THRM - Earnings call transcript Q1 2021

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Operator

Hello, and welcome to the Gentherm Inc's.

First Quarter 2021 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Yijing Brentano, Investor Relations. ahead. go Please

Yijing Brentano

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

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

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

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

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

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

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

Phillip Eyler

other the supply strong and port on Thank This despite of momentum the quarter. and morning, semiconductor us as disruption, inflationary results line thank the continued factors. in everyone, including shortages, pleased solid you, financial our with execution first Good today. Gentherm Yijing. you and significant for congestions I'm the joining we delivered team top

vehicle XX% outperforming foreign growth currency revenue in Automotive in points. by key Excluding the markets light our the in basis organic XXX first of we year-over-year translation, delivered quarter, production impact

XXXX, to fourth Automotive declined supply at XX% quarter, remained fourth flat company record in the first to XXXX the production quarter the quarter revenues While global chain, the from our of levels. reflecting sequentially of challenges vehicle light the still

securing quarter. In in XX% automotive from continued first OEMs on global quarter, million $XXX our fourth strong the addition, awards we a in momentum win rate the awards from with

cost quarter from to expenses XXXX. further managing disciplined fourth expenses the reduce to front, the operating of On allowed our approach us

comparing were the X years of when XXXX where the expenses XX% period than to first addition, in In in operating we were XXXX. ago, lower same quarter

expenses adjusted margin teens high in and new We flow, and in EBITDA prepare launches for more provide technologies. cash deliver minutes. about will in free quarter continued invest capital our the few financial first generated Matteo as to rate even details considering results strong we increased new a

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

MDX, CCS our Grand VW and Sportage, momentum to for Cherokee, the on continue Tiguan. see and Acura the DSX Stellantis, Kia We Jeep CrossBlue launched product in China

We continue to based progress algorithm ClimateSense, an microclimate using platform our our great thermophysiology. software-driven make on on

Motors as BMW X projects X advancing development well both Phase Our and with in as with well Phase General Honda. are

development XX% OEM. seen weather on greater savings energy GM. between delivered even we share in XX% based energy cold ClimateSense recall, to with you have savings project that weather If our testing testing in pleased another to cold I'm with

solutions. performance critical of into ClimateSense In multiple transition to part with and addition, Measurement Comfort we our which long-term cooling human-based continue our enhance Model, heat to a strategy. innovative We're thermal Thermal of Freunhofer our discussions is localized work in strategic the measurement partner with to this measures methodology. OEMs

This, best-in-class are and reducing disrupting passenger all providing thermal the consumption We significantly comfort. range. solutions in power current vehicles by increasing while

Genesis Volkswagen I'm program Audi wheel to Wagoneer, in awards we of opportunities XX continuing quarter. We Toyota Hyundai see Transit have X, Tacoma and quarter. We CR-V, quarter, In of wins available secured awards momentum award in to different awards including significant business XX% Jeep OEMs, the with XX for Van, I'm the from Slide to that Now on excited QX, the across Polo, the Passat. and across Volkswagen you Group X steering won very to and platform Volkswagen new Passat KAX, AX we we win customers. received us. RXS our team and first including City Honda that multiple can EQXXX, our Kia the RXT Rivian fourth share Ford awards, Grand won where heater with Tiguan. $XXX and proud continued business global million also CCS the

In and Group. to awards global also that the Passat, AX, won AX, like for Volkswagen we team to AX. Audi our mentioned, Superb, and our already Volkswagen I CCS Tiguan and Heater awards addition Steering congratulate the Skoda Heater growing AX I'd business Wheel with for Seat

Battery Kia. Seat Performance and Hyundai to On winning awards Battery winning we control Thermal with award the by air-cooling to progress both Electronics Solutions in continue In stand-alone business, General with front, multiple make expanding Power expand a continued our Shanghai Management our business electronic we unit Electronics, Motors.

previously, As tailwinds very on well is to positioned of capitalize EV adoption. the Gentherm we've discussed

