Gentherm swings to $2.59M net loss in Q3 2026
The post-quarter combination issued 23,735,961 shares to Modine shareholders; Gentherm reported 52,504,512 shares outstanding as of October 16.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Gentherm Incorporated (THRM) reported third-quarter 2026 product revenue of $405.102 million, compared with $386.870 million a year earlier, but recorded a $2.590 million net loss versus $14.949 million net income. Operating income was $14.363 million versus $23.858 million. For the first nine months, revenue was $1,214.974 million versus $1,115.814 million, while net income was $6.048 million versus $15.298 million and operating cash flow was $36.007 million versus $87.820 million.
On October 1, after quarter-end, Gentherm completed its combination with Modine's Performance Technologies business for preliminary estimated purchase consideration of approximately $800 million, subject to customary closing adjustments. Gentherm issued 23,735,961 shares to Modine shareholders, who owned approximately 43.62% of outstanding shares after closing, excluding overlapping shareholder ownership. Gentherm had 52,504,512 shares issued and outstanding as of October 16, 2026. SpinCo borrowed $250 million, which became debt of a wholly owned Gentherm subsidiary; Gentherm paid a $63.5 million special cash dividend ($2.07 per share) on October 7. Subsequent to September 30, Gentherm repurchased $60 million of stock at an average $30.82 per share; the new program had $340 million of repurchase authorization remaining as of the report date.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNine-month product revenue increased to $1,214.974 million from $1,115.814 million.
Negative
- Moderate pointThird-quarter result: $2.590 million net loss versus $14.949 million net income.
- Moderate pointNine-month operating cash flow was $36.007 million versus $87.820 million.
- Minor pointNine-month net income fell to $6.048 million from $15.298 million.
Filing Explained
Gentherm guarantees the deal-related, asset-secured subsidiary loans; the filing reports principal of $250,000 in thousands-based figures.
The October 1 combination is complete, and SpinCo’s
The loans amortize in quarterly installments and the remaining balance is due on
Gentherm committed to two restructuring plans in 2026: the global production plan has expected cash costs of
Key Figures
Key Terms
Reverse Morris Trust transaction financial
delayed-draw term loan facility financial
Consolidated Net Leverage Ratio financial
cash flow hedge derivatives financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were THRM's third-quarter 2026 revenue and earnings?
What were the terms of Gentherm's Modine transaction?
How much was THRM's special dividend and when was it paid?
How much stock did THRM repurchase after September 30, 2026?
AI-generated analysis. How Rhea-AI works. Not financial advice.
r
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to .
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ |
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Accelerated filer |
☐ |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of October 16, 2026, there were
GENTHERM INCORPORATED
TABLE OF CONTENTS
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Part I. Financial Information |
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3 |
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Item 1. |
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Financial Statements (Unaudited) |
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3 |
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Consolidated Condensed Balance Sheets |
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3 |
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Consolidated Condensed Statements of (Loss) Income |
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4 |
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Consolidated Condensed Statements of Comprehensive (Loss) Income |
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5 |
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Consolidated Condensed Statements of Cash Flows |
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6 |
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Consolidated Condensed Statements of Changes in Shareholders’ Equity |
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7 |
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Notes to Unaudited Consolidated Condensed Financial Statements |
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8 |
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Note 1 - Overview |
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8 |
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Note 2 - Recently Issued Accounting Pronouncements |
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9 |
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Note 3 - Acquisitions |
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10 |
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Note 4 - Restructuring |
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11 |
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Note 5 - Details of Certain Balance Sheet Components |
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13 |
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Note 6 - Goodwill and Other Intangibles |
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14 |
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Note 7 - Debt |
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15 |
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Note 8 - Commitments and Contingencies |
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16 |
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Note 9 - Earnings Per Share |
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17 |
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Note 10 - Financial Instruments |
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18 |
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Note 11 - Fair Value Measurements |
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19 |
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Note 12 - Equity |
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19 |
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Note 13 - Reclassifications Out of Accumulated Other Comprehensive Loss |
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20 |
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Note 14 - Income Taxes |
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21 |
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Note 15 - Segment Reporting |
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22 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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25 |
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Item 3. |
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Quantitative and Qualitative Disclosures About Market Risk |
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38 |
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Item 4. |
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Controls and Procedures |
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39 |
Part II. Other Information |
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40 |
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Item 1. |
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Legal Proceedings |
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40 |
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Item 1A. |
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Risk Factors |
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40 |
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Item 2. |
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Unregistered Sales of Equity Securities and Use of Proceeds |
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40 |
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Item 5. |
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Other Information |
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40 |
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Item 6. |
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Exhibits |
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41 |
Signatures |
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42 |
|||
Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENTHERM INCORPORATED
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
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September 30, 2026 |
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December 31, 2025 |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Inventory: |
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Raw materials |
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Work in process |
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Finished goods |
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Inventory, net |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Goodwill |
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Other intangible assets, net |
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Operating lease right-of-use assets |
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Deferred income tax assets |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current Liabilities: |
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Accounts payable |
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$ |
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$ |
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Current lease liabilities |
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Current maturities of long-term debt |
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Other current liabilities |
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Total current liabilities |
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Long-term debt, less current maturities |
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Non-current lease liabilities |
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Pension benefit obligation |
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Other non-current liabilities |
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Total liabilities |
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$ |
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$ |
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Shareholders’ Equity: |
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Common Stock: |
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No par value; |
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Paid-in capital |
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Accumulated other comprehensive loss |
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( |
) |
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( |
) |
Accumulated earnings |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
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$ |
|
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$ |
|
||
See accompanying notes to the consolidated condensed financial statements.
3
Table of Contents
GENTHERM INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF (LOSS) INCOME
(In thousands, except per share data)
(Unaudited)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
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2026 |
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2025 |
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2026 |
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2025 |
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||||
Product revenues |
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$ |
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$ |
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$ |
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$ |
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Cost of sales |
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Gross margin |
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Operating expenses: |
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Net research and development expenses |
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Selling, general and administrative expenses |
|
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||||
Restructuring expenses, net |
|
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||||
Loss on sale of land and building, net |
|
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— |
|
|
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— |
|
|
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— |
|
|
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|
|
Total operating expenses |
|
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|
||||
Operating income |
|
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|
||||
Interest expense, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Foreign currency gain (loss) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Other income (loss) |
|
|
|
|
|
— |
|
|
|
|
|
|
( |
) |
||
Earnings before income tax |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Basic (loss) earnings per share |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Diluted (loss) earnings per share |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Weighted average number of shares – basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average number of shares – diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
See accompanying notes to the consolidated condensed financial statements.
4
Table of Contents
GENTHERM INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In thousands)
(Unaudited)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Pension benefit obligations, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Unrealized (loss) gain on cash flow hedge derivatives, net of tax |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Other comprehensive (loss) income, net of tax |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Comprehensive (loss) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
See accompanying notes to the consolidated condensed financial statements.
5
Table of Contents
GENTHERM INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Operating Activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
( |
) |
|
|
( |
) |
Stock based compensation |
|
|
|
|
|
|
||
Loss on disposition of property and equipment |
|
|
|
|
|
|
||
Provisions for inventory |
|
|
|
|
|
|
||
Other non-cash items, including unrealized foreign currency (gain) loss |
|
|
( |
) |
|
|
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable, net |
|
|
( |
) |
|
|
( |
) |
Inventory |
|
|
( |
) |
|
|
( |
) |
Other assets |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
|
|
|
|
||
Other liabilities |
|
|
|
|
|
|
||
Net cash provided by operating activities |
|
|
|
|
|
|
||
Investing Activities: |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
( |
) |
|
|
( |
) |
Proceeds from the sale of property and equipment |
|
|
|
|
|
|
||
Acquisition of business, net of cash acquired |
|
|
( |
) |
|
|
— |
|
Cost of technology investments |
|
|
( |
) |
|
|
( |
) |
Proceeds from deferred purchase price of factored receivables |
|
|
— |
|
|
|
|
|
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Financing Activities: |
|
|
|
|
|
|
||
Borrowings on debt |
|
|
|
|
|
|
||
Repayments of debt |
|
|
( |
) |
|
|
( |
) |
Cash paid for financing new loans |
|
|
( |
) |
|
|
— |
|
Taxes withheld and paid on employees' stock based compensation |
|
|
( |
) |
|
|
( |
) |
Cash paid for the repurchase of Common Stock |
|
|
— |
|
|
|
( |
) |
Net cash provided by (used in) financing activities |
|
|
|
|
|
( |
) |
|
Foreign currency effect |
|
|
( |
) |
|
|
|
|
Net increase in cash and cash equivalents |
|
|
|
|
|
|
||
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
Non-Cash Investing Activities: |
|
|
|
|
|
|
||
Period-end balance of accounts payable for property and equipment |
|
$ |
|
|
$ |
|
||
See accompanying notes to the consolidated condensed financial statements.
6
Table of Contents
GENTHERM INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
||||||
|
|
Common Stock |
|
|
Paid-in |
|
|
Comprehensive |
|
|
Accumulated |
|
|
|
|
|||||||||
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Loss |
|
|
Earnings |
|
|
Total |
|
||||||
Balance at December 31, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Stock based compensation, net |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Balance at March 31, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Stock based compensation, net |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Balance at June 30, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Stock based compensation, net |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Balance at September 30, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
||||||
|
|
Common Stock |
|
|
Paid-in |
|
|
Comprehensive |
|
|
Accumulated |
|
|
|
|
|||||||||
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Income (Loss) |
|
|
Earnings |
|
|
Total |
|
||||||
Balance at December 31, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Stock based compensation, net |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Balance at March 31, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Stock based compensation, net |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Stock repurchase |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance at June 30, 2025 |
|
|
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Stock based compensation, net |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Balance at September 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
See accompanying notes to the consolidated condensed financial statements.
7
Table of Contents
Note 1 – Overview
Gentherm Incorporated, a Michigan corporation, and its consolidated subsidiaries (“Gentherm”, “we”, “us”, “our” or the “Company”) is a global leader of innovative thermal and precision flow management technologies. Our automotive products include Climate Control Seats (CCS®), Climate Control Interiors (CCI™), Lumbar and Massage Comfort Solutions, Valve Systems, and Climate and Comfort Electronics. We operate in locations aligned with our major customers’ product strategies to provide locally enhanced design, integration and production capabilities. Our medical products include patient temperature management systems that can be found in hospitals throughout the world.
On October 1, 2026, Gentherm completed its previously announced combination of the Performance Technologies business (“Performance Technologies”) of Modine Manufacturing Co., a Wisconsin corporation (“Modine”), with Gentherm. Refer to Note 3 “Acquisitions” for details.
Basis of Presentation and Significant Accounting Policies
The unaudited consolidated condensed financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules and regulations. The information furnished in the consolidated condensed financial statements include all adjustments (consisting of only normal, recurring adjustments) considered necessary to present fairly the results of operations, financial position and cash flows of the Company. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The operating results for interim periods are not necessarily indicative of results that may be expected for other interim periods or for the full year.
In preparing these financial statements, management was required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions are based on our historical experience, the terms of existing contracts, our evaluation of trends in the industry, information provided by our customers and suppliers and information available from other third-party sources, as appropriate. These estimates and assumptions are subject to an inherent degree of uncertainty and may change as new events occur and additional information is obtained. As a result, actual results may differ significantly from our estimates, and any such differences may be material to our financial statements.
All amounts in these notes to the consolidated condensed financial statements are presented in thousands, except share and per share data.
