THRM - Earnings call transcript Q4 2020

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Operator

Greetings. Welcome to Gentherm, Inc. Fourth Quarter and Full Year 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. this being note Please Instructions] conference recorded. is [Operator conference your host, will now Brentano. to the turn I Yijing over

You may begin.

Yijing Brentano

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

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

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

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

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

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

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

Phil Eyler

record challenges two swiftly proud agility and in the was global one the half, In XXXX, saw health in demand their team significant for while from members. the to liquidity the all second followed automotive of today. Company. in and worldwide, XXXX us half to global that preserving flexibility, of delivering thank team the opposite half was Gentherm for dedication joining a first of of Yijing. like then second maintaining pandemic half. you, the you safety everyone, results for our year no morning, which created first by recovery Thank other, I'm and Good and operating pivot strong hardship the a global the polar extremes

half plan year second solutions the shareholder and growth, in to strategic bring of performance realign that our continues confirms market focus long-term the deliver to Our returns. our cost innovative structure to

XXXX in automotive, In our outperform slide We Company. strong clearly detail. little key percentage Now, finished vehicle record-breaking XX more demonstrates environment challenging our we XXXX in a execution over in X. operational quarterly the profitability history achievements markets enterprise. a generating production fourth such the turn to in light points. Accomplishing by a at of with Please look let's revenue and the highest these across quarter,

at along increasing the back Japan and other pandemic. Gentherm’s the full markets XX% vehicle wheel Looking a Management, China, and and new hands-on-detection Battery with light comfort rates outperform enabled XXXX, that as Europe, Thermal climate in enabled result declined steering of of Korea year serve. electronics North in us solutions America, automotive the production to key we versus consistently launches heaters take in of

production translation, a in the in XXXX. points. quarter, Excluding decrease key by awards we fourth organic a outperformed basis vehicle our our of revenue year of full finish the With secured million X% automotive impact of markets light in currency $XXX XXX during awards $XXX approximately million total in in foreign strong automotive

conservatively prior growth. our our by we portfolio. Stihler such rate demand long-term Blanketrol annual in for and blood While positions growth and flagship for XXXX, to warming record us and of driven opportunities manage win revenue year-over-year Hemotherm with of award achieved decisions, XX% the products years reflects than medical, over as double-digit lower addition products is strong unlimited the OEMs our level sourcing annual In as well

with operating continued XX% negative rebounded adjusting half, cost we our XXXX. and basis revenue the level. XXXX, XXXX, million On year, improved launches front, pandemic adjusted shifting for effects from increasing delivered first XX in rates and manufacturing operating meet operations at first reduced in expense $XXX expenses, the operating percentage we and our the half Adjusted to unprecedented XXXX in all approach the disciplined of take Despite a ensuring new performed times. XXXX. exceptionally points the challenges safety global EBITDA divestiture our points from while to XXX a swiftly demand, of well and acquisition of and chain in to expenses in expenses. second then basis managing of line our employees After On the the teams front, we supply the in by responding restructuring, the the in XXXX by as

the EBITDA More our delayed improved our will review tax over a adjusted XXX year, Company well information earnings as margin about our up we points and minutes. on to as quarter results, that the for from valuation from fourth total XX few XXXX Matteo rate provide details some announcement, asset basis XX.X% basis points in more financial XXXX. importantly,

on Audi, Now different General turning solutions we highlights Hyundai Volkswagen. and Motors, vehicles BMW, our XX automotive to Ford, the automotive XX launched X. across quarter, fourth In the on slide OEMs, including

breadth our we We the best offerings, continue Hyundai Thermal future Management and CCS BPS. momentum Battery current to renamed or the BTM or all portfolio Solutions Performance see recently In Acura and MDX, represent product and F-XXX, product to Sonata. as of Battery Ford for Hyundai of product on launched our Tucson, order

technologies. fastest of Solutions portfolio our cell of is Battery connecting Performance growing our One segments the

