full-size trucks and new Pulse A awards at BMW & Land Rover; CEO: “We will leverage these capabilities, scale our technologies, and optimize our operations to drive shareholder value.” .
  • What Went Wrong
    • Q4 gross margin fell to 24.4% from 26.2% YoY; drivers included product mix, freight, FX, and new plant startup costs .
    • Adjusted EPS dropped to $0.29 from $0.90 YoY, primarily due to unfavorable one-time tax settlements; income tax expense rose to $20.8M vs a $0.9M gain last year .
    • CCS and seat heater revenues declined on lower volumes from Hyundai and Stellantis and Tier 1 destocking; Automotive product revenues -4.3% YoY .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Product Revenues ($M)$375.683 $371.512 $352.914
Automotive Revenues ($M)$364.002 $358.804 $338.834
Medical Revenues ($M)$11.681 $12.708 $14.080
Gross Margin %25.7% 25.5% 24.4%
GAAP Diluted EPS ($)$0.60 $0.51 $0.49
Adjusted Diluted EPS ($)$0.66 $0.75 $0.29
Adjusted EBITDA ($M)$49.873 $48.103 $41.374
Adjusted EBITDA Margin %13.3% 12.9% 11.7%
Q4 YoY ComparisonQ4 2023Q4 2024
Product Revenues ($M)$366.933 $352.914
GAAP Diluted EPS ($)$0.56 $0.49
Adjusted Diluted EPS ($)$0.90 $0.29
Gross Margin %26.2% 24.4%
Adjusted EBITDA ($M)$49.022 $41.374

Segment/product breakdown (Q4 2024 vs Q4 2023):

Product Category ($000s)Q4 2023Q4 2024YoY %
Climate Control Seat$121,797 $116,031 (4.7%)
Seat Heaters$77,456 $70,752 (8.7%)
Lumbar & Massage$35,321 $45,494 28.8%
Steering Wheel Heaters$38,777 $42,824 10.4%
Valve Systems$23,746 $23,082 (2.8%)
Automotive Cables$19,862 $15,906 (19.9%)
Battery Performance Solutions$18,346 $11,643 (36.5%)
Electronics$9,931 $6,847 (31.1%)
Other Automotive$8,709 $6,255 (28.2%)
Subtotal Automotive$353,945 $338,834 (4.3%)
Medical$12,988 $14,080 8.4%
Total Company$366,933 $352,914 (3.8%)

KPIs across quarters:

KPIQ2 2024Q3 2024Q4 2024
Automotive New Business Awards ($M)$660 $600 $640
Adjusted EBITDA ($M)$49.873 $48.103 $41.374
GAAP Diluted EPS ($)$0.60 $0.51 $0.49

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Product Revenues ($B)FY 2025N/A (initiated)$1.4 – $1.5 Initiated
Adjusted EBITDA Margin (%)FY 2025N/A (initiated)12% – 13% Initiated
Effective Tax Rate (%)FY 2025N/A (initiated)26% – 29% Initiated
Capital Expenditures ($M)FY 2025N/A (initiated)$70 – $80 Initiated
Guidance assumptionsFY 2025N/AKey markets LV production down low single digits; EUR/USD 1.03; tariffs excluded Noted

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q3)Current Period (Q4)Trend
Technology innovations (ClimateSense, Pulse A, ComfortScale)Q2: Puls.A award with Hyundai; Compact Vent wins (Hyundai, Great Wall); development progress on ClimateSense/WellSense/ComfortScale . Q3: First ClimateSense launch on Cadillac Escalade IQ; first ComfortScale award at GM; acceleration in tech wins .Q4: New Pulse A awards (BMW, Land Rover); ComfortScale positioned for increased content; strong platform scalability emphasis from new CEO .Increasing adoption and content per vehicle .
Supply chain/footprint optimizationQ2/Q3: Startup costs at new plants in Mexico/Morocco; Fit-for-Growth driving material savings and productivity .Q4: Accelerated footprint actions—Monterrey consolidation, Czech closure, Shanghai→Tianjin; plan to reduce footprint ~30% with near-term margin headwinds .Near-term headwind; long-term margin expansion .
Tariffs/macroQ3: Industry production declines; Tier 1 destocking; China headwinds .Q4: Tariffs excluded from guidance; proactive customer planning; Mexico exposure acknowledged .Uncertain; monitored with contingency planning .
Product performance (Lumbar/Massage, Steering Wheel Heaters)Q2: Lumbar/Massage +22% YOY; SW heaters +8.9% . Q3: Lumbar/Massage +47.2%; SW heaters +12.2% .Q4: Lumbar/Massage +28.8%; SW heaters +10.4% .Sustained double-digit growth .
Regional trends (China, Europe, NA)Q2: Strategy to diversify Chinese OEM exposure; Europe outperformance . Q3: Europe outperformance; China OEM mix shifts .Q4: Continued growth with Li Auto and select OEMs; focus on Chinese domestic OEMs for faster cycles .Shift toward domestic Chinese OEMs .
R&D execution/portfolio pruningQ2: Lower BPS resources; phase-out non-automotive electronics . Q3: Continued pruning; CCS underperformance tied to OEM mix/inventory .Q4: BPS/electronics/cables declines as expected; focus on scalable platforms .Ongoing pruning; redeploy to high-growth platforms .

