ジェンサーム（THRM）2026年第3四半期決算説明会：モーディンが業績予想の更新を牽引

主要なポイント

• Genthermの2026年第3四半期売上高は前年同期比4.7%増（為替影響を除くベースで4.4%増）の4億500万ドルとなりました。
• 調整後EBITDAは4500万ドルで、原材料のインフレ、貨物輸送コストの上昇、為替影響が営業レバレッジを相殺したため、マージンは前年同期の12.7%から11.1%に低下しました。
• 自動車用クライメート＆コンフォート・ソリューション部門の売上高は8.8%増（為替影響を除くベースで8.5%増）となり、Genthermの主要市場における小型車生産台数の伸びを12ポイント上回りました。
• 同社は5億5500万ドルの自動車関連新規ビジネスを受注し、年初来の累計額は16億ドルを超えました。経営陣は4年連続で20億ドル以上を達成する軌道に乗っています。
• Modine Performance Technologiesからの第4四半期の寄与予想を含む通期業績見通しの中央値は、売上高が18億7500万ドル、調整後EBITDAが2億2000万ドル、フリーキャッシュフローが約1億1000万ドルとなっています。
• 10月1日にModineの買収取引を完了して以来、Genthermは約200万株を6000万ドルで自社株買いしました。同社には授権枠に基づき3億4000万ドルが残っています。

主要財務実績

事業および営業業績

自動車用クライメート＆コンフォート・ソリューションが引き続き主たる成長ドライバーとなりました。売上高は8.8%増加し、ランバー＆マッサージ・コンフォート・ソリューションは25%以上の成長を達成しました。また、当四半期には、同製品ラインにおいてGentherm初となる自動車用マッサージシステム「Puls.A」からの初期売上も含まれています。

地域別の業績は中国が牽引しました。Genthermの中国本土の国内OEM（自動車メーカー）向け売上高が、中国におけるグローバルOEM向け売上高を初めて上回り、現地メーカーへの露出を高めるという経営陣の戦略を裏付ける結果となりました。

住宅およびオフィス向け用途において、Genthermは顧客層拡大に向けて家具部品ディストリビューターと契約を締結しました。既存の受注により2028年までに年間3000万ドルの売上見通しが立っており、経営陣は商用パイプラインが2028年の売上目標1億ドルを裏付けていると述べました。

医療部門では、Genthermは第3四半期にFDA（米国食品医薬品局）認可を受けた患者安全システム「ThermAffyx」の初期販売を開始しました。Innovative Medical Equipmentの買収により、温熱療法機器「ThermaZone」が加わり、退役軍人省（VA）の医療システムへのアクセスが拡大しました。

Modineとの事業統合は10月1日に完了しました。2026年6月30日までの直近12か月間の更新後プロフォーマ実績は、売上高が27億ドル、調整後EBITDAが3億4600万ドルとなり、EBITDAは前回のプロフォーマ期間を2000万ドル上回りました。また、Genthermはインド市場向けのエアー・ムービング・デバイス（送風装置）を受注し、生涯売上高で約2500万ドル規模を見込んでおり、出荷は2027年第4四半期に開始される予定です。

経営陣による業績見通し

Genthermの改定後の2026年通期見通しの中央値は以下の通りです：

この見通しには、Modineからの第4四半期の寄与予想（売上高約2億7500万ドル、調整後EBITDA約2800万ドル、フリーキャッシュフロー1500万〜2000万ドル）が含まれています。

経営陣は、既存のGentherm事業（レガシー事業）の2026年売上高が1桁台半ばから後半の成長率を示し、従来のレンジの上限に向かって推移すると引き続き見込んでいます。レガシー事業のEBITDAは、7月の決算説明会以降インフレが加速したため、従来の推計値の中央値付近にとどまる見込みです。第4四半期のマージンは第3四半期から前四半期比で改善すると予想されています。

2027年について、経営陣はレガシーGentherm事業で以前発表した17億ドルの売上目標に対する自信を改めて表明しました。同社は、新製品の投入、医療部門、ランバー＆マッサージ製品、Modineにおける発電需要、および商用車市場の回復の初期兆候による追い風を見込んでいます。なお、経営陣は自動車市場全体の成長は前提としていません。

より長期的な目標として、同社は2030年までに売上高35億ドル超、調整後EBITDA 5億ドル超を目指すほか、今後4年間で10億ドル以上の調整後アンレバード・フリー・キャッシュ・フローを目指しています。Genthermは2500万ドルのコスト・シナジー目標を維持しました。経営陣は売上シナジーの寄与が2028年に始まり、2029年にはより本格化し、2030年にその大半が実現すると予測しています。

