What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-23 compared with 2025-07-24 · 129 added, 127 removed, 297 unchanged (46% of the section changed)

33 unchanged sentences

We believe our diversified OEM customer base and geographic revenue base, along with our flexible cost structure, have well positioned us to withstand the impact of industry downturns and benefit from industry upturns in the ordinary course.

However, shifts in the mix of global automotive production to higher cost regions or to vehicles that contain less of our product content and inflationary pressures

could have adverse impacts on our profitability.

In addition, we have been and may in the future be adversely impacted by volatility or weakness in markets for hybrid or electric vehicles specifically.

However, shifts in the mix of global automotive production to higher cost regions or to vehicles that contain less of our product content and inflationary pressures could have adverse impacts on our profitability.

In addition, we have been and may in the future be adversely impacted by volatility or

weakness in markets for hybrid or electric vehicles specifically.

We believe our products offer certain advantages for hybrid and electric vehicles, including improved energy efficiency, and position us well to withstand changes in the volume mix between vehicles driven by internal combustion engines and hybrid and other electric vehicles.

12 unchanged sentences

We are taking and will continue to take additional actions to mitigate any direct and indirect impacts.

For the six months ended June 30, 2025, the additional tariffs did not have a material impact on our results of operations, financial position, and cash flows.

For the nine months ended September 30, 2025, the additional tariffs did not have a material impact on our results of operations, financial position, and cash flows.

However, these matters are changing rapidly and there is significant uncertainty as to how long and to what degree that Gentherm and the automotive industry will be impacted by these additional tariffs, the adverse global trade environment and the resulting economic uncertainty.

See Part II, Item 1A, “Risk Factors” in this Report for additional information.

Global Conditions

12 unchanged sentences

Further, it is reasonably possible that certain political pressures, such as changes to international trade agreements, increases in tariffs, import quotas or other trade restrictions or actions, including export controls and other retaliatory responses to such actions, could continue to affect the operations of our OEM customers, resulting in reduced automotive production in certain regions or shifts in the mix of production to higher cost regions.

See “—Tariffs and Global Trade Environment” above for further information on the impact

of tariffs and the global trade environment in 2025.

See “—Tariffs and Global Trade Environment” above for further information on the impact of tariffs and the global trade environment in 2025.

We, like other manufacturers, have a high proportion of fixed structural costs, and therefore relatively small changes in industry vehicle production can have a substantial effect on our financial results.

1 unchanged sentence

Our sales are driven by the number of vehicles produced by the automotive manufacturers, which is ultimately dependent on consumer demand for automotive vehicles, our content per vehicle, and other factors that may limit or otherwise impact production by us, our supply chain and our customers.

According to the forecasting firm S&P Global Mobility (July 2025 release), global light vehicle production in the three and six months ended June 30, 2025 in the Company’s key markets of North America, Europe, China, Japan and South Korea, as compared to the three and six months ended June 30, 2024, are shown below (in millions of units):

Three Months Ended June 30,

Six Months Ended June 30,

According to the forecasting firm S&P Global Mobility (October 2025 release), global light vehicle production in the three and nine months ended September 30, 2025 in the Company’s key markets of North America, Europe, China, Japan and South Korea, as compared to the three and nine months ended September 30, 2024, are shown below (in millions of units):

Three Months Ended September 30,

Nine Months Ended September 30,

North America

2 unchanged sentences

Total light vehicle production volume in key markets

The S&P Global Mobility (July 2025 release) forecasted light vehicle production volume in the Company’s key markets for full year 2025 to remain consistent at 74.7 million units, in line with full year 2024 light vehicle production volumes.

The S&P Global Mobility (October 2025 release) forecasted light vehicle production volume in the Company’s key markets for full year 2025 to increase to 76.1 million units, a 1.9% increase from full year 2024 light vehicle production volumes.

Forecasted light vehicle production volumes are a component of the data we use in forecasting future business.

3 unchanged sentences

We believe that innovation is an important element to gaining market acceptance of our products and strengthening our market position.

