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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

     ☒ Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

    

For the quarterly period ended June 30, 2025

     ☐ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 

    

For the transition period from to .

Commission File Number: 0-21810

GENTHERM INCORPORATED

(Exact name of registrant as specified in its charter)


Michigan		95-4318554
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
28875 Cabot Drive, Novi, MI		48377
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (248) 504-0500

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, no par value	THRM	Nasdaq

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At July 18, 2025, there were 30,519,826 issued and outstanding shares of Common Stock of the registrant.

GENTHERM INCORPORATED

TABLE OF CONTENTS




Part I. Financial Information			3
	Item 1.	Financial Statements (Unaudited)	3
		Consolidated Condensed Balance Sheets	3
		Consolidated Condensed Statements of Income	4
		Consolidated Condensed Statements of Comprehensive Income	5
		Consolidated Condensed Statements of Cash Flows	6
		Consolidated Condensed Statements of Changes in Shareholders’ Equity	7
		Notes to Unaudited Consolidated Condensed Financial Statements	8
		Note 1 - Overview	8
		Note 2 - New Accounting Pronouncements	9
		Note 3 - Restructuring	9
		Note 4 - Details of Certain Balance Sheet Components	11
		Note 5 - Goodwill and Other Intangibles	11
		Note 6 - Debt	12
		Note 7 - Commitments and Contingencies	13
		Note 8 - Supplier Finance Program	14
		Note 9 - Earnings Per Share	15
		Note 10 - Financial Instruments	15
		Note 11 - Fair Value Measurements	17
		Note 12 - Equity	18
		Note 13 - Reclassifications Out of Accumulated Other Comprehensive Income (Loss)	18
		Note 14 - Income Taxes	20
		Note 15 - Segment Reporting	21
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
	Item 4.	Controls and Procedures	37
Part II. Other Information			38
	Item 1.	Legal Proceedings	38
	Item 1A.	Risk Factors	38
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
	Item 5.	Other Information	38
	Item 6.	Exhibits	39
Signatures			40

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GENTHERM INCORPORATED

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)


	June 30, 2025		December 31, 2024
ASSETS
Current Assets:
Cash and cash equivalents	$	128,297	$	134,134
Accounts receivable, net		294,719		258,112
Inventory:
Raw materials		130,029		137,511
Work in process		40,466		19,059
Finished goods		77,889		70,786
Inventory, net		248,384		227,356
Other current assets		87,415		64,413
Total current assets		758,815		684,015
Property and equipment, net		262,419		252,970
Goodwill		108,891		99,603
Other intangible assets, net		56,076		57,251
Operating lease right-of-use assets		59,510		43,954
Deferred income tax assets		78,336		75,041
Other non-current assets		37,354		34,722
Total assets	$	1,361,401	$	1,247,556
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	254,133	$	226,815
Current lease liabilities		9,913		7,517
Current maturities of long-term debt		146		137
Other current liabilities		112,733		105,824
Total current liabilities		376,925		340,293
Long-term debt, less current maturities		209,000		220,064
Non-current lease liabilities		51,135		37,052
Pension benefit obligation		3,906		4,017
Other non-current liabilities		20,690		29,183
Total liabilities	$	661,656	$	630,609
Shareholders’ equity:
Common Stock:
No par value; 55,000,000 shares authorized 30,519,826 and 30,788,639 issued and outstanding at June 30, 2025 and December 31, 2024, respectively		—		2,049
Paid-in capital		1,590		4,290
Accumulated other comprehensive income (loss)		2,005		(85,193	)
Accumulated earnings		696,150		695,801
Total shareholders’ equity		699,745		616,947
Total liabilities and shareholders’ equity	$	1,361,401	$	1,247,556

See accompanying notes to the consolidated condensed financial statements.

