THRM - Earnings call transcript Q3 2018

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Operator

Greetings, and welcome to Gentherm, Incorporated Third 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. I would now like to turn the call over to your host, Yijing Brentano. proceed. Please

Yijing Brentano

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

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

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

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

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

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

Phillip Eyler

with WLTP, achieved acquisition morning, achieved we Good despite increase primarily growth table solid of impact to us related on production today. forecast Automotive growth top-line million, significantly, report experienced of XXXX. organic the America, of revenues Test vehicle an the translation. you quarter Automotive forecast of year from of we our XXX vehicle in vehicle year-over-year which as More in and significant everyone, basis in well of and X.X%, the markets I'm revenue the Yijing. Worldwide light Japan production more were third and had third you, IHS' X.X% segment Procedure, On our industry, currency quarter for the China, all mid-July declines negative increase product growth quarter. Thank third included was as X.X% European pleased the Light new period with this an the a or which Asia. slide sequential X.X%, in declined across XXXX, the European that North Harmonized According Europe, basis, thank favorable points. large and the of in year. in of to over headwind the In of one for quarter key over swing Volkswagen, X% customers, Vehicle compares Starting same the Etratech quarter. a production volume than automotive latest $XXX.X our our joining X, despite production Korea, third to the declining Notably, headwinds segment, for

outperformed was slightly organic significantly we X.X% While our growth key our original markets. below our expectations,

Our in Industrial in segment was increase Technologies. X.X%, This revenues Power decline by X.X% Global by partially XX.X% of Cincinnati by rose a primary offset an driven Sub-Zero.

very GPT that and of we team pleased as retaining third quarter. trends business in there double-digit to the are medical business recall sequentially to I'm the however, that year-over-year CSZ, intend both encouraging our divest and strong we You'll growth seeing note we're and delivered Industrial our

call. on focused progress revised In outlook on and our to in our company, per is results to for growth Adjusted year. quarter the as provide $XX.X rose an compared as per on $X.XX details results per prior our For $XX.X the third earnings in third This prior year. improvement adjusted to the the with $X.XX reflect million the in of quarter XX%. more million share Barry continued EBITDA will rose in third compared share later total, strategy quarter the the and share

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

and I pleased with production momentum record light Also, market discussed, the to As of launches awards. growth our see achieved we're we in in continue automotive organic environment. we revenue challenging automotive just

quarter, Turning product to you'll CCS our versus Climate year mix Control driven second CCS in third sequentially, the the as quarter, to not recall CCS only of had over also by revenue primarily In declines sequential CCS or Seat, Active we business, Vent increase that reversed year. the rose continued anticipated. but

provide progress growth continue focus We're on expansion positive financials, also We seeing and to about make in in already early a this activities. few margin I'll our and more our details results minutes. significant

repurchased accordance a our million to more during of Rule $XX in adopted continued and Finally, repurchase October, we XXbX-X. approximately in with plan quarter pursuant to shares the third

of of repurchases. As $XXX and repurchase since total current have our value launching program million will of to recognize in shares and remaining in shares share million $XXX share We we yesterday, over opportunistically towards our we've repurchased authorization. the deploy a capital our continue

been with years, models HX; algorithms X. CCS nameplate different our on to driving launches of help Turning software that is Tang; our and is systems industry-leading slide the OEMs. RDX; suite on our many XX, comfort and revenue vehicle launches XX, Porsche provide on part the strategy. and GLE; received to Convertible. including BYD full quarter an XX seat execution and content X our sequential climate-controlled our management. algorithm-controlled Growing XX X Mercedes important quarter, We solutions contents continued to automotive strong machines. Convertible and Evoque. launch across first Series AX/AX; thermal pleased our to The an Rover continued per ultimate XX, of in by neck enhance Cayenne, launches incremental important and in rely Coupe XXXX on saw Gentherm leveraging third Series warmer in We're passenger driving by technologies, the the quarters. of Series, team innovative BMW and significant Hover included Haval providing on a customer testament lineup the expertise CCS Series passenger the and six comfort we XXX; I'm The for of the in the range Gentherm of Audi Panamera, X of BMW with continue GT; growth Acura a year-over-year the Bentley for Range XX With our electronics has on has X focused-growth and broad temperature-control solutions cooling experience their that heating,