During the second quarter of 2025, we secured automotive new business awards totaling $620 million.

During the third quarter of 2025, we secured automotive new business awards totaling $745 million.

Automotive new business awards represent the aggregate projected lifetime revenue of new awards provided by our customers to Gentherm in the applicable period, with the value based on the price and volume projections received from each customer as of the award date.

Although automotive new business awards are not firm customer orders, we believe that automotive new business awards are an indicator of future revenue.

Automotive new business awards are not projections of revenue or future business as of June 30, 2025, the date of this Report or any other date.

Automotive new business awards are not projections of revenue or future business as of September 30, 2025, the date of this Report or any other date.

Customer projections regularly change over time, and we do not update our calculation of any automotive new business award after the date initially communicated.

Automotive new business awards in the second quarter of 2025 also do not reflect, in particular, the impact of macroeconomic and geopolitical challenges on future business.

Automotive new business awards in the third quarter of 2025 also do not reflect, in particular, the impact of macroeconomic and geopolitical challenges on future business.

Revenues resulting from automotive new business awards also are subject to additional risks and uncertainties that are included in this Report or incorporated by reference in “Forward-Looking Statements” above.

3 unchanged sentences

Repurchases under the 2024 Stock Repurchase Program may be made, from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions, applicable legal requirements, debt covenants and other considerations.

Any such repurchases may be executed using open market purchases, accelerated share repurchase programs, privately

negotiated agreements or other transactions.

Any such repurchases may be executed using open market purchases, accelerated share repurchase programs, privately negotiated agreements or other transactions.

Repurchases may be funded from cash on hand, available borrowings or proceeds from potential debt or other capital markets sources.

During the three and six months ended June 30, 2025, the Company repurchased $10.0 million with an average price paid per share of $26.24.

The 2024 Stock Repurchase Program had $110.1 million of repurchase authorization remaining as of June 30, 2025.

During the nine months ended September 30, 2025, the Company repurchased $10.0 million with an average price paid per share of $26.24.

There were no share repurchases during the three months ended September 30, 2025.

The 2024 Stock Repurchase Program had $110.1 million of repurchase authorization remaining as of September 30, 2025.

Reportable Segments

1 unchanged sentence

Automotive and Medical.

See Note 15, “Segment Reporting,” to the consolidated condensed financial statements included in this Report for a description of our reportable segments as well as their proportional contribution to the Company’s reported product revenues, significant segment expenses, operating income (loss), and depreciation and amortization.

Consolidated Results of Operations

The results of operations for the three and six months ended June 30, 2025 and 2024, in thousands, were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

The results of operations for the three and nine months ended September 30, 2025 and 2024, in thousands, were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

(Unfavorable)

10 unchanged sentences

Interest expense, net

Foreign currency (loss) gain

Other (loss) income

Foreign currency gain (loss)

Other income (loss)

Earnings before income tax

Income tax expense

Product revenues by product category, in thousands, for the three and six months ended June 30, 2025 and 2024, were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Product revenues by product category, in thousands, for the three and nine months ended September 30, 2025 and 2024, were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Climate Control Seats (a)

9 unchanged sentences

(a) Product categories have been modified, and prior-period amounts have been recast to conform with the current period presentation.

Climate Control Seats (CCS) includes CCS Heat (previously Seat Heaters), CCS Vent/CCS Active Cool (previously CCS) and CCS Neck Conditioners (previously included in Other Automotive).

Climate Control Seats (CCS) includes CCS Heat (previously Seat Heaters), CCS Vent/CCS Active Cool (previously CCS) and CCS Neck

Conditioners (previously included in Other Automotive).

Climate Control Interiors (CCI) includes CCI Steering Wheel Heat and CCI Interior Heat (previously included in Other Automotive).

1 unchanged sentence

Product Revenues

Below is a summary of our product revenues, in thousands, for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

Below is a summary of our product revenues, in thousands, for the three months ended September 30, 2025 and 2024:

Three Months Ended September 30,

Variance Due To:

1 unchanged sentence

Product revenues

Product revenues for the three months ended June 30, 2025 decreased 0.2% as compared to the three months ended June 30, 2024.