During results, and Europe secure manufacturers extending awards total EV play platforms. EV accounted with we in delighting with of EVs will dollars. of Consistent XXXX, the additional North of important award passengers an XXXX, technologies first to across first awards we continued leading and for awards EV quarter on which XX our over program XXXX on with XXXX Asia. and XX% quarter range different the current role XX% thermal comfort. America, platforms, won future In of our Gentherm's were

Medical restrictions Blanketrol for The turn the equipment business Asia. create and late-quarter for discussion business. Medical COVID-XX elective continued X U.S. recovery in some said, to challenges with our to our and That demand in Slide on saw a pandemic let's Now procedures. canceled we

to ambulatory to United centers in for in clearance portfolio expect to point recall, you ASTOPAD the Patient we the XXX(k) automotive business strong to To and convert how the chain. to proof quarters. leverage from advancements Patient we're patient which upcoming We're the pleased our from the the If introduction able System is Gentherm The States starting the in ASTOPAD temperature received continued summarize, we our of business. FDA execution strong Medical team interest despite from a by I'm sales in strong System ASTOPAD Warming supply of our global surgery to provide headwinds XXXX. product with technology in management Warming the added in see

We Automotive key achieved continue outperform we serve revenue first in quarter versus markets the EBITDA. record and adjusted and to

on to $XXX from awards million new addition, around and make the ClimateSense. secured progress In automakers world, of we we continued

supply expand is the of our the performance uncertainty on global results. the turn top leadership. still that, chain, I'll momentum I'm to delivering little for continuing in financial to more color the the and proud for call team over while With technology operating there line a strong maintaining While on Matteo

Matteo Anversa

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

let to focus our So impacted on first most results. to turn Slide me that X quarter the items significantly

Jeep XX% higher to Xs. with Stellantis history several of increased revenue finally, COVID-XX revenue increased by Automotive $XXX increased and Tier heaters outperformed quarter, increased approximately by according BMW. the Europe, earlier, primarily Cable North VW, last higher Mercedes as period million, to Heater production we of other trucks result to FX, to launches increased move with products. with decreased due result CCS XX% management for we Hyundai by the Blanketrol by a quarter as remind with China, due product the of period. Japan due XX%, memory the to in impact and volumes corresponding detection-enabled the the revenues Renegade. and second-highest seat If Mercedes, We battery higher XX% period. XX%, SUVs, and Motors with Revenues increased higher result and cell General of more year. by Audi revenue prior-year And rate due light Steering vehicle launches of and segment, year-over-year. boards the extremely in heaters and revenue America, wheel launched with with and to management from vehicle compared a volumes Kia, overall as XX% same the specifically, as Ford increased If increased quarter the our XX% to compared revenue almost hands-on models. for automotive, XX% as a light result, of the segment, And increased Stellantis take strength by as QX in BMW production the Korea quarter year sales XX% the Seat latest of the all strength a new Medical including prior-year Mercedes product the S-Class volume driven thermoelectric XXX strong the the the And to of to our COVID-XX In lines mentioned thermal of in XX% revenue for program ramp-up let translation, points. module For benefited revenue higher you volumes company's as well saw a from connecting first that well IHS' Starting help take XX% Product product of by adjust last solution $XXX the patients. year's to BPS me Adjusting temperature our the by new Electronics data, million, the basis the quarter. the to and was key the markets comparison, e-Mini on as almost compared first quarter the last first XX%. Porsche Y. in over foreign on to negative Phil and revenue the of prior-year Model Automotive rates, revenues we of impact increase revenues currency RV as increased Tesla Automotive higher

Hemotherm Gentherm that resulted higher in as $X in negative in and price and labor well disruptions. fixed impact supply We the cost the U.S. customer the due equipment, volume. rate as increase these Euro by shutdowns. the These to to negative wage partially of shortages, to higher In goods the congestions this inflation due for million cost due freight least period. quarter. costs, to on from offset port material to chain at the products productivity from protracted of gross due both was driven addition, gross for the we of the the ... pandemic margin one move TREO year-ago expect The primarily first UV point demand COVID-XX year at If down by the elective the XXX-basis This surgeries. and million And in semiconductor resin were factories disruptions more this of lost increased impact customer premium quarter plant compares industry-wide to shortages, leverage continue Blanketrol These trends positive compared estimate we XX.X%. sold and for the XX.X% was overtime. $X to revenue annual reductions, and approximately included margin to appreciation FX, dollar, approximately higher was

Moving from X% higher cash-settled the approximately million offset million of to primarily Adjusted in as adjust both which If R&D $X.X $X.X operating stock were included compares travel amount period. higher increased expenses current last result as to year of reduced restructuring rights charges. $XX.X compared in mark-to-market The of adjustment periods, XX% quarter compensation million a to well we million, $XX restructuring million of when we income expenses from stock-based $XX.X EBITDA $XX this by by restructuring up by in quarter, operating first and as the partially were quarter or million year's prior-year expenses, And of period. million R&D expenses in million costs. $XX.X the of driven charges. XXXX. increased for first year-over-year quarter incurred increase the first expenses, A was in $XX.X prior-year appreciation

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

in earnings to our XX.X%. per quarter share And effective was diluted rate the the of in compared first share year. the per was adjusted $X.XX Finally, quarter per share last tax quarter in $X.XX

on Slide Now X. sheet moving to the balance

flow Phil flow in of flow $XXX position The in Our prior-year million at sequentially from the quarter the discussed. million, $XX period. total in revolver, of was of quarter in stood the first of at investments cash partially in higher end cash operating of generation million. our the capital $XX of the $XXX free December partially repayment decreased cash million offset We generated the by result cash position was XXXX, activities, up associated XX, free offset quarter. the million cash as and with down The by the decrease $XXX first that XXXX. million increase debt by from was just Net million, from million to expenditures $XX debt higher $XX due $XX

the hand up XX, on $XXX as the availability Based we end XX March at of from on $XXX So, net we million trailing ended line gross closed from a our March available was $XXX on credit that end quarter now in debt. cash XX-month of I of liquidity consolidated Total pleased first credit, last the facility given repaid the million quarter exceeded of strong cash remaining months, EBITDA of million had cash million, in am up XXXX. of our as of the a position, adjusted result XXXX. also of as that XX million the all the first pandemic. to revolving the at $XXX last have in the COVID we generation flow the year occurred $XXX drawdown share

Now Slide guidance. let XXXX to turn X me the for

we due global start continue the to saying chain that the just by challenges discussed. So see industry me that supply let in to uncertainty significant I

by $X our in negatively last goods spite reiterating Product billion, to Revenues by assuming earnings sold of guidance provided versus that rate be as are this believe and delivered FX of in approximately million market the the the relevant billion on the $X of quarter in approximately low-teens we the based grows in impact cost chain production I our performance to first we a supply disruptions earlier, million. of range the still remains our just that mentioned first the call, at $X.XX XXXX levels at impacted lingering we In We're vehicle mentioned, $X.XX As as quarter. light well current revenues in XXXX. expecting the our we on

an midpoint our the organic guidance previously, rate growth XX%. of implies of mentioned we As

we still going turn session. be to call I'm to in the adjusted of to XX% that, Additionally, Q&A and to in range back XX% capital million to of range be margin EBITDA to million. rate begin the the With to the expenditures expect the $XX operator $XX

Operator

[Operator Instructions].

Matt Partners. today Our first Koranda Capital coming from is ROTH from question

Matthew Koranda

how I more if of given color you to some have just cadence especially bit on bit of shortage. losing sort year take a the customers your about semiconductor provide production we growth revenue for to thinking on know rest can a of that. kind production vehicle the Obviously, expectations here, to Just the the the revenue curious your can for the progression margin year? and rest but light would that bit be still sort some XQ. of a guiding we get for little And on should more the year of of of about rest of little talked relative you're of wanted the like that infer of color quite the outperformance here just

Matteo Anversa

this take to going I'm Matt, one.