Management Commentary

  • CEO initial observations: “Gentherm has a proven track record of product innovation… When I look at Gentherm, I see a technology company… portable and scalable technologies… unique opportunity to generate shareholder value.” .
  • Strategy on platforms: “These platforms are thermal management, air moving devices, pneumatic solutions and valve systems… we have successfully deployed across the automotive and medical industries… we believe there is further opportunity to scale.” .
  • Footprint plan: “We intend to reduce our footprint by approximately 30% while maintaining the capacity necessary to support our expected growth and improve margins and cash flow generation.” .
  • CFO on cadence and margins: “We expect adjusted EBITDA margin for 2025 to be in the range of 12% to 13%… favorable material savings and productivity actions to more than offset inflation… headwinds related to the impact of footprint changes.” .

Q&A Highlights

  • Footprint optimization and margin timing: Near-term ~50+ bps headwind from consolidation and transfers; foundational for mid- to high-teens EBITDA over time .
  • Tariff risk management: Guidance excludes tariffs; proactive planning with customers; primary exposure via Mexico plants .
  • 2025 outgrowth and product drivers: Expect mid-single-digit outgrowth in core Climate & Comfort; growth across CCS/seat heaters, pneumatics, and steering wheel heaters; pruning BPS and contract electronics offsets .
  • Capital allocation: Focus on funding organic growth; opportunistic M&A; buybacks in absence of M&A; strong balance sheet and liquidity .
  • Scaling platforms beyond seats: Target strategic conquests to deploy core thermal/pneumatic/air-moving technologies across applications and geographies within 6–7 months .

Estimates Context

  • Wall Street consensus (S&P Global) EPS and revenue estimates for Q4 2024 were unavailable at time of request due to data limits; thus, we cannot quantify beat/miss versus consensus for this quarter. Values intended to be sourced from S&P Global; unavailable*.
  • Implication: Given adjusted EPS fell sharply YoY due to one-time tax items, and revenue declined 3.8% YoY, estimate revisions may center on tax rate normalization for FY 2025 and margin cadence given footprint actions .
  • S&P Global disclaimer: Values retrieved from S&P Global*.

Key Takeaways for Investors

  • Core franchise intact: Lumbar/massage and steering wheel heaters continue double-digit growth, offsetting weaker CCS/seat heaters at select OEMs; Climate & Comfort outgrew production again .
  • Transition year ahead: Accelerated footprint actions create near-term margin drag but should structurally lift margins and cash generation; monitor Q1 margin cadence and H2 recovery .
  • 2025 guide conservative on macro: Revenue $1.4–$1.5B with mid-teen bps outgrowth vs a declining LV production backdrop; EBITDA margin 12–13% despite headwinds .
  • Cash discipline: Strong OCF ($109.6M FY), low net leverage (~0.5x), continued buybacks ($50M FY) support flexibility through investments and potential M&A .
  • Product mix shifts: Continued pruning of BPS/cables/electronics; expect mix to skew toward higher-content thermal/pneumatic platforms (ComfortScale, Pulse A) over 2025–2026 .
  • China strategy pivot: Increasing exposure to domestic OEMs with faster cycles may accelerate backlog conversion; monitor tariff risk and export dynamics .
  • Watch catalysts: Execution on footprint consolidation milestones, incremental ComfortScale/Pulse A awards, and any tariff developments—key drivers of sentiment and multiple .