Table of Contents

GENTHERM INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Product revenues	$	375,090		$	375,683		$	728,944		$	731,698
Cost of sales		285,328			278,982			552,717			546,244
Gross margin		89,762			96,701			176,227			185,454
Operating expenses:
Net research and development expenses		22,558			21,861			46,774			44,606
Selling, general and administrative expenses		41,087			39,410			79,565			80,131
Restructuring expenses, net		2,108			2,442			6,622			9,680
Loss on sale of land and building, net		—			—			2,196			—
Total operating expenses		65,753			63,713			135,157			134,417
Operating income		24,009			32,988			41,070			51,037
Interest expense, net		(4,043	)		(4,002	)		(7,598	)		(7,246	)
Foreign currency (loss) gain		(17,432	)		(282	)		(27,730	)		2,267
Other (loss) income		—			(284	)		(1,124	)		689
Earnings before income tax		2,534			28,420			4,618			46,747
Income tax expense		2,057			9,544			4,269			13,086
Net income	$	477		$	18,876		$	349		$	33,661
Basic earnings per share	$	0.02		$	0.60		$	0.01		$	1.07
Diluted earnings per share	$	0.02		$	0.60		$	0.01		$	1.06
Weighted average number of shares – basic		30,600			31,534			30,687			31,539
Weighted average number of shares – diluted		30,652			31,710			30,781			31,714

See accompanying notes to the consolidated condensed financial statements.

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GENTHERM INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended June 30,					Six Months Ended June 30,
	2025		2024			2025		2024
Net income	$	477	$	18,876		$	349	$	33,661
Other comprehensive income (loss):
Pension benefit obligations, net of tax		15		19			28		33
Foreign currency translation adjustments		54,623		(4,610	)		80,051		(18,992	)
Unrealized gain (loss) on cash flow derivative securities, net of tax		4,248		(5,913	)		7,119		(6,580	)
Other comprehensive income (loss), net of tax		58,886		(10,504	)		87,198		(25,539	)
Comprehensive income	$	59,363	$	8,372		$	87,547	$	8,122

See accompanying notes to the consolidated condensed financial statements.

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GENTHERM INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2025			2024
Operating Activities:
Net income	$	349		$	33,661
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		26,089			26,733
Deferred income taxes		(12,202	)		4,365
Stock based compensation		6,604			7,392
Loss on disposition of property and equipment		2,444			(42	)
Provisions for inventory		3,213			793
Other non-cash items, including unrealized foreign currency (gain) loss		31,364			(863	)
Changes in assets and liabilities:
Accounts receivable, net		(23,690	)		(14,310	)
Inventory		(13,430	)		(12,338	)
Other assets		(23,102	)		(36,874	)
Accounts payable		20,522			8,436
Other liabilities		13,540			9,871
Net cash provided by operating activities		31,701			26,824
Investing Activities:
Purchases of property and equipment		(23,728	)		(30,704	)
Proceeds from the sale of property and equipment		3,745			81
Proceeds from deferred purchase price of factored receivables		744			6,208
Cost of technology investments		(590	)		(265	)
Net cash used in investing activities		(19,829	)		(24,680	)
Financing Activities:
Borrowings on debt		52,000			35,000
Repayments of debt		(63,076	)		(35,420	)
Proceeds from the exercise of Common Stock options		—			2,763
Taxes withheld and paid on employees' stock based compensation		(1,238	)		(2,417	)
Cash paid for the repurchase of Common Stock		(10,015	)		(21,703	)
Net cash used in financing activities		(22,329	)		(21,777	)
Foreign currency effect		4,620			(6,574	)
Net decrease in cash and cash equivalents		(5,837	)		(26,207	)
Cash and cash equivalents at beginning of period		134,134			149,673
Cash and cash equivalents at end of period	$	128,297		$	123,466
Supplemental disclosure of cash flow information:
Cash paid for taxes	$	12,843		$	12,300
Cash paid for interest		6,757			6,723
Non-Cash Investing Activities:
Period-end balance of accounts payable for property and equipment	$	6,645		$	6,430
Deferred purchase price of receivables factored in the period		—			8,168

See accompanying notes to the consolidated condensed financial statements.

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GENTHERM INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)


										Accumulated
										Other
	Common Stock						Paid-in			Comprehensive			Accumulated
	Shares			Amount			Capital			Income (Loss)			Earnings			Total
Balance at December 31, 2024		30,789		$	2,049		$	4,290		$	(85,193	)	$	695,801		$	616,947
Net loss		—			—			—			—			(128	)		(128	)
Other comprehensive income		—			—			—			28,312			—			28,312
Stock based compensation, net		70			1,397			—			—			—			1,397
Balance at March 31, 2025		30,859		$	3,446		$	4,290		$	(56,881	)	$	695,673		$	646,528
Net income		—			—			—			—			477			477
Other comprehensive income		—			—			—			58,886			—			58,886
Stock based compensation, net		43			3,869			—			—			—			3,869
Stock repurchase		(382	)		(7,315	)		(2,700	)		—			—			(10,015	)
Balance at June 30, 2025		30,520		$	—		$	1,590		$	2,005		$	696,150		$	699,745


