THRM - Earnings call transcript Q1 2020

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Operator

Greetings, and welcome to the Gentherm Inc.

First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

conference recorded. this reminder, a is being As I to Investor your like to Relations conference over turn the host, Corporate would Communications. now and Yijing Brentano with Please ahead. go

Yijing Brentano

section for morning, Thank of and this today's Gentherm's webcast available available morning, of of be results everyone, at joining copy earlier us later a call the release and were you, will released today. good Investor today replay thank the Operator, and gentherm.com earnings Gentherm's a Relations you website. on is Additionally,

XX-K During we meaning make current statements of future results and disclosures We forward-looking federal may respect our factors other update our for differ performance. and events with this reflect actual undertake risk the may call, to within of SEC no and and financial forward-looking security the them, statements. laws. latest views such subsequent obligation uncertainties and underlying to risks see reports, Please Statements Gentherm's materially. filings, including

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

Officer. Officer; On me and Executive Phil Chief today and Financial Matteo Eyler, the Chief Anversa, President are with call

be their will deck pleased During to prepared to at website and your made be available our we a will take that referring Phil remarks, Matteo presentation on have their we gentherm.com/events. remarks, questions. After

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

Phillip Eyler

everyone, and morning, you Good today. Yijing. you, joining Thank thank for us

of a hardship worldwide. significant the As we're created all and well the global has outbreak pandemic aware, challenge

the safety, serve. support the for essential our like workers, line, the to other we of to and communities first and on the healthcare COVID-XX would front has health, We affected all out our deeply remained those responders, communities service by the pandemic, go From hearts of Our clear express our gratitude of and global and members the including ... pandemic. individuals team the providers. top priority outset

our will COVID-XX liquidity, ago, the built sheet have which perspective. two balance X. to extent Slide of still to move growth capital, me are a from full launching ramifications, years severe let a and Now, focused Since strategy economic foundation determined. strong we've be

As no take has conserve revolving X, moved the drew improve actions and one these to of on Slide or virus's facility we've additional impact severity under economy, our predict quickly our financial longevity we the global on perfectly million $XXX in additional cash. can the to include, March. down an further Shown credit flexibility

a reducing compensation X, deferral expenditures XX% XX% are a our We're expenses. capital deferring of other all re-prioritized and operating We're salaried have employees. and portion beginning reducing employee level the executive actively to We capital for May at XX% planned spending. deferral a including

capital working cash with discipline flow. strong managing are to We improve

current on you X, Turning the to give update quick let Slide of a our operations. me status

the of and are Mexico. our In manufacturing morning, for this America, we're operations, and government North reopen of resume majority many our offices open. plants waiting customers of to facilities outside OEM to in As North approval for America still

essential, in is at capacity. is operation medical our considered operating However, full Cincinnati and

facilities supporting In our are are partially are in Vietnam Macedonia primarily at to medical is demands. in on capacity Canada Europe, the fully partial customer limited open Burlington, in our facility our based we customer support capacity. warehouse and our Hungary, operational, in as addition, Ukraine, In manufacturing reduced our as In orders. adjusting China plants business well and North Asia, but

each to and of actively government taking We're safety health to the in from were those back first facilities leveraged Asia-based As you identify our learnings in and around and the come can facilities manufacturing managing mandates online guidelines. situation and into other protocols response our see appropriate COVID-XX we work implement and our have regions, safe the world. the practices the our operations to consideration

our our back online, with health production always safety are possible account As where of up we the members. coming taking and our into line are demand, team ramping in customers

of implemented ensure force our have flow to a key from We global task components to chain supply our partners. proper a manage and

are this real-time dynamic managing all we meeting on requirements customer and far, basis. So we're a situation

