THRM - Earnings call transcript Q4 2021

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Operator

Greetings. Welcome to the Gentherm Inc. Fourth Quarter and Year-End 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Instructions]. [Operator conference this being is note recorded. Please now Yijing Brentano, will turn the host, your to over Corporate conference I Development Investor and

Yijing Brentano

you. Thank Relations.

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

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

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

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

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

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

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

Phil Eyler

continuously everyone, environment. and XXXX, able of in morning, challenging you to Good proud was a what today. what Yijing. you, team extremely was operating and joining Gentherm Thank thank for us the I'm accomplish

record outperformed points, the awards our markets see of billion. highest automotive achieving on by and near slide approximately $X.X automotive in revenue light production vehicle in percentage can key history secured revenue As the annual we XX company's four, full-year you automotive

record addition, XXXX. in and from free adjusted delivered record operations, flow In cash we cash EBITDA, record flow

electric expanding the I elaborate a position minutes. vehicle on leading will supplier few have in rapidly we as clearly expanded our a market, Finally, in which

one and On the impact teams operations freight front, for working shortages, I the would of manufacturing of to costs, demand, material the and the that including on Matteo like suppliers tirelessly volatile semiconductor customer global will escalating recognize the results of in minutes. supply last fourth details chain our full-year fourth quarter, our with inflation, earnings we our cost quarter course, to in financial minimize gap supply provide mentioned about few our a anticipated and call.

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

platform, Zephyr, and our MLA Pathfinder, We special note, plug-in continue Rovers and Ariya now on and to launched our see is mild Nissan on momentum the launch Range Infiniti Lincoln vehicles. hybrid QXXX. Nissan product solution for Of CCS CCS hybrid EV, including

plug-in addition our RXP, applications. for While across share business the is I'm of teams for platforms. launched electric This traditionally our and transforming launched an cable RXS. Rivian combustion the and Rover recently been I'm high-voltage product to pleased value Jaguar that hybrid lines solution has on on cable vehicle to to cables vehicles, Land high-voltage create internal the our we proud

recall, first for milestone based on continue on ClimateSense algorithm with physiology. new in long-term which part have on an launched of great continues model third was our priority microclimate key announce we XXXX strategy is a interest Europe. ClimateSense, remains OEMs. us, OEM global as software year our top we pleased our ClimateSense the project a development flawless to launch from and XXXX will make addition, to in In production to driven critical using gain a award progress this you and I'm platform. that our platform Thermal is Winning

for proposition significantly and value the providing reducing range power comfort. while extreme optimize electric to best-in-class increasing temperatures, passenger continue consumption vehicles all in by We

we awards and EV were technologies quarter, XX like climate the I'd Cadillac CTX, launched was with future new including [Indiscernible] program out [Indiscernible], since secured Gentherm controlled seat platforms. see sedans, OEM XCXX. multiple position million our the Slide the fourth can where billion global total In program continue to and with to finish award to to in the We the Great one in awards, you won of quarter, Honda in to programs, expand largest solid continues different Wall including win KIA over Lincoln continue WEY electric already foundation adoption this wins, that that Of our steering for This the for growth. X, wheel new on teams business these space. $XXX we the to Vessel, manufacturers. that eight fourth wheel note, Wall we quarter, the challenging $X.X Cadillac a across hands-on the seats received and in enabled. XTX, win accelerate FlashCat, OEMs addition X XXXX. at In ever with heater on We for the our This to year. have of multiple heaters. and is Nautilus, XX a we to secured vehicle we Voltswagen Great programs customers. brings and the EV strong awards, this Volvo Gentherm year seat awards This Now that CCS XX sets and SUV. a detection Chevrolet platform across a heater Tiguan, HSX, we've EV thank Hongqi for XRV, breakthrough us win strong of largest pace wins had as CUV, Sportage, very steering

further controller award electronics, Moving that want our multi-function follow-on share to I'm pleased we to to Ford. electronic for next-generation with

