THRM - Earnings call transcript Q4 2017

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Operator

Greetings and welcome to the Gentherm Fourth Quarter 2017 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tania Esquivel [ph], Investor Relations for Gentherm. Thank you, Ms. Esquivel, you may begin.

Tania Esquivel

good and and joining you operator today. us you, morning thank everyone for Thank were this gentherm.com. released copy results earnings Gentherm’s earlier press is of morning release available at the a and

will Additionally replay the Relations of a section later website. of call Investor webcast Gentherm’s today be today’s on available

materially statements events actual Statements During forward-looking views reflect of statements. representatives forward-looking with company Please uncertainties and and of and meaning differ. respect may the call, underlying the company’s risk may various and federal including future financial the current results performance latest this the such factors make discussions subsequent to SEC of within see security laws. for reports filings, XX-K

SEC the Regulation measures release. Reconciliations non-GAAP call, financial GAAP company’s in these comparable G. the company non-GAAP the financial by During of to measures discuss earnings the may are financial included measures defined as

Please Officer we review gentherm.com/events. be On take Chief Steele, prepared will available Chief your the the are and that Phil to President Eyler, be Officer. questions. website our on will call made that After remarks, me Barry with referring pleased Executive presentations Barry and the we Phil results, note act during have to and today Financial at of the

over like to turn Phil. Now, I’d the to call Phil?

Phil Eyler

thank Thank us today. for and all you, Tanya joining you

few as as Before for we thoughts. cover the XXXX, share results quarter and our outlook well a wanted of full year fourth the the I to

has was I that and addition joined diligence the $X leadership advantages. car unique The as of in know, business, untapped that direct in role also of competitive potential market as billion its is its across numerous you a industrial connected into thermal proved a not it’s company the and I significant market to well auto division previously position on organization. hundreds to industry. an of only the Gentherm’s patents that the and most is with to geographies, International, Gentherm to this leverage at result the company presented sustainable by to in brings the When technology to strong markets. solutions automotive there innovative take industry-leading December technologies Harman due medical a in begun As me Gentherm opportunity bring early it having of penetrated run plus the unique the

automotive this, the more to platform gives Cincinnati and Sub-Zero combination driven our Etratech, segment industrial and the strong with new Over drive to earnings growth acquired along our across to Thermoelectric, organization and medical significant as and improvements revenue of the in by products of vehicle as Gentherm in growth. content, us a R&D products that years, see past more X innovative develop existing Global businesses, opportunities we has design new platforms. continues growth content well Because company. vehicle and per This, powerful

the course a solicit you And us. company to doing of that many before few unvarnished on we on what the input of Over tour. learning as have investor next into speaking receive largest and the constituents across of capture ask with customers, effectively past opportunity as opportunities in, this an really has our and to participate us me our an of to for number of key production facilities, in fundamental This to plot the feedback did begun shareholders on lot would to I Gathering can a our next describe deep a helping what most dive the and with questions afforded enterprise, in XX perception days, Gentherm. be days, our invitation listening the I meeting R&D suppliers core visiting and leadership the note, will is study. all organization a

strategic Board it’s growth of few late with Over our been next thereafter. in spring, shortly our we finalized team and it to refined plan. expect you months, will share After finalizing management the Directors the be

is value that shareholder and continued primary car and our growth plan the in through rest assure and portfolio; and the may strategic automotive expanding goal address will strategy of the through accelerated to the developing earnings which accelerated You address revenue will short first, drive in an product opportunities growth. core technology mid-term solution future. revenue This product second, and the

of no and a fourth expansion long-term analysis product diligent portfolio businesses and be short-term opportunities. There operating sacred and Third, margin lines cows. all will

aggressively the company drive focused look execution. into to the future We will through

presentation Slide to turn to let’s of year. in results our deck. the quarter #X the Please turn Now and the

announced line organic, to was or which X.X% prior as X.X% will challenging revenue was growth. moment. we of on the growth These quarter above organic our and exchange. reflect $XXX.X million acquisitions brought for of results year, That remain I a this the in market the just even we top conditions of solid earlier XXXX achieved year X.X% foreign excluding the impact X.X% in full growth As today, which and touch

for look start. year-over-year EBITDA, is modest year you full but a the in at you in the we changes our tax through tune signal noise is the possible. improvement improve and a rapidly those that so that I, than intent year. introduced and the I if earnings clearly we for the adjusted it’s a the of from to both As lot far well all as results quarter laws quarter as Barry to adept more this with on and know him, will But periods, numbers walking recent defer commentary noise the see that

from with XXXX, Before Barry X. would into like dives detail begin some I the Slide review to let’s highlights

seat course management. system steering battery business, well growth solid significant have in the as both we automotive heaters and of in wheel in growth and Over traction early cabling as the in heaters past some year the thermal

revenue shipments we the move a expect growth see vehicle pricing X.X%. event the Although control CCS to heat we is growth near and next stabilization saw in the ship The we in mix to year. period, decline seating in climate of did from to within

market year, growth not past North insignificant declining is overall our the the an achievement. over American Given automotive

Now few year. past upon highlights a me let from touch the

nameplate XXX E-Class, across S, and A AX, launches Model Rover different First, examples, QXXX, executed Lexus Cherokee, XE, systems Jaguar Range Genesis. Sport, X, Rover of customers. Jeep Audi Mercedes models our GS Infiniti team Cruze, Chevy Range AX, the Tesla the strongly XX on Mazda with few and Hyundai

feature. as a launched heater In of of over year, solutions steering addition, we clear leader XX us, the upholding number wheel market our the the this for course record position

delivery North During launched a In XXXX, electronic German controlling OEM battery with thermal we for product of certain for often content vehicle the with more ramp-up thermoelectric we trend the based in increased another and second the positive along with customer by a saw America. element programs. climate we our are in our management, phase supplying devices launch

We We electric is management. our already opportunities we beginning. these customers. just with customers the battery vehicles these But won company. $XXX customer our intend well million have two for for to which will years expect awards revenue over coming expand the this existing The base in transition thermal follow-on of fully contribute significant lifetime will first beyond provide

awards applications – of and related global Honda systems significant we XX-volt towards for moves only and Gentherm. well number and battery large with expects vehicle the For one vehicles, in mild rapidly. will fully new electric Simply will technology management and as electronic opportunities systems create the year just of to in instance, our account technologies thermal XX% application expand have of which more climate of as we penetrate hybrid the excellence. for And other sales electric battery as the testament expanding global to the market. of supplier two operational third-party XXXX, source anticipated control a begun true of Also put, this our Bosch, autonomous won market

during Etratech, expands which quarter advanced and controls of acquisition was Another the significantly control our and the notable capabilities systems. electronic achievement

intelligent to our With creating solutions capabilities, Etratech of expansion will us into the as automotive are well acquisition value of extending our we electronic product that as applications. increase content allow other and integrated

very we over to to addition, quarters. forward working reporting look few next on number I opportunities In which of exciting back are you the a

you platform I we the on news share year. have awards like received Next, to the over would with past some

see including Truck, XX billion few. awards revenue As CCS, name F-series X platform just for Santa awards Ford during $X.X you program MDX lifetime Fe, and can a than customers, volume Trucks, Hyundai across new XXXX RAM trucks, high Slide more GM we different to several including received on in Acura

As to in we awards personalization into look vehicles, our active preconditioning product. OEMs climate heating interest increase continued and are and and cooling seeing

players small program with but both and with expanded in Subaru and a Chinese OEM S-Class. first our Mazda, us upside. now, are We CCS thermal we domestic [indiscernible] awards major with of business customers of is the won German two and strongest our awarded We luxury for CCS also convenience Mercedes on finally, portfolio Japanese brand with the And significant our major China. first this OEM,

