Gentherm earnings for the third quarter of 2026 showed a $2.6 million net loss despite revenue growth, as margins narrowed and income tax expense increased. The thermal-management company announced the results on October 22 and raised its full-year outlook to include the fourth-quarter contribution from Modine’s Performance Technologies business, a combination completed after the quarter ended.
Key Takeaways
- Third-quarter revenue rose 4.7% to $405.1 million, but adjusted earnings per share fell to $0.33.
- Updated 2026 guidance includes Modine Performance Technologies from the fourth quarter, changing the scope of the forecast.
- Gentherm repurchased $60 million of shares in October and paid a $63.5 million special dividend.
Table of Contents
- Gentherm earnings show sales growth but weaker profitability
- Modine combination changes the full-year forecast
- October capital returns follow the transaction
- Conclusion
Gentherm earnings show sales growth but weaker profitability
Revenue for the quarter ended September 30 increased from $386.9 million a year earlier. Excluding foreign-currency translation, growth was 4.4%. Automotive Climate and Comfort Solutions revenue rose 8.8%, or 8.5% excluding currency effects, and the company secured $555 million of automotive new-business awards during the quarter. Those awards are not current-period revenue.
Gross margin declined to 23.3% from 24.6%. Gentherm attributed the contraction primarily to foreign exchange, higher net material costs and inflation, partly offset by operating leverage. Adjusted EBITDA fell to $45.0 million from $49.0 million, with its margin narrowing to 11.1% from 12.7%.
The net loss compared with a $14.9 million profit in the third quarter of 2025. Pretax earnings remained positive at $10.8 million, but income tax expense reached $13.4 million, exceeding pretax profit. A year earlier, pretax earnings were $20.9 million and tax expense was $5.9 million.
GAAP diluted earnings moved to a loss of $0.08 per share from a profit of $0.49. Adjusted diluted earnings per share declined to $0.33 from $0.73. The adjusted measures exclude specified items and should be considered alongside, rather than instead of, GAAP results.
| Item | Details |
|---|---|
| 2026 product revenue guidance | October: $1.825 billion–$1.925 billion; July: $1.55 billion–$1.65 billion. |
| 2026 adjusted EBITDA guidance | October: $210 million–$230 million; July: $185 million–$200 million. |
| 2026 adjusted free cash flow guidance | October: $100 million–$120 million; July: $85 million–$100 million. |
Modine combination changes the full-year forecast
Modine’s October 1 transaction completion announcement confirms that its Performance Technologies business was spun off and combined with Gentherm through a Reverse Morris Trust transaction. Because closing occurred after September 30, the added business contributes to Gentherm’s fourth-quarter outlook rather than the reported third-quarter results.
Gentherm updated all three full-year guidance ranges to reflect the expected contribution. The higher forecast therefore incorporates a larger business and should not be read simply as an improvement in expectations for the company’s previous operating scope.
Management’s outlook assumes tariffs in effect on October 22, its current customer-demand forecast, a low-single-digit decline in relevant-market light-vehicle production for 2026 and an exchange rate of $1.15 per euro. These are forecast assumptions, not completed results.
October capital returns follow the transaction
Gentherm paid a special cash dividend of $2.07 per share on October 7, returning $63.5 million to shareholders as part of the Modine transaction. It also repurchased $60 million of common stock after closing, leaving approximately $340 million available under the $400 million repurchase authorization approved in July.
Before those October transactions, Gentherm ended the third quarter with liquidity of $494.2 million and net leverage of approximately 0.4 times. Those quarter-end figures do not describe the balance sheet after the combination and subsequent capital returns.
Third-quarter operating cash flow declined to $36.0 million from $87.8 million a year earlier. Adjusted free cash flow, a separate non-GAAP measure, was $59.5 million, down from $72.3 million.
Conclusion
The next reporting period will be Gentherm’s first to include Modine Performance Technologies. Fourth-quarter results will show how the expanded business performs against the updated full-year ranges, after a third quarter in which higher sales did not translate into stronger profitability.
Read More News
Disclaimer
This FinanceVelix article provides general information, not personalized financial, investment, legal, or tax advice. Market prices, interest rates and economic conditions can change; investments carry a risk of loss. Facts reflect the material available when published and may change. Check important information independently and consult a qualified professional when needed. Mentioning an asset, company, or service is not an endorsement.