リスクおよび注視すべき点

原材料のインフレ、特に貨物輸送コストの上昇が、引き続き短期的なマージン圧迫の主な要因となっています。レガシーGentherm事業には公式な顧客転嫁（価格転嫁）メカニズムが存在しないため、各価格交渉が必要となり、経営陣は2027年までタイムラグが続く可能性があると予想しています。

また、主にメキシコ・ペソの前年比の値動きによる為替影響も第3四半期の収益性を圧迫しました。経営陣は自動車市場全体が概ね横ばいで推移すると予想しており、個別企業としての製品投入や市場シェアの拡大が成長見通しの中心となります。

Modineからの第4四半期の寄与予想は、コスト圧力と価格転嫁のタイミングを反映しています。Modineには契約上の価格スライド条項（エスカレーター）がありますが、価格上昇時には依然としてタイムラグが発生します。

アナリスト質疑応答の要点

• インフレの転嫁：経営陣は、前年同期比での収益性悪化の約3分の1は原材料インフレおよび転嫁の限界によるものだと説明しました。Genthermは工場の稼働率、労働効率、スクラップ率の改善を進めつつ、顧客との価格交渉を推進しています。
• 事業再編の効果：メキシコ拠点の統合はほぼ完了しており、チェコ工場の閉鎖は第4四半期に完了する見込みです。経営陣は2027年に一段の業績改善効果を見込んでおり、これらの施策をレガシーGentherm事業のマージン15%回復に向けた道のりの一環と捉えています。
• 自社株買い：自社株買いの動きは株価に依存します。経営陣は第4四半期中に、10月1日以降に完了した6000万ドルと同等以上の自社株買いを実施する見込みであり、さらに増額する可能性もあると述べました。取引構造上、自社株買いの上限は2年間で1000万株とされており、残り800万株となっています。
• 発電機会：Modineは、データセンターをサポートする用途を含むディーゼル非常用発電需要に対応するための生産能力を増強しています。また、経営陣はエネルギー貯蔵、産業用HVAC（空調）、医療用途向けの熱交換器および関連技術の検討も進めています。
• 売上シナジーの時期：新規受注から開発および立ち上げまでに時間を要するため、経営陣は後半に偏重した軌道を予想しています。初期の寄与は2028年に見込まれ、2029年にはより目に見える形での売上、2030年には最大の寄与が予想されます。

決算説明会トランスクリプト全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Greetings. Welcome to the Gentherm Third Quarter 2026 Earnings Conference Call. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to Gregory Blanchette, Senior Director of Investor Relations. Thank you, Greg. You may begin.

Gregory Blanchette

Thank you, and good morning, everyone, and thanks for joining us today. Gentherm's earnings results were released earlier this morning, and a copy of the release is available at gentherm.com. Additionally, a webcast replay of today's call will be available later today on the Investor Relations section of Gentherm's website. During this call, we will make forward-looking statements within the meaning of federal securities laws.

These statements reflect our current views with respect to future events and financial performance, and actual results may differ materially. We undertake no obligation to update them, except as required by law. Please see Gentherm's earnings release and its SEC filings, including the latest 10-K and subsequent reports for discussions of our risk factors and other significant assumptions, risks and uncertainties underlying such forward-looking statements.

During the call, we will also discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included in our earnings release and investor presentation. On the call with me today are Bill Presley, President and Chief Executive Officer; and John Douyard, Chief Financial Officer. During their comments, they will be referring to a presentation deck that we made available on the Investors section of Gentherm's website. After the prepared remarks, we'd be pleased to take your questions. Now I'd like to turn the call over to Bill.

William Presley

Thank you, Greg. Good morning, everyone. Let's begin on Slide 3. When John and I joined Gentherm in January of 2025, we made it an imperative to diversify the business and to capitalize on Gentherm's capabilities to further expand into new markets. October 1 marked a defining milestone in Gentherm's evolution. We have emerged as a fundamentally different company, a global leader in innovative thermal and precision flow management technologies with a more diversified portfolio, incremental secular growth drivers, enhanced margin expansion opportunities and stronger cash generation.

There are 3 key takeaways I want to highlight. First, our expanded end market exposure creates a more resilient business. We retain our leadership position in automotive while adding meaningful exposure to attractive growth markets, including power generation, commercial vehicles and heavy-duty equipment. The broader exposure provides greater diversification, expands our addressable markets and creates additional avenues for sustainable, profitable growth.