Gentherm's proprietary you functionality, seat our technology. positioning initial climate If utilizes with combined control system with our solution Ford, recall, which win intelligent memory

Lincoln system Expedition models efficiency forward and for Navigator increased controlling the As reduce added North further boards, follow-on be will award Ford in example, module other running which costs. and power This produced functionalities, used in America. the helps

Finally, Renault foil using new plug-in award a to our technology a Battery technology. unique proprietary compared Performance This validate art. this vehicle, we thin by strategically battery securing the to continues award state of for current hybrid had a our important in Group, of potential heating our

I'd full extending give Slide in grow vehicle electric, vehicles IHS of to mild vehicle, electrified per perspective Gentherm's you comfort. delighting global important expand how electric range to X. significantly an in content moving thermal like and expected future on electric According some solutions technologies to vehicles and Now including battery with estimates, is innovative our in hybrid, hybrid, Gentherm's production, increase can the and the passengers in to current, play XX% market. as XX% production from believe XXXX XXXX. will We of to role

past years, to several Over solutions. expand we core and our comfort climate the continue

Our shoulder portfolio wheel and now detection-enabled our conditioning, as seat well heat, includes heaters. steering neck climate-controlled heat, seats, heat, proprietary as surface and ceiling advanced floor radiant hands-on,

system on the and individually instead of management All or vehicle, occupant of these thus, of the and reduce the combined, by help range. increase on focusing consumption reliance thermal HVAC reduce power

Systems. now foil PACE Performance proprietary products cooling volt Battery as ion thin battery XX and well our mild heater, battery thermal award-winning for foil Solutions. cables, electric And to thin thermal lithium launched and We've hybrid as we've beyond batteries. management expanded Cell air high-voltage Connecting wire-based our Moving

and longevity. extend portfolio improve battery Performance OEMs performance Solutions Our of Battery growing helped

vehicles. vehicle, the innovative the such of and units, Ford for number mentioned or electronic reduce intelligence ECUs, as thereby we the cost electric weight, benefits functionality and ones earlier. and On which thermal award in manufactured units the developed and multi-function the digital I control front, to Combining ECUs, helps reducing particularly

we significantly grown addition, software have In capabilities. our

Gentherm prepare developed physiology. advance first summarize, microclimate key based we on to are algorithm to thermal ClimateSense the To to As looking our continue only performance are platform we interior EVs, customers but Comfort battery we've launch for our the for conservation award, solutions, and Climate using element of digital also solutions. that proprietary a of for not be our production intelligence to proving which energy

well-positioned the to growth are accelerating vehicles. on of capitalize electric We

bring I'd market. proprietary is work Now moving differentiated, the to to highlight solutions Slide X, our team doing to innovative to like

me talk of that XXXX. some about Let introduced technologies we in the

First, as is ClimateSense we've now discussed production solution times, our software several ready.

In experience experience. a compelling addition, application enrich and to OEMs inspire platform consumer to user we've introduced

proprietary savings compared energy our seat carbon thus heaters next-generation to CP traditional and fiber and FIBERTHERM the seat comfort our integrates the technology. heater is enables surface, to to closer technology. Fiber-Therm, provides Next wire faster time

single HOD ECU, HOD Third, levels or controlling Pilot to Sense, a a functions. hands-on which layer heating safely is operations. Gentherm's in next technology. higher single Combining both generation key capacitive autonomous with enable solution of vehicle sensing function a is and proprietary detection both

layer The sense costs neck sensing provides the order while Fourth, second and need proprietary designs ECU HOD seat and the resolution in a heating mode. solution. second traditional steering during eliminates sensation a Pilot warmer integrated reduce warm the into Our immediate our by opportunity surface the providing for an wire is to to wheel lightweight a eliminating multi-layer XXX% occupant. conditioning intelligent providing system heating solution better headrest harness the in neck solution. for

