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Gentherm Reports 2016 First Quarter Results

NORTHVILLE, Mich., April 28, 2016 /PRNewswire/ -- Gentherm (nasdaq-gs:THRM), the global market leader and developer of innovative thermal management technologies, today announced its financial results for the first quarter ended March 31, 2016.

Gentherm revenues for the 2016 first quarter increased year over year to $215.7 million from $206.9 million for the 2015 first quarter. Excluding the impact of the strength of the U.S. Dollar, revenues for this year's first quarter would have increased approximately 6 percent to $219.4 million.

Net income for the quarter was $11.9 million, which included the effect of a previously disclosed, one-time Canadian withholding tax payment and other related tax adjustments. Without that payment and the other tax adjustments, net income for the quarter would have increased to $21.5 million from $19.8 million for the first quarter of 2015, or $0.59 per basic and diluted share.

"Our topline revenue in the first quarter was softer than we planned but all of our core automotive businesses continued to grow and increase market share," said President and CEO Daniel R. Coker. "It's important to note that we are in an exciting new phase of our business as we expand into new vertical markets and create new, powerful growth drivers, and revenue streams."

In addition to the 2016 first quarter results, the company also announced that it has acquired a design group with technologies and resources to help existing customers of energy storage systems. The design group, based out of California, hold expertise and technology for development of electrical systems architectures for electrified vehicles. The addition of this team strengthens the company's market position and will open up new markets for the company's proprietary battery thermal management technology; which will enable the company to further support their customers in this important and growing space.

"This acquisition further expands Gentherm's activities in battery systems technologies such as our battery thermal management and other existing products and extends our presence across the board in electric vehicle architecture. This increases our customer value in an important product category, which we believe will add value to this specialized target market," said Coker.

At the end of the first quarter, Gentherm announced that, effective April 1, 2016, it would acquire Cincinnati Sub-Zero Products (CSZ), a manufacturer of environmental test chambers for the industrial market and provider of related industrial product testing services, and a manufacturer of patient temperature management systems for the health care industry, opening new markets and new platforms for growth. And, just yesterday, Gentherm announced that its Electronics Business Unit (EBU) had developed an innovative, cost effective new electronics product that won a contract from a major automobile manufacturer, creating the potential for another new growth platform with a variety of applications.

Those new additions are the latest examples of the global business expansion underway at Gentherm, Coker added. They join other recent additions including the Company's remote power generation and industrial market-focused Global Power Technologies (GPT) business; its Battery Thermal Management business in the global hybrid and electric vehicle market; and its furniture business, which includes a proprietary line of heated and cooled bedding products and heated and cooled office seating.

Gentherm will continue to evaluate strategic business opportunities to leverage its engineering expertise, its thermal management technologies and its global sales, manufacturing and marketing footprint, Coker added.

"We are very optimistic that these new businesses will gain greater traction in coming quarters and be significant contributors to our revenue and profitability in the near future," Coker said. "We will always have a strong focus on thermal management for the global automotive market, but we are a multi-faceted technology company that is expanding beyond our traditional core products into new industries with new products and new global markets."

First Quarter of 2016 Financial Highlights Revenues for the quarter increased to $215.7 million, up 4.3 percent from $206.9 million in the 2015 first quarter.

The year-over-year revenue increase for the quarter included growth in Climate Control Seat® (CCS®) shipments, an increase in seat heater sales and continued growth in sales of heated steering wheels. GPT revenue for the quarter decreased year over year due to the unfavorable impact of market weakness in the energy markets. This decrease partly reflects continued weakness in the demand for GPT's products in North America. During prior quarters, this weakness had been offset by higher sales of products that were sold into geographical markets outside of North America. However, these sales are for typically larger custom products which are more impacted by the timing of shipments which favor some quarterly periods over others. Fewer of these custom systems were shipped during the first quarter. Further information regarding product sales is detailed in the table accompanying this news release.

A portion of Gentherm's product revenues come from sales denominated in foreign currencies. Had the average foreign currency exchange rates in the quarter been the same as the average exchange rates in the first quarter of 2015, the Company's product revenues would have been approximately $3.7 million higher year over year. Adjusting for this unfavorable currency translation impact, Gentherm's product revenues for the quarter would have been $219.4 million or 6 percent higher than the first quarter of 2015, reflecting higher unit volumes in substantially all of the Company's markets and products except for GPT. Even though the exchange rate of the Euro was down during the first quarter, by the end of the quarter the strength of the Euro had improved, and that trend seems to be continuing.

Net income for the quarter, including the effect of a previously disclosed, one-time Canadian withholding tax payment of $6.3 million and other related tax adjustments of $3.3 million all associated with the closing of Gentherm's Windsor, Ontario Canada facility, was $11.9 million, or $0.33 per basic and diluted share. Net income for the first quarter of 2015 was $19.8 million, or $0.55 per basic share and diluted share.

Net income for this year's first quarter excluding the impacts of the one-time Canadian withholding tax payment and the other tax adjustments would have increased 8.6 percent year over year to $21.5 million or $0.59 per basic and diluted share.

Gross margin as a percentage of revenue for the quarter was 31.6 percent compared with 32.2 percent in the first quarter of 2015. The modest decrease reflected an unfavorable change in product mix due to the lower GPT revenues and higher overhead costs associated with the new production facility in...