Gentherm Inc (NASDAQ:THRM) Q1 2018 Earnings Conference Call - Final Transcript
Apr 26, 2018 • 08:00 am ET
Thank you, sir. At this time, we'll be conducting a question-and-answer session. [Operator Instructions] Our first question today comes from Christopher Van Horn of B. Riley FBR. Please go ahead.
Good morning. This is Dan Drawbaugh on the line for Chris. Thanks for taking our questions.
So just to start on battery thermal management, and congratulations on the announcement of that Mercedes win. That sounds like a good opportunity. I think you mentioned $50 million to $60 million run rate in that business by the end of 2019 if I didn't mishear you. And I'm curious to know what you can share as to what you're assuming in that? I think you had shared last quarter that you had a second customer ramping up. Do you have any additional customers assumed in that $50 million to $60 million? Or is that just additional programs at your two customers?
Yeah. Dan, thanks. Well, obviously, we were very excited to be launching on an S-Class is kind of the pinnacle for this technology. But to answer your question, the $50 million to $60 million, first of all, is only battery thermal management related to our thermoelectric technologies, and it's only on the two customers that we've mentioned, so one is obviously Daimler, and the second one is a North America OEM, which we have not announced yet, so that doesn't include. There's a ton of work going on right now to expand that product line, especially now that we've reached a point where we're very comfortable with the technology since it's on the market. So it's right now just those two customers, everything else will be upside.
Okay, terrific. Thank you. And then on the cost savings that you've mentioned, I think you said there could be some impact in the coming quarters, and then, obviously, you may have some more long-term opportunities. Can you share a little bit about the magnitude we should be looking at and some of the areas you might be targeting with those cost savings?
So we've basically put in a formal program, where we're evaluating line by line the cost structure of the business. We're obviously seeing opportunities. We've got kind of a disciplined program in place to start identifying and tracking the specific measures to reduce those costs. But it's still in the early stages. I would expect that you're unlikely to see any significant impact this year. It'll be more effective in the coming year. And in terms of the details behind it and the magnitude, I think we'll be ready in June to share some pretty significant details behind that during the strategy session. So we'll hold off until then.
Okay, fair enough. Thank you. And then last question from me. Etratech, year-over-year revenue growth of about 20% on a pro forma basis. That seems pretty strong. Can you share whether there's something going on this year, in particular, that's boosting that, whether it might be one significant launch or if they're