embedded local last, introduced in market-ready technologies that at be comfort our the active day. time that active sensing. solution and for and of provides With physiology of Fifth, comfort power then long-term levels algorithm. drive sensation this of experience conserve package. one an best-in-class ventilation intelligent energy ECU, Systems a developed for of comfort. cooling microclimate a can now compact new thermal battery electric its algorithm switches range vehicle. optimized Climate in airflow physiology-based benefits standalone vehicles. to enables or to valve our individual neck the offered IMTM, sensors Cell microclimate Connecting systems CCS or And proximity integrated combines systems. the Generation This instantaneous Gentherm other to and control This we've solution, comfort. new Next start and IMTM with part tinfoil of thermal hot enables mode and personalized thermal module, for to pack Our research integrates battery smart shows on conjunction provides and intelligence cell smart with electric management savings Seat an comfort IMTM to With thermal ClimateSense. device device has optimal for extend our element, a our the And Controlled thermal ventilated as smart microthermal and This the

are manufacturers add and efficiency enhance range. vehicle comfort more now we to while portfolio, improving leveraging innovative continue to electric energy significantly to As solutions our our solutions

medical We returned Now XX% in quarter growth fourth let's of for X year-over-year Slide discussion revenue double-digit with the in medical to business. turn a to our growth.

to the and fourth to orders upgrade see for replace demand in as and Blanketrol, US international fever in the our trusted for a competitor we Argentina. Blanketrol end-of-life flagship strong markets secured Mexico brand continue is such and in product, We management, quarter. devices

warming business. partnership ASTOPAD exclusive US New is a company a use in that rentals an ASTOPAD In has into technology addition, for Mexico by capital in Orthopedics. Spectrum their with point hospitals to temperature cardiac with and Med-Equip, surgeries. purchasing group University with with for entered automotive hospitals. equipment equipment Hospital using The in Virginia West leverage on approved of to we our Mountain ASTOPAD great but we've members. system, and their procedures provide as strong expand Michigan patient the solution for advancements the equipment have independent a to most long-term conducted in needs. ASTOPAD also well to is rental is market View capital We're organization from all Medical medical for health provides and provide short-term Regional able purchase. management seeing patient a with business don't on proof plans of our budgeted variety large They're contracts, hospitals we're Health of as ASTOPAD, funds of Center good need how adopting at momentum systems, trials introduction that

competitors hospitals convective non-air warm for both and conductive our As patients, to solutions. differentiated look is Gentherm offering from options by

let summarize. me Now,

as delivering results financial our cash market. manage on team, team and thank of record work flow in and successful execution global the well deliver I'm of revenue, Automotive another growth, in to EBITDA, and free hard very demonstrate focus innovative proud Our unprecedented adjusted in to record to as near automotive plan talented continued I'd our yet our global bring securing overcome Awards, XXXX. the for the strategy our XXXX in challenges year. commitment Gentherm the like aggressively market, solutions strategic cost to of and structure,

profitable there cash While is financial company guidance. growth. turn production rates relentless the few strong XXXX long-term extraordinary well generation, demand uncertainty technology that be be resolved. the met constraints Matteo, believe months, and flow with the for for in will where little supply over once certainly pent-up about focus the chain color need leadership, a on on results to This, and we positions operational remains, next more call combined the With excellence, significant are our our that, I'll to will

Matteo Anversa

Okay. Thank you, Phil.

to Let results. XX that impacted on the Slide me most focus items significantly our turn and fourth-quarter

of the starting a for quarter, Japan, corresponding same revenues decreased actual Europe, decrease prior for translation, approximately To Korea. with light decline key XX% XX% period in automotive currency revenues overall below and FX, China, the to impact to by decreased last decreased [Indiscernible] of XXX North were adjust For segment, production Automotive revenue America, year Automotive by period. vehicle foreign markets compared revenue our the Adjusting to the if of basis XX%, and by we the XX%. $XXX our million compared product points