In Honda, with addition, we Motors, BMW, strengthened our Wall, in and market leadership at steering Daimler, Great Volkswagen. launches wheel heated systems General Renault-Nissan

thermal Thermal Gentherm's the system for BTM suppliers and are successful The I'm game-changing Automotive was technologies of batteries. the thermoelectric-based of Gentherm's Gentherm our Award. industry's incredibly this first prestigious auto BTM named for This of products Being PACE finalist this who in is record PACE a by named lithium-ion system. that proud applications. is PACE management. had named News the as a team a XXXX Finally, a Battery for is Award PACE to XX-volt been or developing first especially thermoelectric year for Awards in finalist finalist parts is great that battery our time honor innovation Awards Management the has exemplify expertise testament solution market. number in Gentherm a a reaching the

secured record record win awarded across XF, was of were multiple surpassing customers. that awards and where In awards Land XXXX you the to and done On full-year Control in new quarter, awards vent Seating marquee quarters. new program billion the Rover. awards, and total, Defender; just approximately the different Jaguar, we won active for XE, slide won Land we including wins the $XXX we with In at Rover, continuing in battery to the nearly all-new from we're pace. OEMs in several three our with and electric see Jaguar our million $X.X $X.X this we X, vehicle. XX year-to-date, Climate on secured business I-Type in We platform a third F-Pace new can billion Now customer, Velar

We with JX with and BYD also won in CCS awards JK, also and Genesis China.

AX, continues we Genesis won Battery in numerous Heated vehicles Acura; Dongfeng hybrid ramp including Wheel an to up, And, to nameplates. awards, won award /JK. transition we JX Air In Steering XX-volt Management with Audi VW mild Hyundai the various on Thermal and as the China addition, Cooling AX;

Let company. update Sense, which you personal solution, is to an a our anchor on quick me I feel the the of also give Climate microclimate future

development and vehicles North make with hybrid in America Europe. good We on battery-electric projects to continue OEMs for and progress

This Gentherm partner leading advanced view the customers physiology. validation for strong solutions. a of thermal as is microclimate Our expertise in industry-leading our

over X a on growth XX% maintain with thermal equipment; slide FilteredFlo, for patient segment. disposables Medical, our we in discussion management to to liquid-based turn CSZ normothermia double-digit and let's used strong, in the patient warming growth Industrial Blanketrol, growth our In over surgery. during Now revenue delivered air-based XX%

encouraging force United are our States. We progress the seeing sales direct in with

over Medical the total XX% Our year-over-year. over Medical revenue XX% U.S. in represented business the in quarter. U.S. the sales of grew

of self-sealing safety many will efficiency. improve with for launch Europe Europe next into in workflow system approval Mark disinfection, connectors designed device and other step was technology. integrated with us both heat/cool the all CE dual allow and the received advanced all-new, and we certification control a tap front, control is features, segments our new room automatic of R&D to touchscreen integrated channels. cardiovascular temperature contains remote, automatic in the allowing disinfection in including On channel It innovative a independent This markets. to us device. several blood others, to international This the This operating our last generation system, innovative

portfolio. invest upgrade to existing continue will We and in products next-generation our

engineering automotive to our leveraging is lower sourcing addition, In team the optimize and and scale our of costs secure our component Medical core products. for design

automotive CSZ in accounts, to and on run discussed Investor new Taiwan team from for to large well. At Day leadership at from chamber I secured XX testing. decided our the divesture. We're we've business the Motors June, making time, As awards business. industrial We continues awards SF the our Delta same progress including divest the

our XX date. over to customers continue year for China from chambers We with orders grow XX to business in

you Before Barry, strategy. on focus the update I a growth to over me quick give turn let our call

little or to With recorded expected building areas, good generators. core million both including quarter. in in well of that of million past to savings I'm we implemented summary, Fit-for-Growth furniture, Moreover, increased thermoelectric In the charges continue are to program, savings based on XXXX. automotive now achieve new awards the us actions momentum produce talented in $XX we've $X global more very color other our now product savings. over are are the of million industrial with financial With making we progress the outlook. respect a non-core we're Industrial by restructuring $XX ask pleased our growth $XX to to on seeing packs divestures let a to margin XXXX commitment few hard the In aviation, We've quite The the Gentherm we position I'm in annualized million charge and of Barry? lines, identified all progress in on me on GPT. and the down proud The track give our focus the automotive well annualized CSZ and and target battery battery our momentum team. quarters results. product make. achieve Barry opportunities closed total, on electronics, in exited work management, you to that, addition

