Gentherm Inc (NASDAQ:THRM) Q1 2018 Earnings Conference Call - Final Transcript

Apr 26, 2018 • 08:00 am ET

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Gentherm Inc (NASDAQ:THRM) Q1 2018 Earnings Conference Call - Final Transcript

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Presentation
Executive
Phil Eyler

previously predicted. Revenues from all other automotive product lines grew year-over-year. The industrial segment declined by 20%, the reason for which we'll more fully describe later.

We reported adjusted EBITDA of $33.6 million in the quarter, and we're disappointed with our performance there. While some of the decline was expected, we still have cost issues that are being addressed. We're taking decisive steps and have kicked off a formal program to identify areas where cost savings can be achieved without impacting our growth plan. This program is expected to yield savings in the coming quarters and will significantly rightsize our cost structure for future years.

In total, our results in the quarter were mixed, and Barry will provide more details on the financials later on in the call. While we started out the year soft, it was primarily the month of February where we came in lower than expected. We saw March rebound and so far April is running on a plan. Overall, our outlook is intact and we still expect to meet the 2018 financial guidance we gave you on our earnings call in February. On that same call, I talked about the work we were just beginning to examine all aspects of our business and develop an enhanced strategic plan with the primary goal to drive shareholder value through accelerated revenue and earnings growth.

We put a full-court press digging into all aspects of Gentherm's business with a critical eye to what we can do to most effectively capture the opportunities before us. As a reminder, the strategic plan will address one, continued and accelerated revenue growth in the short and mid-term through our core product and expanding portfolio; two, developing an automotive product and technology solution strategy, which will address the opportunities of the car of the future; three, a diligent portfolio analysis of all businesses and product lines. This means there will be no sacred cows in this review. And finally, four, short and long-term operating margin expansion opportunities.

Let me give you an update on our next steps. Our management team and Board of Directors will be reviewing and finalizing our strategic growth plan over the next two months. We're then planning to host a strategic update meeting in New York on June 27, to share more details around our initiatives with you. The event details and registration will be available shortly.

Now, let's review some business highlights from the quarter. Please turn to Slide 4 in our presentation deck. Despite the industry-driven decline, we saw continued strong execution by our team in the first quarter, with launches of systems on 42 different nameplate models across 21 OEMs. We launched programs with a host of our strong technologies in the quarter, including CCS seat heating, steering wheel heat and advanced cabling and battery thermal management. The launches included Audi Q3 and Q5, Kia K9, Subaru Tribeca, Tesla Model X, the Toyota Avalon and several others. We also successfully launched a CCS program with our first