Principles of Consolidation
The consolidated condensed financial statements include the accounts of the Company, its wholly owned subsidiaries and those entities in which it has a controlling financial interest. The Company evaluates its relationship with other entities for consolidation and to identify whether such entities are variable interest entities and to assess whether the Company is the primary beneficiary of such entities. Investments in affiliates in which Gentherm does not have control but does have the ability to exercise significant influence over operating and financial policies are accounted for under the equity method. When Gentherm does not have the ability to exercise significant influence (generally when ownership interest is less than
Revenue Recognition - payments to customers
From time to time, the Company provides cash incentives to customers in exchange for new business awards. The Company evaluates the underlying economics of each amount of consideration payable to a customer to determine the proper accounting by understanding the reasons for the payment, the rights and obligations resulting from the payment, the nature of the promises in the contract, and other relevant facts and circumstances. When the Company concludes that the payment is incurred only if the new business is obtained and the Company expects to recover the amounts from the customer over the term of the new business arrangement, the Company recognizes these payments as an asset. The Company amortizes the asset as a reduction of revenue as products related to the payment are transferred to the customer, based on the total amount of products expected to be sold over the term of the arrangement (generally
8
Table of Contents
reporting period for recoverability and recognizes a reduction of revenue for any amounts that are no longer expected to be recovered over the term of the business arrangement. Payments to customers that are not capitalized are recognized as a reduction to revenue at the time of the commitment to make such payments.
As of September 30, 2026 and December 31, 2025, total capitalized payments to customers were $
During the three and nine months ended September 30, 2026, the Company recognized $
Loss on Sale of Land and Building, net
In January 2025, we completed the sale of our former headquarters building in Northville, Michigan for cash proceeds of $
Note 2 – Recently Issued Accounting Pronouncements
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)". ASU 2024-03 enhances disclosures around certain costs and expenses. Retrospective adoption is required for all periods presented in the financial statements and early adoption is permitted. This update is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. We are currently in the process of determining the impact the implementation of ASU 2024-03 will have on the Company’s financial statement disclosures.
Internal-Use Software
In September 2025, the FASB issued ASU 2025-06, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40)". ASU 2025-06 modernizes the accounting for internal-use software costs. Retrospective, prospective, or a modified transition approach for adoption are all permitted, as well as early adoption at the beginning of an annual reporting period. This update is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. We are currently in the process of determining the impact the implementation of ASU 2025-06 will have on the Company’s financial statement disclosures.
Environmental Credits and Environmental Credit Obligations
In May 2026, the FASB issued ASU 2026-02, “Environmental Credits and Environmental Credit Obligations (Topic 818)”. ASU 2026-02 provides recognition, measurement, presentation, and disclosure requirements for all entities that generate, purchase, or receive environmental credits or have a regulatory compliance obligation that may be settled with environmental credits. This update is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. We are currently in the process of determining the impact the implementation of ASU 2026-02 will have on the Company’s financial statement disclosures.
9
Table of Contents
Note 3 – Acquisitions
Modine Transaction
On October 1, 2026 (the “Closing Date”), the Company completed its previously announced combination of Performance Technologies with the Company (the “Modine Transaction”). The Modine Transaction was structured as a Reverse Morris Trust transaction, where a wholly owned subsidiary of Modine (“SpinCo”), owning Performance Technologies, was spun off to Modine shareholders (the “Distribution”) and immediately thereafter merged with a wholly owned subsidiary of the Company, with SpinCo as the surviving entity becoming a wholly owned subsidiary of the Company (the “Merger”). The Company issued
Prior to the Distribution and the Merger, SpinCo made a cash distribution to Modine of $
On June 29, 2026, SpinCo entered into a credit agreement, providing for a senior secured delayed-draw term loan facility with aggregate commitments of up to $
Due to the proximity of the Closing Date with the date of filing of this report, the initial accounting for the Modine Transaction is not yet completed. As a result, it is not practicable to disclose the preliminary allocation of the purchase price to assets acquired and liabilities assumed, or to provide other related disclosures. The accounting impact of the Modine Transaction will be included in the consolidated financial statements beginning in the Company's fourth quarter of 2026.
During the three and nine months ended September 30, 2026, the Company incurred $
Innovative Medical Equipment, LLC
On July 1, 2026, the Company acquired all of the membership interests in Innovative Medical Equipment, LLC (“IME”), a provider of the ThermaZone® thermal therapy device. ThermaZone is a non-opioid thermal therapy solution designed to support pain management and recovery through controlled hot-and-cold therapy. The total consideration was $
The acquisition was accounted for as a business combination within our Medical segment, with the purchase price allocated on a preliminary basis using information available as of September 30, 2026, which primarily resulted in the recognition of other intangible assets of $
10
Table of Contents
The pro forma effects of this acquisition would not materially impact the Company’s reported results for any period presented, and as a result no pro forma financial statements are presented herein.
Note 4 – Restructuring
The Company continuously monitors market developments, industry trends and changing customer needs and in response, has taken and may continue to undertake restructuring actions, as necessary, to execute management’s strategy, streamline operations and optimize the Company’s cost structure. Restructuring actions may include the realignment of existing manufacturing footprint, facility closures or similar actions, either in the normal course of business or pursuant to significant restructuring programs.
These actions may result in employees receiving voluntary or involuntary employee termination benefits, which are mainly statutory requirements or other contractual agreements. Voluntary termination benefits are accrued when an employee accepts the related offer. Involuntary termination benefits are accrued upon the commitment to a termination plan and when the benefit arrangement is communicated to affected employees, or when liabilities are determined to be probable and estimable, depending on the existence of a substantive plan for separation or termination.
2026 Global Production Plan
In August 2026, the Company committed to a global restructuring plan to implement a standard organizational structure in all production sites (“2026 Global Production Plan”). The 2026 Global Production Plan is expected to result in structural cost reductions impacting the Company’s global workforce.
The Company expects to incur cash restructuring costs of between $
During the three and nine months ended September 30, 2026, the Company recognized restructuring expense of $
2026 Organizational Realignment Plan
In February 2026, the Company committed to a restructuring plan to realign its operating model and organizational structure to deliver on its key financial and operational priorities (“2026 Organizational Realignment Plan”). The 2026 Organizational Realignment Plan is expected to result in structural cost reductions impacting the Company’s global salaried workforce.
The Company expects to incur cash restructuring costs of between $
During the three and nine months ended September 30, 2026, the Company recognized restructuring expense of $
2025 Manufacturing Footprint Plan
In July 2025, the Company committed to a restructuring plan to further optimize the Company’s manufacturing footprint by realigning its global manufacturing capacity (“2025 Manufacturing Footprint Plan”). As a result, the Company will relocate certain manufacturing activities between existing locations.
The Company expects to incur cash restructuring costs of between $
During the three and nine months ended September 30, 2026, the Company recognized restructuring expense of $
Since the inception of this program, the Company has recorded $
11
Table of Contents
2025 EMEA Plan
In February 2025, the Company committed to a restructuring plan to further optimize the Company’s manufacturing footprint by realigning its manufacturing capacity in Europe (“2025 EMEA Plan”). As a result, the Company will close its facility in Plzeň, Czech Republic and relocate the manufacturing activities into other existing facilities within the region.
The Company expects to incur cash restructuring costs of between $
During the three and nine months ended September 30, 2026, the Company recognized restructuring expense of $
Since the inception of this program, the Company has recorded $
2025 Asia Plan
In February 2025, the Company committed to a restructuring plan to further optimize the Company’s manufacturing footprint by realigning its manufacturing capacity in Asia (“2025 Asia Plan”). As a result, the Company relocated certain manufacturing activities from its facility in Shanghai, China to its facility in Tianjin, China.
During the three and nine months ended September 30, 2026, the Company recognized restructuring expense of $
Since the inception of this program, the Company has recorded $
Other Restructuring Actions
The Company has undertaken several discrete restructuring actions in an effort to optimize its cost structure.
During the three and nine months ended September 30, 2026, the Company recognized $
During the three and nine months ended September 30, 2026, the Company’s Automotive segment recognized $
Restructuring Expenses, Net By Reporting Segment
The following table summarizes restructuring expenses, net for the three and nine months ended September 30, 2026 and 2025 by reporting segment:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Automotive |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Medical |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
12
Table of Contents
Restructuring Liability
Restructuring liabilities are classified as other current liabilities in the consolidated condensed balance sheets.
|
|
Employee Separation Costs |
|
|
Other Related Costs, Net |
|
|
Total |
|
|||
Balance at December 31, 2025 |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Additions, charged to restructuring expenses, net |
|
|
|
|
|
|
|
|
|
|||
Cash payments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Change in estimate |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Currency translation |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at March 31, 2026 |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Additions, charged to restructuring expenses, net |
|
|
|
|
|
|
|
|
|
|||
Cash payments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Change in estimate |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Currency translation |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at June 30, 2026 |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Additions, charged to restructuring expenses, net |
|
|
|
|
|
|
|
|
|
|||
Cash payments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Non-cash utilization |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Currency translation |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Note 5 – Details of Certain Balance Sheet Components
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
Other current assets: |
|
|
|
|
|
|
||
Billable tooling |
|
$ |
|
|
$ |
|
||
Notes receivable |
|
|
|
|
|
|
||
Income tax and other tax receivable |
|
|
|
|
|
|
||
Prepaid expenses |
|
|
|
|
|
|
||
Short-term derivative financial instruments |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other current assets |
|
$ |
|
|
$ |
|
||
Other current liabilities: |
|
|
|
|
|
|
||
Accrued employee liabilities |
|
$ |
|
|
$ |
|
||
Liabilities from discounts and rebates |
|
|
|
|
|
|
||
Income tax and other taxes payable |
|
|
|
|
|
|
||
Accrued warranty |
|
|
|
|
|
|
||
Restructuring |
|
|
|
|
|
|
||
Short-term derivative financial instruments |
|
|
|
|
|
|
||
Merger and acquisition liabilities |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other current liabilities |
|
$ |
|
|
$ |
|
||
13
Table of Contents
Note 6 – Goodwill and Other Intangibles
Goodwill
Changes in the carrying amount of goodwill, by reportable segment, for the nine months ended September 30, 2026 were as follows:
|
|
Automotive |
|
|
Medical |
|
|
Total |
|
|||
Balance as of December 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Acquisition of IME |
|
|
— |
|
|
|
|
|
|
|
||
Currency translation |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Balance as of September 30, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The accumulated impairment losses of goodwill for Automotive and Medical were $
Other Intangible Assets
Other intangible assets and accumulated amortization balances as of September 30, 2026 and December 31, 2025 were as follows:
|
|
Gross |
|
|
Accumulated |
|
|
Accumulated |
|
|
Net Carrying |
|
||||
Definite-lived: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer relationships |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||
Technology |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Product development costs |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Trade names |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
||
Software development |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
||
Indefinite-lived: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trade names |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Balance as of September 30, 2026 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Gross |
|
|
Accumulated |
|
|
Accumulated |
|
|
Net Carrying |
|
||||
Definite-lived: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer relationships |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||
Technology |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Product development costs |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Software development |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
||
Indefinite-lived: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trade names |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Balance as of December 31, 2025 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||
In connection with the acquisition of IME, the Company recorded Customer relationships of $
14
Table of Contents
Note 7 – Debt
The following table summarizes the Company’s debt as of September 30, 2026 and December 31, 2025:
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||
|
|
Interest |
|
|
Principal |
|
|
Interest |
|
|
Principal |
|
||||
Revolving Credit Facility (U.S. Dollar denominations) |
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
||||
Finance leases |
|
|
% |
|
|
|
|
|
% |
|
|
|
||||
Total debt |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: current maturities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Long-term debt, less current maturities |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Credit Agreement
On June 29, 2026, the Company entered into a Third Amended and Restated Credit Agreement (amending and restating in its entirety the Second Amended and Restated Credit Agreement, dated as of June 10, 2022, as amended) described below (the “Credit Agreement”) with a consortium of lenders and Bank of America, N.A., as administrative agent (the “Agent”). The amendment, among other things, extended the maturity date to
The Credit Agreement provides for a $
Under the Credit Agreement, all obligations are unconditionally guaranteed by certain of the Company’s subsidiaries and a security interest is granted in substantially all of the personal property of the Company and its U.S. subsidiaries designated as borrowers or guarantors, including the stock and membership interests of specified subsidiaries. The Credit Agreement contains covenants that, among other things, (i) prohibit or limit the ability to incur additional indebtedness, create liens, pay dividends, make certain types of investments, enter into certain types of transactions with affiliates, prepay other indebtedness, sell assets or enter into certain other transactions outside the ordinary course of business, and (ii) require that Gentherm maintain a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Net Leverage Ratio (based on consolidated EBITDA for the applicable trailing four fiscal quarters) as of the end of any fiscal quarter. The Credit Agreement also contains customary events of default.
