Gentherm Incorporated

Revenue was $416 million in Q2, up 11% year over year, or up 9.5% excluding FX. Automotive Climate and Comfort Solutions revenue grew 14.1% year over year, or 12.7% ex-FX, and lumbar and massage comfort solutions grew 38%. Adjusted EBITDA was $48.8 million, or 11.7% of sales, versus 12.2% a year ago. Reported diluted EPS was $0.14, impacted by about $0.55 per share of merger and restructuring expenses; adjusted diluted EPS was $0.75, up 39% from $0.54. Management raised 2026 full-year guidance to revenue of $1.6 billion at the midpoint, adjusted EBITDA of $185 million to $200 million, and adjusted free cash flow of $85 million to $100 million; CapEx is guided to $45 million to $55 million, or about 3% of sales.

Bill Presley said the company had an excellent first half, driven by strong commercial execution and operational discipline, and that Gentherm is outperforming the market while improving its operating system. He emphasized that the business is gaining traction beyond light vehicles through home and office wins, ThermAffyx, and the IME acquisition, while the Modine combination should create a more diversified company with greater scale and long-term growth potential. His tone was confident and upbeat, but he also noted ongoing attention to macro and geopolitical uncertainty and inflationary pressures.

Jon Douyard said Q2 revenue of $416 million was ahead of expectations, with broad-based auto strength and strong China performance helping drive the beat. He highlighted adjusted EBITDA of $48.8 million, a 11.7% margin, and said margins were pressured by inflation recovery timing, planned inventory reductions, and warranty accruals in automotive and medical. He also pointed to adjusted free cash flow of about $16 million year to date, CapEx of $14 million, net leverage of 0.3 turns, liquidity of $502 million, and the new $800 million financing package supporting the Modine deal; post-close, net leverage is expected around 1 turn, with a target of 1x to 1.5x over time.

Analysts asked where the auto outperformance came from, and management said it was broad-based across regions and products, with China particularly strong, while reaffirming confidence in mid-single-digit over-market growth over time. On home and office, management said the new North American wins were large, the TAM is over $500 million, and the company still sees $50 million to $100 million of revenue by 2028. Questions on IME and ThermAffyx focused on market traction and cross-selling: Gentherm said IME’s $34 million purchase price fits a business with projected 2026 revenue of about $17 million and 20% EBITDA margins, and it sees more than $100 million of cross-selling potential by 2030; ThermAffyx demand was described as strong, with initial sales expected in Q3. Management also said an auto warranty issue is specific to one product/customer and not viewed as part of the ongoing run rate.