Earnings call transcript Q1 2023

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Operator

Greetings, and welcome to the Gentherm First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Yijing Brentano, Senior Vice President of Strategy, Corporate Development and Investor Relations for Gentherm. you. Thank

begin. may You

Yijing Brentano

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

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

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

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

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

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

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

Phillip Eyler

excluding highest of I'm us results quarterly together, translation. the you, impact history, proud and executing Yijing. joining strong quarter. and you the today. or focus XX% delivering year-over-year company first in currency in We quite Thank Gentherm Good everyone, XX%, growing for with morning, the of revenue for foreign the team delivered coming thank

in in the key revenues Adjusting our points. light Alfmeier the markets production vehicle acquisition, year-over-year automotive for quarter, over by basis outperforming FX XXX actual first XX% increased and

$XXX Demand announced thermal that for record a comfort, health just was ago proposition wellness. beyond business Alfmeier, and is year quarter. automotive comfort, awards, lumbar accelerating, of massage within first Gentherm's and expanded of by value new our solutions a we million our our our acquisition thermal It which for evidenced

break integrated system Rover massage and Land EVs. We thermal comfort, through for won a lumbar Jaguar

our future General vehicle. and award The with We pace electric Alfmeier massage also our conquest the a well awards ahead on of Motors lumbar first these acquisition. won expectations following of is

cash improved pro points On basis, performance a year-over-year results $XX of from our as financial recoveries from few and rate result the year-over-year. On operations of cost basis negotiation the details improvement more $XX minutes. our of profitability our a million in of and generated will We forma flow million appropriate quarter. adjusted our margin side, a our repurchased initiatives cost margin customers. XXX on in improved EBITDA Matteo provide shares

launched Slide on OEMs, highlights we X quarter, automotive Ford, to In turning automotive Now, the BMW, Wall, including Great solutions different and X. Mercedes-Benz. our on Hyundai XX Motors, first across vehicles General

X, vehicles. in Chevrolet China. Great quarter, GXX, We our well Nautilus both solutions of Wall were XT Silverado our Genesis the on the Hyundai several continue CCS launched on CCS In EV models Lincoln Colorado, see for solutions ICE electric vehicles and first Cadillac as momentum Chevrolet EV, to as

Now, let update you ClimateSense. give quick me on a

flawless to that implemented launch production with other highlight ClimateSense. across concept preparing design we've the General to we to addition Motors, regions work with continue the In with for of OEMs the critical programs multiple

and ready the update be to platform unleashed integrated can heating for more or the a We've who developed next it cooling could today's heating incrementally our into OEM solution and completely cooling EV customers for of generation as architecture visions that architecture. our scalable be are

their of a current smart building and EV platform to our based on performance. block effectors, modular will to to And us their energy take of thermal can allow increases scale support a customers steady and on this content proprietary in which migration efficiency product advantage strategy. Our implementation installed allows be continuum

Let advantage of have quarters. additional the modular me us and some awarded give you our a taking in customers of are examples thermal effectors approach of couple last of how few our

a As units development will a platforms. heated add their ongoing of of number result our interior including electronic projects, solutions, our EV control Honda to upcoming

to gaining it proof stepping intelligent is stones one In addition, PSA toward points adding of is modular these many growth. are future Awards that Stellantis is model DS their our our like momentum, conditioner neck and some lines. vehicle scalable important our ClimateSense of approach

strides creating opening advanced vast team combination integrate enhancements physical cooling making the that engineering and heating pulsating opportunities thermal solutions treatments, system of and In is with with is lumbar The health and alertness for in and also the addition our wellness full massage in car. recovery ClimateSense, body great to massage.

vehicle are software-defined the to We positioned a integrating perfectly the player our be algorithms. of in proprietary by software and major future

million can further $XXX secured and awards automotive. that the to our first the pipeline opportunities the acquisition, you resoundingly have for of expand thermal solutions, proposition to of see Alfmeier the combined massage expressed beyond strong. to its quarter, on X, Since Now include remains in and see Gentherm value where and of the announcement company support excitement very customers in Slide we pneumatic lumbar

pneumatic earlier, comfort customer relationships. leveraging won several mentioned for As Gentherm's I we awards strong