The decrease in product revenues is due to unfavorable pricing, unfavorable automotive volumes and unfavorable foreign currency impacts primarily attributable to the Chinese Renminbi and Korean Won, partially offset by favorable currency impacts primarily attributable to the Euro.

Below is a summary of our product revenues, in thousands, for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

Product revenues for the three months ended September 30, 2025 increased 4.1% as compared to the three months ended September 30, 2024.

The increase in product revenues is due to favorable automotive volumes and favorable foreign currency impacts primarily attributable to the Euro, partially offset by unfavorable pricing and unfavorable currency impacts primarily attributable to the Chinese Renminbi and Korean Won.

Below is a summary of our product revenues, in thousands, for the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30,

Variance Due To:

1 unchanged sentence

Product revenues

Product revenues for the six months ended June 30, 2025 decreased 0.4% as compared to the six months ended June 30, 2024.

The decrease in product revenues is due to unfavorable pricing and unfavorable foreign currency impacts primarily attributable to the Korean Won and Chinese Renminbi, partially offset by favorable automotive volumes and favorable currency impacts primarily attributable to the Euro.

Product revenues for the nine months ended September 30, 2025 increased 1.1% as compared to the nine months ended September 30, 2024.

Cost of Sales

Below is a summary of our cost of sales and gross margin, in thousands, for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

Below is a summary of our cost of sales and gross margin, in thousands, for the three months ended September 30, 2025 and 2024:

Three Months Ended September 30,

Variance Due To:

3 unchanged sentences

of product revenues

Cost of sales for the three months ended June 30, 2025 increased 2.3% as compared to the three months ended June 30, 2024.

The increase in cost of sales is primarily due to higher labor costs, unfavorable foreign currency impacts primarily attributable to the Euro and higher quality costs, partially offset by lower automotive volumes, material purchasing savings and favorable foreign currency impacts (net of foreign currency hedges) primarily attributable to the Mexican Peso.

Below is a summary of our cost of sales and gross margin, in thousands, for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

Cost of sales for the three months ended September 30, 2025 increased 5.5% as compared to the three months ended September 30, 2024.

Below is a summary of our cost of sales and gross margin, in thousands, for the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30,

Variance Due To:

3 unchanged sentences

of product revenues

Cost of sales for the six months ended June 30, 2025 increased 1.2% as compared to the six months ended June 30, 2024.

The increase in cost of sales is primarily due to higher labor costs, higher automotive volumes, unfavorable foreign currency impacts primarily attributable to the Euro and higher quality costs, partially offset by material purchasing savings and favorable foreign currency impacts (net of foreign currency hedges) primarily attributable to the Mexican Peso.

Cost of sales for the nine months ended September 30, 2025 increased 2.6% as compared to the nine months ended September 30, 2024.

The increase in cost of sales is primarily due to higher automotive volumes, unfavorable foreign currency impacts primarily attributable to the Euro, higher quality costs and higher labor costs, partially offset by material purchasing savings and favorable foreign currency impacts (net of foreign currency hedges) primarily attributable to the Mexican Peso.

Net Research and Development Expenses

Below is a summary of our net research and development expenses, in thousands, for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

Below is a summary of our net research and development expenses, in thousands, for the three months ended September 30, 2025 and 2024:

Three Months Ended September 30,

(Unfavorable)

3 unchanged sentences

Percentage of product revenues

Net research and development expenses for the three months ended June 30, 2025 increased 3.2% as compared to the three months ended June 30, 2024.

The increase in net research and development expenses is primarily related to higher employee compensation expenses.

Below is a summary of our net research and development expenses, in thousands, for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

Net research and development expenses for the three months ended September 30, 2025 increased 6.2% as compared to the three months ended September 30, 2024.

The increase in net research and development expenses is primarily related to lower customer reimbursements in the current year.

