What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-10-22 compared with 2026-07-23 · 166 added, 169 removed, 273 unchanged (55% of the section changed)

4 unchanged sentences

the expected light vehicle production in the Company’s key markets;

the impact of macroeconomic and geopolitical conditions, the components of and our execution of our strategic plan, product and technology development and manufacturing footprint optimization restructuring plans;

the impact of macroeconomic and geopolitical conditions, the components of and our execution of our strategic plan, product and technology development and various restructuring plans;

our operating performance;

5 unchanged sentences

our ability to finance sufficient working capital;

and significant matters related to the Modine Transaction, including the expected closing timing and structure thereof, the ability of the parties to complete such transaction and planned actions to satisfy the closing conditions, the expected benefits thereof, the tax consequences thereof and the combined company’s plans, objectives, expectations and intentions, including integration activities.

and significant matters related to the recently closed Modine Transaction, including the expected benefits thereof, the tax consequences thereof and the combined company’s plans, objectives, expectations and intentions, including integration activities.

Reference is made in particular to forward-looking statements included in this “Item 2.

1 unchanged sentence

Such statements may be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “believe”, “estimate”, “anticipate”, “intend”, “continue”, or similar terms, variations of such terms or the negative of such terms.

The forward-looking statements included in this Report are made as of the date hereof or as of the date specified herein and are based on management’s reasonable expectations and beliefs.

The forward-looking statements included in this Quarterly Report on Form 10-Q (the “Report”) are made as of the date hereof or as of the date specified herein and are based on management’s reasonable expectations and beliefs.

In making these statements we rely on assumptions and analyses based on our experience and perception of historical trends, current conditions and expected future developments, third-party information and projections from sources that management believes to be reputable, as well as other factors we consider appropriate under the circumstances.

2 unchanged sentences

In addition, with reasonable frequency, we have entered into business combinations, acquisitions, divestitures, strategic investments and other significant transactions.

Except as specifically noted for the Modine Transaction, such forward-looking statements do not include the potential impact of any such transactions that may be completed after the date hereof, each of which may present material risks to the Company’s future business and financial results.

Such forward-looking statements do not include the potential impact of any such transactions that may be completed after the date hereof, each of which may present material risks to the Company’s future business and financial results.

Except as required by law, we expressly disclaim any obligation or undertaking to update any forward-looking statements to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by, the consolidated condensed financial statements and related notes thereto included elsewhere in this Report and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Gentherm Incorporated is a global market leader of innovative thermal management and pneumatic comfort technologies.

Gentherm Incorporated is a global leader of innovative thermal and precision flow management technologies.

Our automotive products include Climate Control Seats (CCS ® ), Climate Control Interiors (CCI), Lumbar and Massage Comfort Solutions, Valve Systems, and Climate and Comfort Electronics.

6 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.

Our industry is increasingly

progressing towards a focus on human comfort, health and wellness, which is evidenced by increasing adoption rates for comfort products.

Gentherm is an independent partner that can cooperate with any combination of the vehicle OEMs and seat manufacturers globally, to create innovative and unique configurations that adapt to industry trends.

IME Acquisition

On July 1, 2026, the Company completed its acquisition of Innovative Medical Equipment, LLC (“IME”).

IME, headquartered in Beachwood, Ohio, is a provider of the ThermaZone ® thermal therapy device.

ThermaZone is a non-opioid thermal therapy solution designed to support pain management and recovery through controlled hot-and-cold therapy.

The Company acquired all of the membership interests in IME for $34.0 million, net of cash and debt, and subject to customary adjustments related to IME’s net working capital as of the closing date.

The purchase price may be increased after closing by up to $1.0 million upon the achievement of a specified performance milestone.

The transaction was funded through a combination of the Company’s existing cash balances and borrowings under the Revolving Credit Facility, as defined below.

Our industry is increasingly progressing towards a focus on human comfort, health and wellness, which is evidenced by increasing adoption rates for comfort products.

Gentherm is an independent partner that can cooperate with any combination of the vehicle OEMs and seat manufacturers

globally, to create innovative and unique configurations that adapt to industry trends.

Modine Transaction

On January 29, 2026, the Company, entered into definitive agreements to combine the Performance Technologies business (“Performance Technologies”) of Modine Manufacturing Company, a Wisconsin corporation (“Modine”), with Gentherm (the “Modine Transaction”).

The Modine Transaction is structured as a Reverse Morris Trust transaction, where a wholly owned subsidiary of Modine (“SpinCo”), owning Performance Technologies, will be spun off to Modine shareholders (the “Distribution”) and simultaneously merged with a wholly owned subsidiary of the Company (the “Merger”).