As of September 30, 2026, the Company was in compliance with the terms of the Credit Agreement.
Under the Credit Agreement, U.S. Dollar denominated loans bear interest at either a base rate (“Base Rate Loans”) or Term Secured Overnight Financing Rate (“Term SOFR Rate Loans”), plus a margin (“Applicable Rate”). The rate for Base Rate Loans is equal to the highest of the Federal Funds Rate plus
The Applicable Rate varies based on the Consolidated Net Leverage Ratio reported by the Company. As long as the Company is not in default of the terms and conditions of the Credit Agreement, the lowest and highest possible Applicable Rate is
Based upon consolidated EBITDA for the trailing four fiscal quarters calculated for purposes of the Consolidated Net Leverage Ratio, $
The Company had $
15
Table of Contents
In connection with the Third Amended and Restated Credit Agreement, the Company incurred debt issuance costs of $
The scheduled maturities of our debt as of September 30, 2026 were as follows:
|
|
Revolving Credit Facility |
|
|
Finance Leases* |
|
|
Total |
|
|||
2026 |
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
2027 |
|
|
— |
|
|
|
|
|
|
|
||
2028 |
|
|
— |
|
|
|
|
|
|
|
||
2029 |
|
|
— |
|
|
|
|
|
|
|
||
2030 |
|
|
— |
|
|
|
|
|
|
|
||
2031 or later |
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|||
*
Note 8 – Commitments and Contingencies
Legal and Other Contingencies
The Company is subject to various legal actions and claims in the ordinary course of its business, which may include those arising out of breach of contracts, intellectual property rights, environmental matters, regulatory matters and employment-related matters. The Company establishes accruals for matters which it believes that losses are probable and can be reasonably estimated. Although it is not possible to predict with certainty the outcome of these matters, the Company is of the opinion that the ultimate resolution of these matters outstanding as of September 30, 2026 will not have a material adverse effect on its results of operations or financial position. Product liability and warranty reserves are recorded separately from legal reserves.
Product Liability and Warranty Matters
Our products subject us to warranty claims and, from time to time, product liability claims based on the Company’s products alleged failure to perform as expected or resulting in alleged bodily injury or property damage. If any of our products are or are alleged to be defective, we may be required to participate in a recall or other corrective action involving such products. The Company maintains warranty and product liability insurance coverage at levels based on commercial norms and historical claims experience. Such policies may not cover all costs associated with a claim. The Company can provide no assurances that it will not experience material warranty or product liability claims or liabilities in the future or that it will not incur significant costs to defend such claims.
The Company accrues warranty obligations for products sold based on management estimates of future failure rates and current claim cost experience, with support from the sales, engineering, quality and legal functions. Using historical information available to the Company, including any claims filed by customers, the warranty accrual is adjusted quarterly to reflect management’s estimate of future claims.
On February 14, 2024, the National Highway Traffic Safety Administration announced that Volkswagen Group of America, Inc. (“VW”) is recalling
16
Table of Contents
the date of this report, the Company cannot reasonably estimate the amount and timing of possible costs that may be incurred by the Company.
In April 2025, NHTSA announced that VW and Porsche Cars North America, Inc. (“Porsche”) are each recalling vehicles from model years 2022-2023 to remedy a problem with their passenger occupant detection system that is alleged to be affected by the crimp connection of the seat cushion heating mat, which is produced by Gentherm. Total vehicles included in these recall campaigns are
The following is a reconciliation of the changes in accrued warranty costs:
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Balance at the beginning of the period |
|
$ |
|
|
$ |
|
||
Warranty claims paid |
|
|
( |
) |
|
|
( |
) |
Warranty expense for products shipped during the current period |
|
|
|
|
|
|
||
Adjustments to warranty estimates from prior periods |
|
|
|
|
|
|
||
Adjustments due to currency translation |
|
|
( |
) |
|
|
|
|
Balance at the end of the period |
|
$ |
|
|
$ |
|
||
Note 9 – (Loss) Earnings Per Share
Basic (loss) earnings per share are computed by dividing net (loss) income by the weighted average number of shares of the Common Stock, outstanding during the period. The Company’s diluted (loss) earnings per share give effect to all potential shares of Common Stock outstanding during a period that do not have an anti-dilutive impact to the calculation. In computing the diluted (loss) earnings per share, the treasury stock method is used in determining the number of shares assumed to be issued from the exercise of Common Stock equivalents.
The following table illustrates (loss) earnings per share and the weighted average shares outstanding used in calculating basic and diluted (loss) earnings per share:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic weighted average shares of Common Stock outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of restricted stock, restricted stock units and performance stock units |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Diluted weighted average shares of Common Stock outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic (loss) earnings per share |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Diluted (loss) earnings per share |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Securities excluded from the calculation of diluted loss per share were approximately
17
Table of Contents
Note 10 – Financial Instruments
Derivative Financial Instruments
The Company is exposed to various market risks including, but not limited to, changes in foreign currency exchange rates, changes in interest rates and price fluctuations of certain material commodities.
The Company regularly enters into derivative contracts with the objective of managing its financial and operational exposure arising from these risks by offsetting gains and losses on the underlying exposures with gains and losses on the financial instruments used to hedge them. The decision of whether and when to execute derivative financial instruments, along with the duration of the instrument, may vary from period to period depending on market conditions, the relative costs of the instruments and capacity to hedge. The duration is linked to the timing of the underlying exposure, with the connection between the two being regularly monitored. The Company does not enter into derivative financial instruments for speculative or trading purposes.
Information related to the recurring fair value measurement of derivative financial instruments in the consolidated condensed balance sheet as of September 30, 2026 is as follows:
|
|
|
|
|
|
|
Asset Derivatives |
|
|
Liability Derivatives |
|
|
|
|
||||||||
|
|
Fair Value |
|
Notional Amount |
|
|
Balance Sheet |
|
Fair |
|
|
Balance Sheet |
|
Fair |
|
|
Net Assets/ |
|
||||
Derivatives Designated as Cash Flow Hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency derivatives |
|
Level 2 |
|
$ |
|
|
Other current assets |
|
$ |
— |
|
|
Other current liabilities |
|
$ |
|
|
$ |
( |
) |
||
Interest rate contracts |
|
Level 2 |
|
$ |
|
|
Other current assets |
|
$ |
|
|
Other current liabilities |
|
$ |
— |
|
|
$ |
|
|||
Information related to the recurring fair value measurement of derivative instruments in the consolidated condensed balance sheet as of December 31, 2025 is as follows:
|
|
|
|
|
|
|
Asset Derivatives |
|
|
Liability Derivatives |
|
|
|
|
||||||||
|
|
Fair Value |
|
Notional Amount |
|
|
Balance Sheet |
|
Fair |
|
|
Balance Sheet |
|
Fair |
|
|
Net Assets/ |
|
||||
Derivatives Designated as Cash Flow Hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency derivatives |
|
Level 2 |
|
$ |
|
|
Other current assets |
|
$ |
|
|
Other current liabilities |
|
$ |
— |
|
|
$ |
|
|||
Interest rate contracts |
|
Level 2 |
|
$ |
|
|
Other current assets |
|
$ |
— |
|
|
Other current liabilities |
|
$ |
|
|
$ |
( |
) |
||
Information relating to the effect of derivative instruments on the consolidated condensed statements of (loss) income and the consolidated condensed statements of comprehensive (loss) income is as follows:
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
Location (Income/(Loss)) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Derivatives Designated as Cash Flow Hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency derivatives |
|
Cost of sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Other comprehensive (loss) income, net of tax |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Total foreign currency derivatives |
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate contracts |
|
Interest expense, net |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
Other comprehensive (loss) income, net of tax |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total interest rate derivatives |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives Not Designated as Hedging Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate contracts |
|
Interest expense, net |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
( |
) |
Total interest rate derivatives |
|
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
( |
) |
18
Table of Contents
The Company did
Note 11 – Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and also considers counterparty credit risk in its assessment of fair value.
Fair value measurements are classified under the following fair value hierarchy:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2: Inputs, other than quoted market prices included in Level 1, that are observable either directly or indirectly for the asset or liability.
Level 3: Unobservable inputs that are used when little or no market data is available. Unobservable inputs are used if there is little or no market data for the asset or liability at the measurement date.
Items Measured at Fair Value on a Recurring Basis
The Company uses an income approach to value derivative instruments, analyzing quoted market prices to calculate the forward values and then discounting such forward values to the present value using benchmark rates at commonly quoted intervals for the instrument’s full term. The Company had
Items Measured at Fair Value on a Nonrecurring Basis
The Company measures certain assets and liabilities at fair value on a non-recurring basis. During the nine months ended September 30, 2025, there was a decrease in the fair value of an equity investment of $
Items Not Carried at Fair Value
The Company uses an income valuation technique to measure the fair values of its debt instruments by converting amounts of future cash flows to a single present value amount using rates based on current market expectations (Level 2 inputs). As of September 30, 2026, and December 31, 2025, the carrying values of the indebtedness under the Credit Agreement were not materially different than the estimated fair values because the interest rates on variable rate debt approximated rates currently available to the Company (see Note 7, “Debt”).
Note 12 – Equity
In June 2024, the Board of Directors (the “Board”) authorized a stock repurchase program (the “2024 Stock Repurchase Program”) to commence upon expiration of the Company’s prior stock repurchase program on June 30, 2024. Under the 2024 Stock Repurchase Program, the Company was authorized to repurchase up to $
In July 2026, the Board terminated the 2024 Stock Repurchase Program and authorized a new stock repurchase program (the “2026 Stock Repurchase Program”), pursuant to which the Company is authorized to repurchase up to $
Repurchases may be made, from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions, applicable legal requirements, debt covenants and other contractual restrictions and other considerations, including certain conditions intended to preserve the intended tax treatment of the Modine Transaction.