X share first like wins I'd to breakthrough quarter. the conquest in Specifically,

and that BEVs. first pneumatic company. for comfort our share to result pleased Rover full Land we also with with won award I'm This award a their new the Jaguar a JLR combined ever combined thermal First, massage system is Jaguar as comfort, of lumbar

partnership with lumbar first testament upcoming to Second, vehicles. Alfmeier a and their broke every solution one with strong is competition. award by challenge win the trust the General massage Motors customer. agility, through we extremely for of in developed highlighting for and acquisition, synergies largest creativity, the we our speed This electric won General a and of our formidable and Motors With

awards CCS won in that multiple we the I'm also quarter. pleased to note

large CCS Great Wall EV the to platforms. platform In trucks Jaguar Ora, mentioned we Land won Subaru CRV, for an extension SUV Honda and Motors multi-vehicle earlier, and Outback and addition the Rover Legacy awards General full-size I of that

a special conquest of we award seat largest that volume. award track first EV and quality BYD, proof our key record the world's manufacturer for our Of BYD, and by is point won control advantage. with competitive it's This note, is innovation, climate a execution a

across MKZ first Nissan from we steering Volkswagen. QX Lincoln models also quarter, well the and In Audi multiple received awards wheel heater Honda, XX included e-tron, OEMs. as the These as XX

a In for award detection-enabled heater Geely. steering addition, we won wheel hands-on

follow-on for hydrogen electric we electric create Our the semi-trucks teams continue first fuel cable for to vehicle quarter. I to won am high-voltage value in award cell a our lines to pleased product applications. share transform that

Audi. In battery future sensor harness addition, award the we won for for models a of hybrid system start-stop

share foil Mercedes-Benz. battery We our I'd based awarded Finally, significant thermal mechanical wins in awarded process. proprietary of a battery a XX-volt solutions. to recent of management structuring Mercedes-Benz on performance us thin thermal a like were couple heating solution business battery for extension new also electric-based XX-volt our

to as As is positioned Gentherm increase we bring market. electric content per customers, in to innovative our the vehicle expand solutions continue well vehicles significantly to

Medical. Slide primarily of discussion first quarter FX, business. for to the revenue driven turn XX%, year-over-year, a medical Dacheng let's grew ex of in our our Now X by Medical acquisition

In rebound major are to we face the accounts capital new U.S. in China While surgeries reopening. first their in hospitals gained managing the with and financial saw the elective spending, XX China. pressures in quarter, continue a hospital carefully we

selected across also centers won post-acute Blanketrol hypo-hyperthermia in the partner at Medical medical Pennsylvania. key new that Blanketrol with United is that a award to of choice. share They their I'm Select adding pleased device we of as hospitals Select States. are have a and Medical Mechanicsburg, locations group

In replacing the competitor of warm and filter products. addition, Medical Center, patient business warming we air awarded were systems Cincinnati flow at University with

had not customers, Our supply supply blankets solutions, preferred win clinically to only driven was also the ability our while chain issues. but our our consumable to by consistently competition

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

Matteo Anversa

Okay. Thank you, Phil.

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

contribution period we revenue the revenues impact for year, XX% and to For from the product If same acquisitions. by quarter, our of the last product adjust overall our by including XX%. increased of FX, the increased compared acquisitions the

a Automotive $XX America, foreign to prior currency million And China, year were actual this in translation, the Adjusting reflecting increase and Alfmeier by of segment. production revenue vehicle North key automotive compares compared from a with Europe, the for increase contribution to and in our Automotive Korea. period. revenues the Starting $XXX XX%. markets Japan million, the X% XX% increased light

production we mentioned, just light XXX basis Phil as the volume by vehicle points. outperformed And over

growth website. our category We product materials release available on provided press by detail are the and on earnings have associated our Investor Relations revenue that in

by more higher due volume a demand to XX% volume GM EV of our year significant saw on wheel the We prior majority as heaters production production increased product specifically, global to And steering growth as well OEM. major revenue the platforms period lines. and higher multiple with on compared

increased Hyundai X by BMW hybrid. due production revenue production Jeep Series to trucks rate heater by GM Ford take and Stellantis at of volume revenue Kia. of XX% to GM, volume revenue higher plug-in thin on start the increased our and volume SUVs due higher XX% and increases due trucks Stellantis. Seat BPS of and production of as on Mercedes, the SUVs self-connecting with higher Mercedes, foil XX% as board and CCS increased proprietary to well

units of on Europe. global a several basis as to forma a to decreased due temporary on a pro production China Electronics BMW, issues VW, VW, solutions the on labor for with SGM of Mercedes volume the Valve decreased Ford. production and massage higher X% to X% due Lumbar systems higher revenue our including SAIC. platforms EVs, increased EV sales X% and OEM. due our BMWs revenue revenues to of in Cable ramp-up X% plant control revenue and forma electronic due in basis as well multifunction lower availability EQS increased major pro one in And volume to

year Medical Turning XX%, ex-FX, prior of increased revenues compared to approximately to period, the the as primarily a acquisition. result Dacheng Medical.

