THRM - Earnings call transcript Q2 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Gentherm, Inc.

Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded. pleasure and your Corporate my SVP, Yijing now Relations Investor Communications. is to host introduce Brentano, It Thank you.

You may begin.

Yijing Brentano

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

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

underlying views we differ Statements actual forward-looking meaning call, this current respect of and reflect for of may Laws. such filings, Federal Security results see subsequent statements events the During future discussions XX-K statements. SEC make various within the and our the uncertainties, and materially. with to performance, factors latest risk including reports Gentherm's forward-looking financial Please may and

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

and Phil remarks, be referring After On the during pleased our made will on Phil Barry call presentation President note and Please take Financial prepared be their gentherm.com/events. with Barry are website questions. available comments, that to their me Eyler, Chief Officer. at we Steele, that CEO; will have we deck today to a and your

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

Phillip Eyler

and York strategic was there to New to execution towards many in of disciplined see Thank we you, our goals driving I in Yijing. us Update shareholder are Good which presented morning, team everyone, and event and great to joining today. you thank you June. our value. all you It committed for Strategy My at City

an our initial favorable growth increase the same million, from Etratech currency morning, the XX.X%, we're reflect of lowering operating making progress the Segment, and business had which This of quarter in we results XXXX. and acquisition automotive our quarter core of translation. In second expenses. revenues X.X% Automotive both of second in our included improvements period $XXX.X reported product we in Our solid

segment saw importantly, vehicle despite More production. in headwind on North an X% approximately of basis, growth Automotive the American organic

Our will quarter. We're EPS medical Industrial of the related are expectations, year-over-year. our businesses. trends we or our results an force improved adjusted segment of both in custom and line details seeing in chamber remains revenues quarter. declined you XX.X%, outlook and the as the our to delivered Adjusted encouraging on the reported timing that our power the later our financials provided industrial in total, we We with June. direct in sequential Update our projects growth primarily year-over-year to Strategy EBITDA and business guidance X% generation both revenue provide In Barry in increase $XX.X $X.XX meeting the sales the in and in million $X.XX XXXX to Overall, financial were intact more in at in quarter on our call. focused on by

presentation the let's some for Now business quarter, deck. slide highlights with X our in beginning review

in North just to a during vehicle despite our decline American in business return I growth As Automotive saw the production we quarter. the organic mentioned,

automotive continue we our we quarter. the market record launches to in see and Hyundai, in year-over-year large and customers, volume awards. American declines double-digit several automotive of Specifically, experienced North Nonetheless, including momentum production Ford achieved

details results in I'll and significant minutes. for the results versus driven about quarters We're provide to increased five in financials. seeing a after financial focused this already progress on activities. quarter, As first quarter. by sequentially of be CCS revenue improved trend reversed, more deliver the we've and primarily product margin CCS, decline. to Overall, over positive in we CCS growth mix our made the active expansion able and predicted, early we're vent our downturn of CCS few pleased That's

second the during shares still in million authorization. $XX $XXX current as remaining quarter, of and our have in we now repurchased million we Finally,

hybrid strong Turning The Santa and were important the management improving this overall system slide vehicle's an quarter the launches thermal with system In XX, the continue automotive In Geely ES Gentherm's OEMs offer Jeep vehicle thermal contributor air market. is sequential C-SUV, the lineup cooling launched devices, aggressive included FCA's products, plug-in coupled team iconic trends suite Jeep Thermal Fe, global vehicles eTorque and XX-volt of Sierra, revenue cool XX strategy to Wrangler, hybrid in of the hybrid, is BMW XX-volt management vehicle launches technology. connecting E-PACE, our their with roadmaps. launches second heat OEMs. full X, Group with of electrification our Wrangler, products, Lincoln GMC models increasing growth. the in sensing and in electric to MKX. well the are CCS execution on of on with a efficiency. Gentherm's aligned electric emphasis hybrid BTM different products, used Jaguar thermal by battery of we Battery including Hyundai thermoelectric-based second Lexus XX or nameplate thermoelectric-based saw XXXX the to heating, across an to we systems new version the version Management, powerpack, with an the FCA lithium-ion cell placing on