Below is a summary of our net research and development expenses, in thousands, for the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30,

(Unfavorable)

3 unchanged sentences

Percentage of product revenues

Net research and development expenses for the six months ended June 30, 2025 increased 4.9% as compared to the six months ended June 30, 2024.

The increase in net research and development expenses is primarily related to higher employee compensation expenses.

Net research and development expenses for the nine months ended September 30, 2025 increased 5.3% as compared to the nine months ended September 30, 2024.

The increase in net research and development expenses is primarily related to higher employee compensation expenses and lower customer reimbursements in the current year.

Selling, General and Administrative Expenses

Below is a summary of our selling, general and administrative expenses, in thousands, for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

Below is a summary of our selling, general and administrative expenses, in thousands, for the three months ended September 30, 2025 and 2024:

Three Months Ended September 30,

(Unfavorable)

1 unchanged sentence

Percentage of product revenues

Selling, general and administrative expenses for the three months ended June 30, 2025 increased 4.3% as compared to the three months ended June 30, 2024.

The increase in selling, general and administrative expenses is primarily related to higher expenses for leadership transition, leases and information technology, partially offset by lower employee compensation expenses.

Below is a summary of our selling, general and administrative expenses, in thousands, for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

Selling, general and administrative expenses for the three months ended September 30, 2025 increased 16.3% as compared to the three months ended September 30, 2024.

The increase in selling, general and administrative expenses is primarily related to higher expenses for leadership transition, leases, information technology and employee compensation and unfavorable foreign currency impacts primarily attributable to the Euro.

Below is a summary of our selling, general and administrative expenses, in thousands, for the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30,

(Unfavorable)

1 unchanged sentence

Percentage of product revenues

Selling, general and administrative expenses for the six months ended June 30, 2025 decreased 0.7% as compared to the six months ended June 30, 2024.

The decrease in selling, general and administrative expenses is primarily related to lower employee compensation expenses and favorable foreign currency impacts, partially offset by higher expenses for leadership transition, leases and information technology.

Selling, general and administrative expenses for the nine months ended September 30, 2025 increased 4.7% as compared to the nine months ended September 30, 2024.

Restructuring Expenses, net

Below is a summary of our restructuring expenses, net, in thousands, for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

Below is a summary of our restructuring expenses, net, in thousands, for the three months ended September 30, 2025 and 2024:

Three Months Ended September 30,

(Unfavorable)

Restructuring expenses, net

During the three months ended June 30, 2025, the Company recognized expenses of $1.5 million for employee separation costs and $0.7 million for other costs.

During the three months ended June 30, 2024, the Company recognized expenses of $2.1 million for employee separation costs and $0.3 million for other costs.

Below is a summary of our restructuring expenses, net, in thousands, for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

During the three months ended September 30, 2025, the Company recognized expenses of $2.7 million for employee separation costs and $1.3 million for other costs.

During the three months ended September 30, 2024, the Company recognized expenses of $1.8 million for employee separation costs and $2.6 million for other costs, partially offset by $1.7 million of gain on sale of our Greenville, South Carolina facility.

Below is a summary of our restructuring expenses, net, in thousands, for the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30,

(Unfavorable)

Restructuring expenses, net

During the six months ended June 30, 2025, the Company recognized expenses of $5.7 million for employee separation costs and $1.0 million for other costs.

During the six months ended June 30, 2024, the Company recognized expenses of $8.9 million for employee separation costs and $0.8 million for other costs.

During the nine months ended September 30, 2025, the Company recognized expenses of $8.4 million for employee separation costs and $2.2 million for other costs.

During the nine months ended September 30, 2024, the Company recognized expenses of $10.7 million for employee separation costs and $3.4 million for other costs, partially offset by $1.7 million of gain on sale of our Greenville, South Carolina facility.

See Note 3, “Restructuring,” to the consolidated condensed financial statements included in this Report for additional information.

Loss on Sale of Land and Building, net

Below is a summary of our loss on sale of land and building, net, in thousands, for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

Below is a summary of our loss on sale of land and building, net, in thousands, for the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30,

(Unfavorable)

Loss on sale of land and building, net

Loss on sale of land and building, net for the six months ended June 30, 2025 is primarily related to the sale of our former headquarters building in Northville, Michigan in January 2025.