19
Table of Contents
During the three and nine months ended September 30, 2026, the Company did
On September 29, 2026, in connection with the Modine Transaction and as approved by Gentherm’s shareholders at a special meeting held on September 10, 2026, the Company amended its Second Amended and Restated Articles of Incorporation to increase the number of authorized shares of Gentherm Common Stock from
Subsequent to September 30, 2026, the Company repurchased $
Note 13 – Reclassifications Out of Accumulated Other Comprehensive Loss
Reclassification adjustments and other activities impacting accumulated other comprehensive loss during the three and nine months ended September 30, 2026 and 2025 were as follows:
|
|
Defined |
|
|
Foreign |
|
|
Cash Flow Hedge Derivatives |
|
|
Total |
|
||||
Balance at June 30, 2026 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive loss before reclassifications |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income tax effect of other comprehensive loss before reclassifications |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Amounts reclassified from accumulated other comprehensive loss into net loss |
|
|
|
|
|
— |
|
|
|
( |
) |
a |
|
( |
) |
|
Income taxes reclassified into net loss |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
||
Net current period other comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Balance at September 30, 2026 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
Defined |
|
|
Foreign |
|
|
Cash Flow Hedge Derivatives |
|
|
Total |
|
||||
Balance at June 30, 2025 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Other comprehensive (loss) income before reclassifications |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
||
Income tax effect of other comprehensive (loss) income before reclassifications |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Amounts reclassified from accumulated other comprehensive income (loss) into net income |
|
|
|
|
|
— |
|
|
|
( |
) |
a |
|
( |
) |
|
Income taxes reclassified into net income |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
||
Net current period other comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Balance at September 30, 2025 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
20
Table of Contents
|
|
Defined |
|
|
Foreign |
|
|
Cash Flow Hedge Derivatives |
|
|
Total |
|
||||
Balance at December 31, 2025 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Other comprehensive (loss) income before reclassifications |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Income tax effect of other comprehensive (loss) income before reclassifications |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Amounts reclassified from accumulated other comprehensive (loss) income into net income |
|
|
|
|
|
— |
|
|
|
( |
) |
a |
|
( |
) |
|
Income taxes reclassified into net income |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
||
Net current period other comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Balance at September 30, 2026 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
Defined |
|
|
Foreign |
|
|
Cash Flow Hedge Derivatives |
|
|
Total |
|
||||
Balance at December 31, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income before reclassifications |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Income tax effect of other comprehensive income before reclassifications |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Amounts reclassified from accumulated other comprehensive income (loss) into net income |
|
|
|
|
|
— |
|
|
|
( |
) |
a |
|
( |
) |
|
Income taxes reclassified into net income |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
||
Net current period other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at September 30, 2025 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
The Company expects that substantially all of the existing gains and losses related to cash flow derivatives reported in accumulated other comprehensive loss as of September 30, 2026 to be reclassified into earnings during the next twelve months. See Note 10 for additional information about derivative financial instruments and the effects from reclassification to net (loss) income.
Note 14 – Income Taxes
At the end of each interim period, the Company makes an estimate of the annual expected effective income tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to unusual or infrequent items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which those items occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or income tax contingencies is recognized in the interim period in which the change occurs.
The computation of the annual expected effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and taxed in respective jurisdictions, permanent and temporary differences, and the likelihood of the realizability of deferred tax assets generated in the current year. Jurisdictions with a projected loss for the year for which no tax benefit can be recognized due to a valuation allowance are excluded from the estimated annual effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter, based upon the composition and timing of actual earnings compared to annual projections. The estimates used to compute the provision or benefit for income taxes may change as new events occur, additional information is obtained or as our tax environment changes. To the extent that the expected annual effective
21
Table of Contents
income tax rate changes, the effect of the change on prior interim periods is included in the income tax provision in the period in which the change in estimate occurs.
A summary of the provision for income taxes and the corresponding effective tax rate for the three and nine months ended September 30, 2026 and 2025, is shown below:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Income tax expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Earnings before income tax |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Effective tax rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total cash paid for income taxes, net of refunds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Income tax expense was $
Income tax expense was $
Income tax expense was $
Income tax expense was $
Note 15 – Segment Reporting
The Company is organized under
The Automotive reporting segment is comprised of our global automotive businesses, including the design, development, manufacturing and sales of Automotive Climate and Comfort Solutions (including Climate Control Seats, Climate Control Interiors, Lumbar and Massage Comfort Solutions and Climate and Comfort Electronics), Valve Systems and other automotive products.
The Medical reporting segment is comprised of our patient temperature management business in the medical industry. Patient temperature management includes temperature management systems across multiple product categories addressing the needs of hyper-hypothermia therapy in intensive care, normothermia in surgical procedures and additional warming/cooling therapies utilized in acute and chronic care departments and non-hospital facilities.
The Corporate and other unallocated expenses category includes certain enterprise and governance activities resulting in unallocated corporate costs and other activity and net costs that the Company may choose not to allocate directly to its business segments.
A measure of assets has not been disclosed for each segment as it is not regularly reviewed by our chief operating decision maker.
22
Table of Contents
The table below presents segment information about the reported product revenues, significant segment expenses, operating income (loss) and depreciation and amortization of the Company for the three and nine months ended September 30, 2026 and 2025.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Product Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Automotive |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Medical |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Significant Segment Expenses and Operating Performance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Automotive |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net research and development expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restructuring expenses, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss on sale of land and building, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Automotive operating income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Medical |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Medical operating (loss) income |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate and Other Unallocated Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate and other unallocated expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total consolidated operating income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other Segment Disclosures |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Automotive |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Medical |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
23
Table of Contents
Automotive and Medical segment product revenues by product category for the three and nine months ended September 30, 2026 and 2025 were as follows:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Climate Control Seats |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Lumbar and Massage Comfort Solutions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Climate Control Interiors |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Climate and Comfort Electronics |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Automotive Climate and Comfort Solutions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Valve Systems |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other Automotive |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Subtotal Automotive segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Medical segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Company |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Revenue (based on shipment destination) by geographic area for the three and nine months ended September 30, 2026 and 2025 is as follows:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
China |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Germany |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Czech Republic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
South Korea |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mexico |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Slovakia |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Japan |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United Kingdom |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Netherlands |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Non-U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Company |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Property and equipment, net, for each of the geographic areas in which the Company operates as of September 30, 2026 and December 31, 2025 is as follows:
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
Property and equipment, net |
|
|
|
|
|
|
||
Mexico |
|
$ |
|
|
$ |
|
||
China |
|
|
|
|
|
|
||
Germany |
|
|
|
|
|
|
||
United States |
|
|
|
|
|
|
||
Vietnam |
|
|
|
|
|
|
||
North Macedonia |
|
|
|
|
|
|
||
Hungary |
|
|
|
|
|
|
||
Czech Republic |
|
|
|
|
|
|
||
Morocco |
|
|
|
|
|
|
||
Ukraine |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
24
Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our goals, beliefs, plans and expectations about our prospects for the future and other future events, such as: the expected light vehicle production in the Company’s key markets; the impact of macroeconomic and geopolitical conditions, the components of and our execution of our strategic plan, product and technology development and various restructuring plans; our operating performance; long-term consumer and technological trends in the automotive industry and our related market opportunity for our existing and new products and technologies; the competitive landscape; the impact of global tax reform legislation and other regulatory matters; the sufficiency of our cash balances and cash generated from operating, investing and financing activities for our future liquidity and capital resource needs; capital allocation strategies; our ability to finance sufficient working capital; and significant matters related to the recently closed Modine Transaction, including the expected benefits thereof, the tax consequences thereof and the combined company’s plans, objectives, expectations and intentions, including integration activities. Reference is made in particular to forward-looking statements included in this “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Such statements may be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “believe”, “estimate”, “anticipate”, “intend”, “continue”, or similar terms, variations of such terms or the negative of such terms.
The forward-looking statements included in this Quarterly Report on Form 10-Q (the “Report”) are made as of the date hereof or as of the date specified herein and are based on management’s reasonable expectations and beliefs. In making these statements we rely on assumptions and analyses based on our experience and perception of historical trends, current conditions and expected future developments, third-party information and projections from sources that management believes to be reputable, as well as other factors we consider appropriate under the circumstances. Such statements are subject to a number of assumptions, risks, uncertainties and other factors, which are set forth in “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2025 and subsequent reports filed with the Securities and Exchange Commission, and which could cause actual results to differ materially from that described in the forward-looking statements.
In addition, with reasonable frequency, we have entered into business combinations, acquisitions, divestitures, strategic investments and other significant transactions. Such forward-looking statements do not include the potential impact of any such transactions that may be completed after the date hereof, each of which may present material risks to the Company’s future business and financial results. Except as required by law, we expressly disclaim any obligation or undertaking to update any forward-looking statements to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by, the consolidated condensed financial statements and related notes thereto included elsewhere in this Report and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025.
Overview
Gentherm Incorporated is a global leader of innovative thermal and precision flow management technologies. Our automotive products include Climate Control Seats (CCS®), Climate Control Interiors (CCI™), Lumbar and Massage Comfort Solutions, Valve Systems, and Climate and Comfort Electronics. We operate in locations aligned with our major customers’ product strategies to provide locally enhanced design, integration and production capabilities. Our medical products include patient temperature management systems that can be found in hospitals throughout the world.
Our Automotive sales are driven by the number of light vehicles produced by the OEMs primarily in our key markets of North America, Europe, China, Japan and South Korea, which is ultimately dependent on consumer demand for automotive light vehicles, our product content per vehicle, and other factors that may limit or otherwise impact production by us, our supply chain and our customers. Historically, new vehicle demand and product content (i.e. vehicle features) have been driven by macroeconomic and other factors, such as interest rates, automotive manufacturer and dealer sales incentives, fuel prices, consumer confidence, employment levels, income growth trends and government incentives. Vehicle content has also been driven by trends in consumer preferences. We believe our diversified OEM customer base and geographic revenue base, along with our flexible cost structure, have well positioned us to withstand the impact of industry downturns and benefit from industry upturns in the ordinary course. Our industry is increasingly progressing towards a focus on human comfort, health and wellness, which is evidenced by increasing adoption rates for comfort products. Gentherm is an independent partner that can cooperate with any combination of the vehicle OEMs and seat manufacturers
25
Table of Contents
globally, to create innovative and unique configurations that adapt to industry trends.
Modine Transaction
On October 1, 2026 (the “Closing Date”), the Company completed its previously announced combination of the Performance Technologies business (“Performance Technologies”) of Modine Manufacturing Co., a Wisconsin corporation (“Modine”), with the Company (the “Modine Transaction”). The Modine Transaction was structured as a Reverse Morris Trust transaction, where a wholly owned subsidiary of Modine (“SpinCo”), owning Performance Technologies, was spun off to Modine shareholders (the “Distribution”) and immediately thereafter merged with a wholly owned subsidiary of the Company, with SpinCo as the surviving entity becoming a wholly owned subsidiary of the Company (the “Merger”). The Company issued 23,735,961 shares of the Company’s common stock, no par value (“Common Stock” or “Gentherm Common Stock”) to the Modine shareholders of record as of close of business on September 28, 2026 (the “Record Date”, and such holders of Modine common stock as of the Record Date, the “Record Date Modine Shareholders”). Upon completion of the Modine Transaction, the Record Date Modine Shareholders owned approximately 43.62% of the outstanding shares of Gentherm Common Stock (without taking into account any overlapping shareholder ownership), and continuing Gentherm shareholders owned approximately 56.38% of the outstanding shares of Gentherm Common Stock (without taking into account any overlapping shareholder ownership). The preliminary estimate of purchase consideration is approximately $800.0 million, subject to customary closing adjustments.
Prior to the Distribution and the Merger, SpinCo made a cash distribution to Modine of $156.0 million (the “SpinCo Cash Distribution”). In connection with the Modine Transaction, the Company also declared a special cash dividend (the “Cash Dividend”) in an aggregate amount equal to $63.5 million, or $2.07 per share of Gentherm Common Stock. The Cash Dividend was paid in cash on October 7, 2026, to Gentherm shareholders of record as of the close of business on September 28, 2026.
On June 29, 2026, SpinCo entered into a credit agreement, providing for a senior secured delayed-draw term loan facility with aggregate commitments of up to $250.0 million (the "DDTL Facility"). On the Closing Date, SpinCo borrowed $250.0 million of term loans under the DDTL Facility (the “Term Loans”), the proceeds of which were used by SpinCo on the Closing Date to pay the SpinCo Cash Distribution and other amounts required at closing, such as the estimated net working capital adjustment. Remaining proceeds will be used for general corporate purposes. Upon completion of the Modine Transaction, this represents indebtedness of a wholly owned subsidiary of the Company. The Term Loans amortize in equal quarterly installments of 0.625% for the first eight quarters and 1.250% for each quarter thereafter until maturity. The remaining balance becomes due on June 29, 2031.
During the three and nine months ended September 30, 2026, the Company incurred $6.3 million and $33.4 million, respectively, of costs related to the Modine Transaction. Such fees are recorded in Selling, general and administrative expenses.
