Gentherm (THRM) Misses Q3 EPS by 32c, Miss on Revenues

Gentherm (NASDAQ: THRM) reported Q3 EPS of $0.18, $0.32 worse than the analyst estimate of $0.50. Revenue for the quarter came in at $235.85 million versus the consensus estimate of $236.07 million.

Guidance

Stronger fourth quarter revenue is expected to bring the full year growth rate for 2017 to approximately 6-7% over 2016 product revenue. Our guidance includes the extra quarter of CSZ revenue and assumes a neutral impact from foreign currency translation.

Key takeaways from third quarter operating results

• Consolidated third quarter revenue growth, slightly over 1%, was the slowest rate for the year due to automotive production cuts, a continued shift in CCS programs to the lower priced Heated and Ventilated version on some programs and a $2.0 million special rebate to a customer. Automotive production in North America, our most important market, was lower by nearly 10% during the third quarter 2017 as compared with the same period in 2016.
• Revenue growth of 2% in the industrial segment did less to offset the slow automotive segment growth rate, unlike the first and second quarters of 2017 when the industrial segment grew by over 30%. Lower GPT revenue related to the timing of large program shipments is expected to be offset by higher fourth quarter revenue.
• Fourth quarter revenue forecast of $245 to $250 million is expected to bring the 2017 full-year growth rate to 6.1% - 6.6% over the prior year.
• Gross margin and gross margin percentage was lower due to operational and non-recurring impacts, including the special rebate, unfavorable product mix and continued cost overruns in the CSZ custom environmental test chamber business.
• Higher selling, general and administrative expenses include $2.5 million in CEO transition costs.
• Continued Euro strength resulted in significant unrealized foreign currency loss of $6.0 million, mainly due to US Dollar cash held in Europe.
• Effective tax rate was lower due to favorable impact of the research and development tax credit.
• 163,000 common shares were repurchased during the quarter.

For earnings history and earnings-related data on Gentherm (THRM) click here.

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