Yeah, let's get it kicked off here. Good morning. Thank you for joining us. My name is Luke Young. I'm the Baird analyst covering vehicle tech and mobility. It's our pleasure to introduce you today to Gentherm, the market leader for both thermal and pneumatic devices for automotive, but also looking to push into non-automotive markets as well, which we'll cover this morning. Happy to have Bill Presley, CEO, seated directly to my right, John Douyard, CFO, for a discussion today. Before that, I'll turn to the mic for some introduction from ours. Yeah, thanks, Luke. Happy to be here today. Just a couple of comments real quick about Gentherm. Really what we do is we innovate essential technology to improve performance. Today we are the global market leader of innovative thermal management and pneumatic solutions, mostly in automotive and medical. Just some examples of our technology. If you have a heated and cooled seat in your car, heated steering wheel, that's our technology. If you've ever gone into a surgery and you've had a thermal blanket over you to control hypothermia during anesthesia, that's the type of technology we do. It's really built off of four core platforms, which are thermal management, fancy name for heating pads, air moving devices, fancy name for fans, pneumatic solutions, and valve systems. We put those together to create the system solution. At our core, we are really a flow management company. What I mean by that is our valves manage the flow of fluids and air in the system. Our air moving devices and thermal management systems manage the flow of the thermodynamic equation to modify the environment. That technology, our core competency of flow management and our core platforms, is widely transferable into other markets. That is kind of what we are here to talk a little bit about today. I think there was a time, John, John and I both joined January 1st of this year. I think there was a time where we were probably both looking in the mirror and said, we have got to build a more resilient company. That means a strategy around strategic profitable growth, really driving operational excellence to achieve superior financial performance and really drive total shareholder return. We are very confident in our ability to grow in the light vehicle market. We're on track for another year of $2 billion plus in awards in the light vehicle market. We've secured some strategic wins and we see our take rates continuing to increase in the market. We're confident also in our ability to grow in adjacent markets. We started our adjacent market read across, really, like I said, when we walked in the door at the beginning of the year. Since April, our team has been able to build a funnel of over $300 million in lifetime revenue. They've won awards in power sports. They've won awards in commercial vehicle. Most recently, we've actually been named as a production supplier for a leading furniture brand. We'll go into production with them in the first quarter. We've maintained our focus on operational excellence. We continue to drive our standard operating system and key performance indicator standardization across the company. That is so we can benchmark sites and facilities against each other to really maximize utilization of our assets and drive down capital expenditures. Our goal is to generate the appropriate amount of cash to make sure that we are in a position of strength on our balance sheet. We have a vision. We are on a mission to make sure that Gentherm becomes a $3 billion company with less than 70% exposure to the light vehicle market. We know that M&A will be part of that. We will not get there organically alone. We are very diligent and intentional about our capital allocation. We have built an M&A funnel that specifically targets companies that give us access to the markets we want to be in with products that complement our core competency of flow management. Look, we're building a stronger, more resilient Gentherm. We had a great base to build off of. We're very confident in our ability to execute the strategy. We're very confident in our ability to create the company that's more resilient, as we've talked about. With that, Luke, I'll turn it over to you. Okay, thanks, Bill. If you'd like to jump in the conversation today, just a reminder, you can email questions to session7@rwbaer.com. Why don't we start with the macro on the auto side of the house, then get to non-auto in a second here. Certainly in the very near term, supply chain was a disruptor, kind of late 3Q into 4Q. We had Nexperia. We had the Novelis situation. Sitting here in early November, just kind of what's the latest on those items? Yeah, I mean, it's been an interesting year. There's been a lot of discussion on tariffs and those types of things early in the year. The overall production environment from an OEM perspective was actually relatively stable until about that September timeframe when you had the fire at the aluminum plant. You had the Nexperia chip issue. You had a cybersecurity strike at Jaguar Land Rover as well. You had a Korea strike in there as well, all around the same time. I would say we haven't seen any material shifts. When you look at the