Gentherm (THRM -1.91%), a global leader in thermal management and pneumatic comfort technologies for automotive and medical markets, reported results for Q2 FY2025 on July 24, 2025. The period saw GAAP revenue reach $375.1 million, beating analyst expectations by 3.2%. However, adjusted EPS was $0.54, missing the $0.58 consensus. The company reported strong progress in commercial wins, but profit margins tightened and net income (GAAP) dropped sharply due to unfavorable currency movements and input cost pressures. This highlighted significant headwinds in profitability and cost management.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.54 | $0.58 | $0.66 | (18.2%) |
| Revenue (GAAP) | $375.1 million | $363.39 million | $375.7 million | (0.2%) |
| Adjusted EBITDA | $45.9 million | $49.9 million | (8.0%) | |
| Adjusted EBITDA Margin | 12.2% | 13.3% | (8.3%) | |
| Net Income | $0.5 million | $18.9 million | (97.5%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Gentherm’s Business and Key Focus Areas
Gentherm specializes in designing and manufacturing advanced thermal management and pneumatic comfort products, primarily for the automotive industry. Its portfolio includes climate control seats, seat heaters, massage solutions, interior components, and a small segment dedicated to patient temperature management products for the medical market.
The company’s business centers on innovation and the development of proprietary products, such as its ClimateSense® and ComfortScale™ platforms. These technology-driven solutions enable car makers to offer improved passenger comfort and energy efficiency—areas increasingly valued in today’s vehicles, particularly with the shift toward electric platforms. Gentherm’s focus areas for growth include accelerating new product development, expanding medical segment offerings, refining its global manufacturing footprint, and cultivating strategic relationships with automotive original equipment manufacturers (OEMs).
Quarter in Review: Financial and Operational Highlights
The quarter’s GAAP revenue outpaced expectations, landing at $375.1 million against a $363.4 million analyst consensus. This represented a 3.2% GAAP revenue beat relative to estimates but a 0.2% decline compared to the prior year. In particular, Automotive Climate and Comfort Solutions generated GAAP revenue of $308.0 million, reflecting a 3.8% year-over-year increase. This category includes climate control seats, lumbar and massage comfort products, interior heating, and electronics. Strong demand for lumbar and massage comfort solutions (+14.5%) and electronics (+42.1%) offset weaker results from legacy product lines like valve systems (down 14.1%) and other automotive products (down 19.1%).
Margins were a key topic for the quarter. Gross margin (GAAP) declined by 180 basis points to 23.9% due to higher input and labor costs, as well as an unfavorable product mix and costs associated with realigning the global manufacturing footprint. Adjusted EBITDA margin dropped to 12.2%, while net income (GAAP) fell to $0.5 million—a sharp decline primarily attributed to net unrealized foreign currency losses of $18.9 million. Management continued to emphasize discipline in operational spending, with selling, general, and administrative expenses up just 4.3% year over year. Research and development investment rose 3.2% year-over-year to $22.6 million, underscoring Gentherm’s commitment to technological innovation.
Gentherm secured $620 million in new automotive business awards, which included a significant contract for Ford’s next-generation F-Series platform and multiple wins for its Puls.A™ massage technology product—a comfort system providing pulsating massage in vehicle seating. Year-to-date, total new business awards eclipsed $1.0 billion.
In the medical segment, Revenue (GAAP) for the medical segment declined 3.8% to $11.238 million, following what had been a stronger first quarter. Despite this, management remains focused on growing the medical business by adapting the company’s core technologies for new healthcare applications—a strategy highlighted with recent proofs-of-concept moving from automotive to medical contexts. The ongoing efforts in this segment are intended to provide diversification beyond the cyclical automotive sector, though the medical business remains a smaller portion of total company revenue for now.
Looking Ahead: Outlook and Investor Considerations
The management team updated its full-year 2025 financial guidance to reflect a slightly narrower view. Product revenue is now expected to fall in the $1.43–$1.5 billion range for full year 2025, with an adjusted EBITDA margin target of 11.7%–12.5% (non-GAAP). Capital expenditures were revised downward, now projected at $55–65 million instead of the previously indicated $70–80 million. Management noted that assumptions for full year 2025 guidance include stable to modestly declining light vehicle production in major markets, and the latest guidance does not factor in potential impacts from new tax reforms, which are still being evaluated.
Looking ahead, investors should watch margin trends and the company’s progress in offsetting cost pressures. Demand for comfort and energy-efficient vehicle features continues to support Gentherm’s core business, particularly as car makers launch new models. However, volatility in currency exchange rates, persistent input cost inflation, and softness in specific automotive markets—especially Asia—will remain key risks. The medical business represents a longer-term avenue for diversification.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
