Gentherm, a Northville-based developer of innovative thermal management technologies, Monday announced a strategy expected to deliver an above-market organic growth rate, margin expansion, and improved return-on-investment capital through 2021.
“We believe the global automotive market is large and under-penetrated with climate and comfort solutions. As the clear industry leader, Gentherm is uniquely positioned to deliver innovative solutions not only essential to today’s automotive market, but also key to vehicles of the future,” says Phil Eyler, president and CEO. “We are sharpening our execution and are committed to expanding profit margins and return on invested capital, leveraging our expertise in human thermophysiology and thermal technology, strong global customer base and world-class manufacturing capabilities.”
The company has outlined four pillars of its strategy, which was developed following a six-month review of Gentherm’s business operations and market opportunities. The pillars include focused growth, extend technology leadership, expand margins and return on investment capital, and optimize capital allocation.
Gentherm plans to focus its growth on key technologies and product categories to drive sustainable above-market revenue growth. It plans to accelerate the core automotive climate and comfort growth, introduce microclimate solutions, drive battery thermal management, and expand patient thermal solutions.
The company will also focus investments in key core technologies and competencies, including thermophysiology, software and electronics, simulation, thermal engines, and integration, allowing the company to meet customer needs by increasing efficiency and effectiveness.
The strategy is centered around building a culture of performance. Gentherm has introduced a fit-for-growth cost reduction program consisting of eliminating or minimizing non-core investments; rationalizing selling, general, and administration costs; enhancing focus and efficiency in the company’s engineering organization; driving down component costs through purchasing excellence; and refining manufacturing.
With Gentherm’s strategy and execution, the company is expected to generate more than $550 million in free cash flow over the 2018-2021 period. Gentherm will have the opportunity to return capital to shareholders while reinvesting in the business.
“With focused growth, aligned portfolio, sharpened execution, and technology leadership, we are well positioned to achieve our aspiration of $2.5 billion in revenue by 2025,” says Eyler.
Separately, the company’s board of directors have authorized an increase in Gentherm’s share repurchase plan to $300 million and extended the authorization period until December 2020.
A presentation made to investors regarding the changes can be found here.