EDIs or the demand signals that we get from our customers, we have seen them take down revenue here a little bit in the fourth quarter, but still within the guidance range that we put out on our earnings call. It has created a little bit of inefficiency throughout the manufacturing operations just in terms of managing and shifting schedules. Generally, the top line is more or less in line with what we expected. We will see how that plays out for the balance of the year. Yeah, and Nexperia, maybe too soon to tell. It sounds like some of the shipments are resuming, but it may be pretty early in that resumption process. Yeah, I think that one, the news is positive. I'm not sure if you've seen some announcements from the OEMs that they've adjusted production schedules as a result of some of the shortages. Yes, probably still too early on that one. Yeah. As you said, 2025, certainly the theme of this year up until September has been less bad very consistently. As you just think about 2026 preliminarily, realizing you're not giving guidance yet, what are the more glass half full or glass half empty dynamics as you look at the next year? Yeah, I'll start, and Bill, you can jump in. I think when you look at overall industry production volumes in the relevant markets that we play, they're down about, projected to be down about 2% for 2026. I think with the award activity that we've had over the last couple of years, we would expect to be able to grow year over year in that environment. We've also given some of the strategic initiatives on adjacent markets, things like furniture, which could be a $2 million-$3 million opportunity for us annually just on that one award. Those types of things, as we collect more of them, will also accelerate growth for us. Yeah, no, I would say well said. Look, we have good visibility to the customer schedules, I would say a year out. It just goes back to John said, they expect the market to be down. We have very good visibility to the customer orders. We have very good line of sight to our revenue for next year. As John said, we expect to outgrow the market next year. In terms of that visibility, what about mixed trends or just the actual individual vehicle impacts that might be beneficial or not to you? Yeah, I mean, for us, what's really interesting is our products are really becoming standard, I would say, in the automotive industry, especially with regard to climate-controlled seats or heated steering wheels. Those are features that the OEMs want to include because the customers now expect those. Just as a data point, we've seen China actually drive adoption in the China market. And what I mean is you can get a Chinese OEM car that's fully loaded with comfort technology for under $35,000. That has in turn caused the global joint venture OEMs to actually increase their take rates. So we see our products really becoming standard. We're very confident in our ability to grow in automotive. We know, as an example, Lumbar, which a year ago was, Lumbar and Massage was about $180 million in revenue. By 2027, it'll be well over $300 million. We're confident in that path. That's why we're focused on the ability to drive that same technology coming off the same plant property and equipment into the other markets to create more opportunity. I would just add, I mean, I think we've got a very diversified customer base. A lot of discussion and questions we get around powertrain technologies and the impact on the business. I would say we are completely agnostic in terms of what direction the customers go. It's really about the pull from the end customer that Bill talked about that's creating the increase in take rates and growth for our business. Just asking a couple of polling questions of everyone here this week. One of those is just certainly there is U.S. government policy-related impacts right now. I mean, tariffs have, of course, been a big impact on automotive this year. We have the one big beautiful bill from a tax standpoint, USMCA renegotiations next year, interest rate policy. There is a lot going on. If you put it in the crystal ball and look into next year, what would you say might be most impactful incrementally to Gentherm into 2026? Yeah, I mean, I think as you hit most of those tariffs, the tax bill, a lot of that has been relatively neutral for us, I would say. I think the big one just from a broader industry perspective would be what happens with USMCA, which is a bit of an unknown at this point. I think that would be the sort of question mark as you look out into 2026. I think as we just said, given the visibility that we have, we've certainly got confidence in the growth path based on awarded activity today. We continue to think and look at the strategy and sort of execute through a lot of what the noise is from a political perspective right now. Okay, let's talk about the non-auto piece. As you mentioned, you've got this midterm target for non-auto to be 30% of the company or more. There are a couple of key verticals that you focused on within that. Maybe if we could start with why those are the right ones to focus on. As you mentioned, Bill, we've had some initial proof points in the last couple of