Second, the combination creates complementary thermal and precision flow management platforms. Modine's mission-critical heat exchanger technologies optimize equipment performance across multiple industries. By combining heat exchangers, valves, fans and our complementary thermal management expertise, we can develop integrated solutions for emerging applications that expand beyond the products we offer today as individual businesses. As an example, in a liquid cooled energy storage system, the battery coolant loop passes through a plate heat exchanger to transfer heat to the external environment.

Fans blow air over the exchangers to dissipate heat, while valves adjust coolant flow to the exchanger and control system pressure. This integrated setup ensures the energy storage system stays within a safe operating temperature window, maximizing life cycle and efficiency. We are not simply adding products and markets. We are expanding our ability to solve more complex customer problems and capture a broader range of growth opportunities. Third, we have a clear path to delivering a significant strategic and financial value. We have the capabilities, commercial opportunities and operational improvement levers to build a business generating more than $3.5 billion in revenue and over $500 million in adjusted EBITDA by 2030 with more than $1 billion in adjusted unlevered free cash flow over the next 4 years. We remain confident in delivering $25 million in cost synergies as previously communicated. However, we are most excited about the significant commercial opportunities ahead of us.

As stated in the past, India represents an attractive growth opportunity for Gentherm with annual production of nearly 5 million light vehicles and more than 20 million 2-wheelers. Over the past year, Gentherm has engaged heavily with customers to enter the region, and we have received consistent feedback. Gentherm needs a footprint in India. Modine's established presence in the country has already unlocked a new Gentherm business award for air moving devices representing approximately $25 million in lifetime revenue with one of India's major light vehicle manufacturers and shipments are expected to begin in the fourth quarter of 2027.

This early proof point reinforces our thesis that establishing a local presence creates greater commercial access in India, where demand for climate-controlled seating is growing and the addressable market for valves is significant. We are also adopting some of the operating disciplines that have delivered results at Modine. The Modine team has used the 80/20 philosophy to drive meaningful operational and financial improvements. We are in the early stages of deploying that approach across Gentherm with a focus on prioritization and financial returns.

I will close by emphasizing one point. Gentherm is proud of its heritage and confident in the future of its automotive business. However, we have proven we are more than automotive with recent launches in home and office, and medical. We are not just an automotive seat component supplier looking for adjacent markets. Together with Modine, we are a fundamentally different company with a more diversified business, a stronger platform for growth and clear opportunities to create significant long-term shareholder value. Please turn to Slide 4 for an update on our business and several key performance highlights. Let me start with the operating environment. Industry light vehicle production volumes were down year-over-year, but demand for our products remained relatively stable throughout the quarter. At the same time, macroeconomic and geopolitical developments continue to drive increased uncertainty and volatility. We are also managing additional margin pressures from material cost inflation, including freight.

Our teams are addressing these headwinds through disciplined commercial actions and focused operational execution. We remain committed to protecting profitability while positioning the business for sustainable growth. Our core automotive business continues to deliver growth over market across all regions and product categories, reinforcing our confidence in the business and the strength of our customer relationships. We secured $555 million in automotive new business awards during the quarter, bringing our year-to-date total to more than $1.6 billion.

We remain on track to secure at least $2 billion in awards for the fourth consecutive year. This continued commercial momentum reflects the value our technology portfolio delivers to the OEMs. We also reached an important product milestone with the launch of our first ever Puls.A massage system in the automotive market. This technology delivers an enhanced massage experience, and we see meaningful opportunities to extend its reach beyond automotive. Customer interest in the home and office market remains encouraging.

During the quarter, we signed an agreement with a furniture component distributor that expands our access to customers through a differentiated commercial model. This approach allows us to reach additional customers more efficiently and convert opportunities that may not have been previously serviceable. Wins like this reinforce our confidence in the opportunity to build a $100 million home and office business by 2028. Turning to Medical. We made important progress on both product innovation and commercial expansion.

Following FDA clearance, we successfully launched the ThermAffyx patient safety system with initial sales beginning in the third quarter. This is another demonstration of our ability to leverage proven automotive technologies and intellectual property and apply them in new markets. We've also completed the strategic acquisition of Innovative Medical Equipment, the provider of the ThermaZone thermal therapy device. This acquisition expands our patient thermal management portfolio and extends our commercial reach into the Veterans Administration health care system. IME is performing well, and the Gentherm team is focused on opening channels to cross-sell our complementary thermal management solutions across the combined customer base. Together, the ThermAffyx launch and the IME acquisition directly advanced 2 of our key medical priorities, refreshing and expanding our product portfolio and broadening our commercial channels. Both actions demonstrate how we are translating our strategy into tangible outcomes. Stepping back, the message is straightforward. Our teams are delivering across the priorities that matter most.