of one Award. around our teams intense to our focus in from management Mexico, development Quality most the customers General am recognition Michigan, Excellence quality is world. team product very of testament on and the Motors manufacturing our program and products. in our important This Acuna, Finally, received a proud Northville, Gentherm delivering I Supplier and

business to quarter, see than $XXX million In on XX secured the our in customers. in more that go second total, In you across billion from continuing year-to-date, $XXX win surpass new let's million pace. $X.X in XXXX. new Now to we slide we program approximately where secured record different of record X new at a can awards awards to well in awards OEMs we're track

us This even controlled greater come. turnaround confidence approximately the awards seating. of gives offer those in revenue CCS Importantly, XX% climate to

CCS the Pilot, Hyundai won us. Sonata, the won of we've BJX, including climate to Cherokee We Honda last CTS, Audi Auto over opportunities seating Beijing XX% Jeep six controlled Grand AX, Cadillac multiple and available awards, Over ramp for development the quarters, Audi importance E, the all-new awards and the energy the we in of Porsche our continues electric further Subaru e-tron demonstrating Outback. efficiency to up, of Mission vehicles as the won And solutions. CCS

received vehicles we for addition, the luxury to the Interior the type S-Class. continue this award near-term. believe In Heated of enhancement penetrate We will comfort in Mercedes

with to one that to positioned capitalize helping for first grow trends vehicles ECU the Our demonstrates are climate, business thus memory award electronics we and in for functions control Changan OEMs in award award reduce CCS ECU continues of This CSXX. well reducing combines the number full system on multi-function mirror the with and in integrated software a ECU. and seat This cost. and ECUs consolidation the China

awards BTM Finally, and continues Emgrand applications PDe, Hyundai for air Golf. vehicles, the growth C-Sedan GS cooling management thermal the the and in with for business our battery Geely Volkswagen the

to in In addition, interest show continue solutions. innovative thermoelectric OEMs our strong

fact, awarded with utilizing Asian two contracts development technology. were we OEMs In this

Let me expertise our also in on solution give our you microclimate a quick thermophysiology. showcasing personal ClimateSense, update industry-leading our

the OEMs test has These tested climate testing full EVs ClimateSense from and us interest Gentherm team engaged to Several interior luxury positions cars OEMs cars winning challenges customer our engineering with solution. is the ranging OEMs drives. solutions for have projects, by global strong of equipped future our We're seeing in various to for from well SUVs vehicles which future. in been Our development built address have of awards. ICE-based the successfully

anchor first the personal to the discussed this the June, microclimate solution of during our is world's I As complete Strategy company. Update in future

segment. Now slide X let's discussion on Industrial turn to for our a

the at I leverage Investor of our well we expertise our and our patient in thermophysiology knowledge growing to significant market. automotive products to Cincinnati see management sizable market thermal this continue our body penetration of as Sub-Zero improve from to in in As discussed business opportunities June, Day as increase technological the in

CSZ we've business, outlook we to Chamber divest market and the continue to Although momentum that positive new awards opportunities see business. decided and for Industrial

from review me let the some CSZ business. Now, highlights

announced BD, we market disposables medical has a immersed XX vision business about $XXX and already approximately grew the pharmaceuticals. the our At medical shares appointment joins BD, grow. experience significant week, the company, Paloyan opportunities global to our he Jim new technology he the years double of at the us and and the last devices medical Jim business. from head Just in across of of Jim as business revenue. global into himself million infusion rate brings to

the upgrading our multiple we're I for quarter, investments real the significant in me of equipment this on in Before focused update in awards fruits seeing while compliance discuss awards Micro-Temp our devices and the portfolio R&D – in hospital expect standards across medical, systems. III, and the quick to progress we a Hemotherm latest begin We've to you business front. these near on Blanketrol also existing let future. In innovation made secured give

the relationship our flow addition, In Medical for of important products strategy. us, from we with competitor blankets. Center through to University of hospitals an number part strong converting will an our to This their increasing recurring filtered revenue of continue grow generate our Pittsburgh

let $XX.X million you summary on With the a Chamber to General that little Motors Barry? ask me financial Generac. Industrial awards Finally, different business and color customers quarter, XX across in we secured for industries, the give NASA, results. from including now more Barry