										Accumulated
										Other
	Common Stock						Paid-in			Comprehensive			Accumulated
	Shares			Amount			Capital			Income (Loss)			Earnings			Total
Balance at December 31, 2023		31,542		$	50,503		$	—		$	(30,160	)	$	624,379		$	644,722
Net income		—			—			—			—			14,785			14,785
Other comprehensive loss		—			—			—			(15,035	)		—			(15,035	)
Stock based compensation, net		87			2,766			—			—			(179	)		2,587
Balance at March 31, 2024		31,629		$	53,269		$	—		$	(45,195	)	$	638,985		$	647,059
Net income		—			—			—			—			18,876			18,876
Other comprehensive loss		—			—			—			(10,504	)		—			(10,504	)
Stock based compensation, net		69			5,555			(396	)		—			—			5,159
Stock repurchase		(380	)		(32,285	)		5,345			—			6,654			(20,286	)
Balance at June 30, 2024		31,318		$	26,539		$	4,949		$	(55,699	)	$	664,515		$	640,304

See accompanying notes to the consolidated condensed financial statements.

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Note 1 – Overview

Gentherm Incorporated, a Michigan corporation, and its consolidated subsidiaries (“Gentherm”, “we”, “us”, “our” or the “Company”) is a global market leader of innovative thermal management and pneumatic comfort technologies. Our automotive products include variable temperature Climate Control Seats (CCS®), Climate Control Interiors (CCI™), Lumbar and Massage Comfort Solutions, Valve Systems, and electronic solutions for climate and comfort technologies. Our automotive products can be found on light vehicles manufactured by nearly all the major original equipment manufacturers (“OEMs”) operating in North America and Europe, and several major OEMs in Asia. We operate in locations aligned with our major customers’ product strategies to provide locally enhanced design, integration and production capabilities. Our medical products include patient temperature management systems that can be found in hospitals throughout the world, primarily in the U.S., China, Germany and Brazil. The Company is also developing a number of new technologies and products that will help enable improvements to existing products, improve health, wellness and patient outcomes and will lead to new product applications for existing and new and adjacent markets.

Basis of Presentation and Significant Accounting Policies

The unaudited consolidated condensed financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules and regulations. The information furnished in the consolidated condensed financial statements include all adjustments (consisting of only normal, recurring adjustments) considered necessary to present fairly the results of operations, financial position and cash flows of the Company. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The operating results for interim periods are not necessarily indicative of results that may be expected for other interim periods or for the full year.

In preparing these financial statements, management was required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions are based on our historical experience, the terms of existing contracts, our evaluation of trends in the industry, information provided by our customers and suppliers and information available from other third-party sources, as appropriate. These estimates and assumptions are subject to an inherent degree of uncertainty and may change as new events occur and additional information is obtained. As a result, actual results may differ significantly from our estimates, and any such differences may be material to our financial statements.

All amounts in these notes to the consolidated condensed financial statements are presented in thousands, except share and per share data.

Principles of Consolidation

The consolidated condensed financial statements include the accounts of the Company, its wholly owned subsidiaries and those entities in which it has a controlling financial interest. The Company evaluates its relationship with other entities for consolidation and to identify whether such entities are variable interest entities and to assess whether the Company is the primary beneficiary of such entities. Investments in affiliates in which Gentherm does not have control but does have the ability to exercise significant influence over operating and financial policies are accounted for under the equity method. When Gentherm does not have the ability to exercise significant influence (generally when ownership interest is less than 20%), investments in affiliates are measured at cost, less impairments, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer.

Revenue Recognition - payments to customers

From time to time, the Company provides cash incentives to customers in exchange for new business awards. The Company evaluates the underlying economics of each amount of consideration payable to a customer to determine the proper accounting by understanding the reasons for the payment, the rights and obligations resulting from the payment, the nature of the promises in the contract, and other relevant facts and circumstances. When the Company concludes that the payment is incurred only if the new business is obtained and the Company expects to recover the amounts from the customer over the term of the new business arrangement, the Company recognizes these payments as an asset. The Company amortizes the asset as a reduction of revenue as products related to the payment are transferred to the customer, based on the total amount of products expected to be sold over the

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term of the arrangement (generally 5 to 10 years following start of production). The Company evaluates the amounts capitalized each reporting period for recoverability and recognizes a reduction of revenue for any amounts that are no longer expected to be recovered over the term of the business arrangement. Payments to customers that are not capitalized are recognized as a reduction to revenue at the time of the commitment to make such payments.

