Gentherm Targets $3.5B Revenue as Modine Deal Expands Beyond Autos

Key Points

• Modine transaction: Gentherm expects its combination with Modine Performance Technologies to close in early Q4, creating a company with roughly $2.6 billion in revenue, EBITDA margins above 12% and less than 70% light-vehicle exposure.
• 2030 targets: Management aims to reach $3.5 billion in revenue and more than $500 million in EBITDA by 2030, supported by cross-selling, diversification into industrial markets and more than 300 basis points of planned margin expansion.
• Diversification and growth: Gentherm is expanding into home and office furnishings and medical applications while benefiting from rising adoption of climate-controlled seats, lumbar and massage systems, with home and office revenue targeted at $100 million by 2028.

Gentherm NASDAQ: THRM outlined plans to diversify beyond light-vehicle thermal comfort products, expand margins and complete its combination with Modine Performance Technologies, which management expects to close in early fourth quarter.

Speaking at a JPMorgan event, President and CEO Bill Presley described Gentherm as a $1.5 billion provider of thermal and precision flow-management technologies. The company’s core platforms include air-moving devices, pneumatic systems, valve systems and thermal technologies. Its current revenue mix is 97% automotive and 3% medical, but management said it is pursuing growth in medical, home and office furnishings, commercial vehicles, off-highway equipment and power generation.

Gentherm sells products such as heated and cooled seats, heated steering wheels, lumbar and massage systems, surgical warming blankets, warming pads and fluid-warming devices. Presley said the company supplies more than 50 automakers and holds about 50% of its core automotive market.

Modine transaction targets broader markets

Management said the planned combination with Modine Performance Technologies represents a major step in shifting Gentherm’s end-market mix. Modine Performance Technologies produces heat exchangers used in commercial vehicles, off-highway equipment and power-generation applications.

Presley said the combined company would have approximately $2.6 billion in revenue on day one, EBITDA margins above 12%, and less than 70% exposure to light vehicles. Gentherm has set a goal of reaching $3.5 billion in revenue and more than $500 million in EBITDA by 2030.

The company expects the deal to create cross-selling opportunities, including an estimated $100 million of additional revenue by 2030. More than half of that opportunity is expected to come from Gentherm’s valve business, Presley said. The products can be used alongside Modine’s heat exchangers, while Modine’s operations could provide Gentherm access to new customers and markets.

India was highlighted as one potential benefit. Presley said Modine has manufacturing capacity and commercial teams in the country, enabling Gentherm to pursue opportunities involving two-wheelers, cooling products, valves and fans.

Chief Financial Officer and Treasurer Jon Douyard said the transaction is structured as a Reverse Morris Trust. Gentherm announced the deal in January, has received regulatory approvals and has secured $800 million in committed financing, he said. The company plans to hold its shareholder vote on Sept. 10 and remains on track for an early-fourth-quarter closing, subject to remaining items including an Internal Revenue Service ruling.

Automotive growth supported by take rates and new launches

Douyard said Gentherm delivered a strong first half, driven by production launches, broad-based revenue growth and operational improvements. China, North America and Europe all contributed to growth, while pneumatic lumbar and massage products were a leading contributor.

Management characterized the year as “U-shaped” from a margin perspective. Gentherm saw strong first-quarter results, followed by a second-quarter step-down tied to inflationary pressures and inventory adjustments associated with its manufacturing footprint transitions. The company raised its guidance following its earnings report, Douyard said.

For 2027, Gentherm has projected revenue growth of 10% from the midpoint of its previously issued guidance, based on awarded business and program visibility. Management expects lumbar and massage systems to remain among its fastest-growing product categories.

Gentherm estimates climate-controlled seats currently reach about 50% of seats and could reach 70% by 2030. Pneumatic systems, which replace mechanical and electromechanical lumbar solutions with air bladders and valves, have about a 15% take rate and could double by 2030, according to Douyard.

In China, the company expects long-term growth of mid- to potentially high-single digits above the market. Douyard said Gentherm has tailored its products and operations for local requirements and is selectively partnering with Chinese automakers where it sees durable opportunities. He added that Chinese automakers expanding into Europe could turn to Gentherm because it already has a European footprint.

Home, office and medical initiatives advance

Presley said Gentherm’s home and office business moved from initial work in June of last year to production by December using the same technologies and equipment used for automotive applications. The company initially won business with KUKA Home Furnishings and has since added four other original equipment manufacturers, though those customers have not yet been publicly named.

Management said it is comfortable targeting $100 million in home and office revenue by 2028, supported by applications in sofas, recliners, love seats, mattresses and office furniture. Presley said the business is utilizing open manufacturing capacity and has not required additional capital investment.

In medical, Gentherm plans to begin generating revenue this month from ThermAffyx, a warming and patient-positioning system designed for robotic surgery. Presley said the company combined automotive heated-seat technology with a high-density foam fixation pad and controller to address patient hypothermia during procedures.

The product was soft-launched in April at the Association of periOperative Registered Nurses event in New Orleans. Presley said 60 people signed up for training, 50 enrolled in a trial period, and Gentherm has secured contracts with group purchasing organizations.

Douyard also discussed Gentherm’s acquisition of IME, a patient thermal-management business expected to generate $17 million to $18 million of annual revenue with EBITDA margins above 20%. Gentherm expects its combined medical business, currently about $50 million, to exceed $100 million and approach $150 million by 2030.

Margin expansion plan

Gentherm is pursuing more than 300 basis points of margin expansion over the next five years. Douyard cited manufacturing footprint consolidation, improved pricing and contract terms, higher volumes, and a larger contribution from home, office and medical products as primary drivers.

The company expects both legacy Gentherm and Modine Performance Technologies to move from EBITDA margins of roughly 12% to more than 15% by the end of the decade. Presley said Gentherm intends to use expected cash generation for strategic investments, acquisitions and shareholder returns.

About Gentherm (NASDAQ:THRM)

Gentherm Incorporated NASDAQ: THRM is a global developer and supplier of advanced thermal management technologies for automotive, specialty vehicle, medical, consumer and industrial markets. The company's core focus lies in delivering integrated heating and cooling systems designed to enhance energy efficiency, comfort and safety across a wide range of applications. Gentherm's product portfolio includes seat thermal systems, heated and ventilated seating surfaces, steering wheel heaters, battery thermal management solutions, and climate systems for electric vehicles.

In the automotive sector, Gentherm partners with leading original equipment manufacturers to engineer and manufacture high-performance thermal solutions that meet stringent industry demands for reduced weight, lower energy consumption and improved passenger comfort.

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