Innovative Medical Equipment, LLC
On July 1, 2026, the Company acquired all of the membership interests in Innovative Medical Equipment, LLC (“IME”), a provider of the ThermaZone® thermal therapy device. ThermaZone is a non-opioid thermal therapy solution designed to support pain management and recovery through controlled hot-and-cold therapy. The total consideration was $34.7 million, which is comprised of cash payments, net of cash acquired, and contingent consideration with a fair value of $0.5 million. The acquisition was accounted for as a business combination within our Medical segment.
Recent Trends
Tariffs and Global Trade Environment
Since March 2025, the U.S. government has periodically announced additional significant tariffs on various goods imported to the U.S. and other countries have periodically announced reciprocal tariffs on goods imported to such countries, including goods used by or manufactured by us. There has been significant uncertainty resulting from the implementation, termination and/or conditional pause of these additional tariffs. In February 2026, the Supreme Court of the U.S. issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). During the nine months ended September 30, 2026, we submitted claims for refunds of IEEPA tariffs previously paid. Refunds received through September 30, 2026 were not material. The U.S. presidential administration subsequently invoked additional tariffs under other laws resulting in a rapidly changing tariff environment. At this time we cannot reasonably estimate the total financial impact of this ruling. Further, it is reasonably possible that new or additional tariffs will be periodically announced in the future given the current global trade
26
Table of Contents
environment. We continue to monitor and evaluate the direct and indirect impacts of these tariffs and heightened global trade disputes. Our business model of manufacturing by regions for the regions limits the global impact of certain trade restrictions and tariffs. Further, the majority of our supply components are not currently subject to the additional tariffs or are compliant with exceptions, and we believe that we can generally mitigate the direct impact of any such tariffs currently in effect by directly or indirectly passing the additional costs through to customers. We are taking and will continue to take additional actions to mitigate any direct and indirect impacts.
For the nine months ended September 30, 2026, the additional tariffs did not have a material impact on our results of operations, financial position, and cash flows.
Global Conditions
The global automotive light vehicle industry is impacted by a number of factors, including global and regional economic conditions. At times in recent years, the global economy has experienced significant volatility, inflationary pressures and supply chain disruptions, which have a widespread adverse effect on the global automotive industry. These macroeconomic conditions have resulted in fluctuating demand and production disruptions, facility closures, labor shortages, work stoppages, and increased prices of inputs to our products. Rising costs of materials, labor, equipment and other inputs used to manufacture and sell our products, including freight and logistics costs, have adversely impacted, and may in the future adversely impact, operating costs and operating results. We continue to employ measures to mitigate the impact of cost increases through identification of sourcing and manufacturing efficiencies, where possible, and commercial negotiations with our customers. However, we have been unable to fully mitigate or pass through the increases in our operating costs, which may continue in the future.
We are exposed to foreign currency risk due to the translation and remeasurement of the results of certain international operations into U.S. Dollars as part of the consolidation process. Therefore, fluctuations in foreign currency exchange rates can create volatility in the results of operations and may adversely affect our financial condition.
We have a global manufacturing footprint that enables us to serve our customers in the regions they operate and shift production between regions to remain competitive. There have been various ongoing geopolitical conflicts, such as the current conflicts between Russia and Ukraine and in the Middle East and heightened tensions in the Red Sea and in the South China Sea. These conflicts have interrupted ocean freight shipping and could have a substantial adverse effect on our financial results. Further, it is reasonably possible that certain political pressures, such as changes to international trade agreements, increases in tariffs, import quotas or other trade restrictions or actions, including export controls and other retaliatory responses to such actions, could continue to affect the operations of our suppliers and OEM customers, resulting in reduced automotive production in certain regions or shifts in the mix of production to higher cost regions. See “—Tariffs and Global Trade Environment” for further information on the impact of tariffs and the global trade environment. We, like other manufacturers, have a high proportion of fixed structural costs, and therefore relatively small changes in industry vehicle production can have a substantial effect on our financial results.
Light Vehicle Production Volumes
Our Automotive segment sales are driven by the number of light vehicles produced by the automotive manufacturers, which is ultimately dependent on consumer demand for automotive light vehicles, our content per vehicle, and other factors that may limit or otherwise impact production by us, our supply chain and our customers. According to the forecasting firm S&P Global Mobility (October 2026 release), global light vehicle production in the three and nine months ended September 30, 2026, in the Company’s key
27
Table of Contents
markets of North America, Europe, China, Japan and South Korea, as compared to the three and nine months ended September 30, 2025, are shown below (in millions of units):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
% Change |
|
|
2026 |
|
|
2025 |
|
|
% Change |
|
||||||
North America |
|
|
3.8 |
|
|
|
4.0 |
|
|
|
(4.7 |
)% |
|
|
11.5 |
|
|
|
11.7 |
|
|
|
(1.8 |
)% |
Europe |
|
|
3.9 |
|
|
|
3.9 |
|
|
|
0.9 |
% |
|
|
12.9 |
|
|
|
12.7 |
|
|
|
1.3 |
% |
Greater China |
|
|
7.9 |
|
|
|
8.4 |
|
|
|
(5.9 |
)% |
|
|
22.0 |
|
|
|
23.3 |
|
|
|
(5.5 |
)% |
Japan / South Korea |
|
|
2.9 |
|
|
|
2.9 |
|
|
|
(1.1 |
)% |
|
|
9.1 |
|
|
|
9.0 |
|
|
|
0.9 |
% |
Total light vehicle production volume in key markets |
|
|
18.5 |
|
|
|
19.1 |
|
|
|
(3.5 |
)% |
|
|
55.5 |
|
|
|
56.7 |
|
|
|
(2.2 |
)% |
The S&P Global Mobility (October 2026 release) forecasted light vehicle production volume in the Company’s key markets for full year 2026 to decrease to 75.4 million units, a 2.7% decrease from full year 2025 light vehicle production volumes. Forecasted light vehicle production volumes are a component of the data we use in forecasting future business. However, these forecasts generally are updated monthly, and future forecasts have been and may continue to be significantly different from period to period due to changes in macroeconomic and geopolitical conditions or matters specific to the automotive industry. Further, due to differences in regional product mix at our manufacturing facilities, as well as material production schedules from our customers for our products on specific vehicle programs, our future forecasted results do not directly correlate with the global and/or regional light vehicle production forecasts of S&P Global Mobility or other third-party sources.
New Business Awards
We believe that innovation is an important element to gaining market acceptance of our products and strengthening our market position. During the third quarter of 2026, we secured automotive new business awards totaling $555 million. Automotive new business awards represent the aggregate projected lifetime revenue of new awards provided by our customers to Gentherm in the applicable period, with the value based on the price and volume projections received from each customer as of the award date. Although automotive new business awards are not firm customer orders, we believe that automotive new business awards are an indicator of future revenue. Automotive new business awards are not projections of revenue or future business as of September 30, 2026, the date of this Report or any other date. Customer projections regularly change over time, and we do not update our calculation of any automotive new business award after the date initially communicated. Automotive new business awards in the third quarter of 2026 also do not reflect, in particular, the impact of macroeconomic and geopolitical challenges on future business. Revenues resulting from automotive new business awards also are subject to additional risks and uncertainties that are included in this Report or incorporated by reference in “Forward-Looking Statements”.
Stock Repurchase Program
In June 2024, the Board of Directors (the “Board”) authorized a stock repurchase program (the “2024 Stock Repurchase Program”) to commence upon expiration of the Company’s prior stock repurchase program on June 30, 2024. Under the 2024 Stock Repurchase Program, the Company was authorized to repurchase up to $150.0 million of its issued and outstanding Common Stock over a three-year period, expiring June 30, 2027.
In July 2026, the Board terminated the 2024 Stock Repurchase Program and authorized a new stock repurchase program (the “2026 Stock Repurchase Program”), pursuant to which the Company is authorized to repurchase up to $400.0 million of its issued and outstanding Common Stock over a three-year period, expiring July 27, 2029. At the time of termination, the 2024 Stock Repurchase Program had $110.1 million of share repurchase authorization remaining.
Repurchases may be made, from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions, applicable legal requirements, debt covenants and other contractual restrictions and other considerations, including certain conditions intended to preserve the intended tax treatment of the Modine Transaction.
During the three and nine months ended September 30, 2026, the Company did not repurchase any shares.
28
Table of Contents
Subsequent to September 30, 2026, the Company repurchased $60.0 million under the 2026 Stock Repurchase Program with an average price paid per share of $30.82. The 2026 Stock Repurchase Program has $340.0 million of repurchase authorization remaining as of the date of this report.
Reportable Segments
The Company has two reportable segments for financial reporting purposes: Automotive and Medical. See Note 15, “Segment Reporting,” to the consolidated condensed financial statements included in this Report for a description of our reportable segments as well as their proportional contribution to the Company’s reported product revenues, significant segment expenses, operating income (loss), and depreciation and amortization.