As of June 30, 2025 and December 31, 2024, total capitalized payments to customers were $16,750 and $14,276, respectively. During the three and six months ended June 30, 2025, the Company recognized $208 and $1,044 as reductions of revenue due to amortization and write-off of previously capitalized payments. During the three and six months ended June 30, 2024, the Company recognized $113 and $186 as reductions of revenue due to amortization and write-off of previously capitalized payments.

The Company had no other material contract assets or contract liabilities as of June 30, 2025.

Loss on Sale of Land and Building, net

In connection with our move to a new global headquarters location, we completed the sale of our former headquarters building in Northville, Michigan in January 2025. The sale resulted in cash proceeds of $3,740 and a loss on sale of $2,311. In addition, we recognized a gain of $115 for the sale of land in Asia.

Note 2 – Recently Issued Accounting Pronouncements

Income Taxes

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". ASU 2023-09 enhances income tax disclosures to further disaggregate the effective tax rate reconciliation and income taxes paid. Prospective adoption is required, however, retrospective application is permitted. This update is effective for fiscal years beginning after December 15, 2024. ASU 2023-09 is expected to impact our income tax disclosures beginning with the consolidated financial statements included in the annual report on Form 10-K for the fiscal year ending December 31, 2025, but will have no impact on our results of operations, cash flow or financial condition.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) ". ASU 2024-03 enhances disclosures around certain costs and expenses. Retrospective adoption is required for all periods presented in the financial statements and early adoption is permitted. This update is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. We are currently in the process of determining the impact the implementation of ASU 2024-03 will have on the Company’s financial statement disclosures.

Note 3 – Restructuring

The Company continuously monitors market developments, industry trends and changing customer needs and in response, has taken and may continue to undertake restructuring actions, as necessary, to execute management’s strategy, streamline operations and optimize the Company’s cost structure. Restructuring actions may include the realignment of existing manufacturing footprint, facility closures or similar actions, either in the normal course of business or pursuant to significant restructuring programs.

These actions may result in employees receiving voluntary or involuntary employee termination benefits, which are mainly statutory requirements or other contractual agreements. Voluntary termination benefits are accrued when an employee accepts the related offer. Involuntary termination benefits are accrued upon the commitment to a termination plan and when the benefit arrangement is communicated to affected employees, or when liabilities are determined to be probable and estimable, depending on the existence of a substantive plan for severance or termination.

2025 EMEA Plan

In February 2025, the Company committed to a restructuring plan to further optimize the Company’s manufacturing footprint by realigning its manufacturing capacity in Europe (“2025 EMEA Plan”). As a result, the Company will close its facility in Plzeň, Czech Republic and relocate the manufacturing activities into other existing facilities within the region.

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The Company expects to incur cash restructuring costs of between $4,000 and $6,000 for employee severance and retention costs and between $2,000 and $3,000 of other transition costs primarily for machinery and equipment move and set up costs. Additionally, we expect to incur capital expenditures of between $1,000 and $2,000. The actions under the 2025 EMEA Plan are expected to be substantially completed by the end of 2026.

During the three and six months ended June 30, 2025, the Company recognized restructuring expense of $367 and $2,773, respectively, for employee separation costs and $293 and $333, respectively, for other costs.

2025 Asia Plan

In February 2025, the Company committed to an additional restructuring plan to further optimize the Company’s manufacturing footprint by realigning its manufacturing capacity in Asia (“2025 Asia Plan”). As a result, the Company will relocate certain manufacturing activities from its facility in Shanghai, China to its new facility in Tianjin, China.

The Company expects to incur cash restructuring costs of between $2,000 and $3,000 for employee severance and retention costs and $1,000 of other transition costs primarily for machinery and equipment move and set up costs. Additionally, we expect to incur capital expenditures of between $2,000 and $3,000. The actions under the 2025 Asia Plan are expected to be substantially completed in the first half of 2026.

During the three and six months ended June 30, 2025, the Company recognized restructuring expense of $493 and $1,952, respectively, for employee separation costs and $89 and $117, respectively, for other costs.

Other Restructuring Actions

The Company has undertaken several discrete restructuring actions in an effort to optimize its cost structure.

During the three and six months ended June 30, 2025, the Company recognized $695 and $1,216, for employee separation costs related to structural cost reductions impacting the Company’s global salaried workforce.

During the three and six months ended June 30, 2024, the Company recognized $1,144 and $5,363, respectively, for employee separation costs related to structural cost reductions impacting the Company’s global salaried workforce.

During the three and six months ended June 30, 2025, the Company recognized $(106) and $(262), respectively, for employee separation costs and $277 and $493, respectively, for other costs, primarily related to the relocation of certain manufacturing to best cost locations.

During the three and six months ended June 30, 2024, the Company recognized $958 and $3,510, respectively, for employee separation costs and $340 and $807, respectively, for other costs, primarily related to the relocation of certain manufacturing to best cost locations.

Restructuring Expenses, Net By Reporting Segment

The following table summarizes restructuring expenses, net for the three and six months ended June 30, 2025 and 2024 by reporting segment:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Automotive	$	1,924	$	1,694	$	6,438	$	8,808
Medical		156		—		156		20
Corporate		28		748		28		852
Total	$	2,108	$	2,442	$	6,622	$	9,680

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Restructuring Liability

Restructuring liabilities are classified as other current liabilities in the consolidated condensed balance sheets. The following table summarizes restructuring liability for the six months ended June 30, 2025:


	Employee Separation Costs			Other Related Costs, Net			Total
Balance at December 31, 2024	$	3,288		$	—		$	3,288
Additions, charged to restructuring expenses, net		4,412			284			4,696
Cash payments		(2,123	)		(284	)		(2,407	)
Change in estimate		(182	)		—			(182	)
Currency translation		100			—			100
Balance at March 31, 2025	$	5,495		$	—		$	5,495
Additions, charged to restructuring expenses, net		1,533			659			2,192
Cash payments		(1,274	)		(659	)		(1,933	)
Change in estimate		(84	)		—			(84	)
Currency translation		363			—			363
Balance at June 30, 2025	$	6,033		$	—		$	6,033

Note 4 – Details of Certain Balance Sheet Components


	June 30, 2025		December 31, 2024
Other current assets:
Billable tooling	$	24,085	$	19,740
Income tax and other tax receivable		23,320		20,611
Prepaid expenses		12,708		6,305
Notes receivable		12,414		11,190
Short-term derivative financial instruments		5,884		719
Other		9,004		5,848
Total other current assets	$	87,415	$	64,413
Other current liabilities:
Accrued employee liabilities	$	38,644	$	42,277
Income tax and other taxes payable		28,560		26,385
Liabilities from discounts and rebates		23,978		20,501
Restructuring		6,033		3,288
Accrued warranty		5,475		3,507
Short-term derivative financial instruments		699		2,037
Other		9,344		7,829
Total other current liabilities	$	112,733	$	105,824

Note 5 – Goodwill and Other Intangibles

Goodwill

Changes in the carrying amount of goodwill, by reportable segment, for the six months ended June 30, 2025 were as follows:


	Automotive		Medical		Total
Balance as of December 31, 2024	$	72,754	$	26,849	$	99,603
Currency translation		8,456		832		9,288
Balance as of June 30, 2025	$	81,210	$	27,681	$	108,891

The accumulated impairment losses of goodwill for Automotive and Medical were $0 and $19,509, respectively, as of June 30, 2025.

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Other Intangible Assets

Other intangible assets and accumulated amortization balances as of June 30, 2025 and December 31, 2024 were as follows:


	Gross Carrying Value		Accumulated Amortization			Accumulated Impairment			Net Carrying Value
Definite-lived:
Customer relationships	$	121,071	$	(80,329	)	$	(5,477	)	$	35,265
Technology		48,499		(35,028	)		(24	)		13,447
Product development costs		20,059		(19,891	)		—			168
Software development		1,007		(302	)		—			705
Indefinite-lived:
Tradenames		7,021		—			(530	)		6,491
Balance as of June 30, 2025	$	197,657	$	(135,550	)	$	(6,031	)	$	56,076

	Gross Carrying Value		Accumulated Amortization			Accumulated Impairment			Net Carrying Value
Definite-lived:
Customer relationships	$	109,608	$	(67,787	)	$	(5,477	)	$	36,344
Technology		43,458		(29,976	)		(24	)		13,458
Product development costs		18,019		(17,849	)		—			170
Software development		1,007		(201	)		—			806
Indefinite-lived:
Tradenames		7,003		—			(530	)		6,473
Balance as of December 31, 2024	$	179,095	$	(115,813	)	$	(6,031	)	$	57,251

Note 6 – Debt

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


	June 30, 2025						December 31, 2024
	Interest Rate			Principal Balance			Interest Rate			Principal Balance
Revolving Credit Facility (U.S. Dollar denominations)		5.80	%	$	209,000			5.86	%	$	220,000
Finance leases		3.36	%		146			3.46	%		201
Total debt					209,146						220,201
Less: current maturities					(146	)					(137	)
Long-term debt, less current maturities				$	209,000					$	220,064

Credit Agreement

On June 10, 2022, the Company entered into a Second Amended and Restated Credit Agreement (the “Second Amended and Restated Credit Agreement”) with a consortium of lenders and Bank of America, N.A., as administrative agent (the “Agent”). The amendment, among other things, extended the maturity date to June 10, 2027.

The Second Amended and Restated Credit Agreement provides for a $500,000 secured revolving credit facility (the “Revolving Credit Facility”), with a $50,000 sublimit for swing line loans and a $15,000 sublimit for the issuance of standby letters of credit. Any amount of the facility utilized for swing line loans or letters of credit outstanding will reduce the amount available under the Second Amended and Restated Credit Agreement. Subject to specified conditions, Gentherm can increase the Revolving Credit Facility or incur secured term loans in an aggregate amount of up to $200,000.

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Under the Second Amended and Restated Credit Agreement, all obligations are unconditionally guaranteed by certain of the Company’s subsidiaries and a security interest is granted in substantially all of the personal property of the Company and its U.S. subsidiaries designated as borrowers, including the stock and membership interests of specified subsidiaries. The Second Amended and Restated Credit Agreement contains covenants, that, among other things, (i) prohibit or limit the ability 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. The Second Amended and Restated Credit Agreement also contains customary events of default. 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.

Under the Second Amended and Restated Credit Agreement, U.S. Dollar denominated loans bear interest at either a base rate (“Base Rate Loans”) or Term Secured Overnight Financing Rate (“SOFR”) rate (“Term SOFR Rate Loans”), plus a margin (“Applicable Rate”). The rate for Base Rate Loans is equal to the highest of the Federal Funds Rate plus 0.50%, Bank of America’s prime rate, or the Term SOFR rate plus 1.00%. The rate for Term SOFR Rate Loans denominated in U.S. Dollars is equal to the forward-looking Term SOFR rate administered by the Chicago Mercantile Exchange with a term of one month. All loans denominated in a currency other than the U.S. Dollar must be Term SOFR Rate Loans. Interest is payable at least quarterly. Additionally, a commitment fee of between 0.175% to 0.300% is payable on the average daily unused amounts under the Revolving Credit Facility.

The Applicable Rate varies based on the Consolidated Net Leverage Ratio reported by the Company. As long as the Company is not in default of the terms and conditions of the Second Amended and Restated Credit Agreement, the lowest and highest possible Applicable Rate is 1.125% and 2.125%, respectively, for Term SOFR Rate Loans and 0.125% and 1.125%, respectively, for Base Rate Loans.

Based upon consolidated EBITDA for the trailing four fiscal quarters calculated for purposes of the Consolidated Net Leverage Ratio, $287,970 remained available for additional borrowings as of June 30, 2025.

The Company had $3,030 and $2,838 of outstanding letters of credit issued as of June 30, 2025 and December 31, 2024 respectively.

The scheduled principal maturities of our debt as of June 30, 2025 were as follows:


	U.S. Revolving Note		Other Debt		Total
2025	$	—	$	73	$	73
2026		—		73		73
2027		209,000		—		209,000
Total	$	209,000	$	146	$	209,146

Note 7 – Commitments and Contingencies

Legal and Other Contingencies

The Company is subject to various legal actions and claims in the ordinary course of its business, which may include those arising out of breach of contracts, intellectual property rights, environmental matters, regulatory matters and employment-related matters. The Company establishes accruals for matters which it believes that losses are probable and can be reasonably estimated. Although it is not possible to predict with certainty the outcome of these matters, the Company is of the opinion that the ultimate resolution of these matters outstanding as of June 30, 2025 will not have a material adverse effect on its results of operations or financial position. Product liability and warranty reserves are recorded separately from legal reserves.