We are securing profitable new business to grow above market in automotive, expanding into new markets, refreshing our product portfolio, broadening our commercial reach and improving operational execution. With that, I'll turn the call over to John.

Jonathan Douyard

Thanks, Bill. Please turn to Slide 5. Our third quarter highlights reflect both short- and long-term commercial progress. Overall, automotive new business awards were $555 million. In addition, revenue of $405 million was up 4.7% compared to the same period last year or 4.4% when excluding foreign currency translation. Automotive Climate and Comfort Solutions revenue increased 8.8% year-over-year or 8.5% ex-FX, outpacing actual light vehicle production in our key markets by 12 percentage points. This growth included strong outperformance across all regions, led again by China, where our sales to domestic OEMs exceeded our sales to global OEMs for the first time, a key indicator that our intentional focus to better represent the local market is gaining traction.

From a product perspective, Lumbar and Massage Comfort Solutions delivered another strong quarter of revenue growth at more than 25% year-over-year. These results included the initial Puls.A revenue, as Bill noted earlier. Turning to profitability. We delivered $45 million of adjusted EBITDA or 11.1% of sales compared to 12.7% in the third quarter of last year. Strong operating leverage was offset by headwinds related to net material costs, inflation and foreign exchange. FX was primarily impacted by the year-over-year movement in the Mexican peso. On a GAAP basis, diluted losses per share were $0.08 in the third quarter.

This was impacted by approximately $0.37 per share related to merger and restructuring expenses. Adjusted diluted earnings per share were $0.33 compared to $0.73 per share in the third quarter of last year. The decrease was primarily attributable to a higher tax rate driven by the timing and treatment of M&A expenses. These impacts are more normalized on a year-to-date basis, where adjusted diluted earnings per share were $1.90 compared to $1.78 per share in the prior year. Adjusted free cash flow was approximately $59 million compared to $72 million in the prior year. We ended Q3 with net leverage of 0.4 turns and liquidity of $494 million.

Following the closing of the Modine transaction on October 1 and the payment of the $63.5 million special dividend, we estimate that pro forma net leverage post synergies was 0.8 turns below our prior estimate of 1 turn. We previously indicated our intent to repurchase shares once the Modine transaction was closed. Since October 1, we have repurchased approximately 2 million shares for a total of $60 million. With $340 million remaining on our authorization and the current trading levels of Gentherm stock, we expect to remain active throughout the fourth quarter.

As Bill indicated earlier, Gentherm is a different company post transaction with a strong growth outlook, and we believe the future of this business is currently underappreciated. Please turn to Slide 6. Before discussing our guidance, I want to echo Bill's comments regarding our combination with Modine Performance Technologies.

Having now worked with the Modine team for over a year and worked closely over the last few weeks, our appreciation of the business' potential has grown and our confidence in the value of this transaction has only increased. The team is engaged and energized and most significantly, excited about the growth opportunities ahead in both their traditional and nontraditional markets. The integration is progressing well, and we are focused on delivering our synergy target and accelerating commercial opportunities. We continue to believe our combined business has a compelling outlook with a strong balance sheet, multiple growth engines and a clear path to margin expansion.

As an update to our prior communication, while we cannot yet comment on Modine's most recent quarter performance, we have updated our view of the combined company's trailing 12-month pro forma financials through June 30, 2026. This update results in revenue of $2.7 billion and adjusted EBITDA of $346 million, which is up $20 million with improvements seen in both businesses when compared to the prior pro forma period. Turning to 2026.

We have updated our full year guidance to reflect the expected fourth quarter financial contribution from Modine, which includes approximately $275 million of revenue, approximately $28 million of adjusted EBITDA and approximately $15 million to $20 million of free cash flow. As a result, we now expect the midpoint guidance for the full year to be as follows: revenue of $1.875 billion, adjusted EBITDA of $220 million and free cash flow of approximately $110 million with assumed CapEx of $55 million. This update reflects limited changes to Gentherm's prior full year guidance that was communicated in July. We continue to expect that the legacy Gentherm business will grow mid- to high single digits for the year, with revenue trending towards the higher end of the previous range, while we expect EBITDA to remain near the midpoint given the impact of increased inflation, which has accelerated since our July earnings call.

As previously noted, we expect margins to be sequentially higher in the fourth quarter compared to Q3. We look forward to providing a more comprehensive outlook on 2027 in our February earnings call and remain excited about the financial profile of the combined company. We have a high level of visibility to growth, driven by strong automotive and adjacent market launch activity in the legacy Gentherm business as well as several exciting growth opportunities within Modine, including strong activity in power generation and early signs of recovery in commercial vehicles. Our view on the new Gentherm is increasingly positive, and we will see our strategic progress translate into improved financial performance as we move forward. I'll now hand it back to Bill for some closing remarks.

William Presley

Thanks, John. Our achievements year-to-date demonstrate we are on the right track, and we remain focused on finishing the year strong. Our business is growing. We're expanding our technologies into new markets and the improvements we are making to our operating system are positioning us for margin expansion.

With the strength of our existing business and our transformational combination with Modine Performance Technologies, we are building a fundamentally stronger company that can deliver long-term value for our shareholders. With that, I will turn the call back to the operator to begin the Q&A session.

Operator

[Operator Instructions]

Our first question is from Nathan Jones with Stifel.

質疑応答

Nathan Jones

I guess I'll start with some of the price/cost stuff.

Gross margins were down year-over-year, not surprising given all of the inflation and higher freight costs. I know you also attributed part of that to FX. Can you maybe just talk about what the impact was from price cost, what you're doing to recover that and pass it through to customers? And what's a typical lag when you expect to see that, kind of, dynamic improve?

Jonathan Douyard

Yes. I think -- I mean, when you look at it overall, the year-over-year drop, I would say about 1/3 of it is related to sort of, material inflation and ability to recover. We -- we don't have formal mechanisms from a recovery perspective with our customers. And so each one is a negotiation as we've talked about before. I think if we looked at this earlier in the year, there were certainly some commodity impacts, the impact of oil on transportation and those types of things. I think what we saw accelerate in Q3 is really on the freight side, which is typically a more difficult conversation with the customer. It takes a little bit longer to materialize. And so there's maybe a bit more of a lag than what we would have anticipated and also some increased inflation there. But the teams are doing a good job working with the customer base to push it through, but we continue to experience the impact.

William Presley

Yes. And I would just say, Nathan, the mindset here is we know inflation is a challenge, but we're not going to be a victim of inflation. We're attacking what we can control. So if you look deep into our fundamentals, the capacity utilization, the direct labor efficiency in the plants is up. Cost of nonconformance as a percentage of sales, like scrap, is down. And that doesn't happen by accident. That's the team focused on gaps to standards. We've removed spans and layers earlier in '26. As you know, we're now working through a standard plant structure to be completed by the end of the year.

So where we can offset, where we cannot offset, to John's point, we're having structured commercial conversations with the customer, but it starts with building credibility with the customer by attacking the things that you can control and the self-help.

Nathan Jones

Okay. I'm going to ask one on the share repurchase. I think you said about $340 million on the authorization there. And John mentioned a plan to be active during the fourth quarter. Obviously, the share price has come down here, a lot of good opportunities ahead. How aggressive can you be -- will you be in the fourth quarter with that? And kind of, over what time frame do you expect to exercise that authorization?

Jonathan Douyard

Yes. I mean, obviously, dependent on share price. I think as we look at it today, we think there's pretty severe dislocation in what the future outlook of the company is. We did $60 million in the fourth quarter already. As we noted, there's $340 million open on the authorization. The other limitation we have under the RMT is 10 million shares over a 2-year period of time. So there's 8 million shares remaining on that. We would -- I would expect that we will do at least what we did quarter-to-date, again, in the fourth quarter with the opportunity to do more than that.

Nathan Jones

I'll get back in the queue.

William Presley

Thanks, Nathan.

Operator

Our next question is from Rajat Gupta with JPMorgan.

Rajat Gupta

I just had a clarification around, like, just the fourth quarter Modine contribution. The $28 million EBITDA, $275 million revenue, it seems like around 10% EBITDA margins, which is a little lower than at the time of the acquisition, where I think it was tracking at 11%. I'm curious if that is just seasonality? Or is it, like, similar cost pressures that you're seeing on the Modine side, which can recover over time? Just any thoughts on that would be helpful. And I have a quick follow-up.

Jonathan Douyard

Yes. I mean, I think the -- certainly, we expect more on that business going forward. Obviously, we've owned them now for about 3 weeks.

And so there may be a sense of conservatism in there as well. But when you look at that business, they are certainly experiencing cost pressures. They do have escalators in their contracts. So there is more of a mechanical mechanism to recover that, which creates a bit of a timing lag. And obviously, we've seen prices continue to increase throughout the year. So there's an element of that. But overall, we think the business will operate at a higher level than that going forward. We're just early on in the acquisition. And so that's the current view.

Rajat Gupta

Understood. And then any preliminary color you can give us on 2027 puts and takes? Any key moving pieces either product-wise or regionally just given all the cross currents in Europe and China, any initial color on just growth of market would be helpful. Maybe separating legacy Gentherm and Modine performance would be helpful as well.

Jