THRM

This article first appeared on GuruFocus. - Revenue: $405 million, up 4.7% year-over-year (up 4.4% ex-FX). - Automotive Climate and Comfort Solutions Revenue: Up 8.8% year-over-year (up 8.5% ex-FX), outpacing light vehicle production in key markets by 12 percentage points. - Lumbar and Massage Comfort Solutions Revenue: Grew more than 25% year-over-year, including initial Puls.A revenue. - Automotive New Business Awards: $555 million in Q3; year-to-date total over $1.6 billion; on track for at least $2 billion for the fourth consecutive year. - Adjusted EBITDA: $45 million, or 11.1% of sales, versus 12.7% in Q3 of the prior year. - GAAP Diluted EPS: Loss of $0.08 per share, including approximately $0.37 per share related to merger and restructuring expenses. - Adjusted Diluted EPS: $0.33 versus $0.73 in the prior-year quarter; year-to-date $1.90 versus $1.78. - Adjusted Free Cash Flow: Approximately $59 million versus $72 million in the prior year. - Net Leverage: 0.4 turns at quarter end; estimated pro forma net leverage post synergies of 0.8 turns following the Modine transaction and $63.5 million special dividend. - Liquidity: $494 million at quarter end. - Share Repurchases: Approximately 2 million shares repurchased for $60 million since October 1; $340 million remaining on authorization. - Cost Synergies: $25 million target from Modine combination reaffirmed. - Combined Company Pro Forma (trailing 12 months through June 30, 2026): Revenue of $2.7 billion and adjusted EBITDA of $346 million, up $40 million versus prior pro forma period. - Q4 Modine Contribution (expected): Approximately $275 million revenue, approximately $28 million adjusted EBITDA, and approximately $15 million to $20 million free cash flow. - Full-Year 2026 Guidance (midpoint): Revenue of $1.875 billion, adjusted EBITDA of $220 million, free cash flow of approximately $110 million, assumed CapEx of $55 million. - Legacy Gentherm Outlook: Mid to high single-digit revenue growth for the year, trending toward the higher end of the prior range; EBITDA near the midpoint due to increased inflation. - Long-Term Targets (2030): More than $3.5 billion in revenue, over $500 million in adjusted EBITDA, and more than $1 billion in adjusted unlevered free cash flow over the next four years. - Warning! GuruFocus has detected 4 Warning Signs with THRM. - Is THRM fairly valued? Test your thesis with our free DCF calculator. Release Date: October 22, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Gentherm Inc (NASDAQ:THRM) secured $555 million in automotive new business awards in Q3, bringing year-to-date total to over $1.6 billion, on track for at least $2 billion for the fourth consecutive year. - Automotive Climate and Comfort Solutions revenue grew 8.8% year-over-year, outpacing light vehicle production by 12 percentage points, with strong outperformance across all regions, led by China where domestic OEM sales exceeded global OEM sales for the first time. - The Modine acquisition closed on October 1, diversifying the business into power generation, commercial vehicles, and heavy-duty equipment, with a clear path to $3.5 billion revenue and $500 million adjusted EBITDA by 2030. - Gentherm Inc (NASDAQ:THRM) launched its first Puls.A massage system in automotive and received FDA clearance for ThermAffyx, with initial sales in Q3, while also acquiring Innovative Medical Equipment to expand patient thermal management portfolio. - The company repurchased approximately 2 million shares for $60 million since October 1, with $340 million remaining on authorization, and expects to remain active in Q4 given undervalued stock price. - Adjusted EBITDA margin declined to 11.1% from 12.7% year-over-year, due to net material cost inflation, higher freight costs, and foreign exchange headwinds, particularly the Mexican peso. - Adjusted diluted earnings per share fell to $0.33 from $0.73 year-over-year, primarily due to a higher tax rate from M&A expense timing and treatment. - Gentherm Inc (NASDAQ:THRM) faces margin pressures from material cost inflation and freight, with no formal recovery mechanisms with customers, leading to lag in passing through costs. - Modine's Q4 contribution is expected at ~10% EBITDA margin, lower than the 11% at acquisition, partly due to cost pressures and conservatism, with recovery timing uncertain. - Inflation and recovery lag are expected to continue into 2027, and revenue synergies from the Modine combination will not meaningfully flow through until 2029-2030, with the bulk in 2030. Q: Gross margins were down year over year due to inflation and higher freight costs. What was the impact from price cost, what are you doing to recover it, and what is the typical lag before improvement? A: CFO Jonathan Douyard said about one-third of the year-over-year gross margin decline was related to material inflation that has not been recovered, noting Gentherm has no formal recovery mechanisms with customers and each case is a negotiation. He said freight inflation accelerated in Q3 and is harder to pass through, creating a longer lag than anticipated. CEO Bill Presley added that the company is focused on what it can control, including higher capacity utilization and direct labor efficiency, lower scrap as a percentage of sales, and removal of spans and layers, while holding structured commercial conversations with customers. Q: How aggressive can Gentherm be with share repurchases in the fourth quarter, and over what time frame do you expect to use the authorization? A: CFO Jonathan Douyard said buyback activity will depend on share price but that he sees severe dislocation in the stock relative to the company's future outlook. Gentherm has already repurchased $60 million of shares since October 1 and has $340 million remaining on its authorization, with 8 million shares remaining under the 10-million-share, two-year limit. He said he expects to repurchase at least as much in the fourth quarter as it has quarter-to-date, with the opportunity to do more. Q: The fourth-quarter Modine contribution implies roughly 10% EBITDA margins, below the ~11% at the time of the acquisition. Is that seasonality or cost pressure, and how should we think about it going forward? A: CFO Jonathan Douyard said Gentherm expects the Modine business to perform at a higher level going forward and that the current view may include some conservatism given the company has only owned the business for about three weeks. He noted Modine faces cost pressures but has escalators in its contracts that provide a more mechanical recovery mechanism, albeit with a timing lag. Q: Can you give preliminary color on 2027, including key puts and takes for legacy Gentherm and Modine? A: CFO Jonathan Douyard said Gentherm remains confident in the $1.7 billion revenue outlook for the legacy business in 2027, supported by launches including Puls.A, medical products and the IME acquisition, plus continued strength in Lumbar and Massage. On the Modine side, he expects power generation growth to pick up and sees early signs of commercial vehicle recovery. Overall, Gentherm expects a strong growth profile against a relatively flat automotive market. Q: On margins, are the inflation recovery lag and footprint action benefits on track? A: CFO Jonathan Douyard said the inflation recovery lag appears likely to continue into 2027, while benefits from footprint actions in the legacy Gentherm business should be visible in 2027, with those actions largely complete in the fourth quarter. He also cited continued productivity and efficiency efforts and the early-stage 80/20 mindset, with teams mobilized to find margin opportunities and reallocate resources, which could benefit 2026 or 2027. Q: SG&A was up significantly year over year. What drove the increase? A: CFO Jonathan Douyard attributed the increase to transaction-related costs, additional depreciation from systems put in place, higher personnel costs in the quarter, and costs related to the acquisition of Innovative Medical Equipment. Q: Where does the home and office business stand today in terms of size, and how is the path to a $100 million business by 2028 progressing? A: CEO Bill Presley said Gentherm has strong visibility to $30 million in annualized revenue by 2028 based on awards to date with OEMs, supported by a pipeline that underpins the $100 million target. He noted the venture began in mid-2025 and the team has built a significant pipeline, including a differentiated commercial model signed with a furniture component distributor in the quarter that allows Gentherm to serve smaller customers it might not otherwise reach. Q: On power generation growth, what opportunities do you see, including backup power and data centers? A: CFO Jonathan Douyard said much of Modine's power generation work supports diesel generation for after-meter power, largely for data centers, and the business has been building a backlog for months with capacity now in place to execute. He said there are also opportunities inside the data center, such as energy storage and plate heat exchanger technology, and broader applications outside traditional markets including medical products and industrial HVAC. Q: Light vehicle expectations moved lower in Q3, yet you reiterated the higher end of legacy Gentherm guidance. Where are the opportunities and changes in end-market expectations? A: CEO Bill Presley said demand for Gentherm's products remains strong in all regions despite lower industry volumes, with no regional dependency. He highlighted China, where Q3 marked the first quarter in company history that sales to domestic OEMs outpaced sales to global OEMs in China, a result of the company's local-market strategy, and said Gentherm expects the automotive segment to continue growing with no weakness in demand. Q: When should revenue synergies from the Modine combination begin to drive growth? A: CEO Bill Presley said revenue synergies will be back-end loaded, with green shoots in 2028, meaningful revenue flow starting in 2029 and the bulk hitting in 2030. He said the India win reinforced the thesis that local footprint and presence open up that market, and that the combined teams are aggressively pursuing joint product development for markets neither company serves separately today. Q: Is the restructuring and footprint consolidation program on schedule, and what savings are expected in 2027? A: CFO Jonathan Douyard said North American facilities in Mexico are largely consolidated with some cleanup in the fourth quarter, and the European footprint consolidation, including closing the Czech Republic site, is on track to be completed this quarter, leaving the company relatively clean entering January. He did not provide a specific 2027 savings number but said footprint actions are a key driver toward returning the legacy Gentherm business to 15% margins and should produce a step-function change in 2027. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Investing.com - On Thursday, Gentherm Inc. (NASDAQ:THRM) delivered third quarter results that showed earnings below analyst expectations despite revenue slightly exceeding forecasts. Still guessing which stocks will beat the market? Our AI portfolio updates monthly and is outperforming the S&P 500 by 118%. See this month's list » Shares of the thermal management technology tumbled 7.5% in pre-market trading following the company's announcement. The company reported adjusted earnings per share of $0.33 for the third quarter, missing the analyst consensus of $0.65 by $0.32. Revenue reached $405.1 million, narrowly beating the estimate of $404.0 million and representing a 4.7% increase from $386.9 million in the prior year period. Excluding foreign currency impacts, revenue grew 4.4% YoY. "Our third quarter results were in line with expectations as we made continued progress on growth and operational excellence initiatives, while completing the Modine Performance Technologies combination on October 1," said Bill Presley, the company's President and CEO. Unsure what to buy ahead of earnings? Our AI's recent pre-earnings calls delivered gains of +77% to +118% after results dropped. See this month's earnings picks » The company's Automotive Climate and Comfort Solutions segment posted revenue growth of 8.8% YoY, outperforming light vehicle production in relevant markets by 12 percentage points. However, gross margin declined to 23.3% from 24.6% in the prior year, primarily due to foreign exchange headwinds, higher material costs and inflation. Adjusted EBITDA totaled $45.0 million, or 11.1% of revenue, compared to $49.0 million, or 12.7% of revenue, in the year-ago quarter. For full year 2026, Gentherm updated its guidance to $1.825 billion to $1.925 billion in revenue, above the consensus estimate of $1.61 billion. The midpoint of $1.875 billion exceeds the analyst consensus by $265 million. The updated outlook reflects the expected contribution from the recently completed Modine Performance Technologies acquisition in the fourth quarter. The company also raised its full year adjusted EBITDA guidance to $210 million to $230 million from the prior range of $185 million to $200 million. Following the Modine transaction closure, Gentherm repurchased $60 million of common stock in October under its newly authorized $400 million buyback program. Original Article Gentherm shares tumble 7% on third quarter earnings miss Tesla slips as group sets lower annual sales goal amid SpaceX merger talk PulteGroup shares tumble over 8% on earnings and revenue miss

Image source: The Motley Fool. Oct. 22, 2026 - Senior Director of Investor Relations - Gregory Blanchette - President and Chief Executive Officer - Bill Presley - Chief Financial Officer - John Douyard Operator: Greetings. Welcome to the Gentherm Third Quarter 2026 Earnings Conference Call. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to Gregory Blanchette, Senior Director of Investor Relations. Thank you, Greg. You may begin. Gregory Blanchette: Thank you, and good morning, everyone, and thanks for joining us today. Gentherm's earnings results were released earlier this morning, and a copy of the release is available at gentherm.com. Additionally, a webcast replay of today's call will be available later today on the Investor Relations section of Gentherm's website. During this call, we will make forward-looking statements within the meaning of federal securities laws. These statements reflect our current views with respect to future events and financial performance, and actual results may differ materially. We undertake no obligation to update them, except as required by law. Please see Gentherm's earnings release and its SEC filings, including the latest 10-K and subsequent reports for discussions of our risk factors and other significant assumptions, risks and uncertainties underlying such forward-looking statements. During the call, we will also discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included in our earnings release and investor presentation. On the call with me today are Bill Presley, President and Chief Executive Officer; and John Douyard, Chief Financial Officer. During their comments, they will be referring to a presentation deck that we made available on the Investors section of Gentherm's website. After the prepared remarks, we'd be pleased to take your questions. Now I'd like to turn the call over to Bill. William Presley: Thank you, Greg. Good morning, everyone. Let's begin on Slide 3. When John and I joined Gentherm in January of 2025, we made it an imperative to diversify the business and to capitalize on Gentherm's capabilities to further expand into new markets. October 1 marked a defining milestone in Gentherm's evolution. We have emerged as a fundamentally different company, a global leader in innovative thermal and precision flow management technologies with a more diversified portfolio, incremental secular growth drivers, enhanced margin expansion opportunities and stronger cash generation. There are 3 key takeaways I want to highlight. First, our expanded end market exposure creates a more resilient business. We retain our leadership position in automotive while adding meaningful exposure to attractive growth markets, including power generation, commercial vehicles and heavy-duty equipment. The broader exposure provides greater diversification, expands our addressable markets and creates additional avenues for sustainable, profitable growth. Second, the combination creates complementary thermal and precision flow management platforms. Modine's mission-critical heat exchanger technologies optimize equipment performance across multiple industries. By combining heat exchangers, valves, fans and our complementary thermal management expertise, we can develop integrated solutions for emerging applications that expand beyond the products we offer today as individual businesses. As an example, in a liquid cooled energy storage system, the battery coolant loop passes through a plate heat exchanger to transfer heat to the external environment. Fans blow air over the exchangers to dissipate heat, while valves adjust coolant flow to the exchanger and control system pressure. This integrated setup ensures the energy storage system stays within a safe operating temperature window, maximizing life cycle and efficiency. We are not simply adding products and markets. We are expanding our ability to solve more complex customer problems and capture a broader range of growth opportunities. Third, we have a clear path to delivering a significant strategic and financial value. We have the capabilities, commercial opportunities and operational improvement levers to build a business generating more than $3.5 billion in revenue and over $500 million in adjusted EBITDA by 2030 with more than $1 billion in adjusted unlevered free cash flow over the next 4 years. We remain confident in delivering $25 million in cost synergies as previously communicated. However, we are most excited about the significant commercial opportunities ahead of us. As stated in the past, India represents an attractive growth opportunity for Gentherm with annual production of nearly 5 million light vehicles and more than 20 million 2-wheelers. Over the past year, Gentherm has engaged heavily with customers to enter the region, and we have received consistent feedback. Gentherm needs a footprint in India. Modine's established presence in the country has already unlocked a new Gentherm business award for air moving devices representing approximately $25 million in lifetime revenue with one of India's major light vehicle manufacturers and shipments are expected to begin in the fourth quarter of 2027. This early proof point reinforces our thesis that establishing a local presence creates greater commercial access in India, where demand for climate-controlled seating is growing and the addressable market for valves is significant. We are also adopting some of the operating disciplines that have delivered results at Modine. The Modine team has used the 80/20 philosophy to drive meaningful operational and financial improvements. We are in the early stages of deploying that approach across Gentherm with a focus on prioritization and financial returns. I will close by emphasizing one point. Gentherm is proud of its heritage and confident in the future of its automotive business. However, we have proven we are more than automotive with recent launches in home and office, and medical. We are not just an automotive seat component supplier looking for adjacent markets. Together with Modine, we are a fundamentally different company with a more diversified business, a stronger platform for growth and clear opportunities to create significant long-term shareholder value. Please turn to Slide 4 for an update on our business and several key performance highlights. Let me start with the operating environment. Industry light vehicle production volumes were down year-over-year, but demand for our products remained relatively stable throughout the quarter. At the same time, macroeconomic and geopolitical developments continue to drive increased uncertainty and volatility. We are also managing additional margin pressures from material cost inflation, including freight. Our teams are addressing these headwinds through disciplined commercial actions and focused operational execution. We remain committed to protecting profitability while positioning the business for sustainable growth. Our core automotive business continues to deliver growth over market across all regions and product categories, reinforcing our confidence in the business and the strength of our customer relationships. We secured $555 million in automotive new business awards during the quarter, bringing our year-to-date total to more than $1.6 billion. We remain on track to secure at least $2 billion in awards for the fourth consecutive year. This continued commercial momentum reflects the value our technology portfolio delivers to the OEMs. We also reached an important product milestone with the launch of our first ever Puls.A massage system in the automotive market. This technology delivers an enhanced massage experience, and we see meaningful opportunities to extend its reach beyond automotive. Customer interest in the home and office market remains encouraging. During the quarter, we signed an agreement with a furniture component distributor that expands our access to customers through a differentiated commercial model. This approach allows us to reach additional customers more efficiently and convert opportunities that may not have been previously serviceable. Wins like this reinforce our confidence in the opportunity to build a $100 million home and office business by 2028. Turning to Medical. We made important progress on both product innovation and commercial expansion. Following FDA clearance, we successfully launched the ThermAffyx patient safety system with initial sales beginning in the third quarter. This is another demonstration of our ability to leverage proven automotive technologies and intellectual property and apply them in new markets. We've also completed the strategic acquisition of Innovative Medical Equipment, the provider of the ThermaZone thermal therapy device. This acquisition expands our patient thermal management portfolio and extends our commercial reach into the Veterans Administration health care system. IME is performing well, and the Gentherm team is focused on opening channels to cross-sell our complementary thermal management solutions across the combined customer base. Together, the ThermAffyx launch and the IME acquisition directly advanced 2 of our key medical priorities, refreshing and expanding our product portfolio and broadening our commercial channels. Both actions demonstrate how we are translating our strategy into tangible outcomes. Stepping back, the message is straightforward. Our teams are delivering across the priorities that matter most. We are securing profitable new business to grow above market in automotive, expanding into new markets, refreshing our product portfolio, broadening our commercial reach and improving operational execution. With that, I'll turn the call over to John. Jonathan Douyard: Thanks, Bill. Please turn to Slide 5. Our third quarter highlights reflect both short- and long-term commercial progress. Overall, automotive new business awards were $555 million. In addition, revenue of $405 million was up 4.7% compared to the same period last year or 4.4% when excluding foreign currency translation. Automotive Climate and Comfort Solutions revenue increased 8.8% year-over-year or 8.5% ex-FX, outpacing actual light vehicle production in our key markets by 12 percentage points. This growth included strong outperformance across all regions, led again by China, where our sales to domestic OEMs exceeded our sales to global OEMs for the first time, a key indicator that our intentional focus to better represent the local market is gaining traction. From a product perspective, Lumbar and Massage Comfort Solutions delivered another strong quarter of revenue growth at more than 25% year-over-year. These results included the initial Puls.A revenue, as Bill noted earlier. Turning to profitability. We delivered $45 million of adjusted EBITDA or 11.1% of sales compared to 12.7% in the third quarter of last year. Strong operating leverage was offset by headwinds related to net material costs, inflation and foreign exchange. FX was primarily impacted by the year-over-year movement in the Mexican peso. On a GAAP basis, diluted losses per share were $0.08 in the third quarter. This was impacted by approximately $0.37 per share related to merger and restructuring expenses. Adjusted diluted earnings per share were $0.33 compared to $0.73 per share in the third quarter of last year. The decrease was primarily attributable to a higher tax rate driven by the timing and treatment of M&A expenses. These impacts are more normalized on a year-to-date basis, where adjusted diluted earnings per share were $1.90 compared to $1.78 per share in the prior year. Adjusted free cash flow was approximately $59 million compared to $72 million in the prior year. We ended Q3 with net leverage of 0.4 turns and liquidity of $494 million. Following the closing of the Modine transaction on October 1 and the payment of the $63.5 million special dividend, we estimate that pro forma net leverage post synergies was 0.8 turns below our prior estimate of 1 turn. We previously indicated our intent to repurchase shares once the Modine transaction was closed. Since October 1, we have repurchased approximately 2 million shares for a total of $60 million. With $340 million remaining on our authorization and the current trading levels of Gentherm stock, we expect to remain active throughout the fourth quarter. As Bill indicated earlier, Gentherm is a different company post transaction with a strong growth outlook, and we believe the future of this business is currently underappreciated. Please turn to Slide 6. Before discussing our guidance, I want to echo Bill's comments regarding our combination with Modine Performance Technologies. Having now worked with the Modine team for over a year and worked closely over the last few weeks, our appreciation of the business' potential has grown and our confidence in the value of this transaction has only increased. The team is engaged and energized and most significantly, excited about the growth opportunities ahead in both their traditional and nontraditional markets. The integration is progressing well, and we are focused on delivering our synergy target and accelerating commercial opportunities. We continue to believe our combined business has a compelling outlook with a strong balance sheet, multiple growth engines and a clear path to margin expansion. As an update to our prior communication, while we cannot yet comment on Modine's most recent quarter performance, we have updated our view of the combined company's trailing 12-month pro forma financials through June 30, 2026. This update results in revenue of $2.7 billion and adjusted EBITDA of $346 million, which is up $20 million with improvements seen in both businesses when compared to the prior pro forma period. Turning to 2026. We have updated our full year guidance to reflect the expected fourth quarter financial contribution from Modine, which includes approximately $275 million of revenue, approximately $28 million of adjusted EBITDA and approximately $15 million to $20 million of free cash flow. As a result, we now expect the midpoint guidance for the full year to be as follows: revenue of $1.875 billion, adjusted EBITDA of $220 million and free cash flow of approximately $110 million with assumed CapEx of $55 million. This update reflects limited changes to Gentherm's prior full year guidance that was communicated in July. We continue to expect that the legacy Gentherm business will grow mid- to high single digits for the year, with revenue trending towards the higher end of the previous range, while we expect EBITDA to remain near the midpoint given the impact of increased inflation, which has accelerated since our July earnings call. As previously noted, we expect margins to be sequentially higher in the fourth quarter compared to Q3. We look forward to providing a more comprehensive outlook on 2027 in our February earnings call and remain excited about the financial profile of the combined company. We have a high level of visibility to growth, driven by strong automotive and adjacent market launch activity in the legacy Gentherm business as well as several exciting growth opportunities within Modine, including strong activity in power generation and early signs of recovery in commercial vehicles. Our view on the new Gentherm is increasingly positive, and we will see our strategic progress translate into improved financial performance as we move forward. I'll now hand it back to Bill for some closing remarks. William Presley: Thanks, John. Our achievements year-to-date demonstrate we are on the right track, and we remain focused on finishing the year strong. Our business is growing. We're expanding our technologies into new markets and the improvements we are making to our operating system are positioning us for margin expansion. With the strength of our existing business and our transformational combination with Modine Performance Technologies, we are building a fundamentally stronger company that can deliver long-term value for our shareholders. With that, I will turn the call back to the operator to begin the Q&A session. Operator: [Operator Instructions] Our first question is from Nathan Jones with Stifel. Nathan Jones: I guess I'll start with some of the price/cost stuff. Gross margins were down year-over-year, not surprising given all of the inflation and higher freight costs. I know you also attributed part of that to FX. Can you maybe just talk about what the impact was from price cost, what you're doing to recover that and pass it through to customers? And what's a typical lag when you expect to see that, kind of, dynamic improve? Jonathan Douyard: Yes. I think -- I mean, when you look at it overall, the year-over-year drop, I would say about 1/3 of it is related to sort of, material inflation and ability to recover. We -- we don't have formal mechanisms from a recovery perspective with our customers. And so each one is a negotiation as we've talked about before. I think if we looked at this earlier in the year, there were certainly some commodity impacts, the impact of oil on transportation and those types of things. I think what we saw accelerate in Q3 is really on the freight side, which is typically a more difficult conversation with the customer. It takes a little bit longer to materialize. And so there's maybe a bit more of a lag than what we would have anticipated and also some increased inflation there. But the teams are doing a good job working with the customer base to push it through, but we continue to experience the impact. William Presley: Yes. And I would just say, Nathan, the mindset here is we know inflation is a challenge, but we're not going to be a victim of inflation. We're attacking what we can control. So if you look deep into our fundamentals, the capacity utilization, the direct labor efficiency in the plants is up. Cost of nonconformance as a percentage of sales, like scrap, is down. And that doesn't happen by accident. That's the team focused on gaps to standards. We've removed spans and layers earlier in '26. As you know, we're now working through a standard plant structure to be completed by the end of the year. So where we can offset, where we cannot offset, to John's point, we're having structured commercial conversations with the customer, but it starts with building credibility with the customer by attacking the things that you can control and the self-help. Nathan Jones: Okay. I'm going to ask one on the share repurchase. I think you said about $340 million on the authorization there. And John mentioned a plan to be active during the fourth quarter. Obviously, the share price has come down here, a lot of good opportunities ahead. How aggressive can you be -- will you be in the fourth quarter with that? And kind of, over what time frame do you expect to exercise that authorization? Jonathan Douyard: Yes. I mean, obviously, dependent on share price. I think as we look at it today, we think there's pretty severe dislocation in what the future outlook of the company is. We did $60 million in the fourth quarter already. As we noted, there's $340 million open on the authorization. The other limitation we have under the RMT is 10 million shares over a 2-year period of time. So there's 8 million shares remaining on that. We would -- I would expect that we will do at least what we did quarter-to-date, again, in the fourth quarter with the opportunity to do more than that. Nathan Jones: I'll get back in the queue. William Presley: Thanks, Nathan. Operator: Our next question is from Rajat Gupta with JPMorgan. Rajat Gupta: I just had a clarification around, like, just the fourth quarter Modine contribution. The $28 million EBITDA, $275 million revenue, it seems like around 10% EBITDA margins, which is a little lower than at the time of the acquisition, where I think it was tracking at 11%. I'm curious if that is just seasonality? Or is it, like, similar cost pressures that you're seeing on the Modine side, which can recover over time? Just any thoughts on that would be helpful. And I have a quick follow-up. Jonathan Douyard: Yes. I mean, I think the -- certainly, we expect more on that business going forward. Obviously, we've owned them now for about 3 weeks. And so there may be a sense of conservatism in there as well. But when you look at that business, they are certainly experiencing cost pressures. They do have escalators in their contracts. So there is more of a mechanical mechanism to recover that, which creates a bit of a timing lag. And obviously, we've seen prices continue to increase throughout the year. So there's an element of that. But overall, we think the business will operate at a higher level than that going forward. We're just early on in the acquisition. And so that's the current view. Rajat Gupta: Understood. And then any preliminary color you can give us on 2027 puts and takes? Any key moving pieces either product-wise or regionally just given all the cross currents in Europe and China, any initial color on just growth of market would be helpful. Maybe separating legacy Gentherm and Modine performance would be helpful as well. Jonathan Douyard: Yes. I think what we put out on the legacy Gentherm business, we put out a $1.7 billion revenue number for 2027. We're still very confident in what that looks like. And I think it will be a continued trend with what you're seeing, right? We've had a number of key launches. We talked about Puls.A entering the market today. We've got some medical launches and some favorability from the small acquisition we did there. And then the Lumbar and Massage products continue to operate well. I think on the Modine side, there's been some anticipation of power generation growth in that business and what they've been preparing for. We really start to see that pick up as well. So that will be a nice addition. We're also seeing early signs of commercial vehicle recoveries through indications from our customers. And so there are some nice tailwinds from that perspective. Overall, from an automotive market standpoint, we're still not anticipating growth. And so we think as we look at the year, we've got a strong growth profile and what's overall a relatively flat market. Rajat Gupta: And on the margin side, anything to call out there? Obviously, some of the inflation and recoveries are not entirely in your control, but just from a cost standpoint and footprint action benefit standpoint, are those on track? Jonathan Douyard: Yes. Completely fair. I think inflation, the recovery lag that will continue -- it appears like it will continue into '27. We do see the benefit from footprint actions in the legacy Gentherm business, the benefit of that in '27. So we are largely through those actions here in the fourth quarter. So we would anticipate an increase from that perspective. And beyond that, we're really looking to -- Bill talked about some of the operational items that we're really driving the teams on, and we look to continue to see productivity and efficiency out of the business. The one other piece I would point to, Bill made the comment in his prepared remarks, is just on the 80/20 mindset in general. We are early stages within the Gentherm business, but we do have teams together who are mobilized on specifically looking for margin opportunities and efficiency to ultimately reallocate resources to drive growth in the company. We may see some of that benefit as we get into 2026 and 2027 as well. So a lot going on, but we think there's a lot of positive momentum in the company. Rajat Gupta: Understood. Great. Thanks for all the color and good luck. Operator: Our next question is from Justin Ages with CJS Securities. Justin Ages: Hi, morning all. William Presley: Hey, Justin. Justin Ages: As I look at comparison to last year, SG&A was up pretty significantly. And I know you talked about some of the cost pressures, but maybe you could give us a little more detail on that, please? Jonathan Douyard: Yes. I mean, I think if you're looking at -- you've got a couple of drivers in there. There's a lot of transaction-related costs, but to the extent that you're looking at an adjusted number, you do have an increase in -- related to the acquisition of IME. You'll see some additional depreciation in there as well from some of the systems that we put in place. There has been an increase in personnel costs as well in the quarter. So those, I would say, are the big drivers. Justin Ages: Okay. That's helpful. And then you mentioned good outlook remains on home and office getting to that $100 million business in 2028. Can you give us any more color on where the business kind of sits today in terms of size? Jonathan Douyard: Yes. I would say based on awards to date with the OEMs, and it's a different model, obviously, than light vehicles, Justin, we have very strong visibility to $30 million in annualized revenue by 2028 with a pipeline that supports the $100 million target that we've been putting out there. So I would say 12 months in, right? I mean, we started this venture kind of in the middle of last year. The team has built a significant pipeline with significant engagement. As mentioned, we signed a differentiated commercial model with a component distributor during the quarter. So that allows us to service smaller customers that we might not otherwise service just due to scale. Justin Ages: That's helpful. All right. I appreciate the answers. Thank you. Jonathan Douyard: Thanks, Justin. William Presley: All right. Thank you. Thanks, Justin. Operator: Our next question is from Ryan Sigdahl with Craig-Hallum Capital Group. Ryan Sigdahl: I want to start with, Jon, something you said of anticipation of some big things coming from power generation growth and preparing for that. Maybe more specifically, I know backup power and data centers, if that's what you're referring to, what you see in the pipeline is inside the data center, an opportunity, and then other industries. Jonathan Douyard: Yes. I think on the power generation side, a lot of what they're doing is supporting diesel generation, which is after meter power. A lot of that is going into the data center. And so the business has been building up a backlog associated with that now for a number of months. We've been working on capacity, and that's really in place to execute at this point. I think when we look at opportunities inside the data center, I mean, Bill gave an example early on that could certainly be applied from an energy storage perspective or even a heat exchanger plate technology that could be inside the data center. I think as we look at the business, there continues to be a view of broad application of Modine's products outside of their traditional markets. We alluded to it in the call. But even things like the medical industry and medical products have heat exchangers. If you look at what we're working with the team on now is things in, like, industrial HVAC potentially, which is not a place they played historically. So there's really broad opportunities for their products, and we're going to take a pretty broad view on how we go after the markets there. Ryan Sigdahl: Helpful. Light vehicle expectations moved a little lower in Q3. Good to hear you guys reiterate higher end of guidance for legacy Gentherm. But maybe talk through end markets specifically where there is opportunity where maybe there are changes in expectations from an industry standpoint? Jonathan Douyard: Yes. I think, Ryan, as you said, the industry moved down, the demand for our products remains strong. It actually remains strong in all regions. So we don't see any regional dependency on the demand for our products. I would say China continues to be strong for us. Third quarter was the first quarter in the history of the company that our domestic sales outpaced our global sales. So we officially sold more to Chinese OEMs in China than we did to the global customers over there, which has been part of our strategy. So we expect that to continue strong. We expect the automotive segment to continue to grow, and we see no weakness there from a demand standpoint. Ryan Sigdahl: Great. Congrats on closing the merger and kudos on having the buyback in place to execute. Operator: [Operator Instructions] Our next question is from Nathan Jones with Stifel. Nathan Jones: I'll do another couple. On the revenue synergy front, those are typically longer dated. It takes longer to get the awards. It takes longer to engineer the products, it takes longer for them to generate revenue. I know you talked about the one in India starting 4Q '27. When should we start to think about revenue synergy generation as a driver of growth? How do you see that progressing towards the longer-term goal? William Presley: Yes. I think, Nathan, you're right. It's going to be very hockey stick, right? It's going to have a very pronounced tail end. So I mean, I think appreciably, we'll start seeing some revenue flow through in '29. We'll start seeing green shoots of that in '28, but the bulk of that will hit in 2030. As you highlight, the win that we had in India really reinforced our thesis that having footprint and presence there would open up that market, and that's a market that we're excited about. And I would say there's a very aggressive hunger between the teams working together on product development. And you heard John allude to some of the things that they're working through that would put us together into markets that we're not in today separately. Nathan Jones: And the other one I wanted to ask about was the restructuring program, footprint consolidation stuff that you guys have been doing over the last year, 1.5 years. I think that was supposed to be complete by the end of 2026. Can you talk about -- is it on schedule and what the expected savings are in 2027? Jonathan Douyard: Yes. We talked -- as you look at North America, we've largely consolidated our facilities in Mexico at this point. So there's some cleanup in the fourth quarter. When you look at our European footprint consolidation, closing of the Czech Republic, that is on track to be completed this quarter as well. And so we should be relatively clean as we get into January of next year. We haven't put out a '27 number necessarily on that. We did talk about it as being a key driver for us as we look to get back to the 15% margin in the legacy Gentherm business. And so we should see a step function change as we get into '27. Operator: We have reached the end of the question-and-answer session. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Before you buy stock in Gentherm, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Gentherm wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $350,756!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,363,905!* Now, it's worth noting Stock Advisor's total average return is 922% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 22, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Gentherm. The Motley Fool has a disclosure policy. Gentherm (THRM) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Gentherm (THRM) came out with quarterly earnings of $0.33 per share, missing the Zacks Consensus Estimate of $0.66 per share. This compares to earnings of $0.73 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -50.00%. A quarter ago, it was expected that this maker of climate-controlled seats and other products would post earnings of $0.59 per share when it actually produced earnings of $0.75, delivering a surprise of +27.12%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Gentherm, which belongs to the Zacks Automotive - Original Equipment industry, posted revenues of $405.1 million for the quarter ended September 2026, surpassing the Zacks Consensus Estimate by 0.17%. This compares to year-ago revenues of $386.87 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Gentherm shares have lost about 21.8% since the beginning of the year versus the S&P 500's gain of 13.3%. While Gentherm has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Gentherm was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.63 on $402.9 million in revenues for the coming quarter and $2.89 on $1.62 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Automotive - Original Equipment is currently in the bottom 18% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, XPEL, Inc. (XPEL), has yet to report results for the quarter ended September 2026. The results are expected to be released on November 4. This company is expected to post quarterly earnings of $0.55 per share in its upcoming report, which represents a year-over-year change of +17%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. XPEL, Inc.'s revenues are expected to be $137.14 million, up 9.3% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Gentherm Inc (THRM) : Free Stock Analysis Report XPEL, Inc. (XPEL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - The October 1st closing of the Modine Performance Technologies acquisition marks a fundamental shift from an automotive-centric supplier to a global leader in thermal and precision flow management. - Management attributes the strategic pivot to a need for greater resilience, adding exposure to power generation, commercial vehicles, and heavy-duty equipment to balance traditional automotive cycles. - The combination creates a reasoning chain where integrated thermal solutions (combining heat exchangers, valves, and fans) allow the company to solve more complex customer problems than as standalone entities. - Operational performance in the core automotive business remains robust, with revenue outpacing light vehicle production by 12 percentage points, driven largely by Lumbar and Massage solutions. - Strategic focus on China has reached a milestone where sales to domestic Chinese OEMs exceeded sales to global OEMs for the first time, validating the local-market penetration strategy. - Current margin pressures are primarily driven by material cost inflation and freight, which management is addressing through disciplined commercial negotiations and internal efficiency improvements. - The company is adopting Modine's 80/20 operating philosophy across the legacy Gentherm business to drive prioritization and improve financial returns. - Management established a 2030 target of over $3.5 billion in revenue and $500 million in adjusted EBITDA, supported by $1 billion in adjusted unlevered free cash flow over the next four years. - The company remains confident in delivering $25 million in cost synergies and expects significant commercial opportunities from establishing a local footprint in India. - The Home and Office segment is projected to reach $100 million in revenue by 2028, supported by a new differentiated commercial model using furniture component distributors. - Guidance for 2026 assumes a fourth-quarter contribution from Modine of approximately $275 million in revenue and $28 million in adjusted EBITDA. - Revenue synergies are expected to follow a 'hockey stick' trajectory, with initial green shoots in 2028 and the bulk of the impact realized by 2030. - A special dividend of $63.5 million was paid in connection with the Modine transaction closing on October 1st. - The company has aggressively utilized its share repurchase authorization, buying approximately 2 million shares for $60 million since the start of October. - Macroeconomic and geopolitical developments continue to drive uncertainty, with specific headwinds noted from Mexican peso volatility and accelerated freight inflation. - The acquisition of Innovative Medical Equipment (IME) expands the medical portfolio into the Veterans Administration healthcare system and adds the ThermaZone thermal therapy device. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management noted that about one-third of the year-over-year margin drop is related to material inflation and recovery timing. - Unlike some competitors, Gentherm lacks formal mechanical recovery mechanisms, requiring individual negotiations that result in a lag, particularly for freight costs. - The company is prioritizing 'self-help' through plant efficiency and scrap reduction to build credibility during these customer negotiations. - The projected 10% EBITDA margin for Modine in Q4 is slightly lower than previous levels due to a mix of early-ownership conservatism and timing lags in contract escalators. - Management expects the Modine business to operate at higher margin levels going forward as price escalators catch up with inflation. - Growth in the power generation segment is being driven by diesel generation for 'after-meter' power in data centers. - Management sees potential to apply Modine's plate heat exchanger technology directly inside data centers and within industrial HVAC markets where they haven't historically competed. - Restructuring actions, including the closure of the Czech Republic facility and Mexico consolidations, are on track to be completed by the end of 2026. - These actions are expected to drive a 'step function change' in margins for the legacy Gentherm business starting in January 2027.

- Interested in Gentherm Inc? Here are five stocks we like better. - Third-quarter revenue rose 4.7% to $405 million, led by strong automotive climate and comfort sales and more than 25% growth in lumbar and massage products. Adjusted EBITDA margin declined to 11.1% due to material and freight inflation, foreign-exchange effects and a higher tax rate. - Gentherm secured $555 million in automotive awards during the quarter, pushing year-to-date awards above $1.6 billion and keeping the company on track for at least $2 billion for a fourth consecutive year. It also advanced growth initiatives in home and office, medical and India. - Following the Modine combination, Gentherm expects the combined company to reach more than $3.5 billion in revenue and $500 million in adjusted EBITDA by 2030. For 2026, it forecasts midpoint revenue of $1.875 billion, adjusted EBITDA of $220 million and approximately $110 million in free cash flow, including Modine's expected fourth-quarter contribution. - Modine's $4B AI Coup Freezes Out the Competition Gentherm (NASDAQ:THRM) reported third-quarter revenue growth and continued automotive commercial momentum while outlining its strategy following the October 1 closing of its combination with Modine Performance Technologies. President and Chief Executive Officer Bill Presley said the transaction broadens Gentherm's end-market exposure beyond automotive into power generation, commercial vehicles and heavy-duty equipment. The company aims to combine Modine's heat exchangers, valves and fans with Gentherm's thermal-management technologies to address applications including energy-storage systems. → Aurora Rejects Curaleaf's Higher Bid, But the Takeover Fight Isn't Over "We have emerged as a fundamentally different company," Presley said, describing a more diversified portfolio, additional secular growth drivers, margin-expansion opportunities and stronger cash generation. Gentherm reported third-quarter revenue of $405 million, up 4.7% from a year earlier, or 4.4% excluding foreign-exchange translation. Automotive climate and comfort solutions revenue rose 8.8%, or 8.5% excluding currency effects, outperforming light-vehicle production in the company's key markets by 12 percentage points. → Could Quantinuum's Breakthrough Make Its Sell-Off a Bargain? Chief Financial Officer Jon Douyard said China was a notable contributor, as sales to domestic Chinese original equipment manufacturers exceeded sales to global OEMs in the country for the first time. Lumbar and massage comfort solutions revenue grew more than 25% year over year, including initial revenue from the company's Puls.A Massage system. Third-quarter adjusted EBITDA was $45 million, or 11.1% of sales, compared with 12.7% of sales in the prior-year period. Gentherm said operating leverage was offset by net material-cost inflation, freight costs and foreign-exchange effects, particularly movements in the Mexican peso. - GAAP diluted loss per share was $0.08, including about $0.37 per share of merger and restructuring expenses. - Adjusted diluted earnings per share were $0.33, compared with $0.73 a year earlier. The company attributed the decline primarily to a higher tax rate associated with the timing and treatment of M&A expenses. - Year-to-date adjusted diluted EPS was $1.90, compared with $1.78 in the prior-year period. - Adjusted free cash flow was about $59 million, compared with $72 million a year earlier. - Gentherm ended the quarter with net leverage of 0.4 turns and liquidity of $494 million. → IonQ's Bold Expansion Could Leave Shareholders Paying the Price Douyard said roughly one-third of the year-over-year gross-margin decline was tied to material inflation that the company had not yet recovered from customers. Gentherm does not have formal cost-recovery mechanisms with its customers, meaning price adjustments are negotiated individually, he said. Freight inflation accelerated during the third quarter and can take longer to address commercially. The company secured $555 million in automotive new-business awards during the quarter, bringing its year-to-date total above $1.6 billion. Gentherm said it remains on track to achieve at least $2 billion in awards for the fourth consecutive year. Presley said industry light-vehicle production declined year over year, but demand for Gentherm products remained relatively stable. The company said it continued to grow above market across regions and product categories. In India, Modine's existing local presence helped Gentherm win an air-moving-device program with a major Indian light-vehicle manufacturer. The award represents about $25 million in lifetime revenue, with shipments expected to begin in the fourth quarter of 2027. Presley said the award supports the company's view that a local footprint can expand commercial access in India. Gentherm also said it is pursuing non-automotive growth. In home and office, the company signed an agreement with a furniture-component distributor intended to broaden access to customers through a different commercial model. The company said it has visibility to $30 million of annualized home-and-office revenue by 2028 based on OEM awards, with a pipeline supporting its $100 million target for that business. In medical, Gentherm began initial third-quarter sales of its ThermAffyx Patient Safety System following FDA clearance. The company also completed its acquisition of Innovative Medical Equipment, which provides the ThermaZone thermal therapy device and expands Gentherm's access to the Veterans Administration Healthcare System. Gentherm said the combination with Modine creates a path toward more than $3.5 billion in revenue and over $500 million in adjusted EBITDA by 2030, along with more than $1 billion in adjusted unlevered free cash flow over the next four years. The company reaffirmed its target of $25 million in cost synergies. On a trailing-12-month pro forma basis through June 30, 2026, the combined company had revenue of $2.7 billion and adjusted EBITDA of $346 million, an increase of $40 million from the prior pro forma period, according to Gentherm. For 2026, the company updated its guidance to include an expected fourth-quarter contribution from Modine of about $275 million in revenue, $28 million in adjusted EBITDA and $15 million to $20 million in free cash flow. Gentherm now expects full-year midpoint revenue of $1.875 billion, adjusted EBITDA of $220 million and free cash flow of about $110 million, assuming $55 million in capital expenditures. Management said legacy Gentherm revenue is expected to grow at a mid- to high-single-digit rate for the year, toward the higher end of its prior range, while EBITDA is expected near the midpoint due to increased inflation. The company expects fourth-quarter margins to improve sequentially from the third quarter. Looking ahead, Douyard said Gentherm remains confident in its previously stated $1.7 billion 2027 revenue outlook for the legacy business. He cited automotive product launches, continued strength in lumbar and massage products, medical activity, potential power-generation growth at Modine and early signs of a commercial-vehicle recovery. Gentherm also repurchased approximately 2 million shares for $60 million after the Modine transaction closed. With $340 million remaining under its authorization, Douyard said the company expects to remain active in the fourth quarter, subject to share-price conditions. Gentherm Incorporated (NASDAQ: THRM) develops and manufactures thermal management and comfort technologies for the automotive and medical industries. The company's automotive products include heated and cooled seating systems, climate-controlled seats, heated steering wheels, seat ventilation, and other technologies designed to improve passenger comfort and manage temperature. Gentherm also provides battery thermal management systems and related technologies that support the performance, efficiency, and safety of electrified vehicles. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "What Gentherm (THRM) Said on Its Q3 Earnings Call" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

- Modine Manufacturing has proposed amending its Articles of Incorporation to change its legal name to Modexus Solutions Inc. following the completed separation of its Performance Technologies business into a Reverse Morris Trust combination with Gentherm, with the name change contingent on shareholder approval and regulatory filing. - The upcoming earnings release, with expected EPS of $1.47 on revenue of $964.62 million and a record of beating recent consensus estimates, puts Modine Manufacturing's post spin climate and data center focus under closer scrutiny as investors assess how effectively the remaining operations are performing on their own. - We will now look at how Modine Manufacturing's expected earnings strength could influence the investment narrative around its climate pivot. Seize Modine Manufacturing's climate pivot as a jumping-off point to review other potential breakouts with resilient fundamentals in our hand picked 21 high quality undiscovered gems. To own Modine Manufacturing, you need to believe the slimmed down climate and data center business can turn strong demand into healthier, more stable earnings despite recent volatility. The key near term swing factor is execution on high growth data center orders while managing the supply chain issues that already pressured gross margin and forced capacity resequencing. The recent name change proposal to Modexus Solutions and completion of the Performance Technologies separation do not alter that operational test in a material way. They mainly formalize the climate focused profile. The biggest near term risk stays the same: weaker conversion and margins if component constraints or lower margin mix in HVAC persist. The most relevant recent announcement for this story is the upcoming earnings release, with Wall Street expecting EPS of $1.47 and revenue of US$964.62m for the September 2026 quarter. Those numbers matter because they show how Modine Manufacturing is performing as a cleaner climate and data center platform after the Performance Technologies spin. Investors are watching whether margins begin to rebuild after the supply chain headwind that cut gross margin by 340 basis points in Q1 fiscal 2027. The earnings call on November 4, 2026, should give more detail on data center order quality, Commercial HVAC mix, and how management is pacing capacity against that large multi year cooling backlog. Modine Manufacturing's current analyst story rests on revenue reaching US$4.6b and earnings of US$959.3m by 2029, based on forecasts that assume 10.5% yearly top line growth and an earnings increase of about US$815m from US$144.2m today. Uncover why Modine Manufacturing's fair value signals a 102% potential upside to its current price that could close more quickly than many investors expect. One alternate view focuses less on Modine Manufacturing's climate pivot upside and more on concentration risk. The most cautious analysts were assuming revenue of about US$6.9b and earnings near US$1.0b by 2029, yet still used a lower 17.4x P/E. The Modexus Solutions renaming and spin completion could push those expectations in either direction. Treat this as a live debate and explore both sides. Explore 2 other Modine Manufacturing fair value estimates, including one that suggests it could be worth just $299.11! Don't just follow the ticker; dig into the data and build a conviction that's truly your own. - A great starting point for your Modine Manufacturing research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision. - See our latest analysis for Modine Manufacturing. The report includes a comprehensive fundamental analysis summarized in a single visual, the Snowflake, making it easy to evaluate Modine Manufacturing's overall financial health at a glance. Once you have a view on Modine Manufacturing, a smart next step is to widen the lens and compare it with other opportunities that fit different risk and return profiles using the Simply Wall St Screener. - If you want potential mispricing with quality behind it, start by reviewing a 33 high quality undervalued stocks that combines solid cash generation with cautious market expectations. - For investors who care most about resilience and capital preservation, filter for a 31 resilient stocks with low risk scores that scores well on volatility and balance sheet strength. - If income is your focus, zero in on a 7 dividend fortresses that pairs higher yields with more robust cash flow support. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include MOD. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Delivered Revenue of $405 Million, up 4.4% (ex-FX) Year-over-Year 2026 Full Year Guidance Updated to Include Modine Performance Technologies Repurchased $60 Million of Common Stock in October NOVI, Mich., Oct. 22, 2026 (GLOBE NEWSWIRE) -- Gentherm (NASDAQ:THRM), a global leader of innovative thermal and precision flow management technologies, today announced its financial results for the third quarter ended September 30, 2026. "Our third quarter results were in line with expectations as we made continued progress on growth and operational excellence initiatives, while completing the Modine Performance Technologies combination on October 1," said Bill Presley, the Company's President and CEO. "With the completion of the transaction, we are fundamentally a different company. We are entering an exciting new phase for Gentherm with industry leading platforms and I am increasingly confident in the significant value creation opportunities ahead." Third Quarter Highlights - Secured Automotive New Business Awards totaling $555 million in the quarter. - Expanded portfolio of differentiated technologies with launch of ThermAffyx™ Patient Safety System and Puls.A™. - Product revenues of $405.1 million increased 4.7% from $386.9 million in the prior year. Excluding the impact of foreign currency translation, product revenues increased 4.4%. - Automotive Climate and Comfort Solutions revenue increased 8.8% year over year, or 8.5% excluding the impact of foreign currency translation, outperforming S&P Global's mid-October light vehicle production report in our relevant markets by 12 percentage points. - Gross margin was 23.3%, compared to 24.6% in the prior year. The decrease was primarily driven by foreign exchange, higher net material costs and inflation, partially offset by strong operating leverage. - Net (loss) income was $(2.6) million, compared to $14.9 million in the prior year. - Adjusted EBITDA was $45.0 million, or 11.1% of revenue, compared to $49.0 million, or 12.7% of revenue, in the prior year. - GAAP diluted (loss) earnings per share was $(0.08), compared to $0.49 in the prior year. - Adjusted diluted earnings per share was $0.33, compared to $0.73 in the prior year. - Cash flow from operations was $36.0 million, compared to $87.8 million in the prior year. - Adjusted free cash flow was $59.5 million, compared to $72.3 million in the prior year. The Company provides various non-GAAP financial measures in this release. See "Use of Non-GAAP Measures" below for additional information, including definitions, usefulness for investors and limitations, as well as reconciliations below to the most directly comparable GAAP financial measures. Guidance The Company updated its full year 2026 guidance to reflect the expected contribution from Modine Performance Technologies in the fourth quarter¹. | As of July 2026 | As of October 2026 Product Revenues | $1.55B – $1.65B | $1.825B – $1.925B Adjusted EBITDA | $185M – $200M | $210M – $230M Adjusted Free Cash Flow | $85M – $100M | $100M – $120M | | ¹2026 guidance based on tariffs currently in effect as of today, our current forecast of customer demand and expectations of near-term conditions, light vehicle production in our relevant markets decreasing at a low single digit rate for full year 2026 versus 2025, and a EUR to USD exchange rate of $1.15/Euro. Capital Allocation Update - On July 1, acquired Innovative Medical Equipment, LLC, provider of the ThermaZone® thermal therapy device, expanding thermal management product portfolio and providing strong cross-selling opportunities by leveraging complementary customer bases across additional healthcare channels. - On October 1, completed combination with Modine's Performance Technologies business. - On October 7, returned $63.5 million to shareholders through a special cash dividend of $2.07 per share as part of the Modine transaction. - In July, the Board of Directors authorized a new stock repurchase program of up to $400 million of the Company's issued and outstanding common stock. Following the closing of the transaction with Modine in October, the Company repurchased $60 million of common stock. As of today, the program has approximately $340 million of stock repurchase authorization remaining. - Third quarter ended with net leverage of ~0.4x and liquidity of $494.2 million. "As expected, following the combination with Modine Performance Technologies, we remain in a strong financial position and continue to have confidence in the ability to generate significant cash moving forward," said Jon Douyard, the Company's Chief Financial Officer. "We believe the current share price does not reflect the value of the Company. We previously communicated our intention to repurchase shares following the Modine transaction. Since closing, we have repurchased $60 million and we remain committed to returning capital to shareholders, particularly in times of value dislocation." Conference Call As previously announced, Gentherm will conduct a conference call today at 8:00 am Eastern Time to review these results. The dial-in number for the call is 1-877-407-4018 (callers in the U.S.) or +1-201-689-8471 (callers outside the U.S.). The passcode for the live call is 13763267. A live webcast and one-year archived replay of the call, as well as a copy of the supplemental materials that will be used during the conference call, can be accessed on the Events page of the Investor section of Gentherm's website at www.gentherm.com. A telephonic replay will be available approximately two hours after the call until 11:59 pm Eastern Time on November 5, 2026. The replay can be accessed by dialing 1-844-512-2921 (callers in the U.S.), or +1-412-317-6671 (callers outside the U.S.). The passcode for the replay is 13763267. Investor Contact Gregory Blanchette [email protected] 248.308.1702 Media Contact Haley Baur [email protected] 248.289.9711 About Gentherm Gentherm (NASDAQ: THRM) is a global leader of innovative thermal and precision flow management technologies. The Company brings together industry leading products from Gentherm's climate, comfort and valves businesses serving the light vehicle, medical, and home and office markets, with Modine's highly engineered, mission-critical thermal solutions serving commercial vehicle, off-highway equipment, light vehicle and power generation markets. Gentherm has more than 18,000 employees in facilities across 17 countries. For more information, go to www.gentherm.com. Forward-Looking Statements Except for historical information contained herein, statements in this release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent Gentherm Incorporated's goals, beliefs, plans and expectations about its prospects for the future and other future events. The forward-looking statements included in this release are made as of the date hereof or as of the date specified herein and are based on management's reasonable expectations and beliefs. In making these statements we rely on assumptions and analysis based on our experience and perception of historical trends, current conditions and expected future developments, third party information and projections from sources that management believes to be reputable, as well as other factors we consider appropriate under the circumstances. Such statements are subject to a number of important assumptions, significant risks and uncertainties (some of which are beyond our control) and other factors that may cause actual results or performance to differ materially from that described in or indicated by the forward-looking statements, including but not limited to: - macroeconomic, geopolitical and similar global factors in the cyclical Automotive industry; - the impact of, and our ability to mitigate the effects of, global economic and trade policies, including increases in duties, tariffs and taxation on the import or export of our products related to U.S. trade disputes; - increasing U.S. and global competition, including with non-traditional entrants; - our ability to effectively manage new product launches and research and development, and the market acceptance of such products and technologies; - the evolution and challenges of the automotive industry towards electric vehicles, autonomous vehicles and mobility on demand services, and related consumer behaviors and preferences; - our ability to convert automotive new business awards into product revenues; - the constraints in the supply chain environment, and inflationary and other cost pressures; - the production levels of our major customers and OEMs in our relevant markets and sudden fluctuations in such production levels; - our business in China, which is subject to unique operational, competitive, geopolitical, regulatory and economic risks; - the impact of our global operations, including our cost structure and global manufacturing footprint, operations within Ukraine, and foreign currency and exchange risk; - our product quality and safety and impact of product safety recalls and alleged defects in products; - our ability to attract and retain highly skilled employees and wage inflation; - a tightening labor market, labor shortages or work stoppages impacting us, our customers or our suppliers, such as recent labor strikes among certain OEMs and suppliers; - our achievement of product cost reductions to offset customer-imposed price reductions or other pricing pressures; - our ability to execute efforts to optimize our global supply chain and manufacturing footprint, including opening new facilities and transferring production; - our ability to source, consummate, integrate and achieve planned benefits of strategic acquisitions, investments and, as applicable, exits; - any security breaches and other disruptions to our information technology networks and systems, as well as privacy, data security and data protection risks, including risks associated with use of artificial intelligence capabilities in our business operations; - any loss or insolvency of our key customers and OEMs, or key suppliers; - our ability to project future sales volume based on third-party information, based on which we manage our business; - the protection of our intellectual property in certain jurisdictions; - our compliance with global anti-corruption laws and regulations; - legal and regulatory proceedings and claims involving us or one of our major customers; - the extensive regulation of our patient temperature management business; - risks associated with our manufacturing processes; - the effects of climate change and regulatory and stakeholder-imposed requirements to address climate change and other sustainability issues; - our product quality and safety; - our borrowing availability under our revolving credit facility, as well as the ability to access the capital markets, to support our planned growth; and - our indebtedness and compliance with our debt covenants. Furthermore, important factors related to the combination with Modine Performance Technologies (the "Transaction") could cause actual results to differ materially from those currently anticipated, including: - uncertainty of the expected financial performance of the combined company following completion of the Transaction; - failure to realize the anticipated benefits of the Transaction; - the ability of the combined company to implement its business strategy; - difficulties and delays in the combined company achieving revenue and cost synergies; - inability of the combined company to retain and hire key personnel; - evolving legal, regulatory and tax regimes; - changes in general economic and/or industry specific conditions or any volatility resulting from the imposition of and changing policies, including those policies with respect to tariffs; and - actions by third parties, including government agencies. The foregoing risks should be read in conjunction with the Company's reports filed with or furnished to the Securities and Exchange Commission (the "SEC"), including "Risk Factors," in its most recent Annual Report on Form 10-K and subsequent SEC filings, for a discussion of these and other risks and uncertainties. In addition, with reasonable frequency, we have entered into business combinations, acquisitions, divestitures, strategic investments and other significant transactions. Such forward-looking statements do not include the potential impact of any such transactions that may be completed after the date hereof, each of which may present material risks to the Company's future business and financial results. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. Except as required by law, the Company expressly disclaims any obligation or undertaking to update any forward-looking statements to reflect any change in its strategies or expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Use of Non-GAAP Financial Measures In addition to the results reported in accordance with GAAP throughout this release, the Company has provided here or elsewhere information regarding: adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"); Adjusted EBITDA margin; Adjusted net income; Adjusted earnings per share ("Adjusted earnings per share" or "Adjusted EPS"); Quarter-to-date Operating Cash Flow; Free Cash Flow; Adjusted Free Cash Flow; Adjusted Free Cash Flow Conversion rate; net capital expenditures ("net CAPEX"); Net Debt; Liquidity; Net Leverage Ratio ("Net Leverage"); revenue, segment revenue and product revenue excluding foreign currency translation and other specified gains and losses; Adjusted operating expenses; Pro Forma Revenue; Pro Forma Adjusted EBITDA; and Pro Forma Adjusted EBITDA Margin, each a non-GAAP financial measure. The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, deferred financing cost amortization, non-cash stock based compensation expenses, restructuring expenses, net, unrealized currency gain or loss and other gains and losses not reflective of the Company's ongoing operations and related tax effects. The Company defines Adjusted EBITDA margin as Adjusted EBITDA divided by product revenues. The Company defines Adjusted net income as earnings adjusted by restructuring expenses, net, unrealized currency gain or loss and other gains and losses not reflective of the Company's ongoing operations and related tax effects. The Company defines Adjusted EPS as Adjusted net income divided by the Company's weighted average shares outstanding. The Company defines Quarter-to-date Operating Cash Flow as Net cash provided by/(used in) operating activities for the current period, less that of the immediately preceding period. The Company defines Free Cash Flow as Net cash provided by/(used in) operating activities plus Proceeds from the sale of property and equipment less Purchases of property and equipment. The Company defines net CAPEX as Purchases of property and equipment less Proceeds from the sale of property and equipment. The Company defines Adjusted Free Cash Flow as Net cash provided by/(used in) operating activities, excluding cash restructuring expenses, net and other gains and losses not reflective of the Company's ongoing operations, less net CAPEX. The Company defines Adjusted Free Cash Flow Conversion rate as Adjusted Free Cash Flow divided by Adjusted EBITDA. The Company defines Net Debt as the principal amount of all Consolidated Funded Indebtedness (as defined in the Credit Agreement) less cash and cash equivalents. The Company defines Liquidity as the sum of cash and cash equivalents and availability under the Company's revolving line of credit. The Company defines Net Leverage as Net Debt divided by Adjusted EBITDA for the trailing four fiscal quarters. The Company defines revenue, segment revenue or product revenue excluding foreign currency translation and other specified gains and losses as such revenue, excluding the estimated effects of foreign currency exchange on revenue by translating actual revenue using the prior period foreign currency exchange rates and excluding the other items specified. The Company defines Adjusted operating expenses as operating expenses excluding related non-cash stock based compensation, restructuring expenses, net, and other gains and losses not reflective of the Company's ongoing operations. The Company defines Pro Forma Revenue as Gentherm's product revenues for the trailing four fiscal quarters (from the date specified), plus Modine Performance Technologies' Net sales for the trailing four fiscal quarters (from the date specified), as reported by Modine Manufacturing Company, adjusted to reflect the latest business structure. The Company defines Pro Forma Adjusted EBITDA as Gentherm's Adjusted EBITDA for the trailing four fiscal quarters (from the date specified), plus Modine Performance Technologies' Adjusted EBITDA for the trailing four fiscal quarters (from the date specified), as reported by Modine Manufacturing Company, adjusted to reflect the latest business structure and go-forward operational alignment. The Company defines Pro Forma Adjusted EBITDA Margin as Pro Forma Adjusted EBITDA divided by Pro Forma Revenue. The Company's reconciliations are included in this release or can be found in the supplemental materials for this reporting period on the Company's website. In evaluating its business, the Company considers and uses Quarter-to-date Operating Cash Flow, Free Cash Flow, Adjusted Free Cash Flow, Adjusted Free Cash Flow Conversion rate, Net Debt, Net Leverage and Liquidity as supplemental measures of its liquidity and the other non-GAAP financial measures as supplemental measures of its operating performance. Management provides such non-GAAP financial measures so that investors will have the same financial information that management uses with the belief that it will assist investors in properly assessing the Company's performance on a period-over-period basis by excluding matters not indicative of the Company's ongoing operating or liquidity results and therefore enhance the comparability of the Company's results and provide additional information for analyzing trends in the business. In evaluating our non-GAAP financial measures, you should be aware that in the future we may incur revenues, expenses, and cash and non-cash obligations that are the same as or similar to some of the adjustments in our presentation of non-GAAP financial measures. Our presentation of non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There also can be no assurance that we will not modify the presentation of our non-GAAP financial measures in the future, and any such modification may be material. Other companies in our industry may define and calculate these non-GAAP financial measures differently than we do and those calculations may not be comparable to our metrics. These non-GAAP measures have limitations as analytical tools, and when assessing the Company's operating performance or liquidity, investors should not consider these non-GAAP measures in isolation, or as a substitute for net income/(loss), revenue or other consolidated income/(loss) statement or cash flow statement data prepared in accordance with GAAP. Non-GAAP measures referenced in this release and other public communications may include estimates of future Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Free Cash Flow, Adjusted Free Cash Flow Conversion rate, Adjusted EPS, Pro Forma Revenue, Pro Forma Adjusted EBITDA and Pro Forma Adjusted EBITDA Margin. The Company has not reconciled the non-GAAP forward-looking guidance included in this release to the most directly comparable GAAP measures because this cannot be done without unreasonable effort due to the variability and low visibility with respect to taxes and non-recurring items, which are potential adjustments to future earnings. We expect the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results. GENTHERM INCORPORATED CONSOLIDATED CONDENSED STATEMENTS OF (LOSS) INCOME (Dollars in thousands, except per share data) (Unaudited) | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | | 2026 | | | 2025 | | | 2026 | | | 2025 | Product revenues | | $ | 405,102 | | | $ | 386,870 | | | $ | 1,214,974 | | | $ | 1,115,814 | Cost of sales | | | 310,798 | | | | 291,722 | | | | 927,016 | | | | 844,439 | Gross margin | | | 94,304 | | | | 95,148 | | | | 287,958 | | | | 271,375 | Operating expenses: | | | | | | | | | | | | Net research and development expenses | | | 23,465 | | | | 24,429 | | | | 71,480 | | | | 71,203 | Selling, general and administrative expenses | | | 51,638 | | | | 42,875 | | | | 162,648 | | | | 122,440 | Restructuring expenses, net | | | 4,838 | | | | 3,986 | | | | 17,493 | | | | 10,608 | Loss on sale of land and building, net | | | — | | | | — | | | | — | | | | 2,196 | Total operating expenses | | | 79,941 | | | | 71,290 | | | | 251,621 | | | | 206,447 | Operating income | | | 14,363 | | | | 23,858 | | | | 36,337 | | | | 64,928 | Interest expense, net | | | (3,832 | ) | | | (3,313 | ) | | | (9,755 | ) | | | (10,911 | ) Foreign currency gain (loss) | | | 193 | | | | 339 | | | | (1,104 | ) | | | (27,391 | ) Other income (loss) | | | 116 | | | | — | | | | 300 | | | | (1,124 | ) Earnings before income tax | | | 10,840 | | | | 20,884 | | | | 25,778 | | | | 25,502 | Income tax expense | | | 13,430 | | | | 5,935 | | | | 19,730 | | | | 10,204 | Net (loss) income | | $ | (2,590 | ) | | $ | 14,949 | | | $ | 6,048 | | | $ | 15,298 | Basic (loss) earnings per share | | $ | (0.08 | ) | | $ | 0.49 | | | $ | 0.20 | | | $ | 0.50 | Diluted (loss) earnings per share | | $ | (0.08 | ) | | $ | 0.49 | | | $ | 0.19 | | | $ | 0.50 | Weighted average number of shares – basic | | | 30,672 | | | | 30,480 | | | | 30,613 | | | | 30,619 | Weighted average number of shares – diluted | | | 30,672 | | | | 30,748 | | | | 31,078 | | | | 30,802 | GENTHERM INCORPORATED REVENUE BY PRODUCT CATEGORY AND RECONCILIATION OF FOREIGN CURRENCY TRANSLATION IMPACT (Dollars in thousands) (Unaudited) | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | | 2026 | | | 2025 | | | % Change | | | 2026 | | | 2025 | | | % Change | Climate Control Seats | | $ | 215,603 | | | $ | 201,275 | | | | 7.1 | % | | $ | 639,656 | | | $ | 592,448 | | | | 8.0 | % Lumbar and Massage Comfort Solutions | | | 70,923 | | | | 55,799 | | | | 27.1 | % | | | 205,772 | | | | 153,642 | | | | 33.9 | % Climate Control Interiors | | | 51,939 | | | | 52,638 | | | | (1.3 | )% | | | 155,241 | | | | 147,564 | | | | 5.2 | % Climate and Comfort Electronics | | | 7,925 | | | | 8,599 | | | | (7.8 | )% | | | 25,831 | | | | 22,220 | | | | 16.3 | % Automotive Climate and Comfort Solutions | | | 346,390 | | | | 318,311 | | | | 8.8 | % | | | 1,026,500 | | | | 915,874 | | | | 12.1 | % Valve Systems | | | 21,596 | | | | 24,487 | | | | (11.8 | )% | | | 73,271 | | | | 72,803 | | | | 0.6 | % Other Automotive | | | 22,611 | | | | 31,413 | | | | (28.0 | )% | | | 77,807 | | | | 91,260 | | | | (14.7 | )% Subtotal Automotive segment | | | 390,597 | | | | 374,211 | | | | 4.4 | % | | | 1,177,578 | | | | 1,079,937 | | | | 9.0 | % Medical segment | | | 14,505 | | | | 12,659 | | | | 14.6 | % | | | 37,396 | | | | 35,877 | | | | 4.2 | % Total Company | | $ | 405,102 | | | $ | 386,870 | | | | 4.7 | % | | $ | 1,214,974 | | | $ | 1,115,814 | | | | 8.9 | % | | | | | | | | | | | | | | | | | | Foreign currency translation impact(a) | | | 1,025 | | | | — | | | | | | | 20,617 | | | | — | | | | Total Company, excluding foreign currency translation impact | | $ | 404,077 | | | $ | 386,870 | | | | 4.4 | % | | $ | 1,194,357 | | | $ | 1,115,814 | | | | 7.0 | % | | | | | | | | | | | | | | | | | | (a) Foreign currency translation impacts for the Automotive segment and Medical segment were $967 and $58 respectively, for the three months ended September 30, 2026. Foreign currency translation impacts for Automotive Climate and Comfort Solutions was $1,102 for the three months ended September 30, 2026. Foreign currency translation impacts for the Automotive segment and Medical segment were $20,107 and $510 respectively, for the nine months ended September 30, 2026. Foreign currency translation impacts for Automotive Climate and Comfort Solutions was $16,320 for the nine months ended September 30, 2026. | GENTHERM INCORPORATED RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN (Dollars in thousands) (Unaudited) | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | | 2026 | | | 2025 | | | 2026 | | | 2025 | Net (loss) income | | $ | (2,590 | ) | | $ | 14,949 | | | $ | 6,048 | | | $ | 15,298 | Add back: | | | | | | | | | | | | Depreciation and amortization | | | 14,704 | | | | 13,274 | | | | 43,087 | | | | 39,120 | Income tax expense | | | 13,430 | | | | 5,935 | | | | 19,730 | | | | 10,204 | Interest expense, net | | | 3,832 | | | | 3,313 | | | | 9,755 | | | | 10,911 | Adjustments: | | | | | | | | | | | | Non-cash stock based compensation | | | 2,925 | | | | 3,980 | | | | 10,371 | | | | 10,569 | Restructuring expenses, net | | | 4,838 | | | | 3,986 | | | | 17,493 | | | | 10,608 | Unrealized currency loss | | | 681 | | | | 1,865 | | | | 855 | | | | 30,349 | Merger and acquisition expenses | | | 6,528 | | | | — | | | | 34,187 | | | | — | Leadership transition expenses | | | 328 | | | | 777 | | | | 1,738 | | | | 2,935 | Loss on sale of land and building, net | | | — | | | | — | | | | — | | | | 2,196 | Other(a) | | | 328 | | | | 928 | | | | (130 | ) | | | 2,055 | Adjusted EBITDA | | $ | 45,004 | | | $ | 49,007 | | | $ | 143,134 | | | $ | 134,245 | | | | | | | | | | | | | Product revenues | | $ | 405,102 | | | $ | 386,870 | | | $ | 1,214,974 | | | $ | 1,115,814 | Net (loss) income margin | | | (0.6 | )% | | | 3.9 | % | | | 0.5 | % | | | 1.4 | % Adjusted EBITDA margin | | | 11.1 | % | | | 12.7 | % | | | 11.8 | % | | | 12.0 | % | | | | | | | | | | | | (a) Includes a $1,294 decrease in fair value of an equity investment for the nine months ended September 30, 2025. | GENTHERM INCORPORATED RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE (Dollars in thousands, except per share data) (Unaudited) | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | | 2026 | | | 2025 | | | 2026 | | | 2025 | Net (loss) income | | $ | (2,590 | ) | | $ | 14,949 | | | $ | 6,048 | | | $ | 15,298 | Amortization of acquisition related intangibles | | | 2,427 | | | | 1,676 | | | | 5,802 | | | | 4,873 | Restructuring expenses, net | | | 4,838 | | | | 3,986 | | | | 17,493 | | | | 10,608 | Unrealized currency loss | | | 681 | | | | 1,865 | | | | 855 | | | | 30,349 | Merger and acquisition expenses | | | 6,528 | | | | — | | | | 34,187 | | | | — | Leadership transition expenses | | | 328 | | | | 777 | | | | 1,738 | | | | 2,935 | Loss on sale of land and building, net | | | — | | | | — | | | | — | | | | 2,196 | Other | | | (116 | ) | | | 928 | | | | (574 | ) | | | 2,055 | Tax effect of above | | | (2,089 | ) | | | (1,582 | ) | | | (6,550 | ) | | | (13,422 | ) Adjusted net income | | $ | 10,007 | | | $ | 22,599 | | | $ | 58,999 | | | $ | 54,892 | | | | | | | | | | | | | Weighted average shares outstanding: | | | | | | | | | | | | Basic | | | 30,672 | | | | 30,480 | | | | 30,613 | | | | 30,619 | Diluted | | | 30,672 | | | | 30,748 | | | | 31,078 | | | | 30,802 | | | | | | | | | | | | | (Loss) Earnings per share, as reported: | | | | | | | | | | | | Basic | | $ | (0.08 | ) | | $ | 0.49 | | | $ | 0.20 | | | $ | 0.50 | Diluted | | $ | (0.08 | ) | | $ | 0.49 | | | $ | 0.19 | | | $ | 0.50 | | | | | | | | | | | | | Adjusted earnings per share: | | | | | | | | | | | | Basic | | $ | 0.33 | | | $ | 0.74 | | | $ | 1.93 | | | $ | 1.79 | Diluted | | $ | 0.33 | | | $ | 0.73 | | | $ | 1.90 | | | $ | 1.78 | GENTHERM INCORPORATED CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands, except share data) (Unaudited) | | September 30, 2026 | | | December 31, 2025 | ASSETS | | | | | | Current Assets: | | | | | | Cash and cash equivalents | | $ | 252,098 | | | $ | 160,833 | Accounts receivable, net | | | 326,217 | | | | 281,083 | Inventory: | | | | | | Raw materials | | | 127,403 | | | | 128,314 | Work in process | | | 44,437 | | | | 35,429 | Finished goods | | | 91,647 | | | | 88,959 | Inventory, net | | | 263,487 | | | | 252,702 | Other current assets | | | 85,678 | | | | 82,332 | Total current assets | | | 927,480 | | | | 776,950 | Property and equipment, net | | | 263,561 | | | | 270,614 | Goodwill | | | 122,258 | | | | 108,918 | Other intangible assets, net | | | 63,858 | | | | 52,796 | Operating lease right-of-use assets | | | 48,674 | | | | 56,524 | Deferred income tax assets | | | 93,853 | | | | 93,552 | Other non-current assets | | | 42,615 | | | | 37,075 | Total assets | | $ | 1,562,299 | | | $ | 1,396,429 | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | Current Liabilities: | | | | | | Accounts payable | | $ | 298,183 | | | $ | 260,487 | Current lease liabilities | | | 7,846 | | | | 9,646 | Current maturities of long-term debt | | | 912 | | | | 73 | Other current liabilities | | | 144,999 | | | | 134,104 | Total current liabilities | | | 451,940 | | | | 404,310 | Long-term debt, less current maturities | | | 319,531 | | | | 189,000 | Non-current lease liabilities | | | 42,469 | | | | 48,105 | Pension benefit obligation | | | 3,281 | | | | 3,748 | Other non-current liabilities | | | 23,760 | | | | 30,943 | Total liabilities | | $ | 840,981 | | | $ | 676,106 | Shareholders' Equity: | | | | | | Common Stock: | | | | | | No par value; 110,000,000 shares authorized 30,710,902 and 30,526,231 issued and outstanding at September 30, 2026 and December 31, 2025, respectively | | | 13,442 | | | | 5,611 | Paid-in capital | | | 1,590 | | | | 1,590 | Accumulated other comprehensive loss | | | (13,848 | ) | | | (964 | ) Accumulated earnings | | | 720,134 | | | | 714,086 | Total shareholders' equity | | | 721,318 | | | | 720,323 | Total liabilities and shareholders' equity | | $ | 1,562,299 | | | $ | 1,396,429 | GENTHERM INCORPORATED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) | | Nine Months Ended September 30, | | | 2026 | | | 2025 | Operating Activities: | | | | | | Net income | | $ | 6,048 | | | $ | 15,298 | Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | Depreciation and amortization | | | 44,201 | | | | 39,478 | Deferred income taxes | | | (9,548 | ) | | | (12,836 | ) Stock based compensation | | | 10,371 | | | | 10,573 | Loss on disposition of property and equipment | | | 121 | | | | 2,671 | Provisions for inventory | | | 4,086 | | | | 5,234 | Other non-cash items, including unrealized foreign currency (gain) loss | | | (1,018 | ) | | | 30,957 | Changes in assets and liabilities: | | | | | | Accounts receivable, net | | | (43,474 | ) | | | (20,543 | ) Inventory | | | (22,133 | ) | | | (20,136 | ) Other assets | | | (1,403 | ) | | | (22,325 | ) Accounts payable | | | 43,305 | | | | 33,514 | Other liabilities | | | 5,451 | | | | 25,935 | Net cash provided by operating activities | | | 36,007 | | | | 87,820 | Investing Activities: | | | | | | Purchases of property and equipment | | | (22,558 | ) | | | (33,378 | ) Proceeds from the sale of property and equipment | | | 83 | | | | 3,770 | Acquisition of business, net of cash acquired | | | (34,152 | ) | | | — | Cost of technology investments | | | (121 | ) | | | (915 | ) Proceeds from deferred purchase price of factored receivables | | | — | | | | 744 | Net cash used in investing activities | | | (56,748 | ) | | | (29,779 | ) Financing Activities: | | | — | | | | — | Borrowings on debt | | | 204,000 | | | | 72,000 | Repayments of debt | | | (85,887 | ) | | | (103,112 | ) Cash paid for financing new loans | | | (2,761 | ) | | | — | Taxes withheld and paid on employees' stock based compensation | | | (2,540 | ) | | | (1,306 | ) Cash paid for the repurchase of Common Stock | | | — | | | | (10,015 | ) Net cash provided by (used in) financing activities | | | 112,812 | | | | (42,433 | ) Foreign currency effect | | | (806 | ) | | | 4,508 | Net increase in cash and cash equivalents | | | 91,265 | | | | 20,116 | Cash and cash equivalents at beginning of period | | | 160,833 | | | | 134,134 | Cash and cash equivalents at end of period | | $ | 252,098 | | | $ | 154,250 | GENTHERM INCORPORATED OTHER NON-GAAP RECONCILIATIONS (Dollars in thousands) (Unaudited) | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | | 2026 | | | 2025 | | | 2026 | | | 2025 | Total operating expenses | | $ | 79,941 | | | $ | 71,290 | | | $ | 251,621 | | | $ | 206,447 | Restructuring expense, net | | | (4,838 | ) | | | (3,986 | ) | | | (17,493 | ) | | | (10,608 | ) Non-cash stock based compensation | | | (2,889 | ) | | | (3,979 | ) | | | (9,843 | ) | | | (10,211 | ) Merger and acquisition expenses | | | (6,528 | ) | | | — | | | | (34,187 | ) | | | — | Leadership transition expenses | | | (328 | ) | | | (777 | ) | | | (1,738 | ) | | | (2,935 | ) Loss on sale of land and building, net | | | — | | | | — | | | | — | | | | (2,196 | ) Other | | | — | | | | (927 | ) | | | — | | | | (927 | ) Adjusted operating expenses | | $ | 65,358 | | | $ | 61,621 | | | $ | 188,360 | | | $ | 179,570 | | | September 30, 2026 | | | September 30, 2025 | Cash and cash equivalents | | $ | 252,098 | | | $ | 154,250 | Revolving line of credit availability | | | 242,141 | | | | 307,938 | Total liquidity | | $ | 494,239 | | | $ | 462,188 | | | September 30, 2026 | | | September 30, 2025 | Current maturities of long-term debt | | $ | 912 | | | $ | 109 | Long-term debt, less current maturities | | | 319,531 | | | | 189,000 | Total Debt | | | 320,443 | | | | 189,109 | Cash and cash equivalents | | | 252,098 | | | | 154,250 | Net Debt | | $ | 68,345 | | | $ | 34,859 | | | | | | | Adjusted EBITDA for the trailing four fiscal quarters | | $ | 181,034 | | | $ | 175,620 | Net Leverage | | | 0.4 | | | | 0.2 | | | Three Months Ended September 30, | | | Nine Months Ended September 30, | | | 2026 | | | 2025 | | | 2026 | | | 2025 | Net cash provided by operating activities | | $ | 33,735 | | | $ | 56,119 | | | $ | 36,007 | | | $ | 87,820 | Purchases of property and equipment | | | (8,355 | ) | | | (9,650 | ) | | | (22,558 | ) | | | (33,378 | ) Proceeds from the sale of property and equipment | | | 13 | | | | 25 | | | | 83 | | | | 3,770 | Free Cash Flow | | | 25,393 | | | | 46,494 | | | | 13,532 | | | | 58,212 | Cash effect of adjustments: | | | | | | | | | | | | Restructuring expenses, net | | | 5,352 | | | | 2,308 | | | | 11,970 | | | | 6,648 | Merger and acquisition expenses | | | 11,915 | | | | 15 | | | | 32,967 | | | | 15 | Leadership transition expenses | | | 989 | | | | 650 | | | | 1,015 | | | | 6,711 | Other | | | — | | | | 2,103 | | | | — | | | | 704 | Adjusted Free Cash Flow | | $ | 43,649 | | | $ | 51,570 | | | $ | 59,484 | | | $ | 72,290 |