Company: THRM
Filing Date: 2025-02-19
Form Type: 10-K
Source: 0000950170-25-023344
Chunk: 9

Company: Gentherm Inc
Filing Date: 2025-02-19
Form: 10-K
Item: Item 1
Chunk 9
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 seat or interior design. As an independent supplier we can work with any OEM and any seat manufacturer to create scores of innovative and unique configurations for all of their applications.

Once the integration work is complete, prototypes are sent to the OEMs for evaluation and testing. If an OEM awards us the business, a program can then be launched for a particular model on a production basis, but it normally takes one to three years from the time an OEM decides to include any of our products in a vehicle model to actual production for that vehicle. During this process, we derive funding from prototype sales but obtain no significant revenue until mass production begins. Upon commencement of mass production, our products are sold by Tier 1s to the OEMs. Inherent to the automotive supplier market are costs and commitments that are incurred well in advance of the receipt of orders and resulting revenues from customers.

The volume of products we sell is significantly affected by global and regional automotive production levels and the general business conditions in the automotive industry. Our product revenues are generally based upon purchase orders issued by our customers, with updated production schedules for volume adjustments. As such, we typically do not have a backlog of firm orders at any point in time. Once we are selected to supply products for a particular platform, we typically supply those products for the platform life, which is normally five to ten years, although there is no guarantee that this will occur. In addition, when we are the incumbent supplier to a given platform, we believe we have a competitive advantage in winning the redesign or replacement platform, although there is no guarantee that this will occur. 

For 2024, our revenues from sales to our two largest customers, Lear Corporation (“Lear”) and Adient plc (“Adient”) were $231 million and $157 million, respectively, representing 16% and 11% of our product revenues, respectively. Revenues from Lear and Adient represent sales of our climate and comfort solutions. Lear is a direct competitor to Gentherm as part of a vertical integration strategy. The loss of or significant reduction of business from Lear or Adient, would likely have a material adverse impact on our business, results of operations and cash flows. 

As noted above, in many cases automotive OEMs direct their suppliers such as Lear and Adient to work with us. Combined, approximately 66% of product revenues to these customers was sourced directly by the OEMs. It is, therefore, relevant to understand how our revenues are divided among the OEMs, as shown below. 

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