Consolidated Results of Operations
The results of operations for the three and nine months ended September 30, 2026 and 2025, in thousands, were as follows:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
||||||
Product revenues |
|
$ |
405,102 |
|
|
$ |
386,870 |
|
|
$ |
18,232 |
|
|
$ |
1,214,974 |
|
|
$ |
1,115,814 |
|
|
$ |
99,160 |
|
Cost of sales |
|
|
310,798 |
|
|
|
291,722 |
|
|
|
(19,076 |
) |
|
|
927,016 |
|
|
|
844,439 |
|
|
|
(82,577 |
) |
Gross margin |
|
|
94,304 |
|
|
|
95,148 |
|
|
|
(844 |
) |
|
|
287,958 |
|
|
|
271,375 |
|
|
|
16,583 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net research and development expenses |
|
|
23,465 |
|
|
|
24,429 |
|
|
|
964 |
|
|
|
71,480 |
|
|
|
71,203 |
|
|
|
(277 |
) |
Selling, general and administrative expenses |
|
|
51,638 |
|
|
|
42,875 |
|
|
|
(8,763 |
) |
|
|
162,648 |
|
|
|
122,440 |
|
|
|
(40,208 |
) |
Restructuring expenses, net |
|
|
4,838 |
|
|
|
3,986 |
|
|
|
(852 |
) |
|
|
17,493 |
|
|
|
10,608 |
|
|
|
(6,885 |
) |
Loss on sale of land and building, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,196 |
|
|
|
2,196 |
|
Total operating expenses |
|
|
79,941 |
|
|
|
71,290 |
|
|
|
(8,651 |
) |
|
|
251,621 |
|
|
|
206,447 |
|
|
|
(45,174 |
) |
Operating income |
|
|
14,363 |
|
|
|
23,858 |
|
|
|
(9,495 |
) |
|
|
36,337 |
|
|
|
64,928 |
|
|
|
(28,591 |
) |
Interest expense, net |
|
|
(3,832 |
) |
|
|
(3,313 |
) |
|
|
(519 |
) |
|
|
(9,755 |
) |
|
|
(10,911 |
) |
|
|
1,156 |
|
Foreign currency gain (loss) |
|
|
193 |
|
|
|
339 |
|
|
|
(146 |
) |
|
|
(1,104 |
) |
|
|
(27,391 |
) |
|
|
26,287 |
|
Other income (loss) |
|
|
116 |
|
|
|
— |
|
|
|
116 |
|
|
|
300 |
|
|
|
(1,124 |
) |
|
|
1,424 |
|
Earnings before income tax |
|
|
10,840 |
|
|
|
20,884 |
|
|
|
(10,044 |
) |
|
|
25,778 |
|
|
|
25,502 |
|
|
|
276 |
|
Income tax expense |
|
|
13,430 |
|
|
|
5,935 |
|
|
|
(7,495 |
) |
|
|
19,730 |
|
|
|
10,204 |
|
|
|
(9,526 |
) |
Net (loss) income |
|
$ |
(2,590 |
) |
|
$ |
14,949 |
|
|
$ |
(17,539 |
) |
|
$ |
6,048 |
|
|
$ |
15,298 |
|
|
$ |
(9,250 |
) |
Product revenues by product category, in thousands, for the three and nine months ended September 30, 2026 and 2025, were as follows:
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
||||||||||||||||
|
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
% Change |
|
|
2026 |
|
|
2025 |
|
|
$ Change |
|
% Change |
Climate Control Seats |
|
$ |
215,603 |
|
$ |
201,275 |
|
$ |
14,328 |
|
7.1 % |
|
$ |
639,656 |
|
$ |
592,448 |
|
$ |
47,208 |
|
8.0 % |
Lumbar and Massage Comfort Solutions |
|
|
70,923 |
|
|
55,799 |
|
|
15,124 |
|
27.1 % |
|
|
205,772 |
|
|
153,642 |
|
|
52,130 |
|
33.9 % |
Climate Control Interiors |
|
|
51,939 |
|
|
52,638 |
|
|
(699) |
|
(1.3)% |
|
|
155,241 |
|
|
147,564 |
|
|
7,677 |
|
5.2 % |
Climate and Comfort Electronics |
|
|
7,925 |
|
|
8,599 |
|
|
(674) |
|
(7.8)% |
|
|
25,831 |
|
|
22,220 |
|
|
3,611 |
|
16.3 % |
Automotive Climate and Comfort Solutions |
|
|
346,390 |
|
|
318,311 |
|
|
28,079 |
|
8.8 % |
|
|
1,026,500 |
|
|
915,874 |
|
|
110,626 |
|
12.1 % |
Valve Systems |
|
|
21,596 |
|
|
24,487 |
|
|
(2,891) |
|
(11.8)% |
|
|
73,271 |
|
|
72,803 |
|
|
468 |
|
0.6 % |
Other Automotive |
|
|
22,611 |
|
|
31,413 |
|
|
(8,802) |
|
(28.0)% |
|
|
77,807 |
|
|
91,260 |
|
|
(13,453) |
|
(14.7)% |
Subtotal Automotive segment |
|
|
390,597 |
|
|
374,211 |
|
|
16,386 |
|
4.4 % |
|
|
1,177,578 |
|
|
1,079,937 |
|
|
97,641 |
|
9.0 % |
Medical segment |
|
|
14,505 |
|
|
12,659 |
|
|
1,846 |
|
14.6 % |
|
|
37,396 |
|
|
35,877 |
|
|
1,519 |
|
4.2 % |
Total Company |
|
$ |
405,102 |
|
$ |
386,870 |
|
$ |
18,232 |
|
4.7 % |
|
$ |
1,214,974 |
|
$ |
1,115,814 |
|
$ |
99,160 |
|
8.9 % |
29
Table of Contents
Product Revenues
Below is a summary of our product revenues, in thousands, for the three months ended September 30, 2026 and 2025:
|
|
Three Months Ended September 30, |
|
|
|
Variance Due To: |
|
||||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|
|
Automotive |
|
|
FX |
|
|
Pricing / |
|
|
Total |
|
|||||||
Product revenues |
|
$ |
405,102 |
|
|
$ |
386,870 |
|
|
$ |
18,232 |
|
|
|
$ |
18,946 |
|
|
$ |
1,025 |
|
|
$ |
(1,739 |
) |
|
$ |
18,232 |
|
Product revenues for the three months ended September 30, 2026 increased 4.7% as compared to the three months ended September 30, 2025. The increase in product revenues is due to favorable automotive volumes, favorable pricing and favorable foreign currency impacts primarily attributable to the Chinese Renminbi, partially offset by unfavorable currency impacts primarily attributable to the Euro and the Korean Won.
Below is a summary of our product revenues, in thousands, for the nine months ended September 30, 2026 and 2025:
|
|
Nine Months Ended September 30, |
|
|
|
Variance Due To: |
|
||||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|
|
Automotive |
|
|
FX |
|
|
Pricing / |
|
|
Total |
|
|||||||
Product revenues |
|
$ |
1,214,974 |
|
|
$ |
1,115,814 |
|
|
$ |
99,160 |
|
|
|
$ |
86,405 |
|
|
$ |
20,617 |
|
|
$ |
(7,862 |
) |
|
$ |
99,160 |
|
Product revenues for the nine months ended September 30, 2026 increased 8.9% as compared to the nine months ended September 30, 2025. The increase in product revenues is due to favorable automotive volumes and favorable foreign currency impacts primarily attributable to the Euro and the Chinese Renminbi, partially offset by unfavorable pricing and unfavorable currency impacts primarily attributable to the Korean Won.
Cost of Sales
Below is a summary of our cost of sales and gross margin, in thousands, for the three months ended September 30, 2026 and 2025:
|
|
Three Months Ended September 30, |
|
|
|
Variance Due To: |
|
||||||||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|
|
Automotive |
|
|
Operational |
|
|
FX |
|
|
Other |
|
|
Total |
|
||||||||
Cost of sales |
|
$ |
310,798 |
|
|
$ |
291,722 |
|
|
$ |
(19,076 |
) |
|
|
$ |
(12,641 |
) |
|
$ |
4,501 |
|
|
$ |
(5,919 |
) |
|
$ |
(5,017 |
) |
|
$ |
(19,076 |
) |
Gross margin |
|
|
94,304 |
|
|
|
95,148 |
|
|
|
(844 |
) |
|
|
|
6,305 |
|
|
|
4,501 |
|
|
|
(4,894 |
) |
|
|
(6,756 |
) |
|
|
(844 |
) |
Gross margin - Percentage |
|
|
23.3 |
% |
|
|
24.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales for the three months ended September 30, 2026 increased 6.5% as compared to the three months ended September 30, 2025. The increase in cost of sales is primarily due to higher automotive volumes, unfavorable foreign currency impacts primarily attributable to the Chinese Renminbi and the Mexican Peso and higher freight and labor costs, partially offset by net material purchasing savings.
Below is a summary of our cost of sales and gross margin, in thousands, for the nine months ended September 30, 2026 and 2025:
|
|
Nine Months Ended September 30, |
|
|
|
Variance Due To: |
|
||||||||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|
|
Automotive |
|
|
Operational |
|
|
FX |
|
|
Other |
|
|
Total |
|
||||||||
Cost of sales |
|
$ |
927,016 |
|
|
$ |
844,439 |
|
|
$ |
(82,577 |
) |
|
|
$ |
(62,660 |
) |
|
$ |
20,341 |
|
|
$ |
(21,512 |
) |
|
$ |
(18,746 |
) |
|
$ |
(82,577 |
) |
Gross margin |
|
|
287,958 |
|
|
|
271,375 |
|
|
|
16,583 |
|
|
|
|
23,745 |
|
|
|
20,341 |
|
|
|
(895 |
) |
|
|
(26,608 |
) |
|
|
16,583 |
|
Gross margin - Percentage |
|
|
23.7 |
% |
|
|
24.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales for the nine months ended September 30, 2026 increased 9.8% as compared to the nine months ended September 30, 2025. The increase in cost of sales is primarily due to higher automotive volumes, unfavorable foreign currency impacts primarily attributable to the Mexican Peso, Euro, Chinese Renminbi and the Czech Koruna, specific-cause warranty provisions related to products shipped in prior periods and higher labor costs, partially offset by net material purchasing savings.
30
Table of Contents
Net Research and Development Expenses
Below is a summary of our net research and development expenses, in thousands, for the three months ended September 30, 2026 and 2025:
|
|
Three Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|||
Research and development expenses |
|
$ |
31,517 |
|
|
$ |
31,008 |
|
|
$ |
(509 |
) |
Reimbursed research and development expenses |
|
|
(8,052 |
) |
|
|
(6,579 |
) |
|
|
1,473 |
|
Net research and development expenses |
|
$ |
23,465 |
|
|
$ |
24,429 |
|
|
$ |
964 |
|
Percentage of product revenues |
|
|
5.8 |
% |
|
|
6.3 |
% |
|
|
|
|
Net research and development expenses for the three months ended September 30, 2026 decreased 3.9% as compared to the three months ended September 30, 2025. The decrease in net research and development expenses is primarily related to higher customer reimbursements.
Below is a summary of our net research and development expenses, in thousands, for the nine months ended September 30, 2026 and 2025:
|
|
Nine Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|||
Research and development expenses |
|
$ |
91,930 |
|
|
$ |
90,116 |
|
|
$ |
(1,814 |
) |
Reimbursed research and development expenses |
|
|
(20,450 |
) |
|
|
(18,913 |
) |
|
|
1,537 |
|
Net research and development expenses |
|
$ |
71,480 |
|
|
$ |
71,203 |
|
|
$ |
(277 |
) |
Percentage of product revenues |
|
|
5.9 |
% |
|
|
6.4 |
% |
|
|
|
|
Net research and development expenses for the nine months ended September 30, 2026 increased 0.4% as compared to the nine months ended September 30, 2025. The increase in net research and development expenses is primarily related to unfavorable foreign currency impacts primarily attributable to the Euro, Chinese Renminbi and the Mexican Peso.
Selling, General and Administrative Expenses
Below is a summary of our selling, general and administrative expenses, in thousands, for the three months ended September 30, 2026 and 2025:
|
|
Three Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|||
Selling, general and administrative expenses |
|
$ |
51,638 |
|
|
$ |
42,875 |
|
|
$ |
(8,763 |
) |
Percentage of product revenues |
|
|
12.7 |
% |
|
|
11.1 |
% |
|
|
|
|
Selling, general and administrative expenses for the three months ended September 30, 2026 increased 20.4% as compared to the three months ended September 30, 2025. Merger and acquisition expenses, primarily related to the Modine Transaction, were $6.5 million for the three months ended September 30, 2026. The remaining increase in Selling, general and administrative expenses is primarily related to higher expenses for rent and information technology and unfavorable foreign currency impacts primarily attributable to the Mexican Peso and the Chinese Renminbi.
Below is a summary of our selling, general and administrative expenses, in thousands, for the nine months ended September 30, 2026 and 2025:
|
|
Nine Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|||
Selling, general and administrative expenses |
|
$ |
162,648 |
|
|
$ |
122,440 |
|
|
$ |
(40,208 |
) |
Percentage of product revenues |
|
|
13.4 |
% |
|
|
11.0 |
% |
|
|
|
|
31
Table of Contents
Selling, general and administrative expenses for the nine months ended September 30, 2026 increased 32.8% as compared to the nine months ended September 30, 2025. Merger and acquisition expenses, primarily related to the Modine Transaction, were $34.2 million for the nine months ended September 30, 2026. The remaining increase in Selling, general and administrative expenses is primarily related to higher expenses for rent and information technology and unfavorable foreign currency impacts primarily attributable to the Mexican Peso, Euro and the Chinese Renminbi.
Restructuring Expenses, net
Below is a summary of our restructuring expenses, net, in thousands, for the three months ended September 30, 2026 and 2025:
|
|
Three Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|||
Restructuring expenses, net |
|
$ |
4,838 |
|
|
$ |
3,986 |
|
|
$ |
(852 |
) |
During the three months ended September 30, 2026, the Company recognized expenses of $2.4 million for employee separation costs and $2.4 million for other costs.
During the three months ended September 30, 2025, the Company recognized expenses of $2.7 million for employee separation costs and $1.3 million for other costs.
Below is a summary of our restructuring expenses, net, in thousands, for the nine months ended September 30, 2026 and 2025:
|
|
Nine Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|||
Restructuring expenses, net |
|
$ |
17,493 |
|
|
$ |
10,608 |
|
|
$ |
(6,885 |
) |
During the nine months ended September 30, 2026, the Company recognized expenses of $12.3 million for employee separation costs and $5.2 million for other costs.
During the nine months ended September 30, 2025, the Company recognized expenses of $8.4 million for employee separation costs and $2.2 million for other costs.
See Note 4, “Restructuring,” to the consolidated condensed financial statements included in this Report for additional information.