the and EBITDA EBITDA. forma prior X.X% pro year from rate a period pro million the adjusted in prior Moving and $XX.X quarter for comparable the the first compares $XX.X basis. in year-ago this XX.X%, million period on to in The was $XX.X in quarter million, the was up to adjusted EBITDA forma. Adjusted year

price. won. material sales costs negative the basis of the impact These adjusted excluding appreciation and positive the by XX% was compared It the XXX of quarter. euro Gentherm foreign to XX% U.S. prior to Korean noting that fixed lower margin cost to legacy wage volume, were acquisition, EBITDA to worth higher primarily offset increase freight and rose and partially rate Alfmeier and year exchange, inflation the is year-over-year compared dollar impact leverage in the of by due The the points the on driven

million million $XX.X $XX.X and as to Operating expenses up in compared periods, operating were restructuring the as in period. costs million $XX.X prior year. compensation adjust for expenses in million, year stock from were we $XX.X noncash expenses integration first in acquisition, of the quarter last quarter the If both well the

increase well as The as support of wins. million year-over-year the from higher compensation programs cost increased driven was expenses businesses new R&D approximately to primarily by and acquired $XX additional expenses

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

calculation adjusted Our expenses, of year compensation with the prior noncash EPS the consistent impact calculation. includes stock

Our the high range state a guidance approximately impact quarter our on to effective due the settlement. tax of the in XX%, audit rate tax of was end

Slide balance the X. to sheet Moving on

million in $XXX XXXX. the $XX approximately $XXX compared capital position reduction the The [ph] $XX million of and of of of was cash debt million repurchases. December. quarter debt activities, end cash $XX debt by quarter approximately the net Our primarily a position at of million, by net partially up million closed of the was offset in generated December of to share driven from at million from $XX million $X end operating net expenditures We at the end of

the adjusted the As the of ended a $XXX and consolidated end million EBITDA available result, at first March end target on had trailing our of well total X.XX Based was XX, March net quarter, up in our ratio from of the million line at XX availability of was million, leverage XX-month X.Xx. of we liquidity our credit the approximately December. $XXX $XXX as below of

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

we as year. for the As in actual forma we pro the Based since results comparison the as in last had as for Alfmeier the reaffirming XXXX the we purposes, the quarter, of performance are beginning call. the did if our the we incorporated for guidance earnings values earnings XXXX in our as on XXXX prior first results the reported discussed well call, included

midpoint the in and euro be of in to X.XX exchange versus light for revenue single-digit of billion, guidance expecting approximately in USD of our of at XX%. pressure production a points implies are FX vehicle range organic XXX $X.XX XXXX. a XXXX $X.XX we assuming low basis rate market growth XXXX, rate grows our For of relevant rate billion the year-over-year, Adjusting to to an

revenue higher assumes to the first a new also guidance program the in result half Our second half of launches. as compared

in expect to the the for range year through to in the And be in price EBITDA contractual XX.X% XX% incremental full our last be indicated be to margin the range million rate effective supplier as impact to to continue productivity in range XX.X% we $XX million. the $XX recoveries, We of cost expenditures to in of expect earnings the and adjusted due half of of We steadily rate EBITDA XXXX. cadence the call, improvements to tax capital revenue the offset rate throughout and we the and second year. to the to expect adjusted margin expect improve price-downs, which we XX% still year the actions, of to

that, So back call turn I'll to the Phil. with

Phillip Eyler

Matteo. Thanks,

first demonstrates significant Now we're clearly the company quarterly let quarter delivered We long-term profitability the of improved year-over-year. making in strategic initiatives. highest results progress our continued against revenue and me history The summarize. the and

in $XXX quarter. ever automotive highest that awards, secured million in we've first new the secured We the business

profitable on penetration. Our quarter highlight in a our to create accelerated results momentum acquisition the finally, industry has first megatrends flywheel our also of our growth. unique how positioning Alfmeier to market capitalize demonstrates the And

turn call I'll the Q&A the back to begin operator the session. to that, With

Operator

comes Thank MKM. from Matt with question line you. first Instructions] ROTH the [Operator Koranda Our of

Matt Koranda

Hey guys, good morning.

Phillip Eyler

Good morning, Matt.