quarters. Maybe if we could just talk about those a little more in depth. Yeah, absolutely. So we do have a medical business, and we're intent on growing the medical business. I mean, the margins in medical are double that what they are in automotive. One of the things that we did is we have pushed our automotive technology into the medical business to answer some solutions there. What we're really focused on is driving scale of existing technology that we use in light vehicle into other markets, utilizing the existing plant property and equipment. I have to be very clear on that. Luke's probably tired of hearing me say it, but we're not interested in bespoke solutions for bespoke markets. One of the things that we've done is we've looked at total attainable markets where we think that our technology reads directly across. I would say there are a couple that stand out. One is commercial vehicle. Think like heavy class A trucks, think agriculture, that type of stuff. The TAM is quite large, and what they're really interested in are solutions that improve safety, which we have with our heated steering wheel that provides hands-on detection. Our fluid systems, our valves also play directly into that market. There is that other mobility commercial vehicle. The other one that's really starting to resonate is motion furniture. That one was a bit of a surprise for us as we poked into the TAM. Anywhere that you have a power recliner or furniture in your house with motion, there's already power there. We're seeing a real pull for that type of comfort technology, be it lumbar, massage, or heated solutions in that industry. Why it's resonating is people are coming into the furniture dealerships saying, "I have this technology in my vehicle. Why can't I get this in my furniture?" Very fractured market. The problem that we used to have in that market was they do not want to do a volume guarantee. We do not want to do a unique solution. It did not work. Gentherm solved that problem by taking our low voltage, light vehicle technology and creating what we call standard kits. We say, "As long as you use our standard building blocks, we do not need to talk about volume. We can scale for you." We started talking to a furniture manufacturer in June, and we will be from first conversations to revenue in Q1 of 2026. The TAM on that market is quite large. I would say commercial vehicle, agriculture, motion furniture, very attractive to us right now given the size. When we add those things up, we think the total attainable market is probably very close to our total attainable market in light vehicle. I just go back to very focused on utilizing existing assets. All of the wins that we've had thus far, we've not invested anything. We are using existing equipment. Yeah, maybe if we could just double-click on kind of where you're finding customers in terms of receptivity and just how you're winning. I mean, like you said, to go from initial contact to in production within six or seven months is pretty impressive. I guess it kind of begs the question, what wasn't being done in the past that you've pivoted to? I think I'll go back to two things. What wasn't being done in the past is nobody of scale really wanted to engage because there were no volume guarantees. Light vehicle always revolves around, "You're going to source me a program. You're going to give me so much revenue or units a year, and I know how to put in capacity and build to that." Something like the furniture market is very fractured. There are hundreds and hundreds of manufacturers out there. Nobody really of scale wanted to sign up for that. That's where the standard kits, I think, answered question number one. The other thing that Gentherm brings is we bring credibility into that space. There are some of those solutions out there now, but they're very fractured. They're very small organizations. A constant theme we've heard is there are quality issues. There's durability issues. It was interesting as we started pushing into that market, the standard kit resonated. We asked them, "What are your requirements for durability for testing?" The answer we got almost to every company was, "Whatever you do for light vehicle is far more rigorous than anything we do. We'll just use that." It is a very, again, attractive market to us because the margins are higher than light vehicle. Where is this going to be booked? As we look into future years, how should we think about just assessing your progress of turning on this business, John? Yeah, I mean, we'll be very forward in terms of the progress on awards and where we're markets that we're entering. I think in terms of where it ends up in the P&L, from a product perspective, it'll end up being with the climate and comfort solutions group at this point to the extent that we need to pull it out separately. We'll do that when it gets to scale. I think for us, it's about making progress and making sure that we're keeping people up to speed as to that progress that we're making. Let's talk about medical as one of the key cogs here in terms of what you're envisioning. Maybe, Bill, if we could start just how you think about rights of play in these markets. I guess my