other results increased very had to sales a due had X% other a higher amount by to automotive light percentage due production solution year-ago take sales and BTM, revenues primarily the product revenues the which tough makes and interior on rates, and conditioners, in to with record as by outperformed of product with results and record points and of production Motors. more product year-over-year XX% class, revenues, increased BPS increased most the and for self-connecting BPS by volume with General take MINI, C an in quarterly year, heated BMW result higher the as rate quarter E a of XX the a previous of comparisons. achieved we launches line period, the higher extremely comparison All neck automotive. of exception Other fourth lines significant automotive revenue the As in lower Mercedes decreased lines new of automotive comparing air-cooling year the result, sales declined the products. When XXXX, the of quarter. we specifically, QX high XX-volt current of quarter vehicle reminder, difficult And the board in a

quarter. me In let that addition, negatively highlight couple factors fourth our unique of a impacted

Phil mentioned there earlier, gap as from semiconductor our anticipated, of First, suppliers. one supply as was a

rates FXXX the that Hyundai lower due them other also, take reduced launched And high vehicles. memory semiconductor the reduced of take three-mode as has our Ford of with now other suppliers, quarter in fourth rates a normalized. very XXXX, take Next, rates shortages suppliers. to seat electronics prioritizing result Ford of level the in from module, shortage from resulting

medical, Blanketrol by to Hemotherm by continued XX% revenue to compared Moving year the prior increased and period the driven success our of products.

margin These supply reductions, freight, customers. decline, leverage chain recoveries of disruptions, of spot in premium due the primarily XX.X%, to buys was price Now, sales XXX negative points The FX. the mitigate from the turning for the impact margin, driven quarter by and cost to customer negative offset annual year-ago were period. incurred the by gross of to higher basis impact fourth costs next form compares gross this volume to in the rate, was decrease partially XX.X% and

of Moving million, the $XX.X amount stock This acquisition, in fourth and year $XX.X quarter both of and in of cash The of million million acquisition million in divestiture approximately for in from restructuring by taken quarter, was XXXX. per appreciation last income. EBITDA million impact mark-to-market to year offset the restructuring, quarter have current included fourth was operating periods, share driven we prior the of expenses restructuring million the rights lower austerity and incurred fourth decrease down If expenses. charges the divestiture of $X.X quarter divestiture by $X.X prior million the of million $XX.X period, were SG&A, adjustments the expenses, X% XXXX. and fourth of control expenses to we settled in to quarter period. primarily approximately of to adjust year-over-year from quarter partially approximately $XX.X $XX which $X.X driver fourth acquisition, million impact in compares to particularly year's last decreased tight mitigate adjusted and And decreased that third last expenses. when Adjusted in adjusted measures compared the chain of R&D to the year. finally, operating expenses share per of the The year diluted the decrease the we quarter was compared per the of the Sequentially, million share expense benefit by primary negative $X.XX by $X.XX disruptions. in from supply earnings $X.X declined quarter in approximately $XX.X of operating

XX% credit impact to cumulative to XX% to as and for fourth Our quarter forecasted tax the than the from from tax This of due compensation. was range well as favorable related XXXX. approximately effective stock and the was tax XX% rate in lower R&D, XX% impact our full-year deductions rate

Now, sheet, me year key balance the total highlight before I a let for discuss XXXX. accomplishments few

the earlier, delivered for highest And As past XX%. in XXXX. X% the company's history. you is automotive years. very market recall, the up of our in we We're Phil team And the China about our revenue mentioned in debt it China of if proud three to over represented XX% now growth revenues in

our the cost front, as for after percent of approach, expenses, was since managing divestiture continued revenue, the a disciplined lowest On improvement XXXX, restructuring, to operating acquisition, operating points we basis XXX in record, of free delivered XXX expenses, and points and than XX.X%, adjusting lower from XXXX EBITDA, of basis We importantly, $XXX adjusted $XXX generated more cash a record. XXXX. company a setting another and million we XXXX, company flow expense million

balance XX. the sheet to Moving Slide on

free Based $XXX position by ratio X.X. of the and of the negative approximately result XXst, on our as sequential partially quarter million total closed $X of net a credit, the at and as had the repurchase trailing result, $XX XX $XXX December approximately position of We leverage $XXX below stock, flow of end debt, was line $XXX generation. level. the EBITDA, net our of XXXX The common cash cash as adjusted million million, a million million. offset exceeded the in remaining was of was ended December availability quarter Our cash-on-hand was month decrease, cash consolidated XXst, million, on a third XXXX, we liquidity available gross slightly

turn the guidance. shortage optimistic expect by the the the XX the that semiconductor less extremely light me in saying improvement have XXXX, remains customers our situation Based on factored fluid. suppliers, And for which let information latest second our let we to XXXX are production semiconductor we We that the Now, our me and vehicle Slide gradual from in half a IHS about half do guidance. forecast. latest first have than we year, of of into start

revenues of at levels So in rate growth be we guidance an our vehicle billion in XXXX. current XX%. in product of Adjusting range to market in relevant production assuming growth XXX year-over-year, mid-point points the X.XX X.XX versus at of remains high FX billion, our approximately are the currently the implies expecting single-digit FX to XXXX a basis rate of organic pressure for light

assumes compared half in the also the guidance half. higher to second first revenue Our

that a experienced maintain EBITDA the challenges XX% return expect start the we our to supply to to than expect result, pressures supply the adjusted be in we In we second XXXX. of the ease. continue in facing manage assuming profitability to-date. XXXX supply quarter in and most XX.X% resulted our that EBITDA range half chain a in to of the suppliers, in we in an to our And chain of are first in rate the disruptions of teens, In rate see need to first additional of terms costs. to of to reported quarter, rate XXXX fourth we significant continue have profitability, XXXX, XX%. the Due to as continuing In semiconductors high QX to in the expect be adjusted half supply of gaps lower we with the we to have couple

pressures However, quite some we will time. the inflationary for believe that remain

in of proactively aggressive Back to be to law, year $XX to the allocate of became estimate the primarily range the continue costs. new compared We on XXXX expenditure resources XX% XX%. to range are the to over We our tray tax course January impact will expected The rate German product in Xst, tax rate the expected which our million. $XX management guidance cost be effective XXXX. and be of tax focus to to by of reducing increase driven on is the capital on to

begin that, to back turn the with Operator Q&A session. I'll call the to So the

Operator

At a session. Thank we conducting question-and-answer time, you. be this [Operator will Instructions].

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

Matt Koranda

morning. Hey, for guys. question. the Thanks Good taking

Phil Eyler

Matt. Hey,

Matteo Anversa

Matt. morning, Good

Matt Koranda

guys. Morning,

this light your Just help wanted in comments in that on the assume revenue how cadence then revenue to in half us to of you're rate on the front, industry. of the Any we with should industry versus forecast, view first digest start for expecting relative about guys IHS, especially about how your expectations? think the out of in growth and relative and off to XXXX, trend that terms help you take

Phil Eyler

Sure, Matt.

I think factors. of we're basing everything on a couple

product Let that rates. first remains market at by cancellations is our demand our start of consumers, pretty and we from a Number are There's that at still desired customer the by me It's one, for see a that etc. indicators significant really really there foremost dealers, just volatility matter moment. order continued high product off high. the saying

that in. to have We factor

us that volatility. in look IHS just have match we those little we've with we're when it some in closely bit had high that supply are we're that countries. from mentioned, that the the of we a the We're as customers. to when orders especially Matteo U.S., work to orders estimates comes and to Korea, forecast and first-half, are our their that's up supplier also customers -- we cases, the we at looking difficult Of the most one. chips, of all see in reduce view to so Europe the And we at to middle period there the chip in middle faced course, that Even with