Loss on sale of land and building, net for the nine months ended September 30, 2025 is primarily related to the sale of our former headquarters building in Northville, Michigan in January 2025.

Interest Expense, net

Below is a summary of our interest expense, net, in thousands, for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

Below is a summary of our interest expense, net, in thousands, for the three months ended September 30, 2025 and 2024:

Three Months Ended September 30,

(Unfavorable)

Interest expense, net

Interest expense, net for the three months ended June 30, 2025 remained relatively flat as compared to the three months ended June 30, 2024.

Below is a summary of our interest expense, net, in thousands, for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

Interest expense, net for the three months ended September 30, 2025 decreased 29.7% as compared to the three months ended September 30, 2024.

The decrease in interest expense, net is primarily related to the change in fair value of an interest rate swap derivative in the prior year period.

Below is a summary of our interest expense, net, in thousands, for the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30,

(Unfavorable)

Interest expense, net

Interest expense, net for the six months ended June 30, 2025 increased 4.9% as compared to the six months ended June 30, 2024.

The increase in interest expense, net is primarily related to the change in fair value of an interest rate swap derivative.

Foreign Currency (Loss) Gain

Below is a summary of our foreign currency loss, in thousands, for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

Interest expense, net for the nine months ended September 30, 2025 decreased 8.7% as compared to the nine months ended September 30, 2024.

The decrease in interest expense, net is primarily related to the change in fair value of an interest rate swap derivative in the prior year period.

Foreign Currency Gain (Loss)

Below is a summary of our foreign currency gain (loss), in thousands, for the three months ended September 30, 2025 and 2024:

Three Months Ended September 30,

(Unfavorable)

Foreign currency loss

Foreign currency loss for the three months ended June 30, 2025 included net realized foreign currency gain of $1.4 million and net unrealized foreign currency loss of $18.9 million.

The unrealized foreign currency loss is primarily related to a non-current intercompany U.S.

dollar receivable at one of our foreign subsidiaries.

Foreign currency loss for the three months ended June 30, 2024 included net realized foreign currency loss of $0.8 million and net unrealized foreign currency gain of $0.5 million.

Below is a summary of our foreign currency (loss) gain, in thousands, for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

Foreign currency gain (loss)

Foreign currency gain for the three months ended September 30, 2025 included net realized foreign currency gain of $2.2 million and net unrealized foreign currency loss of $1.9 million.

Foreign currency loss for the three months ended September 30, 2024 included net realized foreign currency loss of $0.1 million and net unrealized foreign currency gain of $8.6 million.

Below is a summary of our foreign currency loss, in thousands, for the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30,

(Unfavorable)

Foreign currency (loss) gain

Foreign currency loss for the six months ended June 30, 2025 included net realized foreign currency gain of $0.7 million and net unrealized foreign currency loss of $28.5 million.

Foreign currency loss

Foreign currency loss for the nine months ended September 30, 2025 included net realized foreign currency gain of $3.0 million and net unrealized foreign currency loss of $30.4 million.

The unrealized foreign currency loss is primarily related to a non-current intercompany U.S.

Dollar receivable at one of our foreign subsidiaries.

Foreign currency gain for the six months ended June 30, 2024 included net realized foreign currency loss of $0.1 million and net unrealized foreign currency gain of $2.4 million.

Other (Loss) Income

Below is a summary of our other loss, in thousands, for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

Foreign currency loss for the nine months ended September 30, 2024 included net unrealized foreign currency loss of $6.2 million.

Other Income (Loss)

Below is a summary of our other income, in thousands, for the three months ended September 30, 2025 and 2024:

Three Months Ended September 30,

(Unfavorable)

Other loss for the three months ended June 30, 2025 decreased as compared to other loss for the three months ended June 30, 2024, primarily due to a decrease in miscellaneous expenses.