The transaction was valued at approximately $1,000.0 million as of the date of signing, based on specified assumptions.

Shareholders of the Company immediately prior to the Merger are expected to own approximately 60.0% of the combined company and Modine shareholders are expected to own approximately 40.0% of the combined company, on a fully diluted basis, without taking into account any overlapping shareholder ownership and subject to adjustment.

Prior to and as a condition of, the Distribution, Modine will receive a cash distribution from SpinCo of $210.0 million subject to adjustment for cash, working capital and indebtedness of SpinCo, and subject to decrease if additional shares of Common Stock will be issued to Modine shareholders to support the intended tax-free treatment of the Distribution to Modine shareholders for U.S.

federal income tax purposes (the “SpinCo Cash Distribution”).

The transaction is expected to close by early fourth quarter of 2026, subject to various closing conditions, including specified approvals by the Company’s shareholders, a customary IRS tax ruling and the satisfaction of other customary closing conditions.

The Merger Agreement contains specified termination rights for the Company and Modine, including a right allowing the Company or Modine to terminate the Merger Agreement if the Merger has not been consummated on or prior to March 31, 2027 (which date may be extended to June 30, 2027 in the event that required regulatory approvals have not been received).

Additionally, the Merger Agreement requires the Company to pay Modine a termination fee of $45.0 million if the Merger Agreement is terminated under certain circumstances.

In connection with the Merger Agreement, the Company, SpinCo and a financial institution executed a 364-day bridge loan facility commitment letter, pursuant to which such financial institution committed (i) to provide bridge financing of $290.0 million to fund dividends, fees and expenses related to the transactions contemplated by the Merger Agreement (“Bridge Facility”) and (ii) to the Company a backstop of the Company’s credit agreement (“Backstop Commitment”).

On February 24, 2026, the Company amended its credit agreement to permit the Modine Transaction, which terminated the Backstop Commitment.

On June 29, 2026, SpinCo replaced the Bridge Facility with permanent financing by entering into a credit agreement, providing for a delayed-draw term loan facility with aggregate commitments of up to $250.0 million (the "Senior Credit Facility").

Borrowings under the Senior Credit Facility are expected to be funded on the closing date of the Modine Transaction and used to fund the SpinCo Cash Distribution and to pay certain other amounts required under the Merger Agreement.

During the three and six months ended June 30, 2026, the Company incurred $2.1 million and $5.1 million, respectively, of fees associated with the Bridge Facility, Backstop Commitment and Senior Credit Facility.

On October 1, 2026 (the “Closing Date”), the Company completed its previously announced combination of the Performance Technologies business (“Performance Technologies”) of Modine Manufacturing Co., a Wisconsin corporation (“Modine”), with the Company (the “Modine Transaction”).

The Modine Transaction was structured as a Reverse Morris Trust transaction, where a wholly owned subsidiary of Modine (“SpinCo”), owning Performance Technologies, was spun off to Modine shareholders (the “Distribution”) and immediately thereafter merged with a wholly owned subsidiary of the Company, with SpinCo as the surviving entity becoming a wholly owned subsidiary of the Company (the “Merger”).

The Company issued 23,735,961 shares of the Company’s common stock, no par value (“Common Stock” or “Gentherm Common Stock”) to the Modine shareholders of record as of close of business on September 28, 2026 (the “Record Date”, and such holders of Modine common stock as of the Record Date, the “Record Date Modine Shareholders”).

Upon completion of the Modine Transaction, the Record Date Modine Shareholders owned approximately 43.62% of the outstanding shares of Gentherm Common Stock (without taking into account any overlapping shareholder ownership), and continuing Gentherm shareholders owned approximately 56.38% of the outstanding shares of Gentherm Common Stock (without taking into account any overlapping shareholder ownership).

The preliminary estimate of purchase consideration is approximately $800.0 million, subject to customary closing adjustments.

Prior to the Distribution and the Merger, SpinCo made a cash distribution to Modine of $156.0 million (the “SpinCo Cash Distribution”).

In connection with the Modine Transaction, the Company also declared a special cash dividend (the “Cash Dividend”) in an aggregate amount equal to $63.5 million, or $2.07 per share of Gentherm Common Stock.

The Cash Dividend was paid in cash on October 7, 2026, to Gentherm shareholders of record as of the close of business on September 28, 2026.

On June 29, 2026, SpinCo entered into a credit agreement, providing for a senior secured delayed-draw term loan facility with aggregate commitments of up to $250.0 million (the "DDTL Facility").

On the Closing Date, SpinCo borrowed $250.0 million of term loans under the DDTL Facility (the “Term Loans”), the proceeds of which were used by SpinCo on the Closing Date to pay the SpinCo Cash Distribution and other amounts required at closing, such as the estimated net working capital adjustment.

Remaining proceeds will be used for general corporate purposes.

Upon completion of the Modine Transaction, this represents indebtedness of a wholly owned subsidiary of the Company.

The Term Loans amortize in equal quarterly installments of 0.625% for the first eight quarters and 1.250% for each quarter thereafter until maturity.

The remaining balance becomes due on June 29, 2031.

During the three and nine months ended September 30, 2026, the Company incurred $6.3 million and $33.4 million, respectively, of costs related to the Modine Transaction.

Such fees are recorded in Selling, general and administrative expenses.

Innovative Medical Equipment, LLC

On July 1, 2026, the Company acquired all of the membership interests in Innovative Medical Equipment, LLC (“IME”), a provider of the ThermaZone® thermal therapy device.

ThermaZone is a non-opioid thermal therapy solution designed to support pain management and recovery through controlled hot-and-cold therapy.

The total consideration was $34.7 million, which is comprised of cash payments, net of cash acquired, and contingent consideration with a fair value of $0.5 million.

The acquisition was accounted for as a business combination within our Medical segment.

Recent Trends

6 unchanged sentences

issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”).

During the second quarter of 2026, we submitted claims for refunds of IEEPA tariffs previously paid.

Refunds received through June 30, 2026 were not material.

During the nine months ended September 30, 2026, we submitted claims for refunds of IEEPA tariffs previously paid.

Refunds received through September 30, 2026 were not material.

presidential administration subsequently invoked additional tariffs under other laws resulting in a rapidly changing tariff environment.

At this time we cannot reasonably estimate the total financial impact of this ruling.

Further, it is reasonably possible that new or additional tariffs will be periodically announced in the future given the current global trade environment.

Further, it is reasonably possible that new or additional tariffs will be periodically announced in the future given the current global trade

We continue to monitor and evaluate the direct and indirect impacts of these tariffs and heightened global trade disputes.

Our business model of manufacturing by regions for the regions limit the global impact of certain trade restrictions and tariffs.

Our business model of manufacturing by regions for the regions limits the global impact of certain trade restrictions and tariffs.

Further, the majority of our supply components are not currently subject to the additional tariffs or are compliant with exceptions, and we believe that we can generally mitigate the direct impact of any such tariffs currently in effect by directly or indirectly passing the additional costs through to customers.

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

For the six months ended June 30, 2026, 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, 2026, the additional tariffs did not have a material impact on our results of operations, financial position, and cash flows.

Global Conditions

10 unchanged sentences

There have been various ongoing geopolitical conflicts, such as the current conflicts between Russia and Ukraine and in the Middle East and heightened tensions in the Red Sea and in the South China Sea.

These conflicts have interrupted ocean freight shipping and if prolonged or intensified, could have a substantial adverse effect on our financial results.

These conflicts have interrupted ocean freight shipping and could have a substantial adverse effect on our financial results.

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 suppliers and 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.

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

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.

Light Vehicle Production Volumes

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 2026 release), global light

vehicle production in the three and six months ended June 30, 2026, 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, 2025, are shown below (in millions of units):

Three Months Ended June 30,

Six Months Ended June 30,

Our Automotive segment sales are driven by the number of light vehicles produced by the automotive manufacturers, which is ultimately dependent on consumer demand for automotive light 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 (October 2026 release), global light vehicle production in the three and nine months ended September 30, 2026, 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, 2025, 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 2026 release) forecasted light vehicle production volume in the Company’s key markets for full year 2026 to decrease to 75.5 million units, a 2.6% decrease from full year 2025 light vehicle production volumes.

The S&P Global Mobility (October 2026 release) forecasted light vehicle production volume in the Company’s key markets for full year 2026 to decrease to 75.4 million units, a 2.7% decrease from full year 2025 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 2026, we secured automotive new business awards totaling $690 million.

During the third quarter of 2026, we secured automotive new business awards totaling $555 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, 2026, 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, 2026, 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 2026 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.

Automotive new business awards in the third quarter of 2026 also do not reflect, in particular, the impact of macroeconomic and geopolitical challenges on future business.

Stock Repurchase Program

3 unchanged sentences

At the time of termination, the 2024 Stock Repurchase Program had $110.1 million of share repurchase authorization remaining.

During the three and six months ended June 30, 2026, the Company did not repurchase any shares.

During the three and six months ended June 30, 2025, the Company repurchased $10.0 million under the 2024 Stock Repurchase Program with an average price paid per share of $26.24.

Repurchases 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 contractual restrictions and other considerations, including certain conditions intended to preserve the intended tax treatment of the Modine Transaction.

During the three and nine months ended September 30, 2026, the Company did not repurchase any shares.

Subsequent to September 30, 2026, the Company repurchased $60.0 million under the 2026 Stock Repurchase Program with an average price paid per share of $30.82.

The 2026 Stock Repurchase Program has $340.0 million of repurchase authorization remaining as of the date of this report.

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, and depreciation and amortization.

Consolidated Results of Operations

The results of operations for the three and six months ended June 30, 2026 and 2025, 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, 2026 and 2025, 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

Foreign currency gain (loss)

Other income (loss)

1 unchanged sentence

Income tax expense

Product revenues by product category, in thousands, for the three and six months ended June 30, 2026 and 2025, were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Net (loss) income

Product revenues by product category, in thousands, for the three and nine months ended September 30, 2026 and 2025, were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Climate Control Seats

9 unchanged sentences

Product Revenues

Below is a summary of our product revenues, in thousands, for the three months ended June 30, 2026 and 2025:

Three Months Ended June 30,

Below is a summary of our product revenues, in thousands, for the three months ended September 30, 2026 and 2025:

Three Months Ended September 30,

Variance Due To:

1 unchanged sentence

Product revenues

Product revenues for the three months ended June 30, 2026 increased 11.0% as compared to the three months ended June 30, 2025.

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

Below is a summary of our product revenues, in thousands, for the six months ended June 30, 2026 and 2025:

Six Months Ended June 30,

Product revenues for the three months ended September 30, 2026 increased 4.7% as compared to the three months ended September 30, 2025.

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

Below is a summary of our product revenues, in thousands, for the nine months ended September 30, 2026 and 2025:

Nine Months Ended September 30,

Variance Due To:

1 unchanged sentence

Product revenues

Product revenues for the six months ended June 30, 2026 increased 11.1% as compared to the six months ended June 30, 2025.

Product revenues for the nine months ended September 30, 2026 increased 8.9% as compared to the nine months ended September 30, 2025.

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

Cost of Sales

Below is a summary of our cost of sales and gross margin, in thousands, for the three months ended June 30, 2026 and 2025:

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, 2026 and 2025:

Three Months Ended September 30,

Variance Due To:

3 unchanged sentences

of product revenues

Cost of sales for the three months ended June 30, 2026 increased 12.1% as compared to the three months ended June 30, 2025.

The increase in cost of sales is primarily due to higher automotive volumes, unfavorable foreign currency impacts primarily attributable to the Chinese Renminbi, Mexican Peso, Czech Koruna and the Euro, specific-cause warranty provisions related to products shipped in prior periods and higher labor costs, partially offset by material purchasing savings.

Below is a summary of our cost of sales and gross margin, in thousands, for the six months ended June 30, 2026 and 2025:

Six Months Ended June 30,

Cost of sales for the three months ended September 30, 2026 increased 6.5% as compared to the three months ended September 30, 2025.

The increase in cost of sales is primarily due to higher automotive volumes, unfavorable foreign currency impacts primarily attributable to the Chinese Renminbi and the Mexican Peso and higher freight and labor costs, partially offset by net material purchasing savings.

Below is a summary of our cost of sales and gross margin, in thousands, for the nine months ended September 30, 2026 and 2025:

Nine Months Ended September 30,

Variance Due To:

3 unchanged sentences

of product revenues

Cost of sales for the six months ended June 30, 2026 increased 11.5% as compared to the six months ended June 30, 2025.

The increase in cost of sales is primarily due to higher automotive volumes, unfavorable foreign currency impacts primarily attributable to the Mexican Peso, Euro, Chinese Renminbi and the Czech Koruna, specific-cause warranty provisions related to products shipped in prior periods and higher labor costs, partially offset by material purchasing savings.

Cost of sales for the nine months ended September 30, 2026 increased 9.8% as compared to the nine months ended September 30, 2025.

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, 2026 and 2025:

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, 2026 and 2025:

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, 2026 increased 6.7% as compared to the three months ended June 30, 2025.

The increase in net research and development expenses is primarily related to unfavorable foreign currency impacts primarily attributable to the Chinese Renminbi and the Euro and lower customer reimbursements.

Below is a summary of our net research and development expenses, in thousands, for the six months ended June 30, 2026 and 2025:

Six Months Ended June 30,

Net research and development expenses for the three months ended September 30, 2026 decreased 3.9% as compared to the three months ended September 30, 2025.

The decrease in net research and development expenses is primarily related to higher customer reimbursements.

Below is a summary of our net research and development expenses, in thousands, for the nine months ended September 30, 2026 and 2025:

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, 2026 increased 2.7% as compared to the six months ended June 30, 2025.

The increase in net research and development expenses is primarily related to unfavorable foreign currency impacts primarily attributable to the Euro and the Chinese Renminbi.

Net research and development expenses for the nine months ended September 30, 2026 increased 0.4% as compared to the nine months ended September 30, 2025.

The increase in net research and development expenses is primarily related to unfavorable foreign currency impacts primarily attributable to the Euro, Chinese Renminbi and the Mexican Peso.

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, 2026 and 2025:

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, 2026 and 2025:

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, 2026 increased 35.6% as compared to the three months ended June 30, 2025.

Merger and acquisition expenses, primarily related to the Modine Transaction, were $12.9 million for the three months ended June 30, 2026.

The remaining increase in selling, general and administrative expenses is primarily related to higher expenses for information technology and unfavorable foreign currency impacts primarily attributable to the Mexican Peso, Euro and the Chinese Renminbi.

Below is a summary of our selling, general and administrative expenses, in thousands, for the six months ended June 30, 2026 and 2025:

Six Months Ended June 30,

Selling, general and administrative expenses for the three months ended September 30, 2026 increased 20.4% as compared to the three months ended September 30, 2025.

Merger and acquisition expenses, primarily related to the Modine Transaction, were $6.5 million for the three months ended September 30, 2026.

The remaining increase in Selling, general and administrative expenses is primarily related to higher expenses for rent and information technology and unfavorable foreign currency impacts primarily attributable to the Mexican Peso and the Chinese Renminbi.

Below is a summary of our selling, general and administrative expenses, in thousands, for the nine months ended September 30, 2026 and 2025:

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, 2026 increased 39.5% as compared to the six months ended June 30, 2025.

Merger and acquisition expenses, primarily related to the Modine Transaction, were $27.7 million for the six months ended June 30, 2026.

The remaining increase in selling, general and administrative expenses is primarily related to higher expenses for information technology and utilities and unfavorable foreign currency impacts primarily attributable to the Mexican Peso, Euro and the Chinese Renminbi.

Selling, general and administrative expenses for the nine months ended September 30, 2026 increased 32.8% as compared to the nine months ended September 30, 2025.

Merger and acquisition expenses, primarily related to the Modine Transaction, were $34.2 million for the nine months ended September 30, 2026.

Restructuring Expenses, net

Below is a summary of our restructuring expenses, net, in thousands, for the three months ended June 30, 2026 and 2025:

Three Months Ended June 30,

Below is a summary of our restructuring expenses, net, in thousands, for the three months ended September 30, 2026 and 2025:

Three Months Ended September 30,

(Unfavorable)

Restructuring expenses, net

During the three months ended June 30, 2026, the Company recognized expenses of $4.4 million for employee separation costs and $1.6 million for other costs.

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.

Below is a summary of our restructuring expenses, net, in thousands, for the six months ended June 30, 2026 and 2025:

Six Months Ended June 30,

During the three months ended September 30, 2026, the Company recognized expenses of $2.4 million for employee separation costs and $2.4 million for other costs.

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.

Below is a summary of our restructuring expenses, net, in thousands, for the nine months ended September 30, 2026 and 2025:

Nine Months Ended September 30,

(Unfavorable)

Restructuring expenses, net

During the six months ended June 30, 2026, the Company recognized expenses of $9.9 million for employee separation costs and $2.8 million for other costs.

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 nine months ended September 30, 2026, the Company recognized expenses of $12.3 million for employee separation costs and $5.2 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.

See Note 4, “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, 2026 and 2025:

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, 2026 and 2025:

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, 2026 and 2025:

Three Months Ended June 30,

Below is a summary of our interest expense, net, in thousands, for the three months ended September 30, 2026 and 2025:

Three Months Ended September 30,

(Unfavorable)

Interest expense, net

Interest expense, net for the three months ended June 30, 2026 decreased 18.6% as compared to the three months ended June 30, 2025.

The decrease in interest expense, net is primarily related to a lower interest rate on the Revolving Credit Facility during the three-month period and the impact of a change in fair value of interest rate swap in the prior year period.

Below is a summary of our interest expense, net, in thousands, for the six months ended June 30, 2026 and 2025:

Six Months Ended June 30,

Interest expense, net for the three months ended September 30, 2026 increased 15.7% as compared to the three months ended September 30, 2025.

The increase in interest expense, net is primarily related to a higher average outstanding balance on the Revolving Credit Facility during the three-month period.

Below is a summary of our interest expense, net, in thousands, for the nine months ended September 30, 2026 and 2025:

Nine Months Ended September 30,

(Unfavorable)

Interest expense, net

Interest expense, net for the six months ended June 30, 2026 decreased 22.0% as compared to the six months ended June 30, 2025.

The decrease in interest expense, net is primarily related to a lower interest rate on the Revolving Credit Facility during the six-month period and the impact of a change in fair value of interest rate swap in the prior year period.

Foreign Currency Loss

Below is a summary of our foreign currency loss, in thousands, for the three months ended June 30, 2026 and 2025:

Three Months Ended June 30,

Interest expense, net for the nine months ended September 30, 2026 decreased 10.6% as compared to the nine months ended September 30, 2025.

The decrease in interest expense, net is primarily related to a lower interest rate on the Revolving Credit Facility during the nine-month period and the impact of a change in fair value of interest rate swap in the prior year period, partially offset by a higher average outstanding balance on the Revolving Credit Facility during the three-months ended September 30, 2026.

Foreign Currency Gain (Loss)

Below is a summary of our foreign currency gain, in thousands, for the three months ended September 30, 2026 and 2025:

Three Months Ended September 30,

(Unfavorable)

Foreign currency loss

Foreign currency loss for the three months ended June 30, 2026 included net realized foreign currency loss of $0.8 million and net unrealized foreign currency gain of $0.6 million.

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.

Below is a summary of our foreign currency loss, in thousands, for the six months ended June 30, 2026 and 2025:

Six Months Ended June 30,

Foreign currency gain

Foreign currency gain for the three months ended September 30, 2026 included net realized foreign currency gain of $0.9 million and net unrealized foreign currency loss of $0.7 million.

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.

Below is a summary of our foreign currency loss, in thousands, for the nine months ended September 30, 2026 and 2025:

Nine Months Ended September 30,

(Unfavorable)

Foreign currency loss

Foreign currency loss for the six months ended June 30, 2026 included net realized foreign currency loss of $1.1 million and net unrealized foreign currency loss of $0.2 million.

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 for the nine months ended September 30, 2026 included net realized foreign currency loss of $0.2 million and net unrealized foreign currency loss of $0.9 million.

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.

dollar receivable at one of our foreign subsidiaries, which was settled in 2025.

Other Income (Loss)

Below is a summary of our other income, in thousands, for the three months ended June 30, 2026 and 2025:

Three Months Ended June 30,

Below is a summary of our other income, in thousands, for the three months ended September 30, 2026 and 2025:

Three Months Ended September 30,

(Unfavorable)

Other income for the three months ended June 30, 2026 increased as compared to other income for the three months ended June 30, 2025, due to income from an equity investment.

Below is a summary of our other income (loss), in thousands, for the six months ended June 30, 2026 and 2025:

Six Months Ended June 30,

Other income for the three months ended September 30, 2026 increased as compared to other income for the three months ended September 30, 2025, due to income from an equity investment.

Below is a summary of our other income (loss), in thousands, for the nine months ended September 30, 2026 and 2025:

Nine Months Ended September 30,

(Unfavorable)

Other income (loss)

Other income for the six months ended June 30, 2026 increased as compared to other loss for the six months ended June 30, 2025, primarily due to a fair value adjustment of an equity investment in the prior year period.

Other income for the nine months ended September 30, 2026 increased as compared to other loss for the nine months ended September 30, 2025, primarily due to higher income from an equity investment in the current year period and a fair value adjustment 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, 2026 and 2025:

Three Months Ended June 30,

Below is a summary of our income tax expense, in thousands, for the three months ended September 30, 2026 and 2025:

Three Months Ended September 30,

(Unfavorable)

Income tax expense

Income tax expense was $2.9 million for the three months ended June 30, 2026 on earnings before income tax of $7.3 million, representing an effective tax rate of 39.7%.

Income tax expense was $13.4 million for the three months ended September 30, 2026 on earnings before income tax of $10.8 million, representing an effective tax rate of 123.9%.

The effective tax rate differed from the U.S.

1 unchanged sentence

Federal statutory rate and the unfavorable impact of transactions costs incurred in connection with the Modine Transaction.

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 global intangible low-tax income (“GILTI”).

Below is a summary of our income tax expense, in thousands, for the six months ended June 30, 2026 and 2025:

Six Months Ended June 30,

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

Below is a summary of our income tax expense, in thousands, for the nine months ended September 30, 2026 and 2025:

Nine Months Ended September 30,

(Unfavorable)

Income tax expense

Income tax expense was $6.3 million for the six months ended June 30, 2026 on earnings before income tax of $14.9 million, representing an effective tax rate of 42.2%.

Income tax expense was $19.7 million for the nine months ended September 30, 2026 on earnings before income tax of $25.8 million, representing an effective tax rate of 76.5%.

The effective tax rate differed from the U.S.

1 unchanged sentence

Federal statutory rate and the unfavorable impact of transactions costs incurred in connection with the Modine Transaction.

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.

1 unchanged sentence

Our primary sources of liquidity and capital resources are cash flows from operations and borrowings available under our Credit Agreement (defined below).

Our cash requirements consist principally of working capital, capital expenditures, research and development, operating lease payments, income tax payments and general corporate purposes.

Our cash requirements consist principally of working capital, capital expenditures, research and development, lease payments, income tax payments and general corporate purposes.

We generally reinvest available cash flows from operations into our business, while opportunistically utilizing our authorized stock repurchase program.

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

As of June 30, 2026, the Company had $213.2 million of cash and cash equivalents and $289.1 million of availability under our Credit Agreement.

As of September 30, 2026, the Company had $252.1 million of cash and cash equivalents and $242.1 million of availability under our 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, 2026, the Company’s cash and cash equivalents held by our non-U.S.

As of September 30, 2026, the Company’s cash and cash equivalents held by our non-U.S.

subsidiaries totaled $230.7 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 $2.3 million during the six months ended June 30, 2026 primarily reflecting net income of $8.6 million, $40.3 million for non-cash charges for depreciation, amortization, stock based compensation, loss on disposition of property and equipment, provisions for inventory and other non-cash items, including unrealized foreign currency (gain) loss, $16.2 million related to changes in accounts payable, and $8.3 million related to changes in net other assets and liabilities, partially offset by $58.1 million related to changes in accounts receivable, net, $8.6 million for non-cash deferred income taxes, and $4.4 million related to changes in inventory.

Net cash provided by operating activities totaled $36.0 million during the nine months ended September 30, 2026 primarily reflecting net income of $6.0 million, $58.8 million for non-cash charges for depreciation, amortization, stock based compensation, loss on disposition of property and equipment and provisions for inventory, $43.3 million related to changes in accounts payable, and $4.0 million related to changes in net other assets and liabilities, partially offset by $43.5 million related to changes in accounts receivable, net, $22.1 million related to changes in inventory, $9.5 million for non-cash deferred income taxes and $1.0 million for other non-cash items, including unrealized foreign currency (gain) loss.

Cash Flows From Investing Activities

Net cash used in investing activities was $14.4 million during the six months ended June 30, 2026, primarily reflecting purchases of property and equipment of $14.2 million and investments in technology companies of $0.2 million.

Net cash used in investing activities was $56.7 million during the nine months ended September 30, 2026, primarily reflecting payments for the IME acquisition of $34.2 million and purchases of property and equipment of $22.6 million.

Cash Flows From Financing Activities

Net cash provided by financing activities was $65.9 million during the six months ended June 30, 2026, reflecting the borrowing of debt of $142.0 million partially offset by $71.1 million of debt repayments, $2.7 million paid for financing new loans and $2.3 million paid for employee taxes related to the net settlement of restricted stock units that vested during the year.

The following table summarizes the Company’s debt, in thousands, as of June 30, 2026 and December 31, 2025:

June 30, 2026

Net cash provided by financing activities was $112.8 million during the nine months ended September 30, 2026, reflecting the borrowing of debt of $204.0 million partially offset by $85.9 million of debt repayments, $2.8 million paid for financing new loans and $2.5 million paid for employee taxes related to the net settlement of restricted stock units that vested during the year.

The following table summarizes the Company’s debt, in thousands, as of September 30, 2026 and December 31, 2025:

September 30, 2026

December 31, 2025

5 unchanged sentences

Credit Agreement

Gentherm, together with certain of its subsidiaries, maintain a revolving credit note (the “Revolving Credit Facility”) under its Third Amended and Restated Credit Agreement with a consortium of lenders and Bank of America, N.A.

as administrative agent (as amended by the Second Amendment described below, the “Credit Agreement”).

Gentherm, together with certain of its subsidiaries, maintain a revolving credit facility (the “Revolving Credit Facility”) under its Third Amended and Restated Credit Agreement with a consortium of lenders and Bank of America, N.A.

as administrative agent (the “Credit Agreement”).

The Credit Agreement was entered into on June 29, 2026 and amends and restates in its entirety the Second Amended and Restated Credit Agreement dated June 10, 2022, by and among Gentherm, certain of its direct and indirect subsidiaries, the lenders party thereto and the Agent.

2 unchanged sentences

The Credit Agreement also contains customary events of default.

As of June 30, 2026, the Company was in compliance with the terms of the Credit Agreement.

As of September 30, 2026, the Company was in compliance with the terms of the Credit Agreement.

Modine Transaction

In connection with the Merger Agreement, Gentherm, SpinCo and a financial institution executed a 364-day bridge loan facility commitment letter, pursuant to which such financial institution committed to provide the Bridge Facility and the Backstop Commitment.

On February 24, 2026, the Company amended its credit agreement to permit the Modine Transaction, which terminated the Backstop Commitment.

If the Modine Transaction is consummated, any indebtedness incurred by SpinCo will become indebtedness of a wholly owned subsidiary of the Company.

In connection with the Modine Transaction, the Company declared a special cash dividend (the “Cash Dividend”) in an aggregate amount equal to $63.5 million.

The Cash Dividend was paid in cash on October 7, 2026.

On June 29, 2026, SpinCo entered into the DDTL Facility.

On the Closing Date, SpinCo borrowed $250.0 million of Term Loans under the DDTL Facility (the “Term Loans”), the proceeds of which were used by SpinCo on the Closing Date to pay the SpinCo Cash Distribution, to pay certain other amounts required and for general corporate purposes.

The obligations under the DDTL Facility are unconditionally guaranteed by Gentherm and certain of Gentherm’s wholly-owned domestic subsidiaries, subject to customary exceptions, and are secured by substantially all of the assets of SpinCo, Gentherm and the other guarantors, subject to customary exceptions.

The Term Loans bear interest, at SpinCo’s option, at either (i) term SOFR plus a margin in a range of 1.125% to 2.000% per annum (based on the Consolidated Net Leverage Ratio of Gentherm and its subsidiaries from time to time) or (ii) the base rate plus a margin in a range of 0.125% to 1.000% per annum (based on the Consolidated Net Leverage Ratio of Gentherm and its subsidiaries from time to time).

SpinCo also paid a ticking fee with respect to the DDTL Facility that accrued during the period from June 29, 2026 to the Funding Date at a rate equal to 0.175% per annum on the unfunded commitments thereunder.

The DDTL Facility contains customary affirmative and negative covenants and requires that Gentherm maintain a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Net Leverage Ratio.

The DDTL Facility additionally contains customary events of default.

Material Cash Requirements

In February 2026, we committed to a restructuring plan to realign our operating model and organizational structure to deliver on key financial and operational priorities.

We expect to incur cash restructuring costs of between $9.0 million and $9.5 million for employee separation costs.

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 separation 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.

We expect to incur cash restructuring costs of between $4 million and $6 million for employee separation and retention costs and between $2 million and $3 million of other transition costs primarily for machinery and equipment move and set up costs.

The Company has committed to various ongoing restructuring plans, under which we expect to incur cash restructuring costs of between $1.0 million and $5.5 million for employee separation costs and retention costs and up to $1.5 million of other transition costs primarily for machinery and equipment move and set up costs.

Additionally, we expect to incur capital expenditures of between $1.0 million and $2.0 million.

3 unchanged sentences

Effects of Inflation

The automotive component supply industry has historically been subject to inflationary pressures with respect to materials and labor.

At times in recent years, the automotive industry has experienced significant volatility in the costs of certain materials and components, labor and transportation.

The Company has historically been subject to inflationary pressures with respect to materials and labor.

At times in recent years, the Company has experienced significant volatility in the costs of certain materials and components, labor and transportation.

Rising costs of materials, labor, equipment and other inputs used to manufacture and sell our products, including freight and logistics costs, have adversely impacted, and may in the future adversely impact, operating costs and operating results.

5 unchanged sentences

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, 2025.

There have been no significant changes in our critical accounting policies or critical accounting estimates during the three months ended June 30, 2026.

There have been no significant changes in our critical accounting policies or critical accounting estimates during the three months ended September 30, 2026.

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.

13 unchanged sentences

Cash flows associated with derivatives are reported in net cash provided by operating activities in the Company’s consolidated statements of cash flows.

Information related to the fair values of all derivative instruments in the consolidated condensed balance sheet as of June 30, 2026 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, 2026 is set forth in Note 10, “Financial Instruments” in the consolidated condensed financial statements included in this Report.

Interest Rate Sensitivity

5 unchanged sentences

Variable rate

Variable interest rate as of June 30, 2026

Based on the amounts outstanding as of June 30, 2026, a hypothetical 100 basis point change (increase or decrease) in interest rates would impact annual interest expense by $2.6 million.

Variable interest rate as of September 30, 2026

Based on the amounts outstanding as of September 30, 2026, a hypothetical 100 basis point change (increase or decrease) in interest rates would impact annual interest expense by $3.1 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.

11 unchanged sentences

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, 2026

September 30, 2026

December 31, 2025

6 unchanged sentences

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