Product Liability and Warranty Matters

Our products subject us to warranty claims and, from time to time product liability claims, based on the Company’s products alleged failure to perform as expected or resulting in alleged bodily injury or property damage. If any of our products are or are

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alleged to be defective, we may be required to participate in a recall or other corrective action involving such products. The Company maintains warranty and product liability insurance coverage at levels based on commercial norms and historical claims experience. The Company can provide no assurances that it will not experience material warranty or product liability claims or liabilities in the future or that it will not incur significant costs to defend such claims.

The Company accrues warranty obligations for products sold based on management estimates of future failure rates and current claim cost experience, with support from the sales, engineering, quality and legal functions. Using historical information available to the Company, including any claims filed by customers, the warranty accrual is adjusted quarterly to reflect management’s estimate of future claims.

In February 2024, the National Highway Traffic Safety Administration (“NHTSA”) announced that Volkswagen Group of America, Inc. (“VW”) is recalling 261,257 vehicles from model years 2015-2020 to remedy an alleged problem with a suction jet pump seal inside the fuel tank system. The suction jet pump is a product originally designed and manufactured by Alfmeier, the business Gentherm acquired in August 2022. No litigation has been threatened or filed as of the date of this report and the Company has not accepted any financial responsibility for the recall. The Company has provided replacement parts for the recall at commercial pricing paid by VW. If the Company is obligated to indemnify VW for the direct and indirect costs associated with the recall, such costs could be material. The Company has insurance policies that generally include coverage of the costs of a recall, subject to insured limits, although the Company’s costs related to manufacturing of replacement parts are generally not covered. In addition, the Company’s purchase agreement of Alfmeier included indemnification provisions under which the Company believes it would have a claim against the sellers. Given the uncertainty that exists concerning the resolution of this matter, as of the date of this report, the Company cannot reasonably estimate the amount and timing of possible costs that may be incurred by the Company.

In April 2025, NHTSA announced that VW and Porsche Cars North America, Inc. (“Porsche”) are each recalling vehicles from model years 2022-2023 to remedy a problem with their passenger occupant detection system that is alleged to be affected by the crimp connection of the seat cushion heating mat, which is produced by Gentherm. Total vehicles included in these recall campaigns are 13,508. No litigation has been threatened or filed as of the date of this report and the Company has not accepted any financial responsibility for the recalls. If the Company is obligated to indemnify VW and Porsche for the direct and indirect costs associated with the recall, such costs could be material. Insurance policies, noted above, are expected to apply. Given the uncertainty that exists concerning the resolution of this matter, as of the date of this report, the Company cannot reasonably estimate the amount and timing of possible costs that may be incurred by the Company.

The following is a reconciliation of the changes in accrued warranty costs:


	Six Months Ended June 30,
	2025			2024
Balance at the beginning of the period	$	3,507		$	3,945
Warranty claims paid		(3,620	)		(3,324	)
Warranty expense for products shipped during the current period		3,965			2,520
Adjustments to warranty estimates from prior periods		1,462			362
Adjustments due to currency translation		161			(63	)
Balance at the end of the period	$	5,475		$	3,440

Note 8 – Supplier Finance Program

The Company is party to a supplier finance program with a third-party service provider (“Service Provider”), pursuant to which the Company has offered the opportunity to participate to certain of the Company's suppliers. The Company has no economic interest in a supplier’s participation and the Company has not pledged any assets to the Service Provider under this program.

Under this program, the Company and supplier initially agree on the contractual payment terms for the goods to be procured for the Company in the ordinary course. A supplier’s participation in this program is voluntary and does not impact its contractual payment terms with the Company, including the payment amount and timing of when payments are due. A participating supplier has the sole discretion to determine whether to discount one or more invoices, if any, to the Service Provider in exchange for payment by the Service Provider on an earlier date than provided for in the contract with the Company. Amounts due to participating suppliers are

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included in accounts payable in the consolidated condensed balance sheets until the Company makes payment to the Service Provider, even though the payment of such amount will be made to the supplier at an earlier date by the Service Provider. As of June 30, 2025, the Company had supplier obligations that had been confirmed under these arrangements of $24,769. Payments of the Company’s obligations to the Service Provider are reported as operating cash flows in the consolidated condensed statements of cash flows.

Note 9 – Earnings Per Share

Basic earnings per share are computed by dividing net income by the weighted average number of shares of the Company’s Common Stock, no par value (“Common Stock”), outstanding during the period. The Company’s diluted earnings per share give effect to all potential shares of Common Stock outstanding during a period that do not have an anti-dilutive impact to the calculation. There were no potential shares with an anti-dilutive impact during the three and six months ended June 30, 2025. In computing the diluted earnings per share, the treasury stock method is used in determining the number of shares assumed to be issued from the exercise of Common Stock equivalents.

The following table illustrates earnings per share and the weighted average shares outstanding used in calculating basic and diluted earnings per share:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Net income	$	477	$	18,876	$	349	$	33,661

Basic weighted average shares of Common Stock outstanding		30,600,168		31,534,382		30,687,384		31,538,802
Dilutive effect of restricted stock, restricted stock units and performance stock units		51,560		175,119		94,084		175,623
Diluted weighted average shares of Common Stock outstanding		30,651,728		31,709,501		30,781,468		31,714,425

Basic earnings per share	$	0.02	$	0.60	$	0.01	$	1.07
Diluted earnings per share	$	0.02	$	0.60	$	0.01	$	1.06

Note 10 – Financial Instruments

Derivative Financial Instruments

The Company is exposed to various market risks including, but not limited to, changes in foreign currency exchange rates, changes in interest rates and price fluctuations of certain material commodities.

The Company regularly enters into derivative contracts with the objective of managing its financial and operational exposure arising from these risks by offsetting gains and losses on the underlying exposures with gains and losses on the financial instruments used to hedge them. The decision of whether and when to execute derivative financial instruments, along with the duration of the instrument, may vary from period to period depending on market conditions, the relative costs of the instruments and capacity to hedge. The Company does not enter into derivative financial instruments for speculative or trading purposes. Some derivative contracts do not qualify for hedge accounting; for other derivative contracts, we elect to not apply hedge accounting.

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Information related to the recurring fair value measurement of derivative instruments in the consolidated condensed balance sheet as of June 30, 2025 is as follows:


				Asset Derivatives			Liability Derivatives
	Fair Value Hierarchy	Notional Amount		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Net Assets/ (Liabilities)
Derivatives Designated as Cash Flow Hedges
Foreign currency derivatives	Level 2	$	82,362	Other current assets	$	5,768	Other current liabilities	$	—	$	5,768
Interest rate contracts	Level 2	$	100,000	Other current assets	$	—	Other current liabilities	$	699	$	(699	)
Derivatives Not Designated as Hedging Instruments
Interest rate contracts	Level 2	$	100,000	Other current assets	$	104	Other current liabilities	$	—	$	104

Information related to the recurring fair value measurement of derivative instruments in the consolidated condensed balance sheet as of December 31, 2024 is as follows:


				Asset Derivatives			Liability Derivatives
	Fair Value Hierarchy	Notional Amount		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Net Assets/ (Liabilities)
Derivatives Designated as Cash Flow Hedges
Foreign currency derivatives	Level 2	$	126,496	Other current assets	$	—	Other current liabilities	$	2,037	$	(2,037	)
Derivatives Not Designated as Hedging Instruments
Interest rate contracts	Level 2	$	100,000	Other current assets	$	719	Other current liabilities	$	—	$	719

Information relating to the effect of derivative instruments on the consolidated condensed statements of income and the consolidated condensed statements of comprehensive income is as follows:


		Three Months Ended June 30,						Six Months Ended June 30,
	Location (Income/(Loss))	2025			2024			2025			2024
Derivatives Designated as Cash Flow Hedges
Foreign currency derivatives	Cost of sales – (loss) income	$	(766	)	$	2,896		$	(1,813	)	$	6,272
	Other comprehensive income (loss)		5,427			(7,560	)		9,054			(8,413	)
Total foreign currency derivatives		$	4,661		$	(4,664	)	$	7,241		$	(2,141	)

Interest rate contracts	Interest expense, net	$	—		$	—		$	—		$	—
	Other comprehensive income (loss)		(699	)		—			(699	)		—
Total interest rate derivatives		$	(699	)	$	—		$	(699	)	$	—

Derivatives Not Designated as Hedging Instruments

Gentherm Inc 10-Q