Gentherm raises 2026 guidance after Modine deal

Gentherm (NASDAQ: THRM) raised its full-year 2026 financial outlook on October 22, 2026, following the completion of its combination with Modine Performance Technologies. The company updated its product revenue guidance to a range of $1.825 billion to $1.925 billion, adjusted EBITDA to $210 million to $230 million, and adjusted free cash flow to $100 million to $120 million. These figures supersede earlier projections made in July 2026, which anticipated product revenues between $1.55 billion and $1.65 billion. The revised guidance incorporates the expected contribution from the Modine business in the fourth quarter, based on current tariff levels, customer demand forecasts, and a EUR to USD exchange rate of $1.15.

For the third quarter ended September 30, 2026, Gentherm reported product revenues of $405.1 million, an increase of 4.7% from the prior year period. Excluding foreign currency translation effects, revenue growth was 4.4%. Automotive Climate and Comfort Solutions revenue rose 8.8% year over year, outperforming S&P Global’s mid-October light vehicle production report in relevant markets by 12 percentage points. The company secured $555 million in new automotive business awards during the quarter and launched the ThermAffyx Patient Safety System and Puls.A technologies.

Profitability metrics showed a decline compared to the prior year. Gross margin was 23.3%, down from 24.6% previously, a decrease attributed primarily to foreign exchange impacts, higher net material costs, and inflation, partially offset by operating leverage. Net income was a loss compared to a net income of $14.9 million in the same quarter last year. Adjusted EBITDA was $45.0 million, or 11.1% of revenue, versus $49.0 million in the prior year period. GAAP diluted earnings per share was a loss, while adjusted diluted earnings per share were $0.33.

Cash flow from operations was $36.0 million, down from $87.8 million in the prior year, while adjusted free cash flow totaled $59.5 million compared to $72.3 million previously. As of the end of the third quarter, the company reported net leverage of approximately 0.4x and liquidity of $494.2 million.

In capital allocation actions, Gentherm returned $63.5 million to shareholders via a special cash dividend of $2.07 per share on October 7, 2026, as part of the Modine transaction structure. Following the transaction closing on October 1, the company repurchased $60 million of common stock in October under a $400 million authorization granted by the Board of Directors in July 2026. Approximately $340 million remains available under this repurchase program. Chief Financial Officer Jon Douyard stated that the current share price does not reflect the company's value and affirmed the commitment to returning capital to shareholders during periods of value dislocation.