Now on X. we financial the to environment, for delivered the Despite on challenging first solid highlights quarter results quarter. the Slide

we the outperform that to were First, versus markets serve. able Automotive to in continue key we

the vehicle X% Korea. currency vehicle China, Automotive the quarter a revenue only foreign decrease we impact and of by our our China, first light in our revenue organic decline outperformed markets Europe, XXX for in quarter, actual Adjusting of points. of approximately revenue key compares of North production production lower X.X% which Excluding represented to Japan in exposure in for translation, America, basis XX%

we our Blanketrol XX% solutions to Stihler. record acquisition across Medical quarterly impact in growing Second, the of COVID-XX improve XX% using nearly and or to excluding from Hospitals U.S. year-over-year, the achieved revenue temperature Europe outcomes. the of are patients management support

reducing SG&A was XX% by year-over-year, of which discipline a to divestitures with of portion expenses and the Industrial CSZ Chambers attributable our managed expenses we GPT. Third,

XXXX. operations quarter significantly quarter $XX improved the we We the in compared operations from Finally, million first cash of and last XXXX of months. in nearly of $XXX generated cash to million XX over flow first the flow from

million with safeguard $XXX business to liquidity the provide total cash sheet quarter strong uncertainties Our at marketplace. help in will generates balance current our which along the model, at substantial the flexibility end against financial flow, with

Matteo will results details provide in minutes. financial more a on few our

pandemic. they respirator and that proud the COVID-XX. used Motor electronic to vital the be I air-purifying powered the Ford the of level very an like partner in Before supply their response Ford part to to which into their is of of controller I'm power as the core has air adjusts quarter, details respirators, the I in announced would design the that design selected to that blower. Company get would the manufacture workers this fight electronic healthcare share of Gentherm against protect controller, COVID-XX equipment The to

across In Ford, including Motors, first and Kia Geely, X. and the XX solutions Slide quarter, on XX we different OEMs, automotive highlights General Honda, our Automotive Hyundai, Great to turning launched Now vehicles Volkswagen. Wall, on

started Buick on Mighty, RXX the we Changan Management, our Kia our Thermal in In proprietary the vehicle, solution We our and Sedan, Compass. customer momentum see Roewe. Battery SAIC LG the battery production launched Hyundai DSX Renegade now Enclave, for continue heating Jeep product to a fourth and quarter hybrid Chem on Sorento second plug-in through the of Kona, we PSA for we've Hyundai CCS launched and Jeep

that quality facilities Celaya, key General earned I'm criteria. the for Motors. like would in our Award have congratulate and Excellence share from the performance manufacturing I hard Langfang that and Supplier suppliers commitment XXXX work award acknowledges pleased of Shenzhen, to Mexico, meet and and This Quality and deliver each China Acuna our coveted global team to level operations service a of highest customer. our very stringent for quality their set to top-performing

in The Asian management. edition that to General Vehicle Automotive publications, progress most Systems luxury Car Management magazine Gentherm On on the results highlighted project highlighted projects subsequently Society results Automotive March Thermal German, our In the a were great XXXX, front, development Electric industrial technology Symposium. continue US Motors Engineers and of in at make new ClimateSense recently, with and automakers. Engineering and in number we Charged jointly thermal Green including presented approaches the Congress, development the of of

in-house Lastly, Promethient's this, first the of products management and of thermal I'm portfolio technologies quarter. comfort with of a in a innovative energy excited deliver strategic developing more engineered innovative to share acquisition combination investments that Through next-generation to we're we innovation strategic made efficiency. like industry-leading

our technology and expanding to R&D for their team thank leadership our global this efforts in continued like I'd challenging time. even

first the Now Slide that million we X, across $XXX on program customers. to awards can where in new different quarter, see in five secured you

continue level of our win over environment, opportunities. prior than lower given While the the award XX% current is quarters to we

many While wins the we quarter, there first and delayed awards are seeing activity increased are quarter. the in second in more

platform and CCS wins newest energy Sportage, we Creta, Electric SUV quarter, leveraging Everest, the the and our manufacturers Rivian well first of truck. with our Hyundai enhance multiple while is efficiency as vehicle the are to Kia comfort one won RXS improving range. customers. significantly Ford, now In Rivian including solutions as RXT awards

the a further like that won I'd CCS example, strategic As have Genesis platform. award share Hyundai we just for to a EV

entire continue for displays lineup to provider to of excited our the add battery and first customers vehicles. to Genesis is their is electronic This very I'm with content exclusive an expand won to we important for future vehicles. we Mercedes this Head-Up of cooling propositions air CCS that the as also and all electric share for solutions Gentherm our award, value brand. Gentherm for milestone With now Infotainment the addition of award

meeting in to is our customer The turn our products Slide a to team in doing business. helping play Medical a role safe. COVID-XX. critical of of medical team discussion while demand, Medical Many exceptional members let's an for job fight Now our keeping X, increased

benefit we quarter, the acquisition nearly record delivered XX% revenue excluding year-over-year, In Stihler. quarterly or the growing of first the of XX%

During a support equipment the to the COVID-XX outcomes. improve quarter, consumable Europe substantial management we increase in which to recorded shipments temperature patients, and helps and U.S. across of Blanketrol

healthcare Chicago, few. Hospital, was to Long patients. treat provider; Health, University of Rochester patient name New largest Island; Brook the in large systems solution COVID-XX New liquid-based high management Memorial on Center Stony of and Medical State's Our hospital a to York thermal several in center academic by Hospital selected fevers Northwestern medical largest York These US Northwell University include just

cardiovascular Treo advanced addition, growth management strong surgical system. our UV temperature new In achieved we in

We product thermal expertise further and in pipeline continue our leverage technology growth. and continued production device port design to -- develop to revenue our medical for

Slide to have growth, to businesses, our few structure and plan To XX our divest drive growth. realign long-term to on focus executed market over solutions we innovative years, bring past cost against our the summarize, strategic the steadfastly non-core

implications and XX,XXX and commitments from globally proud our successfully other worldwide to customers, and our agility, our pandemic that more of deliver shareholders on customers for employees the as I'm extremely dedication we has are than to As that with continue faced flexibility we significant our our I've stakeholders. company, a witnessed

We empowering our enable Tier will Ford lines Motor unique ramp to and, manage remain X production suppliers focused execution, and air-purifying OEMs thermal solutions strong to air-power highly needs, to critical temperature delivering again, equipment to powered as respirators medical patient -- deliver up build hospitals worldwide. on

an coupled capability even future. financial With and in in emerge our immediate sheet I'm with our storm customer strong pivot this as weather the and resources meet needs, our company to stronger ability balance to resources, our confident to

that, for results. turn With over the on the a I'll Matteo color little to more financial call

Matteo Anversa

to thank Thank you, everyone Phil. today. joining call you the And

focus So me and XX the first quarter results. on start significantly items let that most Slide on our impacted

in XX% So by XX%. approximately for to The FX, million COVID-XX, $XX impact product of quarter. in same if shortfall year-over-year. the the revenues revenue outbreak, which of much last our was accounted year-over-year the impact declined we approximately the impact revenue decline been driver COVID-XX the pretty our year. exclude primary adjust have would the the of we decreased And of compared in for the by revenues the for flat product If quarter, period overall of quarter

segment exclude Japan and FX. COVID-XX we the year key Automotive Korea. outbreak, production or of down significantly vehicle In data, comparison, XX% IHS over declined markets year, Our North latest if for America, light impacted XX% was to declined and our China, X% by revenue according Europe,

by higher VW. also automotive e-Mini our due BTM X%, Ford in the volume impacted XX% was we and where to revenue revenue product Wheel COVID-XX launched primarily in up lines, due While newly Steering in additionally, FCA, program. all to was was saw the up Heaters strength at And business year-over-year,

by a were revenue lines. CCS all by specifically, other And XX%. These offset decreased in product decline revenues the increases

platform impact impact would However, CCS, grown decreased and Cables FX, the and X%. would volume primarily was later have grown revenues orders X% COVID-XX occurred revenues from in CCS FX. have related XX% to due to lower the cancellations to continued revenue Automotive decline of RV of Heater decreased and and to due X% but down XXXX. the XX%, Bosch excluding excluding Electronics COVID-XX that similar revenue Seat in

