Gentherm Inc

Hello, and welcome to the GenTherm Inc. second quarter 2021 earnings conference call and webcast. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Yijing Brentano, Investor Relations and Corporate Communications. Yijing, please go ahead.

Thank you and good morning, everyone, and thank you for joining us today. Jensen's earnings results were released earlier this morning, and a copy of the release is available at jensen.com. Additionally, a webcast replay of today's call will be available later today on the Investor Relations section of Jensen's website. During this call, we may make forward-looking statements within the meaning of federal securities laws. Statements reflect our current views with respect to future events and financial performance. We undertake no obligation to update them, and actual results may differ materially. Please see Jensen's earnings release and its SEC filings, including the latest 10-K and subsequent reports, for discussions of our risk factors and other risks and uncertainties underlying such forward-looking statements. During the call, we may discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included in our earnings release or investor presentation. On the call with me today are Phil Eiler, President and Chief Executive Officer, and Mattel Anversa, Chief Financial Officer. During their comments, Phil and Mateo will be referring to a presentation deck that we have made available on our website at genthums.com slash events. After their prepared remarks, we will be pleased to take your questions. Now, I'd like to turn the call over to Phil.

Thank you, Eugene. Good morning, everyone, and thank you for joining us today. I'm pleased with the continued strong execution of the Gen 3 solid financial results in the second quarter. The automotive industry continues to face significant supply disruptions, including semiconductor shortages, escalating freight costs, and other inflationary factors. As a result, light vehicle production in our key markets in the quarter was 12% lower than we provided our 2021 guidance, 7% lower than what was expected three months ago, and 7% lower than the first quarter. delivered 96% organic revenue growth in automotive year-over-year in the second quarter, excluding the impact of foreign currency translation. This outperformed light vehicle production in our key markets by 60 percentage points. In addition, we continued our momentum on automotive awards, securing $400 million in awards from global OEMs with an 81% win rate in the second quarter. allowed us to reduce some operating expenses from first quarter levels to offset the near-term material cost challenges we're experiencing as a result of the supply disruptions. In addition, when comparing to where we were two years ago, operating expenses in the second quarter of 2021 were 10% lower than in the same period of 2019. To date, in spite of the significant supply chain headwinds, we delivered adjusted EBITDA margin rate of 17.2%, and we generated $64 million in free cash flow, the highest free cash flow level in the first half of any calendar year in company history. Mateo will provide more details on our financial results in a few minutes. Now let's turn to automotive highlights on slide four. In the second quarter, we launched our automotive solutions on 18 different vehicles across 10 OEMs including General Motors, Great Wall, Kia, Nissan, Rivian, Stellantis, and Volkswagen. We continue to see momentum for our CCS products and launched on the Chevy Volt, Great Wall Haval, Mercedes EQS, and the Rivian R1T. On the battery performance solutions front, the fastest growing product in our portfolio is our cell connecting technologies. We have both a wire-based cell connecting technology foil technology. Our R&D team applied an innovative mechanical structuring process that offers increased design flexibility and some exciting opportunities for new applications. Specifically, we're adding an embedded cell censoring circuit to our proprietary thin foil that can result in a higher overall safety of lithium ion battery packs. By knowing the battery's state of health, abnormalities inside the battery cells can be detected early. As a result of launching our proprietary thin-foil solution, I'm pleased to share that we won the German Innovation Award 2021 for our innovative cell-connecting board in the e-mobility technology category. This award recognizes our ultra-flat-foil conductors for significant reduction in manufacturing complexity, a simplified and very fast design process, our R&D team for continuing to expand Githerm's technology leadership. On the customer front, we were honored to be named a 2020 General Motors Supplier of the Year for the second consecutive year in recognition of our relentless dedication to delivering exceptional customer service and innovative solutions. The annual award highlights a very small percentage of global suppliers that distinguish themselves by exceeding GM's requirements in turn providing GM customers with innovative technologies and the highest quality in the automotive industry. In addition, we're proud to be honored again this year by Honda as a top North American supplier. This recognition reflects our commitment to developing innovative solutions for our customers and our team's dedication and commitment to quality, innovation, and operational excellence. I'd like to thank the GenTherm Global team for continuing to exceed customer expectations. Production Vehicle Award for ClimateSense Technology, our software-driven microclimate platform using an algorithm based on thermophysiology. As you might have already seen in yesterday's press release, this will be on a small volume, new 2024 model year electric vehicle with a global automaker. We expect content per vehicle for this particular EV to be significantly higher than vehicles with our traditional climate comfort solution. This is truly an important milestone in our long-term strategy, demonstrating the potential our technology has to address the growing needs of the electric vehicle market. With the introduction of ClimateSense, we are disrupting the current thermal solutions in vehicles by significantly reducing power consumption and increasing range, all while providing best-in-class passenger comfort. In the second quarter, we continued our business award momentum from the last couple of shared $400 million in new program awards across 11 different OEM customers. I'm proud of our global team for continuing to win over 80% of the opportunities available to us. We won multiple CCS awards, including platform wins with the Ford Expedition, Great Wall Haval F7, Lincoln Navigator, and the Hyundai Grandeur, which includes the CCS Active Solutions. We received 15 steering wheel heater awards across four OEMs, including multiple Cadillac SUV electric vehicles, the Chevy Tahoe, Chevy Traverse, and Hummer EV. Importantly, we won a combined steering wheel heat and hands-on detection sensor award for Audi, including the A4, A5, A6, A8, and Q5. This comes on the heels of seat heater awards on the same Audi vehicles that we announced last quarter. On the battery performance solutions front, we continue to make progress in expanding our business, winning an air cooling battery thermal management award for the key test portage. Now let's turn to slide six for a discussion of our medical business. The pandemic continues to create challenges for our medical business with COVID-19 restrictions and reduced hospital access for our sales force, especially in Canada, Europe, and Latin America. That said, hospital access is improving in the U.S. In the second quarter, we won a three-year patient warming contract with Premier that also includes ASOPAD and warm air filtered flow products. Premier is one of the largest group purchasing organizations in the United States. This award opens the door for us to potentially increase our patient temperature management market share. On the R&D front, we launched Blanketrol Cool Repeat, in the U.S. during the second quarter, further enhancing Blanketrol's functionality. CoolRepeat is an accessory to the Blanketrol equipment. This device allows the patient temperature data from the Blanketrol to be displayed on the patient monitor. Here, the data can then be imported into their medical record. We expect this to have a significant impact on nursing efficiency. and securing another $400 million of new awards from automakers around the world, including our first-ever production award for climate sense. Despite the headwinds in the global supply chain, we generated the highest level of quarterly cash flow from operations since 2018. While the supply disruptions will remain challenging in the near term, the momentum in new awards, winning coveted supplier awards from General Motors and Honda, coupled with a disciplined approach to cost management, positioned us well to continue to deliver over the long term. With that, I'll turn the call over to Matteo for a little more color on the financial results.