Below is a summary of our other (loss) income, in thousands, for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

Other income for the three months ended September 30, 2025 decreased as compared to other income for the three months ended September 30, 2024, primarily due to a decrease in miscellaneous income.

Below is a summary of our other (loss) income, in thousands, for the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30,

(Unfavorable)

Other (loss) income

Other (loss) income for the six months ended June 30, 2025 was unfavorable as compared to the six months ended June 30, 2024.

Other (loss) income for the nine months ended September 30, 2025 was unfavorable as compared to the nine months ended September 30, 2024.

The change in other (loss) income is primarily due to a $1.3 million decrease in the fair value of an equity investment in the current year period and a $1.1 million increase in the fair value of an equity investment in the prior year period.

Income Tax Expense

Below is a summary of our income tax expense, in thousands, for the three months ended June 30, 2025 and 2024:

Three Months Ended June 30,

Below is a summary of our income tax expense, in thousands, for the three months ended September 30, 2025 and 2024:

Three Months Ended September 30,

(Unfavorable)

Income tax expense

Income tax expense was $2.1 million for the three months ended June 30, 2025 on earnings before income tax of $2.5 million, representing an effective tax rate of 81.2%.

Income tax expense was $5.9 million for the three months ended September 30, 2025 on earnings before income tax of $20.9 million, representing an effective tax rate of 28.4%.

The effective tax rate differed from the U.S.

Federal statutory rate of 21.0% primarily due to the impact of income taxes on foreign earnings taxed at rates varying from the U.S.

Federal statutory rate and the unfavorable impact of GILTI.

Income tax expense was $9.5 million for the three months ended June 30, 2024 on earnings before income tax of $28.4 million, representing an effective tax rate of 33.6%.

Federal statutory rate and the unfavorable impact of global intangible low-tax income (“GILTI”) and Subpart F income.

Income tax expense was $3.4 million for the three months ended September 30, 2024 on earnings before income tax of $19.4 million, representing an effective tax rate of 17.7%.

The effective tax rate differed from the U.S.

Federal statutory rate of 21.0% primarily due to the impact of income taxes on foreign earnings taxed at rates varying from the U.S.

Federal statutory rate, the quarterly accrual for uncertain tax positions and the unfavorable impact of the GILTI, partially offset by certain favorable tax effects of equity vesting.

Below is a summary of our income tax expense, in thousands, for the six months ended June 30, 2025 and 2024:

Six Months Ended June 30,

Federal statutory rate, the release of the uncertain tax position reserve accrual due to tax audit settlement, a partial valuation allowance release in the U.S.

related to its capital loss carryforward, and favorable tax effects of equity vesting, partially offset by the unfavorable impact of the GILTI.

Below is a summary of our income tax expense, in thousands, for the nine months ended September 30, 2025 and 2024:

Nine Months Ended September 30,

(Unfavorable)

Income tax expense

Income tax expense was $4.3 million for the six months ended June 30, 2025 on earnings before income tax of $4.6 million, representing an effective tax rate of 92.4%.

Income tax expense was $10.2 million for the nine months ended September 30, 2025 on earnings before income tax of $25.5 million, representing an effective tax rate of 40.0%.

The effective tax rate differed from the U.S.

Federal statutory rate of 21.0% primarily due to the unfavorable impact of GILTI, unfavorable tax effects of equity vesting and a valuation allowance established in the U.S.

Federal statutory rate of 21.0% primarily due to the unfavorable impact of GILTI and Subpart F income, unfavorable tax effects of equity vesting and a valuation allowance established in the U.S.

related to a capital loss carryforward.

Income tax expense was $13.1 million for the six months ended June 30, 2024 on earnings before income tax of $46.7 million, representing an effective tax rate of 28.0%.

Income tax expense was $16.5 million for the nine months ended September 30, 2024 on earnings before income tax of $66.2 million, representing an effective tax rate of 25.0%.

The effective tax rate differed from the U.S.

Federal statutory rate of 21.0% primarily due to the impact of income taxes on foreign earnings taxed at rates varying from the U.S.

Federal statutory rate, the quarterly accrual for uncertain tax positions and the unfavorable impact of the GILTI, partially offset by a one-time benefit related to the Alfmeier acquisition.

Federal statutory rate and the unfavorable impact of the GILTI, partially offset by favorable tax effects of equity vesting, a partial valuation allowance release in the U.S.

related to its capital loss carryforward and a one-time benefit related to the Alfmeier acquisition.

Liquidity and Capital Resources

3 unchanged sentences

Further, we continuously evaluate acquisition and investment opportunities that will enhance our business strategies.

As of June 30, 2025, the Company had $128.3 million of cash and cash equivalents and $288.0 million of availability under our Second Amended and Restated Credit Agreement.

As of September 30, 2025, the Company had $154.3 million of cash and cash equivalents and $307.9 million of availability under our Second Amended and Restated Credit Agreement.

We may issue debt or equity securities, which may provide an additional source of liquidity.

3 unchanged sentences

There are no significant restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Gentherm Incorporated.

As of June 30, 2025, the Company’s cash and cash equivalents held by our non-U.S.

As of September 30, 2025, the Company’s cash and cash equivalents held by our non-U.S.

subsidiaries totaled $98.0 million.

7 unchanged sentences

The following table represents our cash and cash equivalents, in thousands:

Six Months Ended June 30,

Nine Months Ended September 30,

Cash and cash equivalents at beginning of period

5 unchanged sentences

Cash Flows From Operating Activities

Net cash provided by operating activities totaled $31.7 million during the six months ended June 30, 2025 primarily reflecting net income of $0.3 million, $69.7 million for non-cash charges for depreciation, amortization, stock based compensation, loss on disposition of property, provisions for inventory and other, including unrealized foreign currency loss, and $20.5 million related to changes in accounts payable, partially offset by $23.7 million related to changes in accounts receivable, net, $13.4 million related to changes in inventory, $12.2 million for non-cash deferred income taxes and $9.5 million related to changes in net other assets and liabilities.

Net cash provided by operating activities totaled $87.8 million during the nine months ended September 30, 2025 primarily reflecting net income of $15.3 million, $88.9 million for non-cash charges for depreciation, amortization, stock based compensation, loss on disposition of property, provisions for inventory and other, including unrealized foreign currency loss, $33.5 million related to changes in accounts payable and $3.5 million related to changes in net other assets and liabilities, partially offset by $20.5 million related to changes in accounts receivable, net, $20.1 million related to changes in inventory and $12.8 million for non-cash deferred income taxes.

Cash Flows From Investing Activities

Net cash used in investing activities was $19.8 million during the six months ended June 30, 2025, reflecting purchases of property and equipment of $23.7 million and investments in technology companies of $0.6 million, partially offset by proceeds from the sale of property and equipment of $3.7 million and proceeds from deferred purchase price of factored receivables of $0.8 million.

Net cash used in investing activities was $29.8 million during the nine months ended September 30, 2025, reflecting purchases of property and equipment of $33.4 million and investments in technology companies of $0.9 million, partially offset by proceeds from the sale of property and equipment of $3.8 million and proceeds from deferred purchase price of factored receivables of $0.7 million.

Cash Flows From Financing Activities

Net cash used in financing activities was $22.3 million during the six months ended June 30, 2025, reflecting $63.1 million of debt repayments, $10.0 million paid to repurchase Common Stock and $1.2 million paid for employee taxes related to the net settlement of restricted stock units that vested during the year, partially offset by the borrowing of debt of $52.0 million.

The following table summarizes the Company’s debt, in thousands, as of June 30, 2025 and December 31, 2024:

June 30, 2025

Net cash used in financing activities was $42.4 million during the nine months ended September 30, 2025, reflecting $103.1 million of debt repayments, $10.0 million paid to repurchase Common Stock and $1.3 million paid for employee taxes related to the net settlement of restricted stock units that vested during the year, partially offset by the borrowing of debt of $72.0 million.

The following table summarizes the Company’s debt, in thousands, as of September 30, 2025 and December 31, 2024:

September 30, 2025

December 31, 2024

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The Second Amended and Restated Credit Agreement contains covenants, that, among other things, (i) prohibit or limit the ability of the borrowers and any material subsidiary to incur additional indebtedness, create liens, pay dividends, make certain types of investments (including acquisitions), enter into certain types of transactions with affiliates, prepay other indebtedness, sell assets or enter into certain other transactions outside the ordinary course of business, and (ii) require that Gentherm maintain a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Net Leverage Ratio (based on consolidated EBITDA for the applicable trailing four fiscal quarters) as of the end of any fiscal quarter.

As of June 30, 2025, the Company was in compliance, in all material respects, with the terms of the Second Amended and Restated Credit Agreement.

As of September 30, 2025, the Company was in compliance, in all material respects, with the terms of the Second Amended and Restated Credit Agreement.

Finance Leases

As of June 30, 2025 and December 31, 2024, there was $0.1 million and $0.2 million, respectively, of outstanding finance leases.

As of September 30, 2025 and December 31, 2024, there was $0.1 million and $0.2 million, respectively, of outstanding finance leases.

Material Cash Requirements

In July 2025, we committed to a restructuring plan to further optimize our manufacturing footprint by realigning our global manufacturing capacity.

We expect to incur cash restructuring costs of between $3 million and $4 million for employee severance and retention costs and $1 million of other transition costs primarily for machinery and equipment move and set up costs.

Additionally, we expect to incur capital expenditures of between $1 million and $2 million.

In February 2025, we committed to a restructuring plan to further optimize our manufacturing footprint by realigning our manufacturing capacity in Europe.

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In February 2025, we committed to an additional restructuring plan to further optimize our manufacturing footprint by realigning our manufacturing capacity in Asia.

We expect to incur cash restructuring costs of between $2 million and $3 million for

employee severance and retention costs and $1 million of other transition costs primarily for machinery and equipment move and set up costs.

We expect to incur cash restructuring costs of between $2 million and $3 million for employee severance and retention costs and $1 million of other transition costs primarily for machinery and equipment move and set up costs.

Additionally, we expect to incur capital expenditures of between $2 million and $3 million.

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For discussion of our significant accounting policies, see Note 2, “Summary of Significant Accounting Policies,” to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

There have been no significant changes in our critical accounting policies or critical accounting estimates during the three months ended June 30, 2025.

There have been no significant changes in our critical accounting policies or critical accounting estimates during the three months ended September 30, 2025.

We are not presently aware of any events or circumstances that would require us to update our estimates, assumptions or revise the carrying value of our assets or liabilities.

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Cash flows associated with derivatives are reported in net cash from operating activities in the consolidated condensed statements of cash flows.

Information related to the fair values of all derivative instruments in the consolidated condensed balance sheet as of June 30, 2025 is set forth in Note 10, “Financial Instruments” in the consolidated condensed financial statements included in this Report.

Information related to the fair values of all derivative instruments in the consolidated condensed balance sheet as of September 30, 2025 is set forth in Note 10, “Financial Instruments” in the consolidated condensed financial statements included in this Report.

Interest Rate Sensitivity

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Variable rate

Variable interest rate as of June 30, 2025

Based on the amounts outstanding as of June 30, 2025, a hypothetical 100 basis point change (increase or decrease) in interest rates would impact annual interest expense by $2.1 million.

Variable interest rate as of September 30, 2025

Based on the amounts outstanding as of September 30, 2025, a hypothetical 100 basis point change (increase or decrease) in interest rates would impact annual interest expense by $1.9 million.

To hedge the Company's exposure to interest payment fluctuations on a portion of these borrowings, we entered into floating-to-fixed interest rate swap agreements with notional amounts totaling $100.0 million.

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The table below presents the potential gain and loss in fair value for the foreign currency derivative contracts from a hypothetical 10% change in quoted currency exchange rates.

June 30, 2025

September 30, 2025

December 31, 2024

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis