Gentherm Inc

Greetings and welcome to the GenTherm's second quarter 2025 earnings conference call. 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, please press star zero on your telephone keypad as a reminder this conference is being recorded. It is now my pleasure to introduce Gregory Blanchett, Senior Director, Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Thanks for joining us today. GenTherm's earnings results were released earlier this morning, and a copy of the release is available at GenTherm.com. Additionally, a webcast replay of today's call will be available later today on the investor relations section of GenTherm's website. During this call, we will make forward-looking statements within the meaning of federal securities laws. These statements reflect our current views with respect to future events and financial performance, and actual results may differ materially. We undertake no obligation to update them except as required by law. Please see GenTherm's earnings release and its SEC filings, including the latest 10-K and subsequent reports for discussions of our risk factors and other significant assumptions, risks, and uncertainties underlying such forward-looking statements. During the call, we will also 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 and investor presentation. On the call with me today are Bill Presley, President and Chief Executive Officer, and John Dewyard, Chief Financial Officer. During their comments, they will be referring to a presentation deck that we've made available on the investor section of GenTherm's website. After the prepared remarks, we'd be pleased to take your questions. Now, I'd like to turn the call over to Bill.

Thank you, Greg, and good morning, everyone. I want to start on slide three, the few key performance highlights for the second quarter. The Gen 13 delivered results in line with our expectations in a highly dynamic environment. We improved, adjusted even the margin performance versus the first quarter by more than 100 basis points and achieved another strong quarter of automotive new business awards with over $600 million secured in Q2 and $1 billion year-to-date. This keeps us on track for another robust year. We received a significant award from Ford on their F-Series platform, and I would like to use this as an example of how GenTherm is strategically positioned as a differentiated solutions provider. We have industry-leading technology and strong customer relationships, which position us well for this highly contested award. We secure all of the heat, ventilation lumbar massage systems on ford's next generation f-150 f-250 and f-350 platforms making us the full comfort solution provider on one of the most significant platforms in the market the f-series truck platform is the number one volume vehicle in north america and is in the top five globally this reinforces that gen therm thermal and pneumatic products are not just focused on the luxury vehicle segment but they are becoming the customer standard and applicable to large volume platforms additionally it's important to note that gen therm was awarded the program prior to the selection of a tier one seat supplier demonstrating the strength of our commercial approach which is built around direct oem engagement our products are an essential component in the oem product planning process and we work closely with them to deliver capability and value to the end user. I am grateful to the team for securing this significant new business award. We continue to innovate thermal and pneumatic solutions that allow us to create a highly desirable value added feature for the market. Turning to revenue, In the second quarter, automotive climate and comfort solutions outperformed actual light vehicle production in our key markets by 10 basis points, excluding FX. While we are not pleased with the overall result, we did have strong outperformance in North America and Europe, weighed down by underperformance in Asia, where our share does not currently represent the market. We recognize the importance of shifting our customer mix, and are actively tailoring our pursuit maps to close the gap in Asia. To demonstrate progress, we have made to proactively grow our business with Chinese domestic OEMs. If you look at our awards year to date, 70% of our Chinese awards were with Chinese domestic OEMs compared to 50% over the last two years. As a result of the team's efforts, historically in China, our customer revenue mix was about 80-20 in favor of the global OEMs. and we expect next year to be closer to 60-40. It remains a key strategic priority for us to shift our China customer mix toward domestic OEMs to be more closely aligned to the overall market. Operationally, we are laying the necessary foundation for driving improved operational and financial performance, which will allow us to strategically deploy capital.