Gentherm Inc

Greetings and welcome to the GenThurm fourth quarter and year-end 2022 earnings conference call and strategy update. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Yijing Brentano, Senior Vice President of Strategy, Corporate Development, and Investor Relations. Thank you. You may begin.

Thank you, and good morning, everyone, and thanks for joining us today. Jensen's earnings results were released earlier this morning, and a copy of the release is available at jensen.com. In addition to discussing fourth quarter and full year 2022 results, Phil Eiler, our President and CEO, and Mattel and Versa, our CFO, will also share GenThum's strategic plan for 2023 and beyond. You will be able to see the slides on your webcast screen when we advance through them here in the room. A copy of the complete slide deck will be posted under the Events tab in the Investor Relations section of GenThum.com, immediately following the completion of Phil and Mattel's prepared comments. In addition, an audio replay of this event will be available for 90 days. Additionally, a webcast replay of today's call will be available later today on the Investor Relations section of Jentham's website. During this call, we may make forward-looking statements within the meaning of federal security laws. Statements reflect our current views with respect to future events and financial performance. and actual results may differ materially due to a variety of important factors and risks. All statements that address future operating, financial, or business performance, or GEN-STEM strategies or expectations are forward-looking statements. In making these statements, we rely on assumptions and analysis based on our experience and perception of historical trends, current conditions, and expected future developments as well as other factors we consider appropriate under the circumstances. We undertake no obligation to update them, except as required by law. Please see JanThem'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 presentations. After Phil and Mateo's prepared remarks, we will have a Q&A session. Now, I'd like to turn the call over to Phil.

Thank you, Yijing. Good morning, everyone, and thank you for joining us today. First, let me outline the agenda for our enhanced earnings call this morning. We will begin with a brief review of Q4 and full year 2022 results and 2023 guidance. We'll then review our midterm strategic plan in detail and provide 2026 financial goals. We would encourage you to follow along on the webcast as we will kick off the strategy update with a short video. And finally, we'll conclude with a Q&A session. Now turning to slide four for some 2022 highlights. I am extremely proud of what the GenTherm team achieved in 2022, despite a continuously challenging operating environment. During the year, we closed the acquisitions of Altmyer and DotGen Medical, which expanded GenTherm's value proposition in both automotive and medical. We also achieved record revenue in the fourth quarter and for the full year 2022. Of special note, we achieved record annual revenue for climate control seats, steering wheel heat, and battery performance solutions in 2022. With the addition of Altmyer and Dachshund, revenue grew 38% year-over-year in the fourth quarter, or 43%, excluding the impact of foreign currency translation. Adjusting for both foreign currency translation and the Altmyer acquisition, automotive revenues increased 23% year-over-year in the fourth quarter, outperforming actual light vehicle production in our key markets by nearly 20 percentage points. For full year 2022, revenue rose 15% year-over-year, or 23%, adjusting for the impact of foreign currency translation. Adjusting for both foreign currency translation and the Alfmeyer acquisition, automotive revenues increased 11% year-over-year in 2022, outperforming actual light vehicle production in our key markets by over 600 basis points. In addition, we secured new automotive business awards of $1.8 billion in 2022, setting another record in company history. Our milestone achievements on revenue and awards are strong proof points of increasing demand for our thermal and pneumatic massage and lumbar comfort solutions, especially in the EV market. In addition, we continue to innovate with differentiated proprietary solutions such as climate sense and our thin-foil cell connecting systems. These innovations are expected to significantly increase Gen Therm's content per vehicle as electric vehicles expand in the market. On the cost front, we continued our disciplined approach to managing operating expenses. After adjusting for restructuring, acquisition, and divestiture expenses, Operating expense as a percent of revenue improved nearly 100 basis points from 2021 and over 500 basis points from five years ago. Before I turn the call over to Mateo to briefly review the Q4 and full year results, as well as our guidance for 2023, let me touch upon a few key operational highlights in the fourth quarter on slide five. In the fourth quarter, we launched our automotive solutions on 20 different vehicles across 11 OEMs. including CCS launches on the Chevrolet Trax, several Great Wall models, the Honda Pilot in the U.S., the Kia Optima, KX5, and Sportage. Since the announcement of the Alfmeyer acquisition, our customers have resoundingly expressed support and excitement to see GemTherm further expand its value proposition beyond thermal to include pneumatic solutions in comfort, health, wellness, and energy efficiency. Since the close of the acquisition, Our teams have presented a number of technology days at multiple OEMs, showcasing our latest innovations in both thermal and pneumatic comfort. It's clear that customer interest in our extensive product portfolio continues to grow. In the fourth quarter, we secured $560 million of automotive new business awards, bringing us to $1.8 billion of wins in 2022, including three full quarters of Alfmeyer, setting another company record. A highlight in the quarter was two important wins with our longtime customer Stellantis. We were awarded an intelligent closed-cabin neck conditioner and a Conquest thermal electronics and software module, our first with this OEN, which we believe will open the door for many future opportunities. We won multiple CCS awards, including on the Ford Mustang Mach-E, the Buick Enclave, Land Rover Defender, and Lee Auto's eSUV. In the fourth quarter, we also received 12 steering wheel heater awards across seven OEMs. In addition, we won a significant multi-car line award for our pneumatic lumbar and massage solution with Volkswagen. This is another strong proof point of our ability to grow market share by winning business from competitors, as well as grow penetration of pneumatic comfort solutions into vehicles that do not offer the feature currently. On the medical front, hospitals continue to face financial pressures and are carefully managing their capital spending. Medical revenue grew 4% XFX year over year in the fourth quarter, primarily driven by our acquisition of DotGen Medical. In the fourth quarter, the University of Colorado in Denver purchased 10 Blanketrol units to expand usage throughout their facility. In addition, Meyer Heart Hospital in Lansing, Michigan, a part of Spectrum Health, has adopted our patient temperature management product based on resistive technology, AstoPad, in their cardiac operating rooms, replacing competitive air blankets. And with that, I'll turn the call over to Matteo for a little more color on the financial results and to provide 2023 guidance.