the the and the as mentioned, of $X overall in us gross impacted by about about at chain So revenue in in supply rate, you for the first we when bps lost disruptions faced pressure look quarter first the quarter, XXX first million quarter. -- margin I the

announced FCA, we to we in both say, the currently, North Ford, semiconductor shortage. quarter, So slightly in seeing see OEMs, GM particularly impact America, as are all I shutdowns plant would bigger continue a the second due to

I second say quarterly in we give So seen little the impact a would quarter. guidance. bigger don't we've

So provide year. for you've confirming seen, I would we it think we the are way guidance I is, as gave that the the

of a that are lot that's a second little best there I knowledge still have disruptions in thinking, industry thinking the is say uncertainty. the but now. the both would we the we will that kind chain So that revenue things best supply half, right our today, somewhat and I of the think, facing. knowledge the on that of get is And have towards guidance the our around profitability side we the better reflects on

Matthew Koranda

prioritizing with trim-level you higher any in this would forward I And guys concern Okay. That's your that improves fair. revenue OEMs the of just are a vehicles, pulling assume. obviously, probably rates higher-profitability that sort take environment, vehicles any then quite bit

in as so impact vehicle that the any way? an sort you back as that may mix abates, base concern And may we a normalize shift the outsized level of sort whenever to of shortages be, more

Phillip Eyler

say, would not amount. I huge Yes. a

couple penetration little take the those focus highest bit the seem but rates. the where We at been that customers Many expected running a been vehicles we have have of of the take where that rates production. have maintaining are vehicles are a the we of watching fortunate high, are

don't customers bit our built is little to But there. a we change are into that guidance we So a expect few running of on a a see softness think high. bit little

Matthew Koranda

And a some highlighted we're little Great. environment. then with It and some back solid platforms. wondered and could Phil, $XXX you just Okay. pretty the maybe you bookings like if -- just nice about high-volume the level to a pretty current wins talk looks on million, bit,

if issues? the of bit just you're of could sort curious see of the little production I you're just to given, the little changed bookings Has a more what case, seeing? somewhat hands at could in just doesn't that so all kind it's some OEMs environment the on but seem on you And I assume, It would seeing like bookings are talk bit environment. provide that about wanted current color if a all you

Phillip Eyler

pleased we're on far year the and see strong. overall win the of And the the both profile rate. looks over with Obviously, quarter, the so course the awards we

We're expecting of had we're run to 'XX, So in close at rate 'XX, excited back about we to to the up the get level pretty year. 'XX. kind

be could So in lower. now. it's it pretty busy depends It right there that but on could higher, ballpark. It be out timing,

Matthew Koranda

I'm out materials last an It Obviously, just that looks in through of just just we the any any just are that we're through higher But you're -- to what, sort and pressure? margin for purchase or seeing we should in. environment think raw managing out outsized level, matter sort the It remainder margins that looks of you you're well. that. then guys But really as be impact, how on no inventory could about well. in are or to you're supply that year? curious short managing managed front. And have very you call one, like the inflationary like Okay. components of anything and you guys call the gross particular that going that there's noting be gross

Matteo Anversa

Sure.

inventory talk maybe then first, about and me inflation. let we'll address So the question

we balance almost sheet and are you for sheet we balance our very have of the end about The inventory the that the demand. make actually, has have Therefore, as fulfill by cash-generating So look And philosophy a year. company. our our increased customer $XX that been, million since at to inventory sure also extremely we strong to advantage is using we strong. enough to us

we So if congestions, make half half to really electronics we port of customer is the mitigate West this the by Coast. in sure you enough particularly break sure can And other to make semiconductors is -- due that driven down that to we demand. can on increase the the fulfill inventory, and some have pressures that

that's So of the rationale revenue. strategy inventory

balance leveraging strength customers' to advantage. really advantage the of the So our the sheet and

On don't like We semi-finished per se, side, material Matt, the magnet copper. buy we consume, heating products the but we wire, harness buy wire, copper. has inflationary is biggest that that raw copper all wire

about. gross But rate to deliver I pressure increases the is fabulous customers the try despite with through. About this the continuing strong price supply working some mitigate are passed talked performance a chain to that in XX% your pressure. And we've has. margin rest has then we think to -- job we a So inflationary facing done on are copper obviously to point, team that the is selectively disruptions

Operator

Our from Craig-Hallum Group. coming Ryan next Capital question today Sigdahl from is

Ryan Sigdahl

launches couple lower a in the to looking cadence back quarter had Great. of years. bit on the nameplate QX. over so last you XX per Curious quite than was XX-ish It XX

the deceleration Just curious there? why

Phillip Eyler

It's That's the Just of timing launches. the launch vehicle it. time.

Ryan Sigdahl

talk you Then Good. -- about supply, are the from we et do expectations chains, chip supply when out cetera, companies. wide there there as think fairly

And I those guess persist So curious, do guys into challenges are expect what thinking? you to XXXX? you

Phillip Eyler

X that semiconductors points. course, have One take We select of our suppliers. we data is, we Yes. from purchase --

we customers the deep And that are sharing getting as forecast impact to those as everyone, there. putting and from at can best our probably certainly that we're getting looking we're using releases feedback intelligence they're and we at we kind as the and from customers. the those we're information even on and the estimates with best to bigger all with of can. out public be that of customers elements But our that would top suppliers get looking So

quickly. those done of So next all level, we coming listen year. seems like that, kind in persist in the can points, But hand. relatively at But we general, information the best year. those we've the you feel probably the we sometime of some point It with to some second in to data if change -- problem the also will half into believe relief at the to

challenge. to going continued And uncertainty. a as be Matteo So pointed there's it's out,

it we So we'll best But in into to watch closely. have the have built we knowledge forecast. real our

Ryan Sigdahl

then I EVs. know don't what idea you secondly, Battery on type two the guess on if That's then development or GM third of if I update update, had from and cell on And project And BMW? same you've Solutions? any but it EVs the can, have I quarter. you your last quantified market you believe Performance ever on share ClimateSense, with connecting any

And within on the development time those for X of last that OEMs if that So specifically there months line then development. curious is phase few update program? I of any over guess a kind

Phillip Eyler

developed start CCBs, already what market competitive we that's I'll right Sure. launched now, the innovative, we cell boards. consider Pretty our and been low had before EVs share very connecting with most product. because

going up is to awards that's we'll Feedback ground great. So make forward. have with new

foil chemical-etched We advance What which that. nice activity we'll we and start we continue some a and there, have believe we But gradually of that. think product. right we have a primarily the And in replacing. advantage ton now is wire-based is thin market on to

we the of a for potential engine That's future, big think. growth cell So in growth the pretty us connecting. excited about

phases relatively On the the announced I ClimateSense that quarter last we side, some those would -- early. were those in of say

middle But the the good kind showed those actually continue of point that shared I with in make in performance other one so data cold was to they that of than OEMs, of did that even one testing, better progress. is consumption had weather we seen they And just testing. and we're and power

lot a of and power validation the everything move of to the consumption at least So product, good side continues of forward.

it. it. resources and So know got And not-too-distant that to a expect of at We've get of we an ton we have that's we're future. on the we hard eventually point to working award, in a

Operator

reached to comments. We end question-and-answer to floor turn for over the Phil like I'd back our of session. any closing further or

Phillip Eyler

Thanks, Sure. for today. joining call everyone, the

As of we've our I'm on consistently our very of operational shared innovation remain we flow flexibility on to cash proud to and focused all in agility, commitments the past, execution, and all really generation. our of dedication stakeholders. team's deliver

While to support our expect look progress along our industry the and continued new shareholder with new appreciate interest focus value. us our in headwinds awards long-term for of going our forward continued on productivity of demand XXXX, and We remainder momentum to in position forward. you keeping and your deliver technologies we certainly significant apprised well

Operator

Thank does you. and webcast. That conclude today's teleconference

you your your today. disconnect time, thank at may You for We and participation this wonderful day. a have line

Gentherm (THRM) 2 May 212021 Q1 Earnings call transcript