QX driving what's that's maybe QX So lower. and

things and that A We going time. are half believe to pan out, be half period of getting second good likely strong the be to recovery, a second feedback if from pretty suppliers from indications is gradual recovery. we customers is semiconductor and

into all is it, then the the what's supply half second nice chain with spread that's So the in view guidance good some second of Got demand way helpful, into And half so first Phil between the guys lower a built little our margins. are that's bit half. EBITDA expectations sort thanks. ramp-up the headwinds first that and to thinking you a roughly the half in

the So like think call of it kind margin of headwinds. of of second since environment to most XXX, through pressure sort half. to can [Indiscernible]. [Indiscernible] bits the better seeing if us a tightness a now, you're relative supply to XXX And in you just see right just of where and walk Be toughest going way feel get maybe sort about the chain you're tightness understanding this through where we

Matteo Anversa

completely give we at, first significant profitability color of impact of cost the dynamic year. that the the freight, The of again, the And have the dynamics will start quarter, of left. let as to example, that that been able of with where pick fourth costs. know, successful which pretty that maybe we recoveries actually cost on are on what we the what supply have a non-inflationary in where the in we XXXX. we our for to to the that, premium of the comes were on majority look customers the about we the spot actually first you related in recall different bit working is almost Phil is, supply half Matt, the with from gap to me where for a amount And with buys and XX% form facing. little half you the are if get of this management we seen gaps from really from just -- I'm margins you hand going dealing fact are experienced

in this the that And that quarter, the of of to be quarter. at -- a recoveries you I half add higher much consideration, in have of other everything look I'm lumpy. these items. were to have going amount we if really Therefore, into when amount the recover first Then, the started take the negotiation However, expect net the in year. to able fourth what timing earlier reflects in to tends couple to experienced recoveries you we cost compared would the fourth

expecting through will of importantly, that of volume XXXX, are XXXX, mitigate most those tend second -- rebates come also particular from come were in in -- labor the but but able inflation year. that the both the in inflation, we inflation, terms supplier later suppliers where We to in to half in

When we you of things half, of first context, loss challenges at one almost So then impact. a we the goods if kick-in in buys for the I not have in about of we chain be adjust XXXX. rate of to you the all we little reductions this, of cost the of despite that almost of hit half, compared And half. to item context you planning of to the we gives that EBITDA the to have impact premium freight due look half year, normalize price -- $XX the the reduction in customer have we million million would sold negotiations if just form the in supply would what obviously annual the It will some that with in million last occur $XX we expecting mitigate not XX% and in won't these supply the incremental to are final XXXX of recoveries. point effects of had all $XX later had, first put just you the highlight, gaps. to And in for generally year. But are first about spot customers. bit through into price positive these will half come each the revenue second in first We year the able had we

fantastic did spite team think the So mitigating those. a I overall, the job of challenges, in in all

Matt Koranda

thank bring a year-over-year. Matteo, step in then $XXX bookings sequentially you. very And going the you nice this million, to helpful, up and on just front, detailed But lastly, I'm and Very up one.

on one Solutions side curious of you mix have very programs, you put things, You and quarter and quantify been terms that'd just helpful. or guys in shaping of sounded versus front bookings heavy steering around just called just CCS on wheel those. several color it, Battery But on of what any in the Performance bookings out which seeing if may expectations theaters, you're but it you be can that around provide the mix of can

Phil Eyler

significant typical is EV programs, we heat a some of kind and exciting of large very as you there's had with our and heater then -- nice proprietary really a our portfolio, which mix certainly action I Pretty product. think with pointed is across heavy out, steering consistent what and CCS those a in lot products, in on awards. even but on Renault significant new on balanced we that's I pipeline. thin see our ECU wheel a just think It pretty quarter, mix. the pretty some strategically battery our foil mentioned We for pretty award

Matt Koranda

and to our space, an we're up sorry. out, come lot. lot EV cables. a our about pretty bit ready thing there little from more business, maybe a products quick I is thing revenue but of launch We're is interest pointed to platforms, add there. Connecting. couple One getting has excited -- the cables, a proactively seeing out And of business a that's which us opportunities the well. though we're of One we're whole company on getting About who of a is is, led part starting in X% quiet high-voltage that emerging of as will not for Most those that pick our a but on add to as product us to new lot cables customers expertise with chasing awful a Cell in we to both

Phil Eyler

Pleasure.

Operator

[Operator Instructions].

comes question. Luke with Please Baird. proceed Our the Junk your next from line with question of

Luke Junk

you questions. Thank morning. Good the for taking Phil.

Phil Eyler

Morning, Luke.

Luke Junk

further very your still you broader where us FY capacity this assume How high a of related your looking to customer. in I with support versus 'XX? what at plus you work XXXX, first if checked incrementally activity. level you development capacity are front ClimateSense development could you Wondering activity is ongoing your Then support give a is [Indiscernible] and more importantly contracts stand on this where your maybe with to today ClimateSense internally

Phil Eyler

the offset we're electronics selective I us the the with make one suppliers European commit to What Yes. results. new our be on quite completed that of is obviously, we're the with gap. really that were challenge That's resources, OEM to that's we on well. that all of But very side, this to one. a best be also we a a XX, We pretty work a big the team and to out that to new especially on model on not team definitely development a to on to heavily using that's many about for challenges lot able adds be we by hands to launches on And team semiconductors, we're after. bit and we're absolutely production But slowdown we're, contract in we serious seems the year most software shift over the point that that, one that finding little we're taken burdened to careful to a really development deck ClimateSense we're challenges that and one resources excited to have contracts redesigns is as A fortunate going us. -- projects. produce got chasing for finalizing that of led times, contract have. sure work We,

present continue think And we our about market. well continue the We're for first resources, bringing key a market positive ClimateSense in same of it's very is for excited challenge case suppliers biggest lot our it's feedback. this all get and So the certainly, customers is really we've our project but the to far. to to ClimateSense to electronics those managing and done so is I

Luke Junk

for that. Thank you

this on -- extent with question. you better I us what the can you don't called help to Heater but sides? that could you understand field, speak the to know nature the Seat OEM CCS Wondering EV breakthrough award and large Second the of out

Phil Eyler

to this what think I point. have I much put stick with we pretty writing in at

communication. our our Some confidentiality certain of require of in customers levels

broken regions We're importantly and we've that huge steering had heat. to of and multiple with new that, now CCS, on awards not -- plus customer. and some some levels it a some CCS, multiple platforms really also combine And heat. about wheel it's excited into with product, So this applies customer that's that the volume seat

and that worse customer about I think excited relationship with -- really really securing it's our we're it.

Luke Junk

if sneak compare influencing could of first that look in Okay, I Thank right extending comments given here, seeing If you're the share that could around and the the And be of and puts chips the question in outgrowth the would the that I production, mid-point would outgrowth. that. a weighted Should around more that's I you're appreciate be say this of than start first the there that of that mid-single-digit year, the helpful. quarter you. then tactical maybe guidance back organic Any helpful. half? to terms of in is full-year into growth you the the both dynamics now, the at to assuming more outgrowth? the -- maybe on what half year fourth we

Phil Eyler

as out, the out, point customers you a agree But working on fine semiconductor would to have have some chips. challenges their our we midst to certainly what constrain are shortages. I match of said. where their of We proactively as ordering orders pointed in we're supply it, I literally we pointed with just there with most -- team significant I the of faced

certainly that's suppliers. drag the would our second that first-half. semiconductor recovery from plans We're our show That's with That's the recovery crossed the on in what the half supply. keeping hearing. So we're fingers starts what a

XXXX and couple that wheel also tough period into first that us. quarter a is of that look I and HOD mentioned And exciting. for of comp all think year programs quarter the early going too. for rate. to as want at point launched a So out do the that high fourth us comp high if with I a take we part was was the the And new of we for launch steering a you really

the also a of the year. a quarter first in little that's headwind bit of So

Luke Junk

you. color Great, there, I the thank I will leave it appreciate

Phil Eyler

Thank Luke. you

Matteo Anversa

Luke. Thanks,

Operator

your line with Our Please of Craig-Hallum. Sigdahl proceed the next with Ryan from question comes question.

Ryan Sigdahl

Right. Good morning, guys.

Matteo Anversa

Hey, Ryan.

Phil Eyler

Hey, Ryan.

Ryan Sigdahl

secondly, I of note. to there? until to sort one a of dots connect the hits two just timeline there production an basically, want this is to three typical Are to then I follow-up on EV of we years And it accelerated Is that can't missing or CCS newbie. something that? interest breakthrough

Phil Eyler

faster timeline not than the -- going two-year your Yeah. is The And question. is little typical to period. I'm it second answer bit a

Ryan Sigdahl

Fair enough.

you medical about As there? forward think guidance, faster growth think rates directionally your relative to you

Phil Eyler

say but I'd Potential in be guidance line. roughly in line with roughly year. our next faster, for to

Ryan Sigdahl

OEM development projects. the Great. see then on third good to and European so a And ClimateSense,

you third OEMs duration of [Indiscernible] advanced update key an there. the development You ones been two Can they've on status that had on those comment that two projects. were Just further? if third, on longest have

Phil Eyler

of testing continuing well, that's a They're lot those. on happening very

free the fact, of some gone testing, to one, work it of to up allowed exclusive third this so on some mentioned as In into them us resources I earlier.

some as process. of in but I get had little positive pointed strategy, HVAC really a of many are than the most long that's we middle times longer all out significant a the launch just ClimateSense, huge effort these past, So It's and These with the EVs. folks. it's OEMs their of a it's to transformation coming hoped a in to taking obviously of

radiant demonstrate CCS enhanced We product, doing able as the interest,. of an as level things projects, a getting lot so talked here's step-wise, active are think heating independently integral interest. the development we call a We added ClimateSense a more heating, and side attention lot result were that's that's All a development contracts. these the these Now, we're of surface of of to The part about conditioning, have. all getting IMTM. that content, and is, the we these lot positive net

may plays time we to well. get ClimateSense, potential more in to it blown more interest content take and projects as So obviously, full see but some and spin-off these added

Ryan Sigdahl

for cadence gradual to look at rate run the decent on supply the as then QX year Is year chain year. revenue? and the me, start throughout more presumably just you the your One on throughout is QX for what production, Great. improvements

Phil Eyler

Sorry, is. Ryan, catch that didn't quite I

You decent said run QX, rate? a a

Ryan Sigdahl

revenue decent in $XXX did assuming you million the start similar for year that challenges? a So run QX rate to production supply the of chain Is QX.

Matteo Anversa

where And percentage that would the the we we if we higher I to that's -- what look market, it's call, say, about at look thinking relevant give you would expecting the second for quarterly cadence reiterate our earlier a be don't happen. going first and half think X in mentioned I Ryan, the you a production We bit the -- think if IHS little the -- versus points, to IHS expect had volume going guidance. I at the higher just we that. to is is by cadence. half is be little are than what

Ryan Sigdahl

luck, Good Great. Thanks. guys.

Phil Eyler

Thanks. Ryan.

Matteo Anversa

Thank you.

Operator

turn gentlemen, for the now to Phil have session. question-and-answer reached Eyler I the will over and the closing we Ladies end call of remarks.

Phil Eyler

thanks, for Thank Great. call And joining you. everyone, our today.

and we flow supply light challenges proud past, adjusted automotive fluctuating shared take the focused operational deliver free cash chain our to in and action As to of significant I've am I consistently record production very in the EBITDA of innovation, on remain execution, levels, generation. global cash extremely and in swift ability XXXX. operating team's flow

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

Operator

today's conference your your concludes for you this at a This and wonderful disconnect participation may have and time. lines day. Thank you

Gentherm (THRM) 17 Feb 222021 Q4 Earnings call transcript