lens of what happened in medical in the past where the company has been, channels to market are really important as well, just the work that you're doing on channels also. I would say the good thing with Gentherm is the channels were already established. Gentherm acquired a company called Cincinnati Sub-Zero that had a medical group in 2016 or 2017. The channels are established. We go through GPOs. We sell directly to hospitals. We sell through distributors. The thing that we were addressing when we started earlier this year in the medical business was the product portfolio was somewhat aged. Surgical procedures had advanced. There were new problems that needed to be solved. Really, we needed a new infusion of product line management into that business. Tore down the walls between automotive and medical. They were kind of bifurcated in the past. Brought the auto guys in to look at the problems that the medical people had. The medical people looked at the product portfolio that the auto teams had. They found multiple new products that we're now in the process of developing that answer problems and questions that surgeons are having in today's surgery. Really excited about that one for the margin profile. The gross margin of the medical is 50%. We're not focused on being a me too. We're bringing new products to market in a space where there is nothing answering the solution. I'll give you an example just to make it more obvious. There are certain ways that they do surgery now where they actually position the patient to give the surgeon better access. There are these Trendelenburg machines that position things. You have to secure the patient in place, but anytime a patient goes under general anesthesia, you have to control their core thermal temperature so they do not slip into hypothermia. In the past, the way they did that were with heated pads underneath the patient or heated cooled blankets over the patient, but you can't put those in place and secure the patient. There's no slick answer for how to do that today, and they kind of piece it together. Those are the kind of products that we're working to develop to bring to market. Those are products that I think you've said need some FDA approval as well. We can maybe have the keys to unlock that business as we go into next year. Is that right? Correct. We expect around near year-end, we will have some significant announcements with regard to FDA and 510(k) compliance in that space. As you've mentioned, obviously, this is an attractive business from a gross margin percentage standpoint. I guess my perception of the business is it's probably closer to break even from an EBIT margin standpoint right now. Just as you grow this business, maybe one, just kind of what your growth ambition is over the midterm and two, how you think about leveraging volume with that attractive gross margin. Yeah, I mean, I think the business today is $50 million. The gross margins are close to 50%. To your point, the EBITDA or the operating income of the business is relatively break even. The thing that we like about the business is we think that it can be a multiple of what it is today, certainly north of $100 million. The problem with the business, Bill addressed the product piece, but it's really just scale. We have the infrastructure in place, whether it is the channel, whether it is the team operating it, whether it's the regulatory support that we need to support the medical business. All of that is in place today and actually scales really nicely with top-line growth. We would expect the fall through in contribution margin on incremental volume to be very strong and reflect something pretty close to the gross margin of that business. Bill, did you want to talk about just growth ambitions qualitatively in that business at least? I mean, I think John hit it well, right? When we first came in, everybody said, "Hey, we think medical can be about a $100 million business." We really think it can be a multiple of that. Looking forward to early next year when we can really come out and be fully transparent on what we think the total attainable market is and the growth trajectory. Okay. What about acquisitions? You mentioned in your introductory remarks that you do not want to do M&A. I mean, should we think about you acquiring into medical? Maybe put that in the context of the M&A strategy writ large and just what makes an attractive candidate for the company. Yeah. I would say we look at it through some very specific lenses. Certainly, if the right opportunity came in medical and we could find it, we would. We would be very interested in that. Really, what we're focused on is, I would say, three things. One is maintaining our flexibility with regard to capital allocation. We do not want to lever up to the point where we do one thing and we are just doing that one thing for a long period of time. Number two is, does it provide products that complement our existing core competency of flow management? Number three, does it give us access to markets where we want to push into? We are really focused, again, on scaling. We are really focused on profitable growth. M&A has to fit all of those equation parameters, but not