Barry G. Steele

spite production, impact revenues, for of half quarter automotive that nearly down automotive is for nearly Ford of benefit in into the approximately product XX% the slide and of decline automotive basis, vehicle more America to X% during can production second year. North of in On the technology certain grew XX% higher or you segment. This our acquisition. product two the quarter lower. in production down revenues Automotive second CCS American thank by to America you with The impacted was was X%, Automotive our automotive to importantly, on revenues Etratech Even $X.X prior Climate the effect acquisition-related America. increase call The which offset the represents is XXXX, in during during our the changes X disproportionately our million a X.X% fully pro segment, the X.X% of everyone of priced increase and lower concentrated vent the second off shift in the and customers. Hyundai million. offsetting These on quarter million totaling According prior product in market prior included CCS Etratech X% organically a partially that about million about during was which our revenues down that by before North taking segment sales, Automotive XX% in $XXX.X both currency market year, revenues increased increase Ford these Company, customers by North Control to to forma prior $X.X both a of $XX.X to included to year our decline the and revenue of over heat volumes I'll because along comparison year decline revenues. of North America the account and automotive was programs million Motor Phil, products. CCS, organic IATA, in production X% compared Hyundai of production were This its important Adjusting Korea. product in top a of revenues in favorable tough a start joining impacts, our $XX vehicle Thanks, solution our and Industrial the today. a segment first quarter, see significantly when are grew represents are related by where Seat, other for translation our the North quarter.

to unfavorable revenue. million CCS, again $X segment grew approximately about Despite revenue had addition the our X.X% or significantly, Automotive price for these except automotive In which headwinds, year decreased tough comparison. prior production-related customer annual our every of incentives one by a all decreases, of products

the adjusting Automotive and and Etratech nearly acquisition, the CCS out segment grew taking fact, XX%. In currency for

effects were Speaking marking our X% of $X.X lower climate quarter second CCS, to projects downward large or In XXXX of revenue Industrial the sales related chamber primarily revenues GPT. a timing recent million increased the at custom segment, trend. by lower and reversal sequentially, CCS the of

shipped due second shipped is XXXX typically large You fact period custom we quarter custom shipped to issue revenue of XXXX, the recall several for the Also, during these chambers. the few large was of only mainly whereas projects This climate million very an during GPT $X.X for that quarter. programs. second timing quarter, that may during several the

cost of of outlook decreased. main this mix, year from decline related margin for we our represented XXXX. are as than full compared The has quarter normal business to looking in of quarter price have well three as Thermal which as decreases causes The customer was However, the in industrial automotive product. timing margin shift our Management gross lower GPT, new improvements, mix divest, higher Battery revenues gross the for Automotive XX% costs was product due gross XX%, Product product launch second Etratech a for sales, unfavorable second of lower lower are and a to Automotive. and within CCS the margins business the the a which decrease a to

earlier, mentioned about were I the annual million As our price decreases customer during quarter. $X

As in production was first the quarter, during quarter. only and the reductions costs by our raw offset this material partially in

on on $XX $X.X thermoelectric-based launched ramp mainly costs at one million business was two the second which XXXX this However, quarter. will second quarter. in difference by issue. the production the at end the during a the The timing launch our second volume to is early for a and a to temporary our during product impacted end the was which rate the but the In half. vehicle launched margin. quarter, Thermal balance line timing and of the of began this platform second expenses second $XX run to gross XXXX, quarter during XXXX was of second million of new This expected This reflect factories, stage, out fixed is program unfavorably fourth expenses vehicle million Battery Management production only

in initiative, in in some conjunction million. charges million million included fees taken expenses, changes reductions new million operating of $X.X targeting consultant charge $X charge our now total The about center focused in comparative in reduction They quarter XXXX. cost to consist restructuring (XX:XX:XX) implemented non-cash we and is a expenses Fit-for-Growth first addition $XX related idle restructuring tables cost an have for our that the cost have quarter, which our $XXX,XXX Our and strategy is totaling for separately with which California early in of for in the broken related six-month a to the growth by we purposes. are $X.X severance overall research and include employee fees. out This

actions savings annual to to of As an cost are the million mentioned, Phil first these charge provide $XX expected basis. leading on

spite some adjustments. quarter. than restructuring savings operating As the increases year's with the Taking of second cost we first as in increases, and during in program, were related quarter. of We these in approach out target. compensation expenses amount additional we lower year-over-year incur than Etratech, million the $XXX,XXX were mark-to-market million worked $X.X currency $XX million expenses than $X.X restructuring million this likely achieved acquired quarter from recently R&D More prior was will $X Fit-for-Growth and charges this reimbursement to offsetting higher in we coming $XXX,XXX operating million early higher-than-normal translation savings Fit-for-Growth. equity $X.X decrease additional lower overall the million year the charge, $XX.X This second and or X%

second quarter in rate lower Our to weighting XX% in our is guidance, shifted non-recurring effective tax to that from related than due mainly transaction discrete intercompany exercises. was quarter. the jurisdictions recorded items the tax tax option and XX% statutory lower stock due rate windfall employee for benefit our of This earnings to having the

year. to XX% approximately for expect continue the tax balance the an of We rate

on or various reform However, factors tax of two discrete points impacts that other as calculation of U.S. the percentage much final depending be higher amount items. lower could as including and

changes a result of the million of sheet decreased reform. result U.S. by throughout our borrowings cash the economical the $XX by half during as make cash further million. year. revolving debt line We of on made tax plan to outstanding repatriation mainly slide the our to a repayments Turning balance decreased These the are first XX, and on $XX.X

working million the the We our revenues timing related stock the the of repurchase operating half quarter. have which through seasonal our Gentherm the covered share coming first we mainly under capital are cash the $XX in outlay program in to for Increases compared second approximately quarter during to common from half cash during acquired fourth business. first the in

million cash our when undrawn line to credit revolver. at at stands Our total and stands revolving now to $XXX liquidity the approximately of million. availability increased debt million therefore Total our $XXX $XXX adding

discuss XX. guidance slide on let's summarized Now our is which

we today's presented the XXXX we in As that press outlook year saw full at XXXX release, you Investor reaffirming and Day meeting are guidance our June.

As very Phil focused set objectives stated year beyond. and for we are on the this earlier, delivering we have

focused an on back Phil? it give Now to our to strategy. over update I'll turn growth Phil

Phillip Eyler

Barry. as product organic core Thanks, program, know quickly four guiding forward person of bolt-on ROIC acquisitions the opportunistic our with optimizing synergies. key I key growth, CapEx and businesses that in through margins innovation key is and and a our in for and drive on to three, software capital recognized thermal we June are engines prioritizing XX, Two, expanding strategies innovation to number globally above-market review investing areas, firm. I in our through going both technology And moving share categories the supported simulation, into focus drive Growth company on we thermophysiology, capital leadership webcast one, growth of and meeting. the system core Well, where Update projects current driving to extending listened and allocation, you or four, and which growth. Fit new consulting integration. repurchases, invested to by five accelerate including electronics, the drive prudent discussed improved return Number overarching product wanted Strategy our These shareholder either categories many strategies to our at focusing on on returns us the sustainable joined technology attractive are, strong growth,

plans down businesses. let or on business plan, overall of process to you our Now wind buyers divest of CSZ, two quick our our non-core beginning strategic key Global Intense Technology business. these the Power searching pillars moving our update to Chamber has give on and begun slide work a with for of Industrial for me XX,

We are experts the outside process. engaging to us help with

very lines early well of of efforts, timing those stages to we to the the respect we the divestitures. we in product process. have not yet into Given these along that exit, are visibility do With plan

our have $X winding $XX session. savings. the battery rest annualized operator million aviation, Fit-for-Growth positioned businesses and the time, was that sold actions shareholders. closures, that, to over slide in second opportunities savings to and and related million team second of pleased have since as the has I'm that identified team Update. to and taken that cost reductions, so my we're Q&A as global in facility expected slide have electronics through like the at the results results remarks, initiatives the With by demonstrate long-term in business. our actions deliver I the and would management call battery the savings total entire we working to programs progress pack in industrial produce move our down that that million for our Gentherm diligently turn furniture the to momentum to management annualized $XX Moving rapidly confident Strategy outlines projects year several the initiative. organization at million software recognize to I include let's XX, towards finalized report These made. for summary, head represents We're part $XX growth. significant of taken for strong I'm resize quarter of that count consolidating This being Operator? positive beginning The the we we've we'll begin million quarter XXXX. are actions In well to material discussed We savings elements of exit XX million to charge our to $XX $XX savings the the we of initial been identified systems. the back and target continue additional gain mentioned But our the company position savings the now to

Operator

this At conducting be Thank we will time, session. the you. question-and-answer

of Our question. is proceed Please the first Riley. Van with Christopher with line Horn from question B. coming your

Christopher Van Horn

for Good the you morning. taking question. Thank

Phillip Eyler

Chris. Hi,

Christopher Van Horn

that little of around products? the just then, around forefront that is that guidance? call curious potentially could the source and other on mind call Any July everyone's strategy or sort of it's did bit in out you in to alternative finding release, impact identified maybe X you in any out you've press a as the were – suppliers your ways list? those And tariff products the Seeing to guidance it it

Barry G. Steele

the Chris, for So, to added we've the about million $X million in $X second into cost half. tariffs new

Phillip Eyler

we're offset to your to part answer all at million. million absolutely it, second $X Chris, that to options $X of looking

course, next some both year. you to basically both done, ways negotiations good with our activities, to some that on nothing and we could potentially were and in double relocation if that But supplier activities through Of mitigate for have be through some with the suppliers ideas customers. on side production

obviously at we're accept not the to amount, just going that's now. right looking what full but So, we're

Christopher Van Horn

Thanks great. the for Okay, color.

detail, specific Okay. solution business. to full opportunity With of seems else bit system think you. great full that pricing-wise are get give little doing – set here? it a or of out kind some the of movers award the And pricing, like know you you offering kind anybody or more you way, don't relate this how things of it mentioned, don't you other but is does Could the first set I controller you're can if in that a opportunity-wise you the for

Phillip Eyler

announced more So, per what quarter. includes, in adding also solutions. vehicle the last it's give terms activities some you which going a It which obviously general pretty on just content seat suite module, positioning we we're pricing, big with system that of memory CCS in after, Ford announced sense, the those, I'll especially is we increased our intelligent content importantly, of

for two, customers value of provide they reduction number things exciting vehicle number OEM content because, So, the give forward. all terms going for more one, us in the obviously ECU more in are us those and

our in as that So, I I'm far as that anyone know, specific offers of space solution. aware else not

Christopher Van Horn

back think BTM and you coming curious, some going programs you those And that's when be of it phase I Okay, half. was is into seems and back the long about online, XXXX in way it of off maybe of the as the is see ramp how up? launch year half a but not a slower, just a trailing slow lasting, a great. then, over it phases kind about the and do this see these you bit to decline, the to decline like of little And think launch right

Phillip Eyler

Yeah.

I you is about think, what said right.

time second the our should we half of The hit by the which is up we year period, ramp XXXX, primary be clicking pretty good.

Christopher Van Horn

Okay.

Phillip Eyler

any very of new and obviously get technology launching with and right, it the As launch, putting quality we're that. the focused cost assure correctly, on to we're resources amount necessary

Christopher Van Horn

Okay. I'll Thanks the in hop for queue. the back time.

Phillip Eyler

Thank you, Chris.

Operator

Gary question next of is The Research. Prestopino Barrington line from Please proceed your you. question. coming with with Thank the

Gary Frank Prestopino

morning, Good everyone. Hey.

Phillip Eyler

Good morning, Gary.

Gary Frank Prestopino

Quick question.

of $XXX of it new was up, was it that XX% You XX%? million – – CCS you said with hi the that or business signed

Phillip Eyler

XX%, that's correct.

Gary Frank Prestopino

is, split Okay, quarters? you on between of a in awards what so guess, you that get I was business are XX%, Can that's six seeing automotive? us I'm more any the an in how trying idea at acceleration CCS your on new give basis. month to of

Phillip Eyler

if awards, an roughly at We're CCS look split, seeing acceleration definitely it's same, equivalent. the about I in but the think you

Barry G. Steele

at a got basically are very long-term in what quiet awarded mean, (XX:XX:XX) market just on bit I look to being quarter. just vehicle opportunities a or individual on based can being programs it the

Gary Frank Prestopino

I'm No, the trying fine. with – that's I'm just get progress. to happy

Phillip Eyler

CCS the for exciting. in us wins is too, conquest which towards weighting nice market a pretty seeing We're

Gary Frank Prestopino

there's to as Okay. tax tax the think be variation this said you there, caused to where half far the year? be going And but going to rate back the goes, rate it's the as you of then, be down versus what quarter Barry,

Barry G. Steele

It's Gary. discrete items, basically

Phillip Eyler

Yeah.

Barry G. Steele

to switch basically different transactions – intercompany some have taxable We income different jurisdictions. that our

rate. in tax We our different variations have

individually So you a thing. deduction then, Those the we we'll estimate. the the cash. the your And one are booked, part excess option as not related of quarter That exercises, well. benefits was items that discrete that tax have of in in and to we tax stock that all is repatriation expense basically booked our get of quarter, that's when windfall as

Gary Frank Prestopino

right? discrete you of Are think you year, the be the do Sure. items, similar to there for going XX% these said – back half so

Barry G. Steele

in Yes. There other second is items half. very good discrete we'll the have possibility that

Gary Frank Prestopino

Okay. Thank you.

Phillip Eyler

you, Thank Gary.

Operator

Thank you.

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

Matt Koranda

Good Hey, guys. morning.

Phillip Eyler

Matt. morning, Good

Matt Koranda

is on question First CCS.

in terms was for good the see, growth should to sequential Just of the rest we that increase the sequential of year? expect

Phillip Eyler

so yes. far, we're what seeing That's

Matt Koranda

noticing in domestic deck. more China your I'm OEMs

you guys, could call what maybe quotation of CCS at activity you to domestics the is Is penetration contributing all out currently? there is that for with wins what moment? So, if that them like presented? you kind at then, much And the

Phillip Eyler

China. XX% implementing. are you with that kinds activity market CCS When The of the of comfort are on would look our lot about features OEMs are domestic question aggressively a at in to least there. in global you they the we're share, Yeah, trying is asked the about the market share, our my OEMs up view, – I at say this keep the

right as we're and We're effective really assure the strategically and We've to OEMs with marketing certainly going there our the right I domestic job place working trying with for not account for and be capture team obviously So, put key solutions market, a domestic in really is the growth. a Chinese our what aggressively of we're most OEMs. the strong team after but center that will everything, doing our good share. OEMs capturing think fair front we to that China perceive

Matt Koranda

the CCS. there heat/vent then, any of way And a deeper, in I CCS year-to-date? was drill said million XX% think what sense little to vents Is helpful. guys terms in for $XXX a heat/cool That's of you the us down Okay. versus give the just was active

Phillip Eyler

more vent. seeing still of the We're CCS

of vent. transition current the there so obviously still are world, If you adding more quickly CCS to vehicles, in technology. cars those And architectures look at vehicles those to the of of transitioning in entry are mid there's the

XXXX really what we're to first pick up. active half see beyond pretty That's we the look starting the you consistent CCS with the year. launches, as Although, of to continue see in

Matt Koranda

with helpful development pipeline decision guys of sort get Asian two development terms notice BTM is well. you you gestation to for period or as And award? contracts a when program on then, just signed called what of a point sort between of the That's in that and sense the wanted a it. Got OEMs, out contract

Phillip Eyler

It a get the quite period a the doing average. of six-month you're an you analysis to to varies year bit, process if prior in but and through generally contract, period on a award, you go the somewhere that's development

Matt Koranda

Okay. as set EBITDA headwinds for of half embed the increases, me, I your in volume margin going wondering sort here. that tariff be it sort Last and of you does by the facing like efficiencies I gross just on back was gross sort looks mean, margins. you're called one guidance to of, out

the sourcing are could you of of volume and color your the the on – sort implies bridge are in margins in counting the just terms What's us XX%-plus do sort get how we quite important So, of of there? guidance a of we half gross sort efficiencies, driver, of how that more there? there a bit we just increases bit get little back

Barry G. Steele

will couple the Fit-for-Growth but the things to activities you a help our definitely production you start to They're missed mentioned, expenses.

which that contribution higher the actions. to pricing there, the margin, price Thermal it You help the supply right revenue will, higher fixed will so at the the or as our happens covering – of will management that will the base are bouncing within grow out, you cost of things cost because the versus get missed to we customer for improve the if line. The and Battery you product mentioned the higher their cost exactly revenue

Phillip Eyler

cost flow activities, purchasing I'm little Unfortunately the through one, the – are the work a while really that once get it operations and excited right doing revised Matt, that down about to do team bring our we to inventory. those to On costs. takes our

a I the in that good we than that's pick expect half will longer the pretty So up year. expected, taken little but second of

Matt Koranda

guys it Thermal with you launch Can launch call cost one-time quarter, the that possible? this is Battery Management

Barry G. Steele

there We out that's launch in like business specific there but larger support depreciation keep number, a of also there's the themselves, are much place. just the in that all that to cost costs didn't equipment fixed the a mind give a isn't

Matt Koranda

queue. right. all guys. back Okay, jump I'll in Thanks,

Phillip Eyler

Thank you, Matt.

Operator

you. Thank

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

Steven L. Dyer

CCS auto questions address, existing percentage auto new guys. of new Good couple as Thanks. didn't renewals? just A awards well morning, overall versus both are that I hear of you that as

Phillip Eyler

conquest wins renewals, new over We more than XX%. or have

Steven L. Dyer

received I battery how then, how you great. impact much of And guys electronics from much divestiture Okay, the hear business? it's and if didn't the material

Phillip Eyler

large a than million. less was It $X number,

Steven L. Dyer

Thank Okay, got That's you. me. it it. for

Phillip Eyler

Thank you, Steve.

Operator

Thank Research. you. Please follow-up question. a proceed question with line with We do have Barrington Gary your from coming of the Prestopino

Gary Frank Prestopino

Yeah.

interior of Just there that car Phil, awards, floors, cetera? Mercedes Is award an looking automotive seems et armrests, the throughout at feature? be the S-Class, – the the interior on specifically that to whole for your is

Phillip Eyler

a That is that's pillow, very really one rear interesting, a and Yeah. surfaces seat pillow.

Gary Frank Prestopino

pillow? seat rear A

Phillip Eyler

Yeah.

Gary Frank Prestopino

Is that that into built the seat?

Phillip Eyler

rest. It It's head is. back/neck an attached kind and upper pillow. of the It's

Gary Frank Prestopino

That's interesting.

Okay.

And understand the that to was. Just exactly trying what that's for S-class?

Phillip Eyler

Yes.

Gary Frank Prestopino

model Okay. throughout just or proliferating the now? Is that lineup the see – is it S-Class right you Mercedes that specifically for

Phillip Eyler

the of we're luxury It's a interest a little more too certainly these early that, side. to comfort on about but discussions multiple on features OEMs tell types lot adding seeing in across

Gary Frank Prestopino

Yeah.

Okay. All right. Thank you.

Phillip Eyler

you. Thank

Operator

we appears at you. additional time. have this It questions Thank no

So the back additional Mr. to floor like concluding if I'd over any comments. pass Eyler to

Phillip Eyler

everyone our for today. joining operator. Thanks call you, Thank

we we'll ahead. remain quarters support shareholder reiterate, certainly the confident you. and focused Thank value and everyone's appreciate to we execution, And significant on innovation years that interest. improvement. in I'm Just cost and deliver

Operator

Ladies may time. conclude We and and at disconnect gentlemen, for teleconference. participation this lines your does you you this thank today's your

Gentherm (THRM) 26 Jul 182018 Q2 Earnings call transcript