CSZ in this Medical pandemic. was of we first to we more entirely exclude XXXX. Industrial of the continued than move the benefit Chambers where of year; the in the to This due Blanketrol business XX% saw GPT dispositions our we decline and increase due revenues XX% If to a quarter year-over-year, the high result strength to from the compared COVID-XX declined businesses increased last demand the industrial the was or XX% acquisition primarily if revenue segment, Conversely, Stihler. as of of and

margin cost offset the and mix partially reductions factories, was gross the labor due as the COVID-XX, and margin, was If we by strength quarter supplier year-ago in our to result compared move price the The business. XX.X% gross XX.X% for to in lower period. productivity automotive due Medical the a at basis the volume XX annual point the to customer positive sales to reductions decrease of

in Gross the And to lower also compared mix primarily fixed XXXX. improved was sequentially positive expenses, of of points as actions. margin million this quarter, were move the sales that this restructuring September and realignment we restructuring fourth footprint to well our cost. charges included and related XX If other the basis quarter discrete $XX.X manufacturing million expenses operating last to driven $X.X announced as amount by operating we initiative

in last quarter, did of not million quarter. Additionally, this approximately we that year's incurred transition first $X.X repeat cost CFO

SG&A year-over-year and and compensation the approximately Industrial R&D of appreciation operating decline $XX.X we of charges incurred of in than we headcount, in costs reduced driven adjust lower end transition million costs of for as at of rights if GPT So of million, CSZ of to the for more March. the quarter CFO primarily Chambers were million costs. both businesses, by restructuring the travel mark-to-market the stock and divestiture in first revaluation lower due the XX% a costs, was the of Also from lower result the $X the quarter, down impact The periods, lower expenses stock XXXX. $XX.X

We benefit this the market normalize stabilizes. that equity quarters upcoming will when expect in the one-time

$XX.X the of from decreased Adjusted million, million EBITDA or prior $X.X X% period.

cost points However, XX improved EBITDA focus as rate spite volume, XX.X% reduction a adjusted of initiatives. lower the our of continued of on result basis in

compared the quarter $X.XX year. a of to the last And $X.XX a share in was share, quarter EPS in first finally, adjusted

million, driven XX%, Our tax position we approximately of to was lower of income in XX% than impact the was rate $X.X the cash by restricted Chambers Slide million the move higher range of at And including the tax to the in sheet, higher disposition to the our of quarter cash XX, coming rate tax CSZ slightly quarter end our the due Industrial COVID-XX. expected $XXX low If the to of XX%. balance was in jurisdictions the business. quarter from

as in Our we of result cash the drawdown million, $XXX in the from middle million a March position a revolver the executed primarily quarter the by precautionary increased $XXX as that of measure.

cash to quarter. prior-year we had in restricted cash operating from quarter, As million $X million activities $XXX million and of in XX, April approximately we first In cash. compared cash, the equivalents approximately generated $XX.X the in

of for Additionally, technology we had strategic approximately and program expenditure investment our in $X million of cash share for the portfolio. repurchase cash million $X outlay Promethient's

at the Our net debt XX, decreased of X.XX. $XX by $XX million during the a quarter ratio, the from XXXX. XXXX, $XX end million leverage million of net our of was first as end as result, of March at the quarter to And

which credit of quarter, on expect lower the at we XX, end end first approximately on quarter. As approximately had EBITDA adjusted the remaining Based from of stood including availability received million the second on be cash we line, consolidated at the total XX the March $XXX the the debt drawdown. million, revolver of our month trailing $XXX of ended the will