BMW demand expectations. We technology our on proprietary our quarter to have and continues original third both, In the we technology. solution that launched and exceed connecting cell XXXX, electric, the our a tinfoil MINI wire-based wire-based of

won pleased German we automotive. proprietary this confidence a our leaders OEM of also technology of connecting which our the demonstrates OEM cell XXXX. the by based on tinfoil one in previously, with first premium quarter technology premium now discussed that award share As fourth in to BMW Gentherm is in the I'm

applications. mechanical significant innovative some opportunities this that developed structuring technology for and flexibility team design R&D Our offers new exciting

of applications customers. will new OEM some to be these We offering soon

make ClimateSense part based physiology. strategy. is continue our you'll using ClimateSense, our great critical long-term on We to which, thermal platform an is on a microclimate recall, progress as software-driven algorithm of

We are solutions in development reducing announce comfort. the by temperatures, while we to with range BMW. launched extreme best-in-class the project consumption significantly I'm disrupting all pleased have vehicles thermal phase passenger the that in increasing and providing current of third power

of In addition, we Honda. been just since ClimateSense on have share X Phase an to OEM XXXX. ClimateSense kicked of them. We've electric project Gentherm phase And development Asian project with the off vehicle. project I'm for and a OEM And with Audi an an completed is development working happy this that our advanced second

X to well. with continues Motors project development Phase General Our progress

hot As testing. by XX% extension, delivered XX% Translating range in cold its the savings to energy previously weather weather these between ClimateSense we range shared, and savings cold cycle, increased XX% in testing energy in to offering These for ClimateSense weather XX% content results a in efficiency, our ClimateSense is Gentherm in as the and that well it as demonstrate a approximately coming for increase represents XX solution or miles. years. energy opportunity EVs significant unique passenger savings comfort

multiple to secured is opportunities of you across XXXX. Volkswagen year. for growth. awards, new awards Now won global at program can on to In strong solid available that winning F-XXX, This X, $XXX to plug-in-hybrid. platform customers. team XXX, CX-X, the our XX% for EV, business a a of pace us CrossBlue in slide the Chevy challenging quarter, Hummer the the We proud a with including over CCS Range Rover, future see CUV, especially win we that XX different we fourth I'm in foundation a sets million finish where Mazda new Ford, GM continue wins to and

seat partner, eight growing seats, expand also America for with OEMs, both exceptional our our an Chevrolet awards new only heaters is fourth business Motors. not received able in longstanding our continues secure Canyon strong an Gentherm China. wheel position the program wheel and including and for General additional also together, In and We steering to Acadia, across the developing to awards and adopting steering we North nine climate six be Terrain Colorado, our continues technologies. of new in and [indiscernible]. heaters the quarter, and one GM customers were the to but control GMC

In longstanding global heat manufacturers. our business largest of EV awards with one addition also the and we've wheel steering additional customers, seat secured with to growing

Moving to by the milestone This quarter with award example unit a winning control We electronic with adjustment in of credibility fourth achieved Audi. have further electronics. technology-leading wheel established an another OEM. we innovative is steering where a

award to we addition, won with Ford. share multifunction In I'm controller electronic pleased a next-generation just that

added with to used which our utilizes If intelligent Ford now be North China seat control and internal battery memory in Ford our module efficiency positioning We combustion helping for technology. and vehicles system boards, control This both to power win other produced functionality, running America costs. will system reduce initial you'll with vehicles. functionalities, combined solution climate increase electric recall, proprietary example, the have Gentherm's Lincoln further and for and in Ford

importantly, more Ford's advanced also and compatible will with have congratulate cybersecurity module, to electronics features. and architecture, of like flexibility, electrical expansion I business team would global OEMs. which over-the-air it's our for which innovation and allows feature More next-generation with personalization, our this for connectivity update continued

strong in us position for for pipeline Our well rates, a track win growth with RFQs, of coupled record continued automotive. healthy

