Gentherm Profits Dip On Canadian Plant Shutdown Costs

NORTHVILLE — Gentherm Inc. (Nasdaq: THRM), the Northville-based thermal management and electronics manufacturer, reported net income of $11.9 million or 33 cents a share in the first quarter, down from $19.8 million or 55 cents a share in the first quarter of 2015.

Revenue rose to $215.7 million from $206.9 million a year earlier.

The company blamed the profit decline on one-time expenses related to the shutdown of a plant in Windsor, Ontario and a recent acquisition. Without those expenses, Gentherm said net income would have been $21.5 million or 59 cents a share.


The company also said that adjusting sales back to an increasingly strong U.S. dollar hurt revenue by $3.7 million.

“Our topline revenue in the first quarter was softer than we planned but all of our core automotive businesses continued to grow and increase market share,” said President and CEO Daniel R. Coker. “It’s important to note that we are in an exciting new phase of our business as we expand into new vertical markets and create new, powerful growth drivers, and revenue streams.”

Among components of revenue, climate controlled seat revenue was $103.9 million, up from $99.9 million a year earlier. Seat heater revenue was $72.3 million, up from $68.3 million. Steering wheel heater revenue was $11.6 million, up from $9.8 million. Automotive cable revenue was $21.8 million, up from $20.1 million. Remote power generation revenue was $5.3 million, down from $7.5 million.

In addition to the 2016 first quarter results, the company also announced that it has acquired a design group with technologies and resources to help existing customers of energy storage systems. The design group, based in California, has expertise and technology for development of electrical systems architectures for electrified vehicles.

The company said this new employee group would open up new markets for the company’s proprietary battery thermal management technology for hybrid and electric vehicles.

The company also announced a $10 million order for unspecified automotive electronics with an unnamed automaker, a new line of business for Gentherm.

At the end of the first quarter, Gentherm announced that, effective April 1, it would acquire Cincinnati Sub-Zero Products, a manufacturer of environmental test chambers for the industrial market and provider of related industrial product testing services, and a manufacturer of patient temperature management systems for the health care industry, opening new markets and new platforms for growth.

Gentherm is also expanding into new business areas such as industrial power generation and furniture, including heated and cooled bedding and office seating products.

“We are very optimistic that these new businesses will gain greater traction in coming quarters and be significant contributors to our revenue and profitability in the near future,” Coker said. “We will always have a strong focus on thermal management for the global automotive market, but we are a multi-faceted technology company that is expanding beyond our traditional core products into new industries with new products and new global markets.”

The year-over-year revenue increase for the quarter included growth in climate control seat shipments, an increase in seat heater sales and continued growth in sales of heated steering wheels. Power generation product revenue for the quarter decreased year over year due to the unfavorable impact of market weakness in the energy markets.

Gentherm continued to increase cash reserves from operations in the quarter. Total cash as of March 31 increased 46 percent to $210.6 million when compared with total cash of $144.5 million as of Dec. 31.

The company said it now expects 2016 revenue will grow 10 to 15 percent from 2015’s $856.4 million.

To listen to a replay of a conference call discussing these results, visit the events page of the investor section of http://www.gentherm.com.

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