Gentherm Inc (NASDAQ:THRM) Q3 2018 Earnings Conference Call Transcript
Oct 25, 2018 • 08:00 am ET
Greetings, and welcome to Gentherm Incorporated Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.
I'd now like to turn the call over to your host, Yijing Brentano. Please proceed.
Thank you, LaTonya, and good morning, everyone. Thank you for joining us today. Gentherm's earnings results were released earlier this morning and a copy of the release is available at gentherm.com. Additionally, a webcast replay of today's call will be available later today on the Investor Relations section of Gentherm's website.
(Forward-looking cautionary statements)
During the call, we may discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included in our earnings release.
On the call with me today are Phil Eyler, President and Chief Executive Officer; and Barry Steele, Chief Financial Officer. Please note that during their remarks, Phil and Barry will be referring to a presentation deck that we have made available on our website at gentherm.com/events. After their prepared remarks, we will be pleased to take your questions.
Now, I'd like to turn the call over to Phil.
Thank you, Yijing. Good morning, everyone, and thank you all for joining us today. I'm pleased to report that despite headwinds across the automotive industry, we achieved solid top line growth in the third quarter.
Starting with table. The table on slide four, third quarter product revenues were $258.9 million, an increase of 9.8% from the same period in 2017. In our automotive segment, we had growth of 9.9%, which included the impact of the Etratech acquisition and favorable currency translation. On an organic basis, the automotive segment achieved revenue growth of 3.5%, despite the headwind in European vehicle production, primarily related to the new Worldwide Harmonized Light Vehicle Test Procedure or WLTP as well as declining vehicle production in Asia.
According to IHS's latest forecast for our key markets of North America, Europe, China, Japan and Korea, light vehicle production in the third quarter declined over 3% year-over-year. More significantly, this compares with their mid-July forecast of a 3.6% increase for the third quarter of 2018, which was a negative swing of more than 600 basis points. Notably, one of our large European customers, Volkswagen, experienced significant sequential and year-over-year production volume declines in the quarter. While our 3.5% organic growth was slightly below our original expectations, we significantly outperformed our key markets.
Our industrial segment revenues rose by 8.2%, primarily driven by an increase of 11.7% in Cincinnati Sub-Zero. This was partially offset by a 4.7% decline in Global Power Technologies. You'll recall that we intend to divest GPT and the industrial business of CSZ. However, we are retaining our medical business and I'm very pleased to note that we're seeing encouraging trends there as our team delivered strong double-digit growth both year-over-year and sequentially in the third quarter.