Barry G. Steele

for million. $XX.X a from modest million for currency, XXXX, the our company, quarter or over product start X.X% growth Thank of $XX.X to And Etratech. The for Industrial million thank for Automotive today. that segment $XXX headwind segment you, can Automotive Industrial or X.X% or X.X% rose $XX by was slide the you where year X.X% the segment, acquisition third The including Phil. XX%, revenue $X Currency see $X everyone, and revenues joining the million. increased million. X% million for rose the on I'll prior the was Etratech the of during the of segment. the X, for in organic $XX.X call acquisition year-over-year translation Adjusting million to you, the contribution quarter

Despite share revenues, insights decline increases higher factors: from production spoke metrics these Battery steering from primarily resulting wheel automotive the segment resulting now our A some Europe production Thermal underlying due me that revenue volumes heaters Automotive about, cable lower into contributed from a and overall in to seat to CCS Management two contribution segment X% Phil results. also new increased the revenue, revenue Let heater increased in challenging increase. year-to-date. Partially launches in systems China. was Increases offsetting and and vehicle

the impact which medical unit related forma addition, volume Batter segment, volume. and declined decrease discontinuations quarter. of OEM products. the partially a is rose XX%, which partially result the recreational shipments were the by products gross XXXX. on third increase industrial offset quarter in margin of tariffs in of by $XX from the In $X.X market expenses, for softening fixed million decline launched revenues quarter in with In early the during our volumes GPT, nearly this gross XX%. million original sedan in XXXX, starting during our improved fourth two launch third higher efforts XXXX. was Management our which was expected Etratech coverage XXXX end launch from of business Thermal models. quarter are divest. a the but the our second million new of of two quarter new that us to effective a to The offset both product CSZ tariffs. reduced on chamber only thermoelectric-based is a are in reflects are one the sales the to costs was we successful the million increase of lower pro of $XX is This basis, normal This due business of product customer margin lower are of much to Etratech and XX% this businesses three from than on cost the our end expected to a new as team The Etratech, vehicle third This during impact and causes for the XX% $XXX,XXX initial The The to annual the $X Industrial revenue margin to fixed the run mix These for for factories basis, looking gross to quarter. was but of to Thermal represented main gross quarter. became mitigate which at lower our by amount Battery other cost has lower Management temporary and stage an the unfavorably launched much tariffs second XXXX and million $X margin. third a of impacted new to the ramp quarter, higher overall line expenses about and cost fourth was In purchasing product at mainly rate now assessment production the

couple During the margin. one-time quarter, impacted had gross and the of a supply also we operational that issues chain

in to Our Strategy restructuring operating expenses have Growth a quarter totaling included reduction million, our $X.X cost implemented conjunction continued that our we and program. charge the changes for the with related Fit-for-Growth Focused

As part the Phil identified the from annual $XX annualized quarter. the initiatives $XX end million of completed mentioned, This amount totaled is total our savings million of at of savings.

transition million for XXXX for we implement operating quarter, will Taking increase third were reduced million Etratech, through options a cash our to second from during million impacts, million the million Running incur our charge, As $XX.X CEO in more amount our about restructuring during $X.X reduced operating $XX.X the annual we XX% expenses operating third likely the than costs. Taking is approach higher $X.X from quarter by continue as newly-acquired overall or for $X to quarter million, and the $X.X year's that the by operating the X%, of quarter million savings operating $X $XX these additional the expenses these, million year the by by we restructuring quarter. and over charges than million, we during exercise, reduction. XXXX. included we costs sequentially a whereas target current price which more and expenses included or XX% amount the were settled third quarter mark-to-market XXXX in $X.X due stock out this for in out first expenses quarter. the The same

our of therefore tax tax tax XX% provision of tax to recorded the an fair $XX.X best amount for effective benefit to restructuring amount, for loss which is business are on addition and totaled the value. is our the The quarter. we impact in related was non-deductible the purposes deductible no not selling. Adjusting estimates based included industrial we the rate income quarter. the million, The third that for for was our impairment In charge, impairment,

to We this or about plus X%. minus rate fourth the continue quarter, expect into

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

We our $XX covered cash have for outlay share the million operating much of the program year-to-date business. through repurchase coming from cash

to Increases million timing However, at related quarter. our net months to are the XXXX end million mainly $XX.X XXXX. $XX.X debt of of fourth seasonal at end capital September, increased by of compared to quarter, the during million from $XX.X any working revenues the in in the other nine

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

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

in our As guidance adjusting due regarding businesses mainly that today's shipments, the you the as Automotive to intend production levels to quarter, of revised divest. impacted have expectations our saw fourth the the which third from are lowered press well as quarter, for we we two performance volumes release, full-year lower XXXX

However, outlook. this affect does not our XXXX

As seeing to margin Operator? the increased that, outlook. awards the we back us With begin in to Phil new the let's focused call turn the achieve on our mentioned, Q&A momentum session. the operator well automotive XXXX to position are and

Operator

you. Thank first we while session. our conduct time, this for At will a poll we question. moment question-and-answer One

from Please proceed question Horn your Our with first FBR. Christopher Riley Van with comes question. B.

Christopher Van Horn

environment. on execution a a solid in Good and congrats tough morning

Phillip Eyler

Good morning, Chris. Thank you.

Christopher Van Horn

still little a bit additional I kind around order Cool or is can the is the ramping on side? get the this business could it Are from just heated a the growth heated higher more looking of interest seeing the you of CCS you rate of vent? where Active volume on coming Is comment vent versus into and on for Active was you color and Cool?

Phillip Eyler

Active, Active that the higher coming CCS Well, last we've coming vehicles. of low-end growth, growth taken current discussed and I lineups. it and it We years heavily into Certainly, combination interest won't and that and the of credits. previous just a in CCS see some and a opportunities towards look CCS start it When a weighted lot of continue comes in more the and as attractive and and expected. and vehicles OEM That's We many from much as business pretty those several take wins Active. our of place mix as course, over saw of generator I quarters, quite year-over-year from launch hybrids when see future. those a EVs rates for the performance our the pop mentioned have combination more go function launches and those near-term launches we comes but on sequential been again, CCS more to we Vent very between is to to carbon was so mid- across customers. through it's of in a launches to growing growth Vent, also That's when CCS the then interest past become up, we're XXXX, seeing different certainly

Christopher Van Horn

by quicker XXXX, expected, seeing does adoption the you quarter Thanks and the you customers basically? and on it. pipeline you and up into Got are margin; the as just award tracking look what it. than last look than year the the activity obviously And into for could like, a fourth look Got what better you Okay. color. significant the ramp – comment pipeline

Phillip Eyler

do which year and at year. sort coming I still annual we in this platforms Well, weren't still look pipeline. I We're couple you next won't I've I watching the that, of mentioned, more quickly technology. already there's for some years, to some on sure, opportunities And of the numbers give broken this thermal more think as in and good beyond, – year, converting left any record, expecting the to certainly when our we've specific but and closely are management it's

it's years. we're like think to couple strong going looking be I So, a of

Christopher Van Horn

bit revenue a with again, cost you're And then alternative into perspective get to China. side? people's final me, input just China us it. input sure, how you And from side, Got on a I'm give a and exposure, most the little and going both on of what's thinking a could your possible from from overview minds, an about on sources Okay. on

Phillip Eyler

I'll about cost Well, the the let of side. the and talk talk side growth equation, about I'll Barry

XX% right to On China our revenue exposed about of now. we're the side, revenue

and Some a of of OEMs. that is OEMs, that European lot domestic is

short-term a our see Specifically, in in Volkswagen Volkswagen recover chunk a hit is revenue China. is When the a mid- business good because I and our the in long-term, look the with impacts regardless of revenue, quarter at and that bit in took nice over China, in We I of happen feel those in pretty going China Hopefully, pretty the a both in wins little of Europe incremental China good in growth little in decline we'll that coming growth quarter. to with market. a more China. about lot time

Barry G. Steele

the in the cost side, similar costs on China So other to our fairly are facilities.

in, we're America. China each much in different. bit that heaters of the that we're a regions little bit and we're notice in a product little is heavy different It Europe countries, are seat in so in North more we mix; than it's not low-cost You'll

to certain of the from they're bring over way amount to here. the issues, duty able that is have how facilities jurisdictions. those a If The we've we China we to referring, been product duty you're from inbound recharacterize issues Chris, our foreign mitigate into

supply some still pretty working we're chain opportunities how we some fairly begin but able our exposure, mitigate redirect limited with. about overall We which duty been to to the on, we've is things feel in to have good

Christopher Van Horn

Okay. Great. call. again Thanks taking for my

Operator

Thank you.

Phillip Eyler

Sure thing, Chris.

Operator

Gary question proceed your next Our Research. from Barrington with with Please question. is Prestopino

Gary Frank Prestopino

everyone. morning, Good Hi.