OEMs see Tier and As geographies. our and across including you from accomplishments, classes, across significant recognized luxury and we the they to vehicle as can strong these technology offer numerous well is awarding superior automotive are as X business that core us suppliers business

from discussion our chamber The to and full in industrial which segment. both Now, year environmental the of by strong months let’s revenue year-over-year growth organic a for sales X turn was demand of Sub-Zero, the growth Cincinnati CSZ, customized overall X prior XX% benefited year. due chamber versus in products propelled of standard Slide applications. XX% we to for XXXX, and a growth At achieved

blanket, me on the non-invasive gate program for extension Air us sole Pittsburgh in customer. for with the a And is operations. On space St. largest of a an cooler our this passed for for business, contract review blanket CSZ test delivered operating for the completes flow States CSZ’s this the our normative strengthens CSZ and breadth were as that in market continued blood U.S. providing network the Center in device a with used the additional XX top side a Warm products a for hospital awarded supply a this highlights successfully in heart of open critical chamber our design a Japanese in healthcare new offerings. important of differentiates heater our device University XXXX. surgery market XXXX X-year project, X/XX from the dominant finally, Allow development XXX-volt is medical the Force. product, hospital This a warming-only a cooling and of capabilities. custom system pediatric Air underbody market, growing warming the a during normothermia on saw we CSZ. and Hemotherm the few United system, market. product strength business. We having lost the and untapped which launched Coast. testament true hospital a the fast NASA to a secured filter product into We Joseph’s Health position thermal share with We children’s We to integrated our flexibility warming portfolio of for rooms hospitals Medical full West unique We product creating the solution solution we the the thermal market

we During force year, expansion the of the made significant in past investment sales business. a this in

come new getting another improve to improvement As thermal in up patient this and Medical the year. personnel application the market. management business are the just penetrating where in I over expect is we speed started performance at sizable coming productivity, we further believe

Now, Slide X. our Global on Power to Technologies let’s turn

orders Our remote power versus benefited in rebound from strong year. the business prior generation a

in customers on for involved orders aware, shipped the our cycle orders harsh are a was our also under remote producers effect That business, As in XXXX. has for years These and custom across gas which are producers business numerous primary recent often utilizing moderated equipment. our oil maybe we locations. residual having in generally technology you pressure this

rose in revenue versus XXXX. As a generation result, XX% power XXXX remote

XXXX our to the is are new additional opportunities region markets. penetrate up existing outlook to products developing geographic new open flat, While for more and developing we new products

business. few a this a reduction regulations. driver Methane has is year share also stringent more driven by market that new me for Let the highlights us past arisen in environment from government

more position, and TEGs XXX to million of to $X.X develop of to methane reduction of range also to technology we products technology sell XXXX, reduction Because reduction Alberta broader products advanced $X.X thermoelectric sold our revenue This In the have program cleanliness sponsored our immediate of We for applications. for a by market generator grant an received address the opportunity an methane emissions generating we our government. market. is million in this applications. over due

proprietary products spending are research along market. these funds, and in our own with dollars this We new developing for

marked like we to the one India. platform broadening first Caribbean. new of addition the Southeast de In success penetrating examples in find systems offshore shipment energy the and XXXX Caribbean novo include geographically. our to platform to the to places our markets product continue Asia of the Two success success offerings, in our offshore of expansion with

been for for export as Australia products has of our recently LNG demand a Finally, new purposes constructed have in of Asia. growing been facilities number to

this operating costs, for the across need to trend that As the lower facilities product. need demand lower a transportation has continent for for cost GPT’s gas with creates along grown, feed if continues, these the this

Now, I of ask little the will you that Barry? Barry give questions. of the the take I commentary pleased shared color a the quarter will be we to results then more have and business, highlights on to your

Barry Steele

impacted has provided growth some will color results during my comments and financial excellent Thanks, period. items focus the our Phil. Good the on our the everyone. year. the in morning, Phil for material of that quarter I

CCS segments in CSZ. both through heat well due a production we due seat to continue X% our in to except implemented to During technology every active the is concentrated. CCS, In on vent changes the by headwind of certain vehicles some application transition decline last This cool in systems continue OEMs the case quarter, on expected technology to line, revenue XXXX year. we headwind as during experience vehicle to and in as America were that both Seat our the reported operating product Control as high and Climate business for a North

the product higher switched. that American and and have from advantages heat have systems unique However, to new well North on our and for heat Both technologies from increased active lower vehicles volume end rate the expected cooling as will and heat price systems largely begin competitive un-penetrated cool sustainable have as offset production vent launches vent both impact market. both

cost to and across their We related mainly product solutions of action Hemotherm lower these believe core our to heater are regulatory sales an of remain sales important to a against are taken blood high both due The that working provide last to our platforms from CSZ business. our customers automotive closely year’s technologies with effective windfall of the business, sales benefited unusually medical cooler in which we competitor. a

see net on a $X.XX. quarter the X, loss share we As of in Slide per resulted

$X.XX out, discuss significant transition will in include we As for most which fully items, moment. this unusual included Phil these, charge I the these year. a quarter expenses. $X.XX CEO more to a per the for several of adjusting share and the year $X.XX of full and for fourth of the prior the earnings show for the quarter $X.XX compares for year full and pointed tax This similarly adjusted XXXX. The After

to amounted As related expected, the final we CEO, quarter. the of million transition incurred $X.X our to the expenses which during

period. rate. quarter margin adjusted the – year in XX.X%, on during in was just case a expense million adjusted per tax every me XX.X% Slide X, a enterprise, amortization year. X% charge The despite of other intangible adjusted the Tax spending. as the based associated in one-time end lower and fourth period. XX% related year in during final result margin loss a a to XX.X% Act net $XX.X lower product Also revaluation The a U.S. of we into prior of our million the $X.XX higher U.S. with on mandatory effects fourth accounting and This Jobs excuse revenue was foreign in see as of Cut quarter our as the acquisition EBITDA quarter compared to acquisition-related and the rate $XX.X the expenses, result deferred the of expenses multinational is lower of Etratech. gross earnings nearly can depreciation for during of significant margin quarter repatriation was prior share. you As fourth and well the or despite $XX.X of and a comprised of only non-cash which the taxes gross EBITDA million the purchase and down was margin combination totaled dip other signed increase our the quarter during include are as assets now recorded the revenues law of amounts before resulted The our at exchange tax interest, product net and with EBITDA The operating the the in laws, transition overseas the assets or came or $X.XX from

higher press Those planned. to investments we we As release, and noted expand expansion incurred in production. manufacturing class the and at our management Macedonia new battery capacity and in thermal electronics Mexico for were facilities in

highest $X noted approximately impacted as product significantly the higher in out gross rate unusually was the that Gentherm stands blood year the margin also which be for was heater quarters in by Hemotherm quickly cost among moment high should gross overruns However, margin the as being It were the I at a mentioned resolving. buoyed sales that ago. by million prior ever CSZ, of it cooler

at debt outstanding mainly is million, liquidity respect now see is along can million. Next, of $X.X XX. under the brings decrease the for you let’s million facility Etratech. take look due quarter. our Available cash a the to which quarter decreased the balance as $XXX million to $XXX in sheet, borrowing the which to total our cash XX, was balance with a the of our available acquisition our balance December million, on revolving sheet, $XXX Slide On credit $XXX.X of capacity With

let’s XX. Now, Slide guidance. our to discuss Please turn

we the have providing you saw expanded guidance. number today’s As are for we metrics of release, significantly press which

reasons. done We number of this have for a

and striving our progress. are clearer to a actively of transparency view we to improve have First, help investors

the growth earnings a we in as that in be new will of expect strategic our XXXX, there planning. transition changes over to the we and plan X-year growth Second, course revenue some

in we between revenue and wanted interim in on In expected some to mentioned, As XXXX. later ranges period, the to now and expenses we the planned then year. provide present expect Phil that however, our

expect As comprised X% XXXX. be to rate to X% year X% XXXX. flat growth on is guiding factor, we The to EBITDA Adjusted tax of in to we and of XX% our revenue you Gross rate benefit to rate. in of be aware be the can enacted is from tax come One see the of healthy margin are product the lowered tax expected to earnings, in million. approximately organic above should by a quarter U.S. CapEx significant XX% our is growth the we to you XX%. XX% at to full expected the affecting slide, recently slightly which $XX is This of effective revenue Etratech. our augmented achieved fourth rules

effective waiting rate of and pay due tax flexibility that Our we one our our of not cash already XX% the the this up benefit The to reserves in debt down to have approaching will earnings is overseas. use footprint geographic greater from benefit will U.S.

rate to the XXXX. in XX% expected approximately increase to standard accounting include due will points a Additionally tax our new an of adoption effective of XXX we basis

So our top look in growth by dollar threshold $X over initial $XX solid $XX the in million summary, XXXX, million. line is to crossing for

Our be expected are about flat rates XXXX. versus gross operating margin margin and

remarks. apprised as we and additional in expansion synergies the you develop out we let’s forward for costs, over that, some other invest products As to and With keeping to unfolds. of back new of turn bring our our look Phil call closing the progress platforms year begin to to and technologies,

Phil Eyler

our I future. management I that Thanks, my enthusiastic this company become and it’s are team clear Barry. optimistic and sure and about am

innovative we technology, advantages. for and unique have sustainable we competitive solutions produced customers our have We

that We market our cases In plan penetrate adjacent me markets markets growth that accelerate sharing soon. addition, look have as only our to to and capture market very We strategic are with well fully and as the outpace additional share. it’s to to you many large clear expanding. forward in we the growth serve begun intend we to

start Now, session. let’s to over to call turn our the Operator? operator the Q&A

Operator

you. of Please Instructions] with the Barrington Our Thank [Operator Research. line your comes with first question proceed Prestopino question. from Gary

Gary Prestopino

things. of Couple everyone. morning good Hi,

depreciation, the XXXX, in year? in are looking items you amortization First, a that be this of on some of terms Barry, line the of rate what just at run-rate would

BarrySteele

you what in will fourth very similar to be quarter. the saw It

Gary Prestopino

will And then that similar okay. be Okay, amortization, as well? customer the relation

BarrySteele

should of in reasons. in expansions is fourth capital should being Maybe we effect from It a two, and quarter as Yes, a lot as have Etratech a higher of brought quarter. in be. oversees be year, have bit the Those is of for on and rate mentioned. it that we including the One assets in facilities the two will some now full the the little current that is fourth is we expenditures some of one currency are heavier there depreciated. comment depreciated

higher. So it bit is

Gary Prestopino

that question Phil, I Okay. I the for of mean and there months been seeing And with some are now. you the couple then puts takes major like what for have are mean, of you me this potential product that want? it is you at a quite but not there company of that possibly point? set, growth operating ratios maybe is And strikes great there, level great just at expense

PhilEyler

Thanks, excited automotive, first technologies think about Gary. I of a mean to be great so continuing advanced organization, across develop we just are other great technologies range company, talent, far industries. of of a wide not portfolio found products I R&D I and couldn’t what more strong in but and Yes, I absolutely the all,

us earnings for think technologies platform give growth. those revenue I and great a

that as analysis we’ll the But do we we I course time about of certainly really will find expand be to to goes up Of forward, leverage as short ourselves growth. that am the over expect more our as through the set nice margins run we in XXXX, strategy going operating I at go create opportunities some do as well of how and on. course, excited looking

future the that has the I rising the think been and rapid the most with car for opportunities that’s technologies. me, exciting element of especially

that in become that’s microclimates especially by will and important move see as customers to huge OEM to just interest that are applying technologies really an the think starting cars electrification. I we area extremely our

and is more hear there lot about I think refine our opportunities strategy. to those we So, and more start of you as will

Gary Prestopino

to give late sometime us going are early going are summer? you spring, the – you to And strategy get

PhilEyler

we it be that We time announce it spring that and in around in but mentioned. we that late are – to when that should just at you finalize will out, will going roll timeframe

Gary Prestopino

thank Okay, you.

PhilEyler

Gary. you, Thank

Operator

you. Thank

question comes the Steve with your with proceed question. line next from of Craig-Hallum. Our Dyer Please

Steve Dyer

margins? Good Very the guess of faster overarching are speaking, but thanks at disclosures. you Phil added or the what sort to your are factors accumulated of you be inclined thermal more on to are just generally looking you or are all I of helpful. you you what going a for and of overarching the themes are morning. the auto looking coming, dynamic focused sort specifics technology grow what guess for. the the to what I plan kind that’s technology themes pure-play be Welcome, all or more sort that months are Are themes trying the company – are to leverage of underlying are on? of been

PhilEyler

summer. first the spring, Well, that’s will the early come late are those – I all, of you think in with answers the to kind of we

a very want chance fundamental give earlier, – As ourselves that’s I we are flush review, no think don’t to in but under mentioned would it a much too I everything is this and general, sacred cows, say I point. there I as out, too roll to early good give there isn’t out,

our expanding continue accelerate will certainly product portfolio. through growth core We to revenue and

really will definitely tell thing aggressively I after. I you can one go think we that’s more

climate X% than currently vehicles of untapped in are North XX% there in is around especially vehicles think a about and using There globally is control America seating market very our automotive still, of product less I technology. significant for lines.

opportunities So the years about regulations and I especially provides get transitioning vehicles electrification. more think as significant coming that emissions serious more and really us over to

which management technology of area example mentioned be a car as on. will opportunities is this, over in lot the let’s battery transition of you one more strong also developing that as technologies will are important towards I the becomes secondly, migrate of examples that and So next the advancements XX-volt those But just very essential XX and I semi-autonomous products there a electrification electrification. our we hybrids before, term in are to for operating future X and certainly see call will longer of and there that. and the that’s Certainly an focus around much thermal autonomous. use years is to years applications – happening vehicles as of creates more comfort the But one

our for there the think am visited in architecture of products as these I they see is – develop we I vehicles the in a future. having already seeing lot interest customers

also that lot that challenges and our role traditional a technology is a creates in transition for So of I the significant HVAC playing microclimate space. system see very

but will analysis then and as looking do businesses diligent all the we short-term mentioned margin across portfolio the you ways and So course operating I as mentioned in expand a earlier of for to mid-term.

Steve Dyer

have And sort Thanks. new repatriation guys overseas, then with That’s stash super tax plans you helpful. obviously that? laws a Barry any of immediate to anything do

Barry Steele

Yes.

interest element think of our pay be beyond which to help on I there how line, an cash. the further but strategic to spend plan will give balances to our the of that us is some the opportunity about first ideas revolver The you will

Steve Dyer

Good, okay. Thanks very much.

Phil Eyler

Thank you.

Operator

you. Thank

from comes your ROTH the line Our Koranda with proceed next Please Partners. question. Capital of with question Matt

Matt Koranda

one just level first, Thanks. Phil one first guys. all. of welcome high for Maybe Hi,

Phil Eyler

Thank you, Matt.

Matt Koranda

some have is business forward. should OEMs of from battery ramping that provide and if the was about electronics competitive a guys maybe one the you there especially for I landscape management just pertains number going business wondering a little – Phil, you bit you products, speak to as obviously just so tailwinds some your had in it book hand automotive on of great thermal

you how do maybe talk at Gentherm the and once joining if compressed how customers I other to just you a business have introduce of guess are opportunities going the On that CCS least little you product some they the view attempting at look are line, hand, to specifically? competing bit would about within course solutions auto with you

Phil Eyler

you. Thank great Sure, question.

first But of business. clearly – Having good a of be our we was R&D to technologies suite the that’s scratching to of from that competition in Harman, are no I roadmap, a hypercompetitive in calling the competing at I for deeply coming we good compete held awards. our a there do next and feel strong that space. position foremost very to very think I I stranger and have studied technologies role the all several pieces the am for generation and

I So it. certainly embrace

of And active a very it best next in am am win encouraging. think challenging And have level develop the R&D I business is developing and faster cooling few move to team grow I just with to progress technologies. the in especially we months faster class the and – made certainly helps technology. the I that continue heating and to

am feeling you we and and OEM is for of X a mentioned the appreciation both their aligned our really having are customers there think I good and technologies very our spent So I well seeing capabilities. customers, that with deep time with roadmaps. And future Tier course customers about

think that’s of I that’s lot – me confidence. a giving So

and both solutions Of course we to our Tier fast customers. need to paranoid competitive we are developing our OEM X support customers act and in

important with are us. note collaborate solutions they both both to that critical it’s to customers, X extremely think our customers Tier to I and with job is and OEM create

both have about deliver in and order the best the are XX% OEMs. we to but moment, Tier the directed very We at solutions also to we customers by close be with working OEM that Xs know

Matt Koranda

mix That’s helpful, track stable see follow-up in to the you time? that, so the one over mean mix, any OEM terms XX% of by relatively directed change I that do Maybe Phil. does sales in customers,

Phil Eyler

it’s moment, the stable. At pretty

Matt Koranda

and discussed it for ramp a activity two that here, little sort for of implied QX, management, battery then an on quarter launch expectations sequential didn’t really small program changes any fared Maybe quarter, ramping the that guess Barry last there guys how the this with Barry in was I one and maybe like okay. could or at on talk least it, thermal that’s see I just think Got you about XXXX? bit you

Barry Steele

Sure.

may although you occur thermal recall, quarter. of fourth in as As management of we the the said much past the about the had the end that would launch at battery very

out. So it that is how actually worked

the of thermal hundreds in thousands systems. with additional have We interface revenue associated

in two customers, year. one now, second course the It to up one be is XXXX. so basically into nice quicker online will start through that is as somewhat vehicles to first will through start of get get accelerate see vehicle even the much rate year, You we size of XXXX. that part as the with larger not start but the comes is the the going as part go shipping year, until increase, full the to you to the ramp we will end second the the probably we shipping see some of There it

Matt Koranda

was Okay, just And into the might wondered slide in and that to also of $X.X able all, on at outlook? just that how the could I automotive, got how guys then And XXXX given in longer replacement within be essentially businesses help I that understand the programs awards how the that you but fits us cycles is new term the is or all outlook, it. help that those awards, the guess you if with shared sales that you existing spreads typical bookings? business maybe that new there into That’s billion net outlook for helpful. some if spread then XXXX

Phil Eyler

one. see that in any neighborhood XXXX. I years. take of XX months as are to is much XXXX as in X to that know automotive X you revenue is will the was years, of The of development awarded certainly not in cycle it in going The you

first XXXX of business, we all more revenue see late acquisition So, and combination business the new awarded including it’s that business in likely on will follow-on of XXXX, book and business. the of roll early

Matt Koranda

Got it.

it guys. there. Okay, I leave will Thanks.

Operator

you. Thank

proceed question. FBR. from of next line Van with your with Please question Chris Our comes the Horn

Chris Van Horn

let me echo the Phil. Good and morning welcome,

I a penetration and does look additional you commentary seat just don’t it is content of what some taking the on business just that heater strong So, to rear share what’s additional outlook there, like get mind about quarter, if going the seat want the on this forward? significantly question going was for and

Phil Eyler

take Well, in to is it’s market first, the right market and expand existing platforms. we now, more as so there this movement is know – XX% rates as and penetrated about it think add you about to more the technology platforms significant

So, combination a is part certainly the of expanding it. of big that

that We space. pretty business exciting have over also taken in some

think has cost been product and our we effectiveness both I – well are efficiency appreciated.

and the factor of simple the and example is just row is And conditions Another electronics well lot our I for seeing are of key heating more mainstream just product. being that customers as course purchase interesting row seat are more second a we more the business. thing more we into Jeep control a that’s extending a that mentioned made. have is as one Cherokee that seeing second unit you heater

So we more on a growth went. that to top lot it, of we acquisitions content of the in adding seeing just pure new are

Chris Van Horn

I for And sales and outlook but additionally the the do provide you cost the and then for at you that more overruns you saw And any business if on missed great. an you CSZ for it, XXXX then looking that? behind that detail apologize did I are think quarter growth Okay, business. during

Barry Steele

specific this on Yes. seeing guidance safe give It’s are the – to all segment. that we segments. any in say of of We on growth didn’t the

mentioned your what’s product question – second the is medical of think Matt? I that the you part

Matt Koranda

have something the the cost there on that a one-time into overruns, Just or visibility next there into was you year? thing is it

Barry Steele

custom recall expect some recover cost may quarters. us, do most of of you the of on so behind basically largely shipped business the in that the chamber a systems have of business had margin chambers and believe larger are in As those couple is bit. our the have that that that will that we the overruns, part last We we

Matt Koranda

wondering for see capacitized XXXX you is of see new do just what do – in was than And flattish great. you investment coming the visibility Okay, well coming you in for finally programs any are wins expected? about like CapEx are award and higher you you of then the you in feel and on we have if it based pipeline, wins sort terms me an additional looks obviously guiding that online, I just, see should you award up-tick year-over-year

Phil Eyler

I think are shape right we in now. good

– after-tax manufacturing of have well. few new the as of in last capacity we some We acquisition and a acquired over that then the combination couple also plants – acquired we Etratech with of years the with of

what I So of see now, pretty think you for years. with we we are looking right we good – next at are couple the least

Matt Koranda

Okay, great. guys. for Thanks color the

Phil Eyler

you. Thank

Operator

with Thank with Longbow Deem proceed next from question. Research. Instructions] the you your Anthony Please comes Our of line [Operator question

Anthony Deem

Hi, good morning everybody.

Phil Eyler

Anthony. Hi

Anthony Deem

so new numbers. award automotive the I for questions, few have thanks a

prior So the how a years are appreciate then help the $X.X is And higher follow-on, might also a percentage lower, CCS same. billion? to you as of us about as what are billion, or to $X.X able you able that compared to breakout

Phil Eyler

No, answer don’t – have I I your the first. one second will

that in the doing lines to tell pretty on have the strong that specific seen product moment. not years. breakout upcoming we is growth data are the based the is But I I the company. We that going And at it far will billion you for of $X.X the so record see

Anthony Deem

Great.

then it So looking longer to is the organic new out is X% for out are to term growth? on, to revenue accelerate X% the the perhaps growth or say new around year years to it opportunities term, the expectation safe with as the plan go related business write that like longer perhaps strategic this to for there

Phil Eyler

accelerate am at to that And absolutely X% X% only organically. for options to is I looking at moment. the The ‘XX

if we segment. got that expand core got within will we are bullish some at technologies. have automotive you market And know our and look our across As both growth just pretty that I you the very hopper areas products have earlier I in look feel we ways mentioned also only – got about need other at think basic of to even to the as there a industrial

really future. I the of about strong potential growth feeling the organic So, am in very

Anthony Deem

Great.

any if also the outlook share is for currency any updates Etratech revenue of On there benefit growth and the XXXX guidance, XXXX revenue?

Barry Steele

where be X% than run about and bought higher to is in factored is the the Steele benefits. million is we growth the that growth currency that That’s it growth due total on would in plan XX-ish range. we with had and why overall Barry disclosed organic

Anthony Deem

one I if organic line you taking. above when revenue to year guess to then can pinpoint more CCS And very X% positive for in quarter thank the may, growth? might grow and below, specific is for full inflect And you is much there a just for you or X% expectation the

Phil Eyler

Sure.

CCS expect we to relatively this So year. be stable

the the in seen – end say have as we revenue overall the the will growth So of see company what’s increasing is situation called I for answer And general and some in expect would curve general start and the XXXX flattening of I said, towards beyond. growth to the year. I seeing we

Barry Steele

bit drivers easier one of first year. the of to will impact in just to comp from is CCS the add some in year little and little of for year. the the just switching that part a tougher part second the Anthony, year-over-year the of That last the of be

Anthony Deem

much. very you thank Barry, So

BarrySteele

Sure. Thank you.

Operator

does Thank conclude at you. time. today’s further no questions This are There teleconference. this

a You this have lines your for at participation you and disconnect wonderful your may time. day. Thank

Gentherm (THRM) 20 Feb 182017 Q4 Earnings call transcript