are for in withdrew due environment. to of Now March guidance XXXX we as macroeconomic aware, the our uncertainty late the you

what little However, detail would at more the actions we beginning the the outbreak. like have mentioned bit I been to call Phil taking a of COVID-XX provide since that the to regarding

program repurchase of liquidity. outbreak our first dramatic in the March, the impact clear early as in share we suspended So preserve of to became all, as soon order

operations eliminating terms we decided XXXX.And our are to with capital from million. first what by also XX% of quarter We a of through possible. sourcing $XX full plan where negotiating original our discretionary accomplished and $XX finally, XX% review reduce and had payment to non-critical completed are of by to expenditures we costs, reducing our our Moreover, re-prioritize to expenses operating extended partners we our the addition in already million

So we're talk seeing about the let me what in now quarter. second

Korea. the latest decline a markets our on Japan North in production is China, America, based So of for and vehicle Europe, estimating IHS key forecast, of XX%

and ramp up is forecast. in slightly mind will they we is than of the significant prior over accumulated to America the up likely from product resuming Please North Our will year Europe. orders revenues suppliers. in to more second in expectation year, Automotive expect before also IHS Therefore, our OEMs production majority decrease that that shutdown inventory revenue keep slowly, quarter our use the

guidance still on postponing a will June uncertainty we exists, we a our later which originally around production date to was also XXXX can clarity X. scheduled levels Given And the for a operations. that full-year we investors, until as provide customer and ramp-up result, gain strategic not the more meeting update future industry the of are

in improved the currently that to XXXX I weather buybacks, that me cash around our prudent the allow our implemented steps flow So share approach the let available, We liquidity financial us with discipline believe summarize. storm. ample to just will free generation, mentioned, combined

allow Our line April protracted XX in production light XXXX. in current key in a to liquidity vehicle IHS markets should sustain XX% us position market downturn in forecast with our decline over the

situation created So very us. for in of all has the conclusion, dynamic pandemic a

We will maintain continue continue make market and growth opportunities. our further and to pursue monitor appropriate health the as to financial to adjustments

With that turn the I session. the for call Q&A will the operator to back

Operator

Instructions]. [Operator

Please with question from with proceed first your comes Riley Chris FBR. of Van line Horn Your question. the B.

Chris Van Horn

everyone. doing is and well. hope my morning everyone Thanks for Good call taking

Phillip Eyler

Hi, Chris.

Matteo Anversa

Chris. morning. Hi, Good

Chris Van Horn

have slated to that? for maybe product in Have an schedule conversations is guess or best and your planned progressing as you proceeding around launch and us knowledge product I to we're being So at -- update on, are their some your looked you talked here and we're the hearing kind XXXX as April give some in got deferred. go launches of are OEMs

Phillip Eyler

plays that seen We've the that XXXX seen, launches most Those course those how what watching watching of the out. closely closely. very we're obviously the impact. meaningful years delays -- extremely of the kind XX We're so have vehicle and are we're over those ones Based couple of Chris. we've XXXX sure, on Yeah, far.

-- that's now to But at right have flow in. more some the right a at it about we in see wouldn't we're perspective, XXX projects And of where puts vehicles, surprised base least be that's on that kind so now.

Chris Van Horn

Got challenges you out? of could break really, to executing there. Have temporary? that on of What's the cost what from And extract permanent it, curious been despite you've okay. been the just you've or kind good out I'm more able that side here. versus broken at you really

Phillip Eyler

Yeah, Matteo tell will you.