climate expected role like thermal delighting hybrid, XXXX, and Currently, and comfort space. to will are range of cell some full Gentherm, of solutions. growth the also including and in XX% Customers with XXX momentum comfort. an production, Gentherm's heaters, OEMs. we course, with I'd electric electric future almost technologies increase. connecting Battery of heaters, Solutions, solutions fivefold the play Electrified XX% heating working to is proprietary only have Performance such and, share solution important but programs the production wheel global to tinfoil seats thermal a for to seat not grow for as slide vehicles and PACE extending of battery XX in from EV X. like to award-winning mild management in on passengers battery our steering thermal hybrid Moving looking in and vehicle XXXX controlled current we're

multifunction total, for this of year. thermal In for dollar customers total we In addition, ECUs we XX the providing XXXX, awards program platforms, award ECUs. on value for accounted with and our different are won XX% innovative EV and over

range extension. electric provides manufacturers ClimateSense OEMs software, more solution future we're opportunities content the enhance efficiency To growth to and completed are now projects, date, our Europe four leveraging improving and energy seven significantly thermal while Asia. our solutions America, significant comfort, significant North for our addition and working of we've proprietary through and on in development with More increased ahead, vehicle Looking range.

our let's a slide to medical business. of for X Now, discussion turn

the a year growth. demand, fight XXXX, with created role moments in mentioned As medical play in in especially some year-over-year revenue record to of heightened our for ago, first XX% in the annual helping critical pandemic few I a we of half delivered that products The COVID-XX.

Health a the reduced hand, across Einstein by in purchases that are created in or consumables expanded filtered financial are we Pinnacle This capital Pennsylvania. including used caused large in flow impact we tailwind surgeries, in air to a networks, hospitals patient systems Philadelphia electric elective and and Blanketrol. the procedures. quarter. in delaying multiple due delays warming hospital fourth warm Despite Health saw our headwind On short-term Harrisburg, Nonetheless, other the with hardships halted

to Medical progress businesses. and In leveraging our programs, make continue synergies on addition, we innovation between thermophysiology Automotive

a Supplier look to On for to General customer a GM supply highlight top Coveted named to just I'd Motors Supplier base. of exceed X few we and expectations. first several earned the back were of continue award Now, like time for Gentherm's representing year our let's We completed. slide manufacturing of X% at front, our General the in the facilities. from the accomplishments the And we we history, XXXX. customer of Motors a Quality Excellence in Year, turn

suppliers EV X won CCS XX exclusive we in was award all Despite the award several in our In global North Honda, addition, XXXX, XXX. total year. brand. the supplier OEM X Seat the provider We history Company's Hyundai won for Genesis named Gentherm out of by sourcing and strategic We a vehicle largest of Control activities secured solutions American we the became a platforms, slowdown for Top of in for in Climate only strategic series. the single CCS production the the Genesis BMW awards

are products lower temperatures customers. below increasingly We over of our also weeks, solutions multiple significant a affecting drivers Motors. program our General passengers awards won road. few largest our the hundreds customer, in of the people of the freezing across while XX With comfort in states last take adoption on millions on for XX and from We've seen rate increase relying and

both to solution and won steering detection award cooling combined sensor Volkswagen. entire ramped tinfoil displays with and Performance air for content Solutions, head first our for Jeep production and and We heat Renegade their vehicles. innovative, continue BMW to of ICE for add cell electronic We our electric We of hands-on Jeep the won successfully up wheel Battery increased lineup and heating award Mercedes battery connecting BEVs. the we In future with solution our first Compass. for infotainment

the continued times. these leadership challenging to R&D team On front, even global our in innovation our technology expand

Now, let me summarize.

profitability market, the commitment improve the on results I'm financial Our the our our of continued in for an talented record-setting and like quarter of bring growth, team team thank I'd year. global to realign strategic strategy XXXX very adjusted global in cost EBITDA. our revenue overcome work market. another innovative hard and structure in agility, execution focus in and to demonstrate Gentherm successful to our plan unprecedented of proud deliver solutions to and delivering challenges the

there Company little the turn the While flow This, entering in color on relentless macroeconomic still for XXXX with over the operational generation, I'll financial and strong call the Matteo near-term XXXX focus with and now leadership more combined a well our is with on results uncertainty for our we're strong long-term excellence, guidance. cash environment, positions growth. technology that, profitable And to momentum.

Matteo Anversa

to and Phil, thank everyone you the you, call today. Thank during

certain like results, about discuss assets. bit Before valuation of I little fourth details provide I the review information quarter a of our the financial of would our more to tax

deferred overstated and expenses deferred close an and determined process, $XX.X After in tax we that records, investigation of evaluated XXXX. During assets. to identified the were XXXX, assets properly quarter fourth understated not certain we we thorough realizability income of year-end net historical income million for due in review XXXX that Company understatement a by tax the of tax approximately

this the XXXX had now have revision impact that we quarter EBITDA figures. our and release adjusted and cash no change revised in reflected financials, morning. year earnings the that full contained fourth issued the We tables and is in not did The reported

to let quarter Now, our fourth the most me items focus slide move that results. significantly on impacted XX and

the foreign If mentioned of product year. Starting the of result increases compared as XX S due product XX%. with with we specifically, to quarter, a RV was solution CCS Class, And the increased overall launches Kia, by revenue negative VW increased period Phil approximately primarily partially products saw Daimler, on China, segment. prior well Blanketrol $XXX SUVs the to light COVID-XX Mercedes of key of $XXX products increased result to equipment revenues in more year We the over Despite the products reduction a revenues the other Steering In quarterly automotive, last corresponding to And of of prior the market. to increased Hemotherm almost X% medical trucks revenue light a last elective increased quarter by we negative and fourth segment, XX% of production wheel enabled decreases XXXX. of of earlier, impact million over and pandemic launched a revenue with take BPS XX% with volumes the markets with increase same and impact Revenue and vehicle seat virtually new of the newly as revenue increased automotive to with the record we Bosch XXXX volumes strength automotive. IHS latest General XX% translation, as for the a XX% and as approximately increased COVID as our the board of as company increased launches compared group. revenue the XX%. with rates. year with in points. higher demand, percentage of all to FCA primarily in to year revenues other other new new medical For program XX% due to XX% record Europe, million, Motors in comparison, due approximately outperformed thermal and cell module as product higher offset the quarter. new America, FX, approximately the heaters hands-on-detection increased to higher management move surgeries. strength Hyundai Xs. battery by adjust automotive for launched e-Mini. recovery well heaters launch these vehicle and connecting due by period. to Electronics compared revenues new according Korea, and by revenue of a Cable higher increased of the increased by the and the our Adjusting decreased electric due lines currency heaters to Japan by fourth X% in our to the the data, approximately by as production North impact on revenues as GM as of revenue XX%, Seat the Samsung, of were tier well compared If volume automotive result from VW. X% Ford higher memory by for in quarter, XX%

the FX annual were supplier cost volume the of due freight other and move we was if Gross gross driven XX.X% positive The ago primarily appreciation was higher fixed by cost increase the labor the offset cost period. margin to costs. by to higher reductions, partially euro for margin. and quarter due in reductions. XXX U.S. Now the dollar, basis-point this and factories, wage XX.X%, inflation year These the leverage compares rate reductions price the productivity to compared at and to to customer

as we of quarter million fourth expenses. expenses, of year-over-year million was adjust the to acquisition to as well fourth XXXX. as charges. of the travel, amount well as both to when increase as and XX% the in Sequentially, were Current quarter operating $XX.X this adjustment year result XX% price due and quarter of compensation. primarily million million, million shows partially $X.X history of adjustment for last was $XX due a by up $X.X fourth lower stock to year by the divestiture approximately stock offset $XX partially increased $XX.X prior and from million charges quarter in period. XXXX. The and to This to compared divestiture compares and EBITDA income cash that the acquisition by increased of Gentherm's restructuring, in the million were appreciation reduced expenses pandemic. was year approximately in incentive of Adjusted third restructuring settled appreciation lower timing. of compensation mark-to-market other lower the income $XX.X from which by $X.X highest included in mark-to-market we by million R&D approximately approximately $X.X higher These the If expenses of driver Moving Primary rights incurred quarter, approximately year's of million the restructuring expenses the increase operating or were trade of the adjusted R&D mentioned in earlier, driven of periods, project impact I compared $XX.X impact offset operating the and costs period. incentive Company's prior million

XX.X% basis points. the improved Additionally, rate EBITDA adjusted XXX of

quarter Finally, per the was the of share year. adjusted EPS compared $X.XX diluted in fourth share in to a quarter last $X.XX

was approximately year XX% the for in full rate quarter XX% the tax and Our XXXX.

closure rate international multiyear settlement However, tax that second XX%. was tax occurred and quarter, for effect our audits XXXX approximately of the the of in for adjusting the after

to from conclusion I was the range the of that rate deferred review in expected impact Our assets XXXX due tax to than XX% the tax of cumulative mentioned XX% earlier. the lower of our

XX. the slide to sheet moving Now, on balance

at $XXX of was cash the position quarter the million. Our approximately end

increased $XX result Our a million of cash cash from the the of the quarter position the quarter, end generated activities. in by third from as primarily operating

as on XXXX. in million. $XXX trailing as million, of by leverage third debt hand XXst, on in and our up million record negative free gross a Additionally, a result, the $XX was cash our we remaining the adjusted X.XX. up the stood from exceeded in debt, and the net availability ratio the decreased from available sequentially the million net Net XXXX, with end approximately million, cash Company ended on December Based $XX approximately the of total XXXX $XXX we liquidity million at generated $XXX line position The We par quarter. December credit, was debt end in flow closed third consolidated of on at XXst at as XX-month EBITDA total $XXX $XXX million quarter. of of cash had

of ample allows reduce over on last months, million to repaid $XXX due $XX case As outstanding conditions revolving maintaining interest us resurgence. million we balance worsening economic environment on This the in few while hand our the improved credit to costs, macroeconomic facility the the COVID January. approximately in of cash

of cash As end $XXX approximately was January, of million. hand on the

turn let's Now, the guidance. XXXX for XX slide to

in be vehicle range at of We rate the which market IHS are expecting line our light forecast. in current the $X.XX to is XXXX product grows the assuming FX in XXXX, latest relevant level and revenues billion, billion low-teens at with production versus remains $X.XX to in

to rate XXXX approximately have an the XX%. organic exchange benefit guidance basis rates. our XXXX growth the current of XXX at versus FX expect Therefore, midpoint an in of We points of implies

business grow than negative as on medical a automotive impact pace to Additionally, surgeries. elective our continued of at a slower of expect we COVID the result

half also anticipated of XXXX. in first factors to current Gentherm our in on the reduced semiconductor Our of based to production OEM the guidance shortage impact understanding the due

in expected to range to to in expenditures the support assuming we and the terms million. to million measures we the and the R&D $XX to to to range to new in to to to changes In do our significant tax be no XX% increase launches and $XX some of compared of be technology of be Capital estimate regulations. profitability, XX%, rate of tax of XXXX are XXXX. We expect EBITDA that we more our XX% invest rate range adjusted expect austerity implemented in reverse XX%, in current

echo I about Gentherm operator, the our before performance very comment proud to the in record to XXXX, turbulent call of launched team's to I a deteriorated am team. turn then. I we wanted and the ability execute Now, production deliver Phil's automotive we year. growth margins XXXX. significantly since in achieve our to of When has set goal in such outlook June high-teens strategy EBITDA our focused The back

that execution on improvement us the operational revenues. the to will our with spite goal begin enable And of the back XXXX, focus and our that, believe session. to call cost operator turn meet established Q&A the profitability lower in to we However, let's in

Operator

[Operator Instructions] Our first question is from Matt Koranda with Roth Capital Partners.

Matt Koranda

these on Hey is guys. get sounds projects commercial back sort The commercial ClimateSense? quantify gave win you of like Good that? does thanks. like most for of also, just more. do look of them the after do given what into morning and How XXXX, good XX% It opportunities ClimateSense level And operating and rate four new of color normalish any for funnel bookings? encouraging. OEMs, booking on to way guys Phase completing drop long more What to a some a then in working X of number OEM we're an scenarios you completion on some development like program then a

Phil Eyler

in question than XXXX about Well, awards. a in healthy already year. QX progress XXXX better of sure. and is I'll excited expect a be amount, Good And to pretty to the see we're morning. the Matt. with start your our pipeline, for be looking terms Certainly, better on

OEMs coming. optimistic. the launches Definitely, more suppliers terms for aggressive awarding new pretty So, exactly it's much, to we're getting a much are little of but hard in say how

really we're about the excited yes, side, ClimateSense the On progress.

announced, As potential we're know, are -- projects optimistic pretty commitment to you that two pretty closer in award. Phase those we And that's for have we we we're have big clearly, as X getting by And the now. that production OEMS.

posted But more go you into progresses. move Phase not-so-distant these in get production keeping continue the X, be vehicles as much that to definitely potential they could that future. to on we'll So, as focused

Matt Koranda

year. it. just you on a the that Okay, it last baked growth semi-shortage comps into given on of easy the expect the have obviously, year. maybe and maybe cadence that a year. so, in mean, have outlook, of the like early just guys sounds little just the growth But got then, guidance, during little should help from And we a we the then, rates of I revenue bit lower bit

So, maybe? on guys revenue just from a bit -- midpoint the to expect you year help that how the What's little a progress standpoint? outlook embedded of of within the

Matteo Anversa

Matt. morning. Hi, It's Matteo. Good

the what half. think half slightly in semiconductor than first going that second just lower to we're revenue shortage So, be And to yes, expect you to. primarily I the that's due would overall, experience referred the I to

So, that's how I would provide it.

Matt Koranda

then, from expansion a embedded the plant can queue. some in just bit Is you any catch-up there quite there stepped noticed And just or within there, last on things of years. call-outs from are one that call activity couple CapEx? Okay. for out me, I'll specific in embedded CapEx budget the year? specific or any But, in projects jump that's last I back it up

Matteo Anversa

Sure.

of you're implemented due And COVID. the right. was lower to million only We particularly to the due fact austerity about number had some in measures we CapEx $XX yes, So, XXXX. that

the pickup million, if million growth $XX some about be we XX XX% that the look to projects of fulfilling and the in in had guidance to XX, projects around last to That's total it. some in going of the won -- required provide expenditures really we is I of to that is the capital So, amount we'll months. Overall, million way growth due the $XX the XX% And is maintenance. that XXXX. terms you the say, would a the for of million CapEx $XX $XX delayed of XXXX out at assumes

Operator

Ryan And our Capital next Group. with question from Craig-Hallum Sigdahl is

Ryan Sigdahl

growth little first probably just given half. But, that the here to stronger sequential in stronger is I -- is QX wanted dive -- bigger kind et assume QX, stronger than of a I said you than it second half the shortage year, cetera? know fair chip QX throughout

Phil Eyler

Yes. That's expect. what would I

Ryan Sigdahl

good Are on ClimateSense there. to that. how traction kind make And could going them. we that? just can the got I to thinking indication projects, knows a do any follow-up be you development this commercial expect Good. getting seems award you're with think And just on especially But, then, long who ask GM, projects we BMW fifth, fourth, many -- know first continuing and when how to third after of go from, close, or development

Phil Eyler

architecture. little because a I wouldn't is there's these challenge, significant pretty different adjustment of and implementing a and software of an hard the the project of that new that, a I say parts change the of mean, system, clearly, one HVAC tell, one to the It's but OEMs a our but the of that's architecture are go which is controller vehicles, and lot challenges components the into in elements -- also

I said, for been we've a mean, that while. on it So, working quite

So, to continue -- we're think get I closer. we'll

Ryan Sigdahl

on just sheet, the Then, generate cash But, about debt, the in do Good. to to pay a to on growing the flow, some comfortable nice how net down? are getting allocation What that the free position. of priorities plan cash better, the keeps cash you sheet? balance now nice continuing with balance think

Phil Eyler

Yes.

focused I we security very is and think number economic still one, bond. dynamic we're liquidity, on a clearly, and what think

priority. organic of position we're eyes our in the investment and inorganic out definitely opportunities both grow So, that's good first a keep that, our to business. But outside for to

eyes arise, share we potential area. course, we'll buybacks, approval got key that. And And it should the for opportunity a our if of makes that's know, you sense. keep the So, more as of on

So, our areas those of focus. are top three

Operator

next our Morgan. J.P. from with And question Brinkman Ryan is

Ryan Brinkman

there, if you I CT mentioned did remember multiple from been think might customer with awards embrace the but which Motors, in -- projects to and are including relationship call credit your by propulsion you. their also given was terms quick I ClimateSense? -- this you wondering you future in ClimateSense you gas phase automakers greenhouse any XQ, trends Thank technologies. strong or General most say, of and for natural regarding types Motors work the I your you maybe considering sort just General your and Are CCS they them XXXX. can interesting was to product, can discussions your in because stemming limited they've vehicle there remember thought segments, regard use. that intend new to development announcements, I your of be a are how XXX% with in the trends know maybe the you're And it out you of which the CCS I'm you relationship just that Hi. be with battery call out interested what which recent regard there with geographies any for using but can electric or

Phil Eyler

answer mean, side compelling. think, with the EV most we're range extension to just proposition I thing. really the I and space, that's on No, temperatures of first, the ClimateSense, interest value extreme EV question is your the a lot last interest of getting

thermal our So comfort. that's driver. an system the in number increase one has Certainly,

satisfaction and even better passenger traditional our with driver So, CCS this products. than satisfaction with is

delivering pretty in on going to advanced. So, ClimateSense X on of proposition heat the we're a obviously, wheel for and great products. focused about they're products of seriously all a a X. taking their project we're with EVs X doing very -- I'll that's -- coming other years for far with of our have. We're for forward is GM are that very kind It's be value CCS something this with benefit work it's there. along. talked And on relationship to We've our in that couple And we Phase And been the steering talk GM. and we we're that now. And as them. launch about,

lot continue into we to So, excited. resources pretty put a GM, of

Ryan Brinkman

versus looks the guidance of kind bit in maybe to on a on outlook to good be softer of just which, Okay. luxury February That's other with coming the a could start little preannouncement place maybe. helpful. electric in context hearing been that suppliers have battery issue, first versus the in check shortage XXXX vehicles wanted the I I'm of XX also semiconductor the ClimateSense. unchanged sort

in which teens looking for think I low markets is your XX.X%. plus IHS, versus in So, looking you the were for growth

that curious if IHS? customers If Just have you to which also you're the you numbers? than in-house you electronics do you you low see components If impact maybe there's your have are what's own just And given you're that's sourcing being or assumption the electrical semiconductors advance, maybe scarce serves if also? difficulty being if or see driven there of don't in for the any I do and global operate risk if direct the just there? limit any your view more what Just indirect less purchasing might IHS versus extent have other more customers, exposure, to of by doing in production? serve of using exposure know or what lower see or if kind kind you different regions you're external in And that, that the any what business, which impacted direct to impacted you then, teens, customer if you components it's total?

Phil Eyler

your first. answer question I'll Yes. last

it's predominant, ICs, to and do our most On We drivers for that impact the definitely, direct are several the that's motor source an three side, we and products, are with. semiconductors struggling microcontrollers of one us.

get to we been of some at good the moment, and lot to change time. in although seem shape expedites freight, So and any that it far, could pretty with we've be through a able at

QX an we're million freights expecting, $X example, think, around as expedited Just in that. in I

that's think easy. definitely I not been So,

our are But on what OEMs a And than where a with customers. couple maybe get a through their has give our little so releases but a successfully content, what's in they their little content, team impact, specific that's driver as great higher-margin think next of get feature vehicles, information the which built The a that releases, mix one from us I months, suppliers certainly the the us And are the seeing of through I based we're that's guidance Not maybe deducting is the our on the IHS vehicles I we're kind first yes, Our keeps where helping semiconductor situation, a but we really mean, stay in bit closely. is is of in helping we end, we higher. some course, based see. numbers customers. far. obviously, it stable what higher some And the little revenue the most think, of from done focusing it situation, the from not our factor, half on year credit just of us we're I bit we're those. of for because little a And on customer bit on of better the have see job. more then, to watching what lot of bit of

Operator

Our from is Scott Stember question next with King. Instructions] [Operator CL

Scott Stember

in talk wheel additional maybe a a, -- of about seems steering like more Obviously, is opportunities of but technology. about or more something advanced that and the past I the some considered the you growth. is Can of that don't really starting heaters? some Maybe this on to for was this take this talk really item, know, commoditized

Phil Eyler

call commoditized all. wouldn't it at I Well, a item Sure.

still I think it's a luxury feature.

In significantly just general. in look if you fact, CCS lower our than rate a it from take at it's take perspective, heat rates, and

pretty we good side still heat in just growth, think there's steering for of So the wheel things. opportunities

ADAS in in need wheel. vehicles movement Now, picked kind obviously, the towards hands-on-detection, the industry the of up more has the in steering content integration for

for we add invest going going competition. and provide is So, so a our making can steadily, on we're OEMs. we're we to you're most see an to we sure And that expect really that. efficient stand sensoring product. sensor and of to can that Stihler to that solution around I we're other with to going and innovations focused grow out we on in Certainly, our product that the And our focused technologies can We're heat very which continue forward. growth electronics pleased integrating growth, that work think so capability continue into why continuing on of

Scott Stember

like look of XXXX. expect just trends the on And you we second in half that half some at the of question It versus year, from last But, Got given how growth it. seeing? that sounds first you medical. should are guys deferral

Phil Eyler

capital now, has with of effect you, little on direct a salespeople product at utilization. couple more sell course, our go hospitals. electric struggling space honest aren't right allowed reasons. third products. bit hospitals down factor to are a financially, the overall visit is, of to so It's expenditures a because Yes. the tough a be of One procedure And hospitals then, is And and are reduction

do when new there when So, looking out which it just approved that year, sell to -- virtually. our we're pretty this like is product ASTOPAD, difficult was we're to trying

on picks are to hope those We in the Company. expectation. in little that it the growth at rate bit second my the expect I half. So, I second assuming as the we the headwinds That's half. and if some think be a going -- definitely are up won't year expecting Medical same happens the that steady But, do in overall first grow Medical, half, in

year. to So, lag it's going a bit little this

Operator

end And the CEO, Phil over now for President the session. and question-and-answer the to reached have of I'll remarks. turn closing call we Eyler, And

Phil Eyler

today. everyone, right. All joining our call Great. Thanks, for

delivered to the execution, operating we generation. levels innovation I've and flow our half proud I'm operational I’m automotive the XXXX. action As and the remain past, light in ability of cash consistently take on of very very-focused proud that team's in in shared second and pandemic swift production fluctuating we the performance record really global of

very forward expect your appreciate We as new and demand look well our on you progress. believe, and always, long-term with to, position momentum we continued value. expanding interest continued the of XXXX. course, headwinds awards, new apprised support I Of in us for our shareholder That along and technologies productivity, said, industry in to focus deliver significant keeping

Operator

you your your This disconnect at conference, concludes today's participation. this and time. you lines for may Thank

Gentherm (THRM) 1 Mar 212020 Q4 Earnings call transcript