Loss on Sale of Land and Building, net
Below is a summary of our loss on sale of land and building, net, in thousands, for the nine months ended September 30, 2026 and 2025:
|
|
Nine Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|||
Loss on sale of land and building, net |
|
$ |
— |
|
|
$ |
2,196 |
|
|
$ |
2,196 |
|
Loss on sale of land and building, net for the nine months ended September 30, 2025 is primarily related to the sale of our former headquarters building in Northville, Michigan in January 2025.
Interest Expense, net
Below is a summary of our interest expense, net, in thousands, for the three months ended September 30, 2026 and 2025:
|
|
Three Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|||
Interest expense, net |
|
$ |
(3,832 |
) |
|
$ |
(3,313 |
) |
|
$ |
(519 |
) |
32
Table of Contents
Interest expense, net for the three months ended September 30, 2026 increased 15.7% as compared to the three months ended September 30, 2025. The increase in interest expense, net is primarily related to a higher average outstanding balance on the Revolving Credit Facility during the three-month period.
Below is a summary of our interest expense, net, in thousands, for the nine months ended September 30, 2026 and 2025:
|
|
Nine Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|||
Interest expense, net |
|
$ |
(9,755 |
) |
|
$ |
(10,911 |
) |
|
$ |
1,156 |
|
Interest expense, net for the nine months ended September 30, 2026 decreased 10.6% as compared to the nine months ended September 30, 2025. The decrease in interest expense, net is primarily related to a lower interest rate on the Revolving Credit Facility during the nine-month period and the impact of a change in fair value of interest rate swap in the prior year period, partially offset by a higher average outstanding balance on the Revolving Credit Facility during the three-months ended September 30, 2026.
Foreign Currency Gain (Loss)
Below is a summary of our foreign currency gain, in thousands, for the three months ended September 30, 2026 and 2025:
|
|
Three Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|||
Foreign currency gain |
|
$ |
193 |
|
|
$ |
339 |
|
|
$ |
(146 |
) |
Foreign currency gain for the three months ended September 30, 2026 included net realized foreign currency gain of $0.9 million and net unrealized foreign currency loss of $0.7 million.
Foreign currency gain for the three months ended September 30, 2025 included net realized foreign currency gain of $2.2 million and net unrealized foreign currency loss of $1.9 million.
Below is a summary of our foreign currency loss, in thousands, for the nine months ended September 30, 2026 and 2025:
|
|
Nine Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|||
Foreign currency loss |
|
$ |
(1,104 |
) |
|
$ |
(27,391 |
) |
|
$ |
26,287 |
|
Foreign currency loss for the nine months ended September 30, 2026 included net realized foreign currency loss of $0.2 million and net unrealized foreign currency loss of $0.9 million.
Foreign currency loss for the nine months ended September 30, 2025 included net realized foreign currency gain of $3.0 million and net unrealized foreign currency loss of $30.4 million. The unrealized foreign currency loss is primarily related to a non-current intercompany U.S. dollar receivable at one of our foreign subsidiaries, which was settled in 2025.
Other Income (Loss)
Below is a summary of our other income, in thousands, for the three months ended September 30, 2026 and 2025:
|
|
Three Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|||
Other income |
|
$ |
116 |
|
|
$ |
— |
|
|
$ |
116 |
|
Other income for the three months ended September 30, 2026 increased as compared to other income for the three months ended September 30, 2025, due to income from an equity investment.
33
Table of Contents
Below is a summary of our other income (loss), in thousands, for the nine months ended September 30, 2026 and 2025:
|
|
Nine Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|||
Other income (loss) |
|
$ |
300 |
|
|
$ |
(1,124 |
) |
|
$ |
1,424 |
|
Other income for the nine months ended September 30, 2026 increased as compared to other loss for the nine months ended September 30, 2025, primarily due to higher income from an equity investment in the current year period and a fair value adjustment of an equity investment in the prior year period.
Income Tax Expense
Below is a summary of our income tax expense, in thousands, for the three months ended September 30, 2026 and 2025:
|
|
Three Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|||
Income tax expense |
|
$ |
13,430 |
|
|
$ |
5,935 |
|
|
$ |
(7,495 |
) |
Income tax expense was $13.4 million for the three months ended September 30, 2026 on earnings before income tax of $10.8 million, representing an effective tax rate of 123.9%. The effective tax rate differed from the U.S. Federal statutory rate of 21.0% primarily due to the impact of income taxes on foreign earnings taxed at rates varying from the U.S. Federal statutory rate and the unfavorable impact of transactions costs incurred in connection with the Modine Transaction.
Income tax expense was $5.9 million for the three months ended September 30, 2025 on earnings before income tax of $20.9 million, representing an effective tax rate of 28.4%. The effective tax rate differed from the U.S. Federal statutory rate of 21.0% primarily due to the impact of income taxes on foreign earnings taxed at rates varying from the U.S. Federal statutory rate and the unfavorable impact of global intangible low-tax income (“GILTI”) and Subpart F income.
Below is a summary of our income tax expense, in thousands, for the nine months ended September 30, 2026 and 2025:
|
|
Nine Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
Favorable / |
|
|||
Income tax expense |
|
$ |
19,730 |
|
|
$ |
10,204 |
|
|
$ |
(9,526 |
) |
Income tax expense was $19.7 million for the nine months ended September 30, 2026 on earnings before income tax of $25.8 million, representing an effective tax rate of 76.5%. The effective tax rate differed from the U.S. Federal statutory rate of 21.0% primarily due to the impact of income taxes on foreign earnings taxed at rates varying from the U.S. Federal statutory rate and the unfavorable impact of transactions costs incurred in connection with the Modine Transaction.
Income tax expense was $10.2 million for the nine months ended September 30, 2025 on earnings before income tax of $25.5 million, representing an effective tax rate of 40.0%. The effective tax rate differed from the U.S. Federal statutory rate of 21.0% primarily due to the unfavorable impact of GILTI and Subpart F income, unfavorable tax effects of equity vesting and a valuation allowance established in the U.S. related to a capital loss carryforward.
34
Table of Contents
Liquidity and Capital Resources
Overview
Our primary sources of liquidity and capital resources are cash flows from operations and borrowings available under our Credit Agreement (defined below). Our cash requirements consist principally of working capital, capital expenditures, research and development, lease payments, income tax payments and general corporate purposes. We generally reinvest available cash flows from operations into our business, while opportunistically utilizing our authorized stock repurchase program. Further, we continuously evaluate acquisition and investment opportunities that will enhance our business strategies.
As of September 30, 2026, the Company had $252.1 million of cash and cash equivalents and $242.1 million of availability under our Credit Agreement. We may issue debt or equity securities, which may provide an additional source of liquidity. However, there can be no assurance equity or debt financing will be available to us when we need it or, if available, the terms will be satisfactory to us and not dilutive to our then-current shareholders.
We continue to expect to be able to move funds between different countries to manage our global liquidity needs without material adverse tax implications, subject to current monetary policies and the terms of the Credit Agreement. We utilize a combination of strategies, including dividends, cash pooling arrangements, intercompany loan repayments and other distributions and advances to provide the funds necessary to meet our global liquidity needs. There are no significant restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Gentherm Incorporated. As of September 30, 2026, the Company’s cash and cash equivalents held by our non-U.S. subsidiaries totaled $230.7 million. If additional non-U.S. cash was needed for our U.S. operations, we may be required to accrue and pay withholding if we were to distribute such funds from non-U.S. subsidiaries to the U.S.; however, based on our current liquidity needs and strategies, we do not anticipate a need to accrue and pay such additional amounts.
We currently believe that our cash and cash equivalents, borrowings available under the Credit Agreement and cash flows from operations will be adequate to meet anticipated cash requirements for at least the next twelve months and the foreseeable future.
Cash and Cash Flows
The following table represents our cash and cash equivalents, in thousands:
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Cash and cash equivalents at beginning of period |
|
$ |
160,833 |
|
|
$ |
134,134 |
|
Net cash provided by operating activities |
|
|
36,007 |
|
|
|
87,820 |
|
Net cash used in investing activities |
|
|
(56,748 |
) |
|
|
(29,779 |
) |
Net cash provided by (used in) financing activities |
|
|
112,812 |
|
|
|
(42,433 |
) |
Foreign currency effect on cash and cash equivalents |
|
|
(806 |
) |
|
|
4,508 |
|
Cash and cash equivalents at end of period |
|
$ |
252,098 |
|
|
$ |
154,250 |
|
Cash Flows From Operating Activities
Net cash provided by operating activities totaled $36.0 million during the nine months ended September 30, 2026 primarily reflecting net income of $6.0 million, $58.8 million for non-cash charges for depreciation, amortization, stock based compensation, loss on disposition of property and equipment and provisions for inventory, $43.3 million related to changes in accounts payable, and $4.0 million related to changes in net other assets and liabilities, partially offset by $43.5 million related to changes in accounts receivable, net, $22.1 million related to changes in inventory, $9.5 million for non-cash deferred income taxes and $1.0 million for other non-cash items, including unrealized foreign currency (gain) loss.
Cash Flows From Investing Activities
Net cash used in investing activities was $56.7 million during the nine months ended September 30, 2026, primarily reflecting payments for the IME acquisition of $34.2 million and purchases of property and equipment of $22.6 million.
35
Table of Contents
Cash Flows From Financing Activities
Net cash provided by financing activities was $112.8 million during the nine months ended September 30, 2026, reflecting the borrowing of debt of $204.0 million partially offset by $85.9 million of debt repayments, $2.8 million paid for financing new loans and $2.5 million paid for employee taxes related to the net settlement of restricted stock units that vested during the year.
Debt
The following table summarizes the Company’s debt, in thousands, as of September 30, 2026 and December 31, 2025:
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||
|
|
Interest |
|
|
Principal |
|
|
Interest |
|
|
Principal |
|
||||
Revolving Credit Facility (U.S. Dollar denominations) |
|
|
5.13 |
% |
|
$ |
307,000 |
|
|
|
4.95 |
% |
|
$ |
189,000 |
|
Finance leases |
|
|
10.55 |
% |
|
|
13,443 |
|
|
|
3.34 |
% |
|
|
73 |
|
Total debt |
|
|
|
|
|
320,443 |
|
|
|
|
|
|
189,073 |
|
||
Less: current maturities |
|
|
|
|
|
(912 |
) |
|
|
|
|
|
(73 |
) |
||
Long-term debt, less current maturities |
|
|
|
|
$ |
319,531 |
|
|
|
|
|
$ |
189,000 |
|
||
Credit Agreement
Gentherm, together with certain of its subsidiaries, maintain a revolving credit facility (the “Revolving Credit Facility”) under its Third Amended and Restated Credit Agreement with a consortium of lenders and Bank of America, N.A. as administrative agent (the “Credit Agreement”). The Credit Agreement was entered into on June 29, 2026 and amends and restates in its entirety the Second Amended and Restated Credit Agreement dated June 10, 2022, by and among Gentherm, certain of its direct and indirect subsidiaries, the lenders party thereto and the Agent. The Credit Agreement has a maximum borrowing capacity of $550 million and matures on June 29, 2031. The Credit Agreement contains covenants, that, among other things, (i) prohibit or limit the ability to incur additional indebtedness, create liens, pay dividends, make certain types of investments, enter into certain types of transactions with affiliates, prepay other indebtedness, sell assets or enter into certain other transactions outside the ordinary course of business, and (ii) require that Gentherm maintain a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Net Leverage Ratio (based on consolidated EBITDA for the applicable trailing four fiscal quarters) as of the end of any fiscal quarter. The Credit Agreement also contains customary events of default.
As of September 30, 2026, the Company was in compliance with the terms of the Credit Agreement.
Modine Transaction
In connection with the Modine Transaction, the Company declared a special cash dividend (the “Cash Dividend”) in an aggregate amount equal to $63.5 million. The Cash Dividend was paid in cash on October 7, 2026.
On June 29, 2026, SpinCo entered into the DDTL Facility. On the Closing Date, SpinCo borrowed $250.0 million of Term Loans under the DDTL Facility (the “Term Loans”), the proceeds of which were used by SpinCo on the Closing Date to pay the SpinCo Cash Distribution, to pay certain other amounts required and for general corporate purposes.
The obligations under the DDTL Facility are unconditionally guaranteed by Gentherm and certain of Gentherm’s wholly-owned domestic subsidiaries, subject to customary exceptions, and are secured by substantially all of the assets of SpinCo, Gentherm and the other guarantors, subject to customary exceptions.
The Term Loans bear interest, at SpinCo’s option, at either (i) term SOFR plus a margin in a range of 1.125% to 2.000% per annum (based on the Consolidated Net Leverage Ratio of Gentherm and its subsidiaries from time to time) or (ii) the base rate plus a margin in a range of 0.125% to 1.000% per annum (based on the Consolidated Net Leverage Ratio of Gentherm and its subsidiaries from time to time). SpinCo also paid a ticking fee with respect to the DDTL Facility that accrued during the period from June 29, 2026 to the Funding Date at a rate equal to 0.175% per annum on the unfunded commitments thereunder.
The DDTL Facility contains customary affirmative and negative covenants and requires that Gentherm maintain a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Net Leverage Ratio. The DDTL Facility additionally contains customary events of default.
36
Table of Contents
Material Cash Requirements
The Company has committed to various ongoing restructuring plans, under which we expect to incur cash restructuring costs of between $1.0 million and $5.5 million for employee separation costs and retention costs and up to $1.5 million of other transition costs primarily for machinery and equipment move and set up costs. Additionally, we expect to incur capital expenditures of between $1.0 million and $2.0 million.
See Note 4, “Restructuring,” to the consolidated condensed financial statements included in this Report for additional information regarding these plans.
Except as described above and the requirements for the Modine Transaction and the acquisition of IME described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Report, there have been no material changes in our cash requirements since December 31, 2025, the end of fiscal year 2025. See Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2025 for additional information regarding our material cash requirements.
Effects of Inflation
The Company has historically been subject to inflationary pressures with respect to materials and labor. At times in recent years, the Company has experienced significant volatility in the costs of certain materials and components, labor and transportation. Rising costs of materials, labor, equipment and other inputs used to manufacture and sell our products, including freight and logistics costs, have adversely impacted, and may in the future adversely impact, operating costs and operating results. The impact of tariffs and geopolitical conflicts could add to these inflationary pressures. Although the Company has developed and implemented strategies to mitigate the impact of higher material component costs and transportation costs through sourcing and manufacturing efficiencies where possible, these strategies together with commercial negotiations with Gentherm's customers and suppliers have not fully offset to date and may not fully offset our future cost increases. Such inflationary cost increase may increase the cash required to fund our operations by a material amount.
Critical Accounting Estimates
The discussion and analysis of our financial condition and results of operations are based upon our consolidated condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. For discussion of our significant accounting policies, see Note 2, “Summary of Significant Accounting Policies,” to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes in our critical accounting policies or critical accounting estimates during the three months ended September 30, 2026. We are not presently aware of any events or circumstances that would require us to update our estimates, assumptions or revise the carrying value of our assets or liabilities. Our estimates may change, however, as new events occur and additional information is obtained. As a result, actual results may differ significantly from our estimates, and any such differences may be material to our financial statements.
37
Table of Contents
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to various market risks including, but not limited to, changes in foreign currency exchange rates, changes in interest rates and price fluctuations of certain material commodities. Market risks for changes in interest rates relate primarily to the Company's debt obligations under the Credit Agreement. Foreign currency exchange risks are attributable to sales to foreign customers and purchases from foreign suppliers not denominated in a location’s functional currency, foreign plant operations, intercompany indebtedness, acquisitions denominated in foreign currencies, intercompany investments and include exposures to the Euro, Mexican Peso, Hungarian Forint, North Macedonian Denar, Ukrainian Hryvnia, Japanese Yen, Chinese Renminbi, Korean Won, Czech Koruna, Vietnamese Dong and Moroccan Dirham.
The Company regularly enters into derivative contracts with the objective of managing its financial and operational exposure arising from these risks by offsetting gains and losses on the underlying exposures with gains and losses on the financial instruments used to hedge them. The decision of whether and when to execute derivative financial instruments, along with the duration of the instrument, may vary from period to period depending on market conditions, the relative costs of the instruments and capacity to hedge. The duration is linked to the timing of the underlying exposure, with the connection between the two being regularly monitored. The Company does not enter into derivative financial instruments for speculative or trading purposes.
The Company’s designated hedging relationships are formally documented at the inception of the hedge, and hedges must be highly effective in offsetting changes to future cash flows on hedged transactions both at the inception of a hedge and on an ongoing basis to be designated for hedge accounting treatment. For derivative contracts that can be classified as a cash flow hedge, the effective portion of the change in the fair value of the derivative is recorded to accumulated other comprehensive loss in the consolidated condensed balance sheets. When the underlying hedge transaction is realized, the gain or loss included in accumulated other comprehensive loss is recorded in earnings in the consolidated condensed statements of income on the same line as the hedged item. Cash flows associated with derivatives are reported in net cash provided by operating activities in the Company’s consolidated statements of cash flows.
Information related to the fair values of all derivative instruments in the consolidated condensed balance sheet as of September 30, 2026 is set forth in Note 10, “Financial Instruments” in the consolidated condensed financial statements included in this Report.
Interest Rate Sensitivity
The table below presents principal cash flows and related weighted average interest rates by expected maturity dates for each of the Company’s debt obligations, excluding finance leases. The information is presented in U.S. Dollar equivalents, which is the Company’s reporting currency.
|
|
Expected Maturity Date |
|
|
|
|
||||||||||||||||||||||||||
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
2029 |
|
|
2030 |
|
|
2031 |
|
|
Total |
|
|
Fair Value |
|
||||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Long-Term Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Variable rate |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
307,000 |
|
|
$ |
307,000 |
|
|
$ |
307,000 |
|
Variable interest rate as of September 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.13 |
% |
|
|
5.13 |
% |
|
|
|
||||||
Based on the amounts outstanding as of September 30, 2026, a hypothetical 100 basis point change (increase or decrease) in interest rates would impact annual interest expense by $3.1 million. To hedge the Company's exposure to interest payment fluctuations on a portion of these borrowings, we entered into floating-to-fixed interest rate swap agreements with notional amounts totaling $100.0 million.
38
Table of Contents
Exchange Rate Sensitivity
The table below provides information about the Company’s foreign currency exchange rate agreements that are sensitive to changes in foreign currency exchange rates. The table presents the notional amounts and weighted average exchange rates by expected maturity dates for each type of foreign currency exchange agreement. These notional amounts generally are used to calculate the payments to be exchanged under the contract.
|
|
Expected Maturity or Transaction Date |
|
|
|
|
||||||||||||||
Anticipated Transactions and Related Derivatives |
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
Total |
|
|
Fair Value |
|
|||||
USD Functional Currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Exchange Agreements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
(Receive MXN / Pay USD) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total contract amount |
|
$ |
24,318 |
|
|
$ |
79,484 |
|
|
$ |
23,301 |
|
|
$ |
127,103 |
|
|
$ |
(3,275 |
) |
Average contract rate |
|
|
17.58 |
|
|
|
17.93 |
|
|
|
18.35 |
|
|
|
17.94 |
|
|
|
|
|
The table below presents the potential gain and loss in fair value for the foreign currency derivative contracts from a hypothetical 10% change in quoted currency exchange rates.
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||
Exchange Rate Sensitivity |
|
Potential loss in fair value |
|
|
Potential gain in fair value |
|
|
Potential loss in fair value |
|
|
Potential gain in fair value |
|
||||
Exchange Agreement:(Receive MXN / Pay USD) |
|
$ |
11,248 |
|
|
$ |
13,747 |
|
|
$ |
3,328 |
|
|
$ |
4,327 |
|
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Management of the Company, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, 2026. As defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (as amended, the “Exchange Act”), disclosure controls and procedures are controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported on a timely basis, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2026.
(b) Changes in Internal Control over Financial Reporting
In conjunction with our recent acquisition activity, we utilized our framework of internal control over financial reporting specific to business combinations. The applicable controls address the various elements of a business combination, including but not limited to: 1) calculation of the consideration transferred; 2) identifying and properly accounting for transactions that are separate from the business combination; 3) use and oversight of competent and qualified personnel in performing the valuation of assets acquired and liabilities assumed; 4) review of inputs and outputs to the valuation models; 5) identifying and disclosing provisional amounts; and 6) tracking measurement period adjustments.
The acquisition of IME became effective on July 1, 2026. We are currently integrating policies, processes and operations for the combined company and will continue to evaluate our internal control over financial reporting as we develop and execute our integration plan. We will exclude the acquired operations of IME from our assessment of Gentherm’s internal control over financial reporting for the year ended December 31, 2026 as permissible under rules and regulations of the Securities and Exchange Commission.
Except as described above with regard to the acquisition and integration of IME, there were no changes in our internal control over financial reporting during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
39
Table of Contents
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are subject to litigation from time to time in the ordinary course of business, however there was no material pending litigation to which we are a party and no material legal proceeding was terminated, settled or otherwise resolved during the three months ended September 30, 2026.
ITEM 1A. RISK FACTORS
In addition to the information set forth in this Report, you should carefully consider the risk factors previously disclosed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025. The Company is not aware of any additional material risks or uncertainties.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities During Third Quarter 2026
During the three and nine months ended September 30, 2026, the Company did not repurchase any shares. As of September 30, 2026, the 2026 Stock Repurchase Program had $400.0 million of share repurchase authorization remaining.
ITEM 5. OTHER INFORMATION
Trading Plans – Directors and Section 16 Officers
During the three months ended September 30, 2026, none of the Company's
40
Table of Contents
ITEM 6. EXHIBITS
Exhibits to this Report are as follows:
|
|
|
|
|
|
Incorporated by Reference |
||||||
Exhibit Number |
|
Exhibit Description |
|
Filed / Furnished Herewith |
|
Form |
|
Period Ending |
|
Exhibit / |
|
Filing Date |
3.1 |
|
Second Amended and Restated Articles of Incorporation of Gentherm Incorporated |
|
|
|
8-K |
|
|
|
3.2 |
|
3/5/18 |
3.2 |
|
Certificate of Amendment to the Second Amended and Restated Articles of Incorporation of Gentherm Incorporated |
|
|
|
8-K
|
|
|
|
3.1 |
|
10/1/26 |
3.3 |
|
Amended and Restated Bylaws of Gentherm Incorporated |
|
|
|
8-K |
|
|
|
3.1 |
|
5/26/16 |
31.1 |
|
Section 302 Certification – CEO |
|
X |
|
|
|
|
|
|
|
|
31.2 |
|
Section 302 Certification – CFO |
|
X |
|
|
|
|
|
|
|
|
32.1* |
|
Section 906 Certification – CEO |
|
X |
|
|
|
|
|
|
|
|
32.2* |
|
Section 906 Certification – CFO |
|
X |
|
|
|
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document – The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
|
X |
|
|
|
|
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
X |
|
|
|
|
|
|
|
|
104 |
|
Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document |
|
X |
|
|
|
|
|
|
|
|
* Documents are furnished not filed.
41
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
|
Gentherm Incorporated |
|
|
|
/s/ William Presley |
|
William Presley |
|
President and Chief Executive Officer |
|
(Principal Executive Officer) |
|
|
|
Date: October 22, 2026 |
|
|
|
|
|
/s/ Jonathan Douyard |
|
Jonathan Douyard |
|
Executive Vice President, Chief Financial Officer and Treasurer |
|
(Principal Financial Officer) |
|
|
|
Date: October 22, 2026 |
42