Matteo Anversa

if you're have Chris, think, pandemic of I of clear, pandemic a that So to the couple the would things. impact the -- became taking we since actions been referring the I say

foremost, and Fore our we we -- protected priority the of first sure that to make was company. the had liquidity

mid to XX% our of opportunities March, to revolver with concurrently operations said by one. in examples couple And easier which my to the all remarks, the we the be little CapEx, will bit identified give a CapEx, as XX% about compared gave the we guidance original roughly XX% the doing. of in looked we halted And February. what drew of reduce that prepared is we then a at I share I and And buybacks. down So then we of you starting

So the first to clearer. we picture expenditure CapEx until expansion becomes of volume all, any related delayed capacity

year the We year. also IT non-critical have that the improvements kinds for non-essential that such we of in building throughout as the of planned programs, example delayed all be programs and will some planned

XXXX reassess we view effective later So better And if delays will date, we expect through come then postpone the clear a expenditure at will would of and in be volume. to these a once older in will have I this we XXXX.

side, -- similar the the on OpEx operational approach. On a

strict outside of bottoms-up, costs, operating reduced put travel, obviously a ... did but all includes we kind we costs. the expenses on controls So services We hirings. very this training also discretionary

million quarter starting would would costs, in these I that that all in benefits the $XX about -- the expect second yield the So first from of approximately rate we had run annualized reduction the quarter.

picture at mostly this cost X to you think of least loaded cost will the XX get on hit reduction the we assume stay, volume. towards until end a clearer will will to in the the be I -- they I back-end -- months, these cost see there to to year. would And be next

Chris Van Horn

Okay, great.

Phillip Eyler

-- that to really be obviously on orders side closely of top obviously production we'll preparing from at looking to are on and structure of Just kind preparing and level of and our out. adjustments both volumes will And sales meet overall where OpEx our be cost the that, side. we'll cost customers

Chris Van Horn

that great, you you or -- Can the on able here, all you color. a that? potentially Mercedes. describe and to award thanks for Maybe application. application award what of were how a new the is that with side, like detail seems win able -- more positive kind air little It new to maybe Okay, cooling what a a

Phillip Eyler

Yeah.

some asked you came then on help the know, an them. us for We led And of have they were kind overheating thing some having our Mercedes with became great and their that a to and situation. as relationship, issues product one for another analyzing and thermally design and to choice obvious

really So it for that was could a assessment with product the kind an along engineering them. we that craft could help, of good we

many out it be sitting be pretty pointed advanced our number consistently our this think table I one is from at the customers. engineering across in valuable. case, I And goal to to proved as So, times,

Chris Van Horn

healthy. stay Okay, this and much the great. Thank so time for safe you morning, and

Matteo Anversa

Thanks.

Phillip Eyler

you, Thank Chris.

too. You

Operator

Instructions]. [Operator

of Brinkman with Ryan question. your question proceed the line next from JPMorgan. Please with Your comes

Rajat Gupta

right, question. thanks Gupta for Rajat All for Ryan. is taking This my

Phillip Eyler

Good morning, Rajat.

Rajat Gupta

later progress in had margins. cost know, how the be here execution kind the And second You're should would cash or margin And on are then that and you? that about the in half? we in in expecting that And the second how should might third how and be second how quarter, you the the what here through other mid-May? do the the on Just of side, in a the in rewind quarter? also, improve? follow-up on through what previous the good again expect to then unwind cost starts like about reductions, Thanks. decline first decremental follow-up when we OpEx -- flow capital? the -- and rate to fourth like working how you should response. rate Based mean April in pretty I think we on cash burn through Hey. the clearly decremental quarter as talked quarter-- Hi, you of like a quarter

Matteo Anversa

one the about start me with let margin. talk So and first the

me the let first So start the -- with impact. quarter first

we to my $XX XX%, had, terms net decremental little remarks, mentioned side have impact bump was margin that million to obviously And about in million due majority then I of positive Medical in as in a the side. in So prepared terms this the $XX the COVID-XX; Automotive, revenue on we rate. the in on to and was about roughly XX% of the

first as terms quarter As all, second color. me is of far bit is still very visibility the I now maybe releases. in concerned, second little -- so you the right quarter that have we a the on very, would let say, of give limited of

year between regional we closing the what from decline of surprisingly, the But compared seeing of over comes of in process and XX%, as is bit which topline, month of mix what where of we can and XX% the obviously month America, which we the seeing April, April say in starting to in decline revenue I down Europe a are we that on year the the a the the in are are happening be to first different in quarter. of majority not the is little experienced North

to what a obviously the the expect, the in than reasons. So, back to to quarter in what margin of couple is experienced we second higher quarter, be on margin, decremental first your would just question be I for think, the I

the magnitude the decline revenue is First, significantly higher. of

will quarter towards North I last weighted is as different, the We also and mix, America with are half talking a revenue, what year. we But almost over mentioned, of the more it regional because about be Europe. had

So consider the we way, of that quarter. negative margin. I think, at decremental the points, a add also look second to as we impacts, a need in other I couple would

some the the continue maintain some still salary ramp of our the speak. have percentage as of are volume. we First, for post labor is we we locations pay regardless unclear pretty COVID-XX, where government a force In people the we the to which of of will required up the certain preparation by in to local to work, of

ramp-up items on how will will we in that ramped fees we ramp-up the serve that the on in quarter. the order we in the experienced freight back expect That's would incur premium I customers. out up depending then be, some as the also play to additional up And some how cost will and our Asia, and expediting of -- steep first

to that's margins quarter. how bit we color about the So second a you of give little the on are in decremental thinking

As on your question cash. far as second

So started we on where the I we're pretty think pleased year.

look That came -- CFOA $X we the versus at I the million think if year-over-year you improvement. second capital the from million improvement year. that $XX quarter, in experienced last working really

a start the it's So good to year.

would steep how the few a drain cash the ramp will flow quarters, what capital on but of that will function depends for to be. the honestly in company, past the a -- how of say would most -- likely In terms running ramp-up that of the to between will the it's -- quarter, capital ramp-up But the the I quarters the been depending timing on different in And we be. all scenarios how the three the the three up. the next remaining way third have this amount on the be scenarios working in second that drain expect come, play I working in and will out all multiple in weeks,

Rajat Gupta

color. Got helpful it, a that's super

up it decremental margin. sum to the Just on

to margin impact that COVID-related said on XX% So was the detrimental the you XX%.

the XQ overall or decremental was comment be So bit the quarter of on a could XX% margin? that more second the to in little higher XX% relation end the of that, to

Matteo Anversa

no. No,

expect it to due a the be would and the I that margin first second in I and outlined. between would reasons So XX%, the higher decremental little margin quarter than got the quarter correctly. The so to I -- that was you've expect XX% decremental

Rajat Gupta

Great, luck. thanks so much and good

Matteo Anversa

very you Thank much. Stay safe.

Operator

Your from proceed line Stember your with C.L. of King. Please the question. next Scott question with comes

Scott Stember

my questions. thanks and for morning Good taking

Matteo Anversa

morning. Good

Scott Stember

right place all the before you're Could your up now, you flex down markets? to of the and remind end your that and cost us and the with structure COVID taking maneuvers that ability variability

Phillip Eyler

we've Yeah, think taken area an I that's great pride. pretty

follow improving. you XX%. even it If lot been several we in consistently the And it's kind quarters, margin of last really performance, at to the rate can of almost held our close over gross pressure, under going QX a

So, got more do we to, just that lot bit good able got Obviously to adjust helps in to run get Matteo that maneuver should back I to feel year, adjusted like factories clarity to that that. transpire think out, quickly that's I the we've be of our but -- us We've in this QX, adjust with pretty there that a facing flexibility to demand. - later what's trough to as we're get model we difficult a to it's a going little rate. once pointed