handcuff us to the point that we can't continue to invest in the company. Anything else? Yeah. I mean, I think certainly around strategy acceleration, I think it was on an earlier slide, but our balance sheet today sits essentially at almost net debt neutral or at 0.2x levered. We've got plenty of capacity to do M&A. It's got to be on strategy, as Bill talked about. It's got to drive the appropriate return and accretion from a profitability perspective. We think there's a number of attractive assets. As we've relooked at the strategy, as we've focused on four core platforms, we've really had to rebuild the M&A funnel. We've spent a lot of time this year working on that. We think we're getting to the point where there's, I'll call it a handful of attractive assets out there that are worth cultivating further. That are right on the strategy that we've talked about. We're excited about that. Again, we've got the balance sheet. We've got the team, the resources to be able to do it. So we're confident in that and view it as a key piece to the growth profile here over the long term. In terms of an appropriate return, any more context you can provide there? I think there's probably some people wondering if there is a medical acquisition, just what that might look like from a multiple standpoint or returns five years out. Yeah. I mean, I think in the medical space, we would be more at this point looking more at sort of tuck-in type acquisitions, something that are smaller versus transformative, just given the multiples in that industry versus where we're trading today. As we think about return on invested capital, certainly exceeding cost of capital by year two, would expect something north of 15% as we look at the out years. Great. With the time we've got left, let's talk a little automotive and thermal and pneumatics and whatnot. Pneumatics, I'd say, is certainly one of the best stories within automotive supply right now. Can we talk about how you're continuing to press the advantage this year and the $300 million+ sales target that you referenced? I mean, it feels like you're adding to that with this year's awards being above $2 billion again. Yeah. Our pneumatic success is really driven by innovation. If you look at our Pulsea system with just pulsating massage in the seat, there's nothing like it in the marketplace. We introduced it to the market last year, and now we've had four OEMs adopt it and put it into their product line. We always talk within Apte about defend, innovate, and grow. Pneumatics is certainly in the innovation space, and it's allowing us to grow. That's really the driver there. Yeah. How do you think about within innovating in this category, just balancing product leadership, so those Pulsea awards that you mentioned, versus sweating the assets, which is something that feels like we're leaning into a little bit more under your leadership? Yeah. I'm a big sweating the asset person, but I believe that those two things are mutually required. You have to squeeze as much as you can out of your net assets to free up cash so that you can put it into the product line. You can innovate with the company. You can have that flexibility on your balance sheet. I don't view them as an either/or. I think a proof point this year was since the beginning of the year, we pulled the CapEx down. $20 million, $25 million. $20 million-$25 million from the beginning of the year, we took the CapEx number down. We have not delayed anything. It has really been a focus around when somebody says, "I need a new piece of equipment." I come from a heavy operational background. I say, "Great. Show me your overall equipment effectiveness. I want to see your utilization rate." We have just found the ability to generate more capacity with existing floor space and equipment. What about driving faster growth in the other side of the house, seat heat and vent? Just what gets it growing again? Do you think you can grow both of those product groups? Yeah. I think they both continue to grow. I just say we're really pushing high levels of what I would say market adoption. I mean, by 2030, we're talking over 60% of the vehicles on the road have that as standard equipment. I think they'll continue to grow. I think pneumatics is really the wave that comes behind it because it's on a later adoption curve in the light vehicle space. That is why we go back to growing that climate-controlled seat, the heated cooled seat. The other markets are really going to be a big driver for us. Again, what we're putting into the furniture industry are literally the same part numbers in our manufacturing system that we put into the automotive industry. Yeah. The time we got left, I want to make sure we touch on operations as well. Maybe if we could start with kind of day one, walking into the company, kind of what you found operationally. You certainly made some incremental progress already this year, kind of some of the key achievements going into 2026. I would say, look, Gentherm is a young company, 30- years- old, has grown relatively rapidly in its history. It is what you would expect. I come from the last two companies I worked at were both 100- years- old, very established operating systems, very established playbooks. Gentherm, given its scale, was really, really good at functional leadership, felt a lot more like an entrepreneurial type company. We have been focused on building the operating system, standardizing the operating system, and accelerating some footprint moves. We are doing footprint consolidation in every single region right now to take out some of our plants. We are confident even once we do that, we still have the ability to grow into that $3 billion. For next year, we are just going to stay focused operationally on the basics. It is an incremental continuous improvement mindset to drive margin expansion. Yeah. I would just add, I mean, the example on being able to reduce the CapEx requirements for this year. Last year, we were about 5% of revenue. This year, we'll be closer to 3%-3.5%. I think that's a better go-forward run rate that comes with the operating system Bill's talking about. Focus on inventory and conversion from that perspective. We're a little bit elevated right now just given the footprint moves, but a lot of focus on instilling the rigor really across every facility on the importance of inventory and cash flow. We've seen pretty strong cash flow year to date as well. In terms of those, yeah, facility moves you're making, maybe just to put a finer point on that, is it right that investors should think there's going to be some more margin leverage that gets unlocked as those fully come online? Yeah. So I mean, we've spent most of 2025 accelerating those moves, still continue in through 2026, where we can then get rid of the legacy footprint. As we get out to 2027, we would expect a 0.5+ of margin expansion as it relates to the footprint transitions that we're going through right now. This company has historically operated in the 15%-16% EBITDA range. We did 12.5% last year. We view footprint as a key piece and key driver to be able to get back there, as well as being able to scale with growth and then the pneumatics growth as well. The margin that comes along with the new programs there. We feel confident that we've got multiple points of margin expansion here. Footprint is certainly a key piece of that. Yeah. Another polling question for you, Bill. Are you using AI internally at all? I'm just curious if you are, just what you're doing there. We actually view AI as an employee multiplier as opposed to an employee replacement. We are very conscious with regard to AI. When we talk about AI, we say, "What problem are you solving?" I will tell you in the medical product development, there are some software requirements that come with some of the products. Our engineers have used AI as a case study to take something that would have taken them months with regard to code down to days. We are using that, but again, we are using that as an employee multiplier. Okay. Maybe just to capstone here, we got a minute left or so. Just at a very high level, we met three to five years from now, and your facility consolidation is online. You dumped some M&A. Just kind of like your vision for the company maybe three years out now. We'd be a $3 billion company with less than 70% in light vehicle production. Our EBITDA would be above 15%. We'd be back to that mid-teens EBITDA. For me, that would mark success. John? Well said. Yeah. Okay. Cool. Yeah, go ahead and leave it there. Please join me in thanking management for the time today. Thank you. Thank you. Good morning. Thank you for joining us. To markets as well, which we'll cover this morning. Happy to have Bill Presley, CEO, seated directly to my right. John Douyard, CFO, for a discussion today. Before that, I'll turn to the mic for some introduction remarks. Yeah. Thanks, Luke. Happy to be here today. Just a couple of comments real quick about Gentherm. So really what we do is we innovate essential technology to improve performance. Today, we are the global market leader of innovative thermal management, m ostly in automotive and medical. Just some examples of our technology. If you have a heated and cooled seat in your car, heated steering wheel, that's our technology. If you've ever gone into a surgery and you've had a thermal blanket over you to control hypothermia during anesthesia, that's the type of technology we do. It's really built off of four core platforms, which are thermal management, fancy name for heating pads, air moving devices, fancy name for fans, pneumatic solutions, and valve systems. We put those together to create the system solution. At our core, we are really a flow management company. What I mean by that is our valves manage the flow of fluids and air in the system. Our air moving devices and thermal management systems manage the flow of the thermodynamic equation to modify the environment. That technology, our core competency of flow management and our core platforms is widely transferable into other markets. That is kind of what we are here to talk a little bit about today. I think there was a time, John and I both joined January 1 of this year. I think there was a time where we were probably both looking in the mirror and said, "We have got to build a more resilient company." That means a strategy around strategy.