Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q (this "Report") contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our goals, beliefs, plans and expectations about our prospects for the future and other future events, such as: the expected light vehicle production in the Company's key markets; the impact of macroeconomic and geopolitical conditions, the components of and our execution of our strategic plan, product and technology development and various restructuring plans; our operating performance; long-term consumer and technological trends in the automotive industry and our related market opportunity for our existing and new products and technologies; the competitive landscape; the impact of global tax reform legislation and other regulatory matters; the sufficiency of our cash balances and cash generated from operating, investing and financing activities for our future liquidity and capital resource needs; capital allocation strategies; our ability to finance sufficient working capital; and significant matters related to the recently closed Modine Transaction, including the expected benefits thereof, the tax consequences thereof and the combined company's plans, objectives, expectations and intentions, including integration activities. Reference is made in particular to forward-looking statements included in this "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations". Such statements may be identified by the use of forward-looking terminology such as "may", "will", "expect", "believe", "estimate", "anticipate", "intend", "continue", or similar terms, variations of such terms or the negative of such terms.

The forward-looking statements included in this Quarterly Report on Form 10-Q (the "Report") are made as of the date hereof or as of the date specified herein and are based on management's reasonable expectations and beliefs. In making these statements we rely on assumptions and analyses based on our experience and perception of historical trends, current conditions and expected future developments, third-party information and projections from sources that management believes to be reputable, as well as other factors we consider appropriate under the circumstances. Such statements are subject to a number of assumptions, risks, uncertainties and other factors, which are set forth in "Item 1A. Risk Factors" and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2025 and subsequent reports filed with the Securities and Exchange Commission, and which could cause actual results to differ materially from that described in the forward-looking statements.

In addition, with reasonable frequency, we have entered into business combinations, acquisitions, divestitures, strategic investments and other significant transactions. Such forward-looking statements do not include the potential impact of any such transactions that may be completed after the date hereof, each of which may present material risks to the Company's future business and financial results. Except as required by law, we expressly disclaim any obligation or undertaking to update any forward-looking statements to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by, the consolidated condensed financial statements and related notes thereto included elsewhere in this Report and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Overview

Gentherm Incorporated is a global leader of innovative thermal and precision flow management technologies. Our automotive products include Climate Control Seats (CCS®), Climate Control Interiors (CCI™), Lumbar and Massage Comfort Solutions, Valve Systems, and Climate and Comfort Electronics. We operate in locations aligned with our major customers' product strategies to provide locally enhanced design, integration and production capabilities. Our medical products include patient temperature management systems that can be found in hospitals throughout the world.

Our Automotive sales are driven by the number of light vehicles produced by the OEMs primarily in our key markets of North America, Europe, China, Japan and South Korea, which is ultimately dependent on consumer demand for automotive light vehicles, our product content per vehicle, and other factors that may limit or otherwise impact production by us, our supply chain and our customers. Historically, new vehicle demand and product content (i.e. vehicle features) have been driven by macroeconomic and other factors, such as interest rates, automotive manufacturer and dealer sales incentives, fuel prices, consumer confidence, employment levels, income growth trends and government incentives. Vehicle content has also been driven by trends in consumer preferences. We believe our diversified OEM customer base and geographic revenue base, along with our flexible cost structure, have well positioned us to withstand the impact of industry downturns and benefit from industry upturns in the ordinary course. Our industry is increasingly progressing towards a focus on human comfort, health and wellness, which is evidenced by increasing adoption rates for comfort products. Gentherm is an independent partner that can cooperate with any combination of the vehicle OEMs and seat manufacturers

globally, to create innovative and unique configurations that adapt to industry trends.

Modine Transaction

On October 1, 2026 (the "Closing Date"), the Company completed its previously announced combination of the Performance Technologies business ("Performance Technologies") of Modine Manufacturing Co., a Wisconsin corporation ("Modine"), with the Company (the "Modine Transaction"). The Modine Transaction was structured as a Reverse Morris Trust transaction, where a wholly owned subsidiary of Modine ("SpinCo"), owning Performance Technologies, was spun off to Modine shareholders (the "Distribution") and immediately thereafter merged with a wholly owned subsidiary of the Company, with SpinCo as the surviving entity becoming a wholly owned subsidiary of the Company (the "Merger"). The Company issued 23,735,961 shares of the Company's common stock, no par value ("Common Stock" or "Gentherm Common Stock") to the Modine shareholders of record as of close of business on September 28, 2026 (the "Record Date", and such holders of Modine common stock as of the Record Date, the "Record Date Modine Shareholders"). Upon completion of the Modine Transaction, the Record Date Modine Shareholders owned approximately 43.62% of the outstanding shares of Gentherm Common Stock (without taking into account any overlapping shareholder ownership), and continuing Gentherm shareholders owned approximately 56.38% of the outstanding shares of Gentherm Common Stock (without taking into account any overlapping shareholder ownership). The preliminary estimate of purchase consideration is approximately $800.0 million, subject to customary closing adjustments.

Prior to the Distribution and the Merger, SpinCo made a cash distribution to Modine of $156.0 million (the "SpinCo Cash Distribution"). In connection with the Modine Transaction, the Company also declared a special cash dividend (the "Cash Dividend") in an aggregate amount equal to $63.5 million, or $2.07 per share of Gentherm Common Stock. The Cash Dividend was paid in cash on October 7, 2026, to Gentherm shareholders of record as of the close of business on September 28, 2026.

On June 29, 2026, SpinCo entered into a credit agreement, providing for a senior secured delayed-draw term loan facility with aggregate commitments of up to $250.0 million (the "DDTL Facility"). On the Closing Date, SpinCo borrowed $250.0 million of term loans under the DDTL Facility (the "Term Loans"), the proceeds of which were used by SpinCo on the Closing Date to pay the SpinCo Cash Distribution and other amounts required at closing, such as the estimated net working capital adjustment. Remaining proceeds will be used for general corporate purposes. Upon completion of the Modine Transaction, this represents indebtedness of a wholly owned subsidiary of the Company. The Term Loans amortize in equal quarterly installments of 0.625% for the first eight quarters and 1.250% for each quarter thereafter until maturity. The remaining balance becomes due on June 29, 2031.

During the three and nine months ended September 30, 2026, the Company incurred $6.3 million and $33.4 million, respectively, of costs related to the Modine Transaction. Such fees are recorded in Selling, general and administrative expenses.

Innovative Medical Equipment, LLC

On July 1, 2026, the Company acquired all of the membership interests in Innovative Medical Equipment, LLC ("IME"), a provider of the ThermaZone® thermal therapy device. ThermaZone is a non-opioid thermal therapy solution designed to support pain management and recovery through controlled hot-and-cold therapy. The total consideration was $34.7 million, which is comprised of cash payments, net of cash acquired, and contingent consideration with a fair value of $0.5 million. The acquisition was accounted for as a business combination within our Medical segment.

Recent Trends

Tariffs and Global Trade Environment

Since March 2025, the U.S. government has periodically announced additional significant tariffs on various goods imported to the U.S. and other countries have periodically announced reciprocal tariffs on goods imported to such countries, including goods used by or manufactured by us. There has been significant uncertainty resulting from the implementation, termination and/or conditional pause of these additional tariffs. In February 2026, the Supreme Court of the U.S. issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"). During the nine months ended September 30, 2026, we submitted claims for refunds of IEEPA tariffs previously paid. Refunds received through September 30, 2026 were not material. The U.S. presidential administration subsequently invoked additional tariffs under other laws resulting in a rapidly changing tariff environment. At this time we cannot reasonably estimate the total financial impact of this ruling. Further, it is reasonably possible that new or additional tariffs will be periodically announced in the future given the current global trade

environment. We continue to monitor and evaluate the direct and indirect impacts of these tariffs and heightened global trade disputes. Our business model of manufacturing by regions for the regions limits the global impact of certain trade restrictions and tariffs. Further, the majority of our supply components are not currently subject to the additional tariffs or are compliant with exceptions, and we believe that we can generally mitigate the direct impact of any such tariffs currently in effect by directly or indirectly passing the additional costs through to customers. We are taking and will continue to take additional actions to mitigate any direct and indirect impacts.

For the nine months ended September 30, 2026, the additional tariffs did not have a material impact on our results of operations, financial position, and cash flows.

Global Conditions

The global automotive light vehicle industry is impacted by a number of factors, including global and regional economic conditions. At times in recent years, the global economy has experienced significant volatility, inflationary pressures and supply chain disruptions, which have a widespread adverse effect on the global automotive industry. These macroeconomic conditions have resulted in fluctuating demand and production disruptions, facility closures, labor shortages, work stoppages, and increased prices of inputs to our products. Rising costs of materials, labor, equipment and other inputs used to manufacture and sell our products, including freight and logistics costs, have adversely impacted, and may in the future adversely impact, operating costs and operating results. We continue to employ measures to mitigate the impact of cost increases through identification of sourcing and manufacturing efficiencies, where possible, and commercial negotiations with our customers. However, we have been unable to fully mitigate or pass through the increases in our operating costs, which may continue in the future.

We are exposed to foreign currency risk due to the translation and remeasurement of the results of certain international operations into U.S. Dollars as part of the consolidation process. Therefore, fluctuations in foreign currency exchange rates can create volatility in the results of operations and may adversely affect our financial condition.

We have a global manufacturing footprint that enables us to serve our customers in the regions they operate and shift production between regions to remain competitive. There have been various ongoing geopolitical conflicts, such as the current conflicts between Russia and Ukraine and in the Middle East and heightened tensions in the Red Sea and in the South China Sea. These conflicts have interrupted ocean freight shipping and could have a substantial adverse effect on our financial results. Further, it is reasonably possible that certain political pressures, such as changes to international trade agreements, increases in tariffs, import quotas or other trade restrictions or actions, including export controls and other retaliatory responses to such actions, could continue to affect the operations of our suppliers and OEM customers, resulting in reduced automotive production in certain regions or shifts in the mix of production to higher cost regions. See "-Tariffs and Global Trade Environment" for further information on the impact of tariffs and the global trade environment. We, like other manufacturers, have a high proportion of fixed structural costs, and therefore relatively small changes in industry vehicle production can have a substantial effect on our financial results.

Light Vehicle Production Volumes

Our Automotive segment sales are driven by the number of light vehicles produced by the automotive manufacturers, which is ultimately dependent on consumer demand for automotive light vehicles, our content per vehicle, and other factors that may limit or otherwise impact production by us, our supply chain and our customers. According to the forecasting firm S&P Global Mobility (October 2026 release), global light vehicle production in the three and nine months ended September 30, 2026, in the Company's key

markets of North America, Europe, China, Japan and South Korea, as compared to the three and nine months ended September 30, 2025, are shown below (in millions of units):

The S&P Global Mobility (October 2026 release) forecasted light vehicle production volume in the Company's key markets for full year 2026 to decrease to 75.4 million units, a 2.7% decrease from full year 2025 light vehicle production volumes. Forecasted light vehicle production volumes are a component of the data we use in forecasting future business. However, these forecasts generally are updated monthly, and future forecasts have been and may continue to be significantly different from period to period due to changes in macroeconomic and geopolitical conditions or matters specific to the automotive industry. Further, due to differences in regional product mix at our manufacturing facilities, as well as material production schedules from our customers for our products on specific vehicle programs, our future forecasted results do not directly correlate with the global and/or regional light vehicle production forecasts of S&P Global Mobility or other third-party sources.

New Business Awards

We believe that innovation is an important element to gaining market acceptance of our products and strengthening our market position. During the third quarter of 2026, we secured automotive new business awards totaling $555 million. Automotive new business awards represent the aggregate projected lifetime revenue of new awards provided by our customers to Gentherm in the applicable period, with the value based on the price and volume projections received from each customer as of the award date. Although automotive new business awards are not firm customer orders, we believe that automotive new business awards are an indicator of future revenue. Automotive new business awards are not projections of revenue or future business as of September 30, 2026, the date of this Report or any other date. Customer projections regularly change over time, and we do not update our calculation of any automotive new business award after the date initially communicated. Automotive new business awards in the third quarter of 2026 also do not reflect, in particular, the impact of macroeconomic and geopolitical challenges on future business. Revenues resulting from automotive new business awards also are subject to additional risks and uncertainties that are included in this Report or incorporated by reference in "Forward-Looking Statements".

Stock Repurchase Program

In June 2024, the Board of Directors (the "Board") authorized a stock repurchase program (the "2024 Stock Repurchase Program") to commence upon expiration of the Company's prior stock repurchase program on June 30, 2024. Under the 2024 Stock Repurchase Program, the Company was authorized to repurchase up to $150.0 million of its issued and outstanding Common Stock over a three-year period, expiring June 30, 2027.

In July 2026, the Board terminated the 2024 Stock Repurchase Program and authorized a new stock repurchase program (the "2026 Stock Repurchase Program"), pursuant to which the Company is authorized to repurchase up to $400.0 million of its issued and outstanding Common Stock over a three-year period, expiring July 27, 2029. At the time of termination, the 2024 Stock Repurchase Program had $110.1 million of share repurchase authorization remaining.

Repurchases may be made, from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions, applicable legal requirements, debt covenants and other contractual restrictions and other considerations, including certain conditions intended to preserve the intended tax treatment of the Modine Transaction.

During the three and nine months ended September 30, 2026, the Company did not repurchase any shares.

Subsequent to September 30, 2026, the Company repurchased $60.0 million under the 2026 Stock Repurchase Program with an average price paid per share of $30.82. The 2026 Stock Repurchase Program has $340.0 million of repurchase authorization remaining as of the date of this report.

Reportable Segments

The Company has two reportable segments for financial reporting purposes: Automotive and Medical. See Note 15, "Segment Reporting," to the consolidated condensed financial statements included in this Report for a description of our reportable segments as well as their proportional contribution to the Company's reported product revenues, significant segment expenses, operating income (loss), and depreciation and amortization.

Consolidated Results of Operations

The results of operations for the three and nine months ended September 30, 2026 and 2025, in thousands, were as follows:

Product revenues by product category, in thousands, for the three and nine months ended September 30, 2026 and 2025, were as follows:

Product Revenues

Below is a summary of our product revenues, in thousands, for the three months ended September 30, 2026 and 2025:

Product revenues for the three months ended September 30, 2026 increased 4.7% as compared to the three months ended September 30, 2025. The increase in product revenues is due to favorable automotive volumes, favorable pricing and favorable foreign currency impacts primarily attributable to the Chinese Renminbi, partially offset by unfavorable currency impacts primarily attributable to the Euro and the Korean Won.

Below is a summary of our product revenues, in thousands, for the nine months ended September 30, 2026 and 2025:

Product revenues for the nine months ended September 30, 2026 increased 8.9% as compared to the nine months ended September 30, 2025. The increase in product revenues is due to favorable automotive volumes and favorable foreign currency impacts primarily attributable to the Euro and the Chinese Renminbi, partially offset by unfavorable pricing and unfavorable currency impacts primarily attributable to the Korean Won.

Cost of Sales

Below is a summary of our cost of sales and gross margin, in thousands, for the three months ended September 30, 2026 and 2025:

Cost of sales for the three months ended September 30, 2026 increased 6.5% as compared to the three months ended September 30, 2025. The increase in cost of sales is primarily due to higher automotive volumes, unfavorable foreign currency impacts primarily attributable to the Chinese Renminbi and the Mexican Peso and higher freight and labor costs, partially offset by net material purchasing savings.

Below is a summary of our cost of sales and gross margin, in thousands, for the nine months ended September 30, 2026 and 2025:

Cost of sales for the nine months ended September 30, 2026 increased 9.8% as compared to the nine months ended September 30, 2025. The increase in cost of sales is primarily due to higher automotive volumes, unfavorable foreign currency impacts primarily attributable to the Mexican Peso, Euro, Chinese Renminbi and the Czech Koruna, specific-cause warranty provisions related to products shipped in prior periods and higher labor costs, partially offset by net material purchasing savings.

Net Research and Development Expenses

Below is a summary of our net research and development expenses, in thousands, for the three months ended September 30, 2026 and 2025:

Net research and development expenses for the three months ended September 30, 2026 decreased 3.9% as compared to the three months ended September 30, 2025. The decrease in net research and development expenses is primarily related to higher customer reimbursements.

Below is a summary of our net research and development expenses, in thousands, for the nine months ended September 30, 2026 and 2025:

Net research and development expenses for the nine months ended September 30, 2026 increased 0.4% as compared to the nine months ended September 30, 2025. The increase in net research and development expenses is primarily related to unfavorable foreign currency impacts primarily attributable to the Euro, Chinese Renminbi and the Mexican Peso.

Selling, General and Administrative Expenses

Below is a summary of our selling, general and administrative expenses, in thousands, for the three months ended September 30, 2026 and 2025:

Selling, general and administrative expenses for the three months ended September 30, 2026 increased 20.4% as compared to the three months ended September 30, 2025. Merger and acquisition expenses, primarily related to the Modine Transaction, were $6.5 million for the three months ended September 30, 2026. The remaining increase in Selling, general and administrative expenses is primarily related to higher expenses for rent and information technology and unfavorable foreign currency impacts primarily attributable to the Mexican Peso and the Chinese Renminbi.

Below is a summary of our selling, general and administrative expenses, in thousands, for the nine months ended September 30, 2026 and 2025:

Selling, general and administrative expenses for the nine months ended September 30, 2026 increased 32.8% as compared to the nine months ended September 30, 2025. Merger and acquisition expenses, primarily related to the Modine Transaction, were $34.2 million for the nine months ended September 30, 2026. The remaining increase in Selling, general and administrative expenses is primarily related to higher expenses for rent and information technology and unfavorable foreign currency impacts primarily attributable to the Mexican Peso, Euro and the Chinese Renminbi.

Restructuring Expenses, net

Below is a summary of our restructuring expenses, net, in thousands, for the three months ended September 30, 2026 and 2025:

During the three months ended September 30, 2026, the Company recognized expenses of $2.4 million for employee separation costs and $2.4 million for other costs.

During the three months ended September 30, 2025, the Company recognized expenses of $2.7 million for employee separation costs and $1.3 million for other costs.

Below is a summary of our restructuring expenses, net, in thousands, for the nine months ended September 30, 2026 and 2025:

During the nine months ended September 30, 2026, the Company recognized expenses of $12.3 million for employee separation costs and $5.2 million for other costs.

During the nine months ended September 30, 2025, the Company recognized expenses of $8.4 million for employee separation costs and $2.2 million for other costs.

See Note 4, "Restructuring," to the consolidated condensed financial statements included in this Report for additional information.

Loss on Sale of Land and Building, net

Below is a summary of our loss on sale of land and building, net, in thousands, for the nine months ended September 30, 2026 and 2025:

Loss on sale of land and building, net for the nine months ended September 30, 2025 is primarily related to the sale of our former headquarters building in Northville, Michigan in January 2025.

Interest Expense, net

Below is a summary of our interest expense, net, in thousands, for the three months ended September 30, 2026 and 2025:

Interest expense, net for the three months ended September 30, 2026 increased 15.7% as compared to the three months ended September 30, 2025. The increase in interest expense, net is primarily related to a higher average outstanding balance on the Revolving Credit Facility during the three-month period.

Below is a summary of our interest expense, net, in thousands, for the nine months ended September 30, 2026 and 2025:

Interest expense, net for the nine months ended September 30, 2026 decreased 10.6% as compared to the nine months ended September 30, 2025. The decrease in interest expense, net is primarily related to a lower interest rate on the Revolving Credit Facility during the nine-month period and the impact of a change in fair value of interest rate swap in the prior year period, partially offset by a higher average outstanding balance on the Revolving Credit Facility during the three-months ended September 30, 2026.

Foreign Currency Gain (Loss)

Below is a summary of our foreign currency gain, in thousands, for the three months ended September 30, 2026 and 2025:

Foreign currency gain for the three months ended September 30, 2026 included net realized foreign currency gain of $0.9 million and net unrealized foreign currency loss of $0.7 million.

Foreign currency gain for the three months ended September 30, 2025 included net realized foreign currency gain of $2.2 million and net unrealized foreign currency loss of $1.9 million.

Below is a summary of our foreign currency loss, in thousands, for the nine months ended September 30, 2026 and 2025:

Foreign currency loss for the nine months ended September 30, 2026 included net realized foreign currency loss of $0.2 million and net unrealized foreign currency loss of $0.9 million.

Foreign currency loss for the nine months ended September 30, 2025 included net realized foreign currency gain of $3.0 million and net unrealized foreign currency loss of $30.4 million. The unrealized foreign currency loss is primarily related to a non-current intercompany U.S. dollar receivable at one of our foreign subsidiaries, which was settled in 2025.

Other Income (Loss)

Below is a summary of our other income, in thousands, for the three months ended September 30, 2026 and 2025:

Other income for the three months ended September 30, 2026 increased as compared to other income for the three months ended September 30, 2025, due to income from an equity investment.

Below is a summary of our other income (loss), in thousands, for the nine months ended September 30, 2026 and 2025:

Other income for the nine months ended September 30, 2026 increased as compared to other loss for the nine months ended September 30, 2025, primarily due to higher income from an equity investment in the current year period and a fair value adjustment of an equity investment in the prior year period.

Income Tax Expense

Below is a summary of our income tax expense, in thousands, for the three months ended September 30, 2026 and 2025:

Income tax expense was $13.4 million for the three months ended September 30, 2026 on earnings before income tax of $10.8 million, representing an effective tax rate of 123.9%. The effective tax rate differed from the U.S. Federal statutory rate of 21.0% primarily due to the impact of income taxes on foreign earnings taxed at rates varying from the U.S. Federal statutory rate and the unfavorable impact of transactions costs incurred in connection with the Modine Transaction.

Income tax expense was $5.9 million for the three months ended September 30, 2025 on earnings before income tax of $20.9 million, representing an effective tax rate of 28.4%. The effective tax rate differed from the U.S. Federal statutory rate of 21.0% primarily due to the impact of income taxes on foreign earnings taxed at rates varying from the U.S. Federal statutory rate and the unfavorable impact of global intangible low-tax income ("GILTI") and Subpart F income.

Below is a summary of our income tax expense, in thousands, for the nine months ended September 30, 2026 and 2025:

Income tax expense was $19.7 million for the nine months ended September 30, 2026 on earnings before income tax of $25.8 million, representing an effective tax rate of 76.5%. The effective tax rate differed from the U.S. Federal statutory rate of 21.0% primarily due to the impact of income taxes on foreign earnings taxed at rates varying from the U.S. Federal statutory rate and the unfavorable impact of transactions costs incurred in connection with the Modine Transaction.

Income tax expense was $10.2 million for the nine months ended September 30, 2025 on earnings before income tax of $25.5 million, representing an effective tax rate of 40.0%. The effective tax rate differed from the U.S. Federal statutory rate of 21.0% primarily due to the unfavorable impact of GILTI and Subpart F income, unfavorable tax effects of equity vesting and a valuation allowance established in the U.S. related to a capital loss carryforward.

Liquidity and Capital Resources

Overview

Our primary sources of liquidity and capital resources are cash flows from operations and borrowings available under our Credit Agreement (defined below). Our cash requirements consist principally of working capital, capital expenditures, research and development, lease payments, income tax payments and general corporate purposes. We generally reinvest available cash flows from operations into our business, while opportunistically utilizing our authorized stock repurchase program. Further, we continuously evaluate acquisition and investment opportunities that will enhance our business strategies.

As of September 30, 2026, the Company had $252.1 million of cash and cash equivalents and $242.1 million of availability under our Credit Agreement. We may issue debt or equity securities, which may provide an additional source of liquidity. However, there can be no assurance equity or debt financing will be available to us when we need it or, if available, the terms will be satisfactory to us and not dilutive to our then-current shareholders.

We continue to expect to be able to move funds between different countries to manage our global liquidity needs without material adverse tax implications, subject to current monetary policies and the terms of the Credit Agreement. We utilize a combination of strategies, including dividends, cash pooling arrangements, intercompany loan repayments and other distributions and advances to provide the funds necessary to meet our global liquidity needs. There are no significant restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Gentherm Incorporated. As of September 30, 2026, the Company's cash and cash equivalents held by our non-U.S. subsidiaries totaled $230.7 million. If additional non-U.S. cash was needed for our U.S. operations, we may be required to accrue and pay withholding if we were to distribute such funds from non-U.S. subsidiaries to the U.S.; however, based on our current liquidity needs and strategies, we do not anticipate a need to accrue and pay such additional amounts.

We currently believe that our cash and cash equivalents, borrowings available under the Credit Agreement and cash flows from operations will be adequate to meet anticipated cash requirements for at least the next twelve months and the foreseeable future.

Cash and Cash Flows

The following table represents our cash and cash equivalents, in thousands:

Cash Flows From Operating Activities

Net cash provided by operating activities totaled $36.0 million during the nine months ended September 30, 2026 primarily reflecting net income of $6.0 million, $58.8 million for non-cash charges for depreciation, amortization, stock based compensation, loss on disposition of property and equipment and provisions for inventory, $43.3 million related to changes in accounts payable, and $4.0 million related to changes in net other assets and liabilities, partially offset by $43.5 million related to changes in accounts receivable, net, $22.1 million related to changes in inventory, $9.5 million for non-cash deferred income taxes and $1.0 million for other non-cash items, including unrealized foreign currency (gain) loss.

Cash Flows From Investing Activities

Net cash used in investing activities was $56.7 million during the nine months ended September 30, 2026, primarily reflecting payments for the IME acquisition of $34.2 million and purchases of property and equipment of $22.6 million.

Cash Flows From Financing Activities

Net cash provided by financing activities was $112.8 million during the nine months ended September 30, 2026, reflecting the borrowing of debt of $204.0 million partially offset by $85.9 million of debt repayments, $2.8 million paid for financing new loans and $2.5 million paid for employee taxes related to the net settlement of restricted stock units that vested during the year.

Debt

The following table summarizes the Company's debt, in thousands, as of September 30, 2026 and December 31, 2025:

Credit Agreement

Gentherm, together with certain of its subsidiaries, maintain a revolving credit facility (the "Revolving Credit Facility") under its Third Amended and Restated Credit Agreement with a consortium of lenders and Bank of America, N.A. as administrative agent (the "Credit Agreement"). The Credit Agreement was entered into on June 29, 2026 and amends and restates in its entirety the Second Amended and Restated Credit Agreement dated June 10, 2022, by and among Gentherm, certain of its direct and indirect subsidiaries, the lenders party thereto and the Agent. The Credit Agreement has a maximum borrowing capacity of $550 million and matures on June 29, 2031. The Credit Agreement contains covenants, that, among other things, (i) prohibit or limit the ability to incur additional indebtedness, create liens, pay dividends, make certain types of investments, enter into certain types of transactions with affiliates, prepay other indebtedness, sell assets or enter into certain other transactions outside the ordinary course of business, and (ii) require that Gentherm maintain a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Net Leverage Ratio (based on consolidated EBITDA for the applicable trailing four fiscal quarters) as of the end of any fiscal quarter. The Credit Agreement also contains customary events of default.

As of September 30, 2026, the Company was in compliance with the terms of the Credit Agreement.

Modine Transaction

In connection with the Modine Transaction, the Company declared a special cash dividend (the "Cash Dividend") in an aggregate amount equal to $63.5 million. The Cash Dividend was paid in cash on October 7, 2026.

On June 29, 2026, SpinCo entered into the DDTL Facility. On the Closing Date, SpinCo borrowed $250.0 million of Term Loans under the DDTL Facility (the "Term Loans"), the proceeds of which were used by SpinCo on the Closing Date to pay the SpinCo Cash Distribution, to pay certain other amounts required and for general corporate purposes.

The obligations under the DDTL Facility are unconditionally guaranteed by Gentherm and certain of Gentherm's wholly-owned domestic subsidiaries, subject to customary exceptions, and are secured by substantially all of the assets of SpinCo, Gentherm and the other guarantors, subject to customary exceptions.

The Term Loans bear interest, at SpinCo's option, at either (i) term SOFR plus a margin in a range of 1.125% to 2.000% per annum (based on the Consolidated Net Leverage Ratio of Gentherm and its subsidiaries from time to time) or (ii) the base rate plus a margin in a range of 0.125% to 1.000% per annum (based on the Consolidated Net Leverage Ratio of Gentherm and its subsidiaries from time to time). SpinCo also paid a ticking fee with respect to the DDTL Facility that accrued during the period from June 29, 2026 to the Funding Date at a rate equal to 0.175% per annum on the unfunded commitments thereunder.

The DDTL Facility contains customary affirmative and negative covenants and requires that Gentherm maintain a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Net Leverage Ratio. The DDTL Facility additionally contains customary events of default.

Material Cash Requirements

The Company has committed to various ongoing restructuring plans, under which we expect to incur cash restructuring costs of between $1.0 million and $5.5 million for employee separation costs and retention costs and up to $1.5 million of other transition costs primarily for machinery and equipment move and set up costs. Additionally, we expect to incur capital expenditures of between $1.0 million and $2.0 million.

See Note 4, "Restructuring," to the consolidated condensed financial statements included in this Report for additional information regarding these plans.

Except as described above and the requirements for the Modine Transaction and the acquisition of IME described in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Report, there have been no material changes in our cash requirements since December 31, 2025, the end of fiscal year 2025. See Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2025 for additional information regarding our material cash requirements.

Effects of Inflation

The Company has historically been subject to inflationary pressures with respect to materials and labor. At times in recent years, the Company has experienced significant volatility in the costs of certain materials and components, labor and transportation. Rising costs of materials, labor, equipment and other inputs used to manufacture and sell our products, including freight and logistics costs, have adversely impacted, and may in the future adversely impact, operating costs and operating results. The impact of tariffs and geopolitical conflicts could add to these inflationary pressures. Although the Company has developed and implemented strategies to mitigate the impact of higher material component costs and transportation costs through sourcing and manufacturing efficiencies where possible, these strategies together with commercial negotiations with Gentherm's customers and suppliers have not fully offset to date and may not fully offset our future cost increases. Such inflationary cost increase may increase the cash required to fund our operations by a material amount.

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. For discussion of our significant accounting policies, see Note 2, "Summary of Significant Accounting Policies," to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes in our critical accounting policies or critical accounting estimates during the three months ended September 30, 2026. We are not presently aware of any events or circumstances that would require us to update our estimates, assumptions or revise the carrying value of our assets or liabilities. Our estimates may change, however, as new events occur and additional information is obtained. As a result, actual results may differ significantly from our estimates, and any such differences may be material to our financial statements.