Phillip Eyler

Gary. Hi,

Gary Frank Prestopino

for when a comfort you into about just product; comfort going solution? that you're Climate is Sense content not talk climate BMW the The more that morning. solutions BMW, good that's climate Phil, with

Phillip Eyler

is added Climate That's that content. get as No, content. Sense, It's of Sense it's the not approach. that content lot It's a kind you no, want just of content, we just mentioned. on to starting system to Climate the but more to approach

Gary Frank Prestopino

still The the phase? Sense Climate phase, test in That's beta right?

Phillip Eyler

making few right the North progress, to got OEMs still, we've development Sense, that – got some going although with we're contracts time Climate and on go America executing down Yeah. those a we the great contracts. still that's so development European now it's on still and

Gary Frank Prestopino

Okay.

a So climate that what you beyond are seats? just just me car? When solution, can comfort here? comprehensive does the entail you about help there talking for out the in you're total What adding

Phillip Eyler

Sure.

what really So system doing the adding of and much taking rather we're becoming is, thermal solution we're really it's comfort, approach a of than car. an more overall the of approach climate an in integral part

attempt a an it's with OEM approach an system with system. OEM reduce to where size So, of make we'll the together the the HVAC

also We comfort solution features pretty will vehicle heating such as very of integrated add to then have thermal is top a compressor-based neck embedded platform. Active some the would importantly, has the we'll advanced, typically by to and that side, a that more solution. a cooling of be likely this mechanisms, algorithm driven That electronics and – yeah, we be on devices, on cooling personalization module tightly and provide well-known conditioning that the is CCS; architecture software all controller the climate the

Gary Frank Prestopino

sounds would BMW adopts if seem system. to pretty of That the mean, high-end as other would car it a well? Okay. some me that I good this, like companies

Phillip Eyler

it. any BMW a to added content. What we – haven't OEM adopt I we've is hasn't with that announced BMW lot said Well of

Gary Frank Prestopino

Okay.

Phillip Eyler

is it's can a here But morning it driveway, day work about within Series. this I to and great That's block comfortable. you, demo tell a cold system. the Detroit, just the X leaving I in on our so drove car a I my XX of and was XX,

So it's exciting.

Gary Frank Prestopino

us this go get with going could but maybe European is give does we European altogether or not I'm production until production, on it it, the WLTP? this thoughts on new familiar That's good actually Obviously, continue to long you then a up thoroughly and just to apples-to-apples to comps? hear. clog on And so it – law annualizes side your how is it's this impacting is now and

Phillip Eyler

And the are on again, certainly, revised meet most struggling think, in automakers on thus option restrictions certain but test a that systems would our it's of several it's and we're make obviously of and some requirements certainly I let to vehicles. holding back on some comments think had an strong vehicle Yeah, those emissions producing effect of the them OEMs the Europe I we this in. pretty procedure

figure procedure going out to with new let how and that to So, little some bit OEMs we that's get a work up the recovery. hopefully and

Gary Frank Prestopino

Okay. Thank you.

Phillip Eyler

Gary. you, Thank

Operator

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

Matt Koranda

Hey, a guys. into on that outlook to by Nice CCS dig more Wanted update. provided morning. the growth, guys the the you job bit Good little XXXX the way.

is So, growth the back I a guess we CCS in but trajectory, organic brought guide. down XXXX

does both kind and head firming seat the that just that just into there. in negative launch half revenue QX? then the up heater first driving suggest of growth XXXX of as understanding turns sort got we of seat CCS And So, heater what's help sort in that you've we me outlook? that Is of what given schedules for should anticipate

Barry G. Steele

that comp bit QX seen And be as a – quarter little GPT last had into So for on bit to if business systems. they improvement see and we businesses very deliver tough still go so is and to We'll to of year, QX a see the against story first see had custom there. selling, some here the $XX on see we've of up be chamber in were some failing a the in million a We the come different orders softening you able they're remember, of fourth heaters miss where in main going will QX all, QX. both seat in case at don't what Matt, the down. Industrial than that as The we're well.

that's lion's that So, we miss QX. between the the see those share two in businesses of

Phillip Eyler

And production overall in fourth expecting bit a quarter. little certainly, on vehicle of we're the softening side all the

Matt Koranda

how just your firming on they're and up CCS. for schedules XXXX, then the and thoughts okay, it, Got for growth launch

Phillip Eyler

pretty probably launches to solid think like what little front. that crystallize come a I to certainly for for us going really a it's too and that still base on we on down production. We We're things look early XXXX. and have waiting to understand know to our platforms it's of comment

Matt Koranda

it. think Battery those development progressing? quarter guys pipeline? that when mentioned, of some I on in Any Management, then front last solution, And to the are especially Got development on how for Management had contracts Thermal that electric it of contracts Thermal updates the Battery terms thermal you comes the

Phillip Eyler

were through last tested started. getting the We of announced they're and They out those so specifications. setting and the going with prototypes requirements and early early development, just for Yeah. being the scoped in some kind built phase awards and of OEMs quarter,

good early into too to So, start, too much get but detail.

Barry G. Steele

Matt, thing still we as was Thermal QX from where little is the thought revenue we bit bit total there. were a one in slow Management a be ramp out we'd on so Hey, expected, that little just point we to down Battery

Matt Koranda

Okay. of the last business of on or guess for from updates or comment you of one just those the any timing can sale me; provide the terms GPT, chambers there sense occur? any I status in CSZ when your

Barry G. Steele

now. want potential too actual Sure. right you We businesses as to insight marketing are being efforts to actively buyers. much Both we're in don't give shown

mainly have buyers, potential think in we a I of strategic, pretty both strong cases. list

before but least excellent year. progress making running very of soon the the – something at very, but you'll so the So, the there. end out chance year, getting of think think in done we're we're of year, There's I transaction next see I one some

Matt Koranda

back join you. Thank in I'll queue, guys. Okay.

Phillip Eyler

you. Thank

Operator

you. Thank

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

Steven L. Dyer

morning, good Thanks, guys.

Phillip Eyler

Morning, Steve.

Steven L. Dyer

that the which the other are heated – more a heated it the problem, quarter, being down of? in that of obviously of to is a function you CCS? up graduate, slower third cannibalizing you production is would business good are from be to what more so speak, or year-over-year schedules business, various In but seeing seeing words, sort people the Is

Phillip Eyler

almost effect. No, impact, it's had not vehicle production really China so European the cannibalization. was It's WLTP and Volkswagen an the is exclusively that to Heavyweight outsized business and heat, for reduction. seat that related

Steven L. Dyer

know, Okay. XXX, wins global your that number the then outperformance obviously nice hiked quarter, is of sort and as book production order at And XXX look this you versus going forward? points; sustainable you a basis

Phillip Eyler

consistent to very I standpoint a to number to also expect in what the in yeah, take we our Well, think ability it, then certainly both I but market, content to wouldn't put happen and our rate expand that's vehicle. a from a

I things, production really know, two quite while. us a to and tailwinds nice think excited position you in there's going vehicle to outperform put that a those about, we're are for So

Steven L. Dyer

Okay.

Lastly growth know on progress you side, expense from making initiatives expense are year, the year – just I your but guess too flat obviously we going guys you on to won't that do I are sort you me, Fit-for-Growth the plan; very to directionally, side? should about on of next how next or much down just OpEx be like year-over-year feel that good the can of operating higher push year, some a say

Barry G. Steele

in benefit a that nine we'll year, impact, are next see seen have of that $XX the we bit implemented new and in So, that to certainly million, however, spend technologies. we we've totaled this little actually first months, inflation on looking normal

we did than about we spent this example, alone, prior more For in year. Climate in the $XXX,XXX just Sense, quarter

it'll year, an think be to full I for we improvement clearly the maybe build but savings. as amount continue still the not next So,

Phillip Eyler

year, our progress get targeted target to next over we're to going there percent as get we XX% year between – to is and Obviously, OpEx to make expect know, gradual not revenue. You XX% but a we XXXX year. of

Steven L. Dyer

guys. That's it. Got Thanks, helpful.

Operator

Thank question-and-answer back turn to like you. closing of the session would Mr. to remarks. end we and for have Ladies the the Eyler I gentlemen, Phil and call reached

Phillip Eyler

improvement. will our joining Look you, progress everyone. that and focused of and your ahead, Thank going value today. great our in cost certainly deliver support. years and We Great. shareholder a quarters Thank interest forward. on keeping you I'm appreciate the Have apprised absolutely and we you, day. for everyone, forward to remain innovation call confident execution, significant

Operator

today's teleconference. concludes This

lines You time, your at may for your disconnect this and you thank participation.

Gentherm (THRM) 25 Oct 182018 Q3 Earnings call transcript