Matt Koranda

On bookings, guys. morning good the

of be in content On $XXX amount the it Alfmeier bookings million, front, like good the there. may sounded a

breakdown on and any Just comfort between balance lumbar the massage? thermal versus

Phillip Eyler

Yes.

very so with excited performance. us. in was both award total We're JLR, sizable the stronger conquest combined than normal, was especially think very were I for an good exciting and win about which

Matt Koranda

in sounds it is the combined there additional potential like content. for additional And the pipeline

of Just you maybe, if bit curious go-forward on of Phil in pipeline that just little the what's sort front? on if a give could on a basis color

Phillip Eyler

That's had of General are potential JLR traditional have say traditional yes, did see it's than with But do base in the with Sure. would business can for too. us prior Well, customers -- we're Motors. more we anticipated, BMW, big new a interest that more the -- keeping you really customer as from not wins Audi, quite bit the busy, I Gentherm Mercedes, Alfmeier with like especially rolling very Alfmeier platforms we with and the with top acquisition. some on that, Volkswagen, opportunities significant to there,

starting same of So high very at rolling up. busy time, very we're our business all the But was and opportunities rate in. the thermal is pick on with activity to win

excited into the we're the XXXX. of So about pipeline leading rest

Matt Koranda

Revenue if just front, bridge gross first you breakout significantly, quarter? up us? hear. be Okay. gross And the a a -- That's if give detailed on basis a I curious bit think of more detailed Alfmeier a maybe margin for to drag margin for margin great of could then in gross just maybe Matteo, you just a curious more the provide bridge but could the on may year-over-year obviously,

Matteo Anversa

Sure to morning. business. talk this Yes. the about Matt, Gentherm is legacy way the good to best Maybe do

on pleased the So first really the quarter. in profitability came where

to legacy which XX% gross non-automotive the a improvement adjustment -- that on -- at about rate an if exit the we margin is closed, last nice legacy we You first a you little compare year-over-year. the have the had in quarter came XX.X%, electronics, of to bit about in the excluding due year the that of had what

regular rates environment accounted compared XXX as a points. volume of for expansion by were freight couple nicely, by primarily is well as basis leverage what better coming for saw, as freight the about freight. We an drivers, facing reasons, freight, of last premium a A result good year couple expected, down of improved our the of negotiating quite costs key driven as a we team very to job

points So freight of XXX accounted for about basis expansion. margin

the which, is negative real team price-down But of fantastic very the have in cost job you kick our did actually drive quarter, was positive unusual annual to business the with quarter. on always other know, The as impact as the in that price, our for positive in, the the in we first which continuing positive first is a the momentum customers. recoveries

So that's about basis points XX expansion. of margin

material the and was inflation, XXX which for about on then And negative labor bps and have side, you the bps. XXX FX negative accounted

So I business, we comfortable of on again, for in particularly and year. pickup rest nice feel starting see, performance are legacy the think really team. by the profitability, And the to great a we pretty the

Matt Koranda

excellent. the the guide me. one I And for year, from full makes then Okay, noticed, just last you sense. reiterated

both for of to Just it's any rest of build on year in revenue margin? is sort be bit, the on here, year just of the half EBITDA into the more here? of of the margin of or quarter, additional the mean, you cadence the sort and any I the seasonality commentary think, first little year expected on a outperformed back I the the EBITDA but still shape sort commentary

Matteo Anversa

Sure.

right, So Matt. you're yes,

need I are what the you the look which rate is what in you hit needs volume, year, first the the really XX.X% expecting Number is -- average, good. to to at of the XX.X% a think of year, if exactly terms quarters, the the bridge right, you better midpoint. said. one today EBITDA we if of be The remainder have you for of beginning to three things really, really the And -- came of the to XX.X%, is next which rate, the about than we were that couple to quarter happen. from slightly probably EBITDA the be at the expecting where for in we I on

ago. The we revenue of are we cadence, what confirming couple a said months

We half, are the new the second to expecting product thanks than launches. be higher half to first

about to XX basis EBITDA type is be of points rate of that's the So remainder the for of expansion. margin going the in Alfmeier mid-single-digit year.

margin by tend then savings that's recoveries in part negotiate on expansion. as come we And price usual on So year, also in XXX the little as kick April bps us, margin are points an of investment of XX a for you will the the increases about of bit latter And driven that the on basis another the that sourcing then well will team of merit, drive that, expansion. timing have which X. so primarily OpEx, have these to incremental the

that's for how guidance today the So bridge the EBITDA from we today reported the the you've year. towards that -- next of seen of midpoint we

I in think rationale side, quarter overall, where here the one reconfirming on in. our came very of the are guidance, excited terms we

We price on particularly have momentum, recoveries. great the

to I some do think the also we remains continue the work the the -- volatile, -- other have to to on improve the profitability to side, continue environment and of do company.

our So team very months where we of we rationale -- a first couple on that pleased in the are for guidance came the that's ago. to in, gave now the really maintain But quarter.

Matt Koranda

Okay. Super thank helpful. there it detailed and leave guys, I'll you.

Phillip Eyler

you, Thank Matt.

Operator

interest thank Instructions] gentlemen. This and ladies you. concludes Thank today. call your participation. and We Q&A thus our session, Thank you and our you, for [Operator concludes

your now lines. may You disconnect

Gentherm (THRM) 27 Apr 232023 Q1 Earnings call transcript