Gentherm (NASDAQ:THRM) executives used the company’s fourth-quarter and full-year 2025 earnings call to highlight progress on strategic initiatives aimed at expanding beyond its traditional automotive base, while also outlining 2026 guidance and providing a preliminary revenue outlook for 2027. Management also reiterated the rationale for its planned combination with Modine Performance Technologies, describing the transaction as a way to accelerate Gentherm’s push into thermal and “precision flow management” markets.
Strategy: expanding core technology platforms beyond light vehicles
CEO Bill Presley said Gentherm spent 2025 advancing long-term strategic initiatives while also continuing a footprint realignment that is expected to continue through 2026. Presley emphasized that the company has organized its technologies into four platforms—thermal management, air moving devices, pneumatic solutions, and valve systems—to help its commercial team pursue opportunities outside automotive.
In medical, Presley said Gentherm is reinvigorating its product roadmap and leveraging automotive intellectual property to accelerate innovation. He noted the company recently announced an FDA 510(k) submission for its Thermafix system, which combines “conductive, air-free patient warming with securement technology” intended to help prevent hypothermia and patient movement during procedures. Presley said Thermafix is expected to begin generating revenue later in 2026 and is expected to accelerate medical segment growth into the “high teens.” In Q&A, he added that Gentherm has already begun voice-of-customer and clinical work and “anticipate[s] revenue starting this year,” while also signaling additional medical product introductions, including “another significant announcement sometime early 2027.”
2025 results: record revenue, lower adjusted EBITDA margin
CFO Jon Douyard said Gentherm delivered “another strong year” of automotive new business awards, totaling $2.2 billion in 2025, including $485 million in the fourth quarter. He cited awards tied to the Ford F-Series, high-volume Mercedes-Benz platforms, and further adoption of the company’s “pulse-based solution.”
For 2025, Douyard reported record revenue of $1.5 billion, up 2.9% from the prior year, or 1.8% excluding foreign currency translation. Automotive climate and comfort solutions revenue increased 5.8% excluding FX, which he said was offset by declines in other automotive products of $28 million tied to “planned exits.” Douyard also said fourth-quarter climate and comfort solutions revenue outgrew light vehicle production by 820 basis points excluding FX.
Adjusted EBITDA was $175 million in 2025, which Douyard characterized as 11% to 11.7% of sales, compared with 12.6% the prior year. The decline was attributed primarily to higher material costs (including unfavorable mix) and expenses related to footprint realignment, partially offset by operating leverage.
Douyard said operating cash flow was $117 million, up 7%, despite inventory builds to support footprint transitions. Capital expenditures were $56 million, down from $73 million in the prior year. Gentherm ended the year with net leverage of 0.2 turns.
Guidance: 2026 outlook and preliminary 2027 revenue target
Douyard provided 2026 guidance while noting the company has not factored in impacts from the planned combination with Modine Performance Technologies. For 2026, Gentherm expects revenue between $1.5 billion and $1.6 billion, which Douyard said implies about 3% growth at the midpoint excluding “slight” year-over-year FX tailwinds. He referenced S&P Global Mobility’s mid-February 2026 report calling for approximately a 1% decrease in light vehicle production in Gentherm’s key markets, positioning Gentherm for mid-single-digit growth above market.
Key 2026 guidance items discussed on the call included:
- Revenue: $1.5 billion to $1.6 billion
- Adjusted EBITDA: $175 million to $195 million (about 12% margin at the midpoint, or ~30 basis points of expansion year over year)
- Adjusted free cash flow: $80 million to $100 million
- CapEx: $45 million to $55 million (about 3% of sales)
Douyard said footprint transitions are expected to be a profit drag of roughly 60 basis points in 2026. He also said the second half of 2026 is expected to be slightly stronger than the first half due to new program launches, while margins are expected to improve through the year as contractual price downs are offset by material savings and productivity actions.
In addition, Gentherm introduced a preliminary 2027 revenue outlook of $1.7 billion, which Douyard said would be about 10% growth versus the 2026 midpoint. He said the company offered the additional year of visibility because of the lag between awards and production ramps. In Q&A, management attributed confidence in the 2027 revenue outlook to strong automotive launch activity and continued adoption of climate and pneumatic solutions, along with contributions from adjacent markets and new medical products.
Footprint realignment: benefits expected to show in 2027
During Q&A, management addressed questions about timing and benefits of footprint work. Douyard said there was “no change” to the timing, with transitions remaining on track to be completed in 2026 and benefits coming in 2027. He added that while the company did not provide an EBITDA outlook for 2027, it expects a “step function change” in margins in 2027, driven by footprint benefits and more favorable mix, including pneumatics pricing and a larger contribution from adjacent markets.
Douyard also said there were no incremental investments contemplated beyond footprint work and continued adjacent-market focus, which he described as largely a reallocation of internal spending. He noted FX as another dynamic, citing headwinds from the Mexican peso based on recent movements.
Modine Performance Technologies deal: synergies and valves opportunities
Presley described the planned combination with Modine Performance Technologies as central to transforming Gentherm into a precision flow management company serving more diverse markets. He said the transaction is expected to close by the end of 2026, and characterized the combined company as a $2.6 billion revenue “market leader” positioned to grow to more than $3.5 billion.
On the call, Presley cited near-term run-rate cost synergies of about $25 million, tied to direct materials, indirect purchasing and logistics, and costs related to the overall operating model. He also emphasized potential “product and end market opportunities,” including leveraging Modine’s relationships in commercial vehicle and heavy-duty equipment, and using Modine’s footprint in regions like India.
Presley singled out valves as a major product-integration opportunity, including potential applications in power generation—particularly for data centers—where valves are used to regulate fluid and air flow through thermal management systems. In Q&A, he said the data center opportunity relates to liquid cooling and remains early in Gentherm’s understanding, but that Modine provides an “avenue in.” Presley also reiterated that earlier work identified a commercial synergy funnel of more than $100 million, with valves representing more than half of that amount.
About Gentherm (NASDAQ:THRM)
Gentherm Incorporated (NASDAQ: THRM) is a global developer and supplier of advanced thermal management technologies for automotive, specialty vehicle, medical, consumer and industrial markets. The company’s core focus lies in delivering integrated heating and cooling systems designed to enhance energy efficiency, comfort and safety across a wide range of applications. Gentherm’s product portfolio includes seat thermal systems, heated and ventilated seating surfaces, steering wheel heaters, battery thermal management solutions, and climate systems for electric vehicles.
In the automotive sector, Gentherm partners with leading original equipment manufacturers to engineer and manufacture high-performance thermal solutions that meet stringent industry demands for reduced weight, lower energy consumption and improved passenger comfort.