Scott Stember

Automotive is up, you quarter? fair it. facilities that as the comments far expect that made there ones correlation a year-end your to that Is you guess between it May that assume the it sales operating back in at to be, right production particularly as that pick least as fair Got improve and markets And are direct that somewhat are is for the the segment where to it I to open. start at assume obviously from now, where but about, will

Phillip Eyler

but slow are confirmed North low we projected, looking ramping that May And up obviously XX. information at has mean, in to is volume. XXX% very now, a I not still we're gradually projected yet is, ramp-up. Yeah, which be the that May to else America is start by Europe production right very going everyone

In mind keeping fact Tier we're a X -- supplier. -- too in

Tier is So X suppliers' in a lot product our of the at inventory locations.

ramp-ups. very around is no little in we within had little lines further proud expectation side, measures, out each workstations reconfigure distancing -- preparing which allow a assembly so COVID-XX little be we and our the all ready. the our the plant. to -- drop and is So task, less We've COVID that our and why restructured many the or distancing, plants But are which than delay playbook, the in of of IHS of social project easy That's to on it. I'm a of go actually the our of quarter there including was show. for team we're safety We've plants bit but through would said, expect to going more a maybe

manner. we'll So albeit a as maybe keep to demand less up productive well, turned switch be that slightly as able on, at soon really gets with

So think see. all I kind and of that it's wait a said,

Let's see the out. demand how plays

Scott Stember

crystal last on just year, and to the particularly situation free And it. of maneuvers obviously think you Got for that can you your you given your question, the side? some working ability talk right are obviously now being pretty it's with but can remain appreciate tough positive down, the do production in the ball guys cash do about you capital just and

Matteo Anversa

Sure.

ago, think, managing I couple launched the done years of a say, have I flow are strong and -- look we capital strategy I last in focused since we generating strong would the around around a really -- that building working work paying processes think the free growth foundation, off. cash

were really just we ago to the financial better is the work half think a than and credit where year done. condition has a team we all on that the year-on-year I a and this in entered much

work pay we at working to if it's dues have how be put we'll to But some to think the today still opportunities think around sync, And some capital. I look I that collect said all think days how the days steep that to collect, I in that make sure will -- the and going to that a much we again be. have. I longstanding And our function they're will on so that before, past I of ramp-up drain we into on as mid-XXs.

think right now, position. say, also sitting would good a relatively are terms in in inventory we of I I

sure, strong cash But maintain but for lower XXXX, should in our flow will we what XXXX. to obviously are also obviously that momentum free striving help. for we it in So delivered than be

Scott Stember

so right, Got you it. thank All much.

Phillip Eyler

Thank you.

Operator

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

Phillip Eyler

asked you thank our Well, to maybe All innovation development question on joining today. I area one right, very the for and advanced front. a highlight call and want did all you much. wasn't that's thank where

One maintain on. advanced signs working that that see customers technology I of we the focus is consistently see are we our on positive

key example continued that So ClimateSense prioritize effort partners have our and ... an as that.

at to looking everyone OEMs knows ways cut suppliers and As are costs.

our boil the even that the seeing project shutdowns We're to encouraged resource level. that reviews in still up midst and critical of we're heavy

So very teams that's to projects keep creative those our our moving of different proud for pretty and exciting of us and flexible being on all forward businesses.

today's So has more very even important with operational shared become which in COVID-XX in that execution, environment. the innovation past, improvement, focused said, and on as remain I've consistently cost we

around economic to I'm our of that for what dedication team's these flexibility deliver customers, extremely current both agility, to shareholder our the and the well on commitments crisis and to all and stakeholders. significant ability our our emerge Despite from value. productivity to uncertainties on our current continued an Gentherm and means long-term recovery liquidity strong deliver of position us proud focus with our

and our to you. support progress. forward you interest and your of your Thank appreciate look keeping We apprised

Operator

This concludes today's conference.

for your may at your disconnect lines time. You you this participation. Thank

Gentherm (THRM) 10 May 202020 Q1 Earnings call transcript