Gentherm's Q1 2025: Unpacking Contradictions in Tariffs, Production, and Bookings Dynamics

Approach to tariffs and pass-through, industry production assumptions, bookings and award dynamics, tariff impact and pass-through revenue, and production output and capacity utilization are the key contradictions discussed in Gentherm's latest 2025Q1 earnings call.



Tariff Impact and Mitigation Strategies:
- Gentherm expects to pass through incremental tariffs incurred due to recent tariff announcements.
- The company's strategic manufacturing footprint in Mexico supports 40% of its business and 100% of its Mexico operations are either not included on the tariff list or are USMCA compliant, minimizing the direct impact of tariffs.

Commercial Success and Award Wins:
- Gentherm secured $400 million in automotive new business awards during Q1, including strategic wins with a Japanese OEM and Volvo.
- Growth in lumbar and massage comfort solutions contributed to a 5.3% increase in automotive climate and comfort solutions revenue.

Strategic Growth in Medical Business:
- Gentherm identified new medical opportunities leveraging existing technology platforms, with 6% revenue growth in the medical segment ex-FX.
- The company aims to scale its medical business as a more meaningful part of its overall revenue, driven by the potential of its core platforms in patient and physician thermal management.

Operational Excellence and Footprint Realignment:
- Gentherm is implementing standardized business processes and optimizing capacity through its strategic footprint realignment, beginning with a Plan for Every Part supply chain model.
- The company has started ramping up its Morocco facility, with production park approval in Q1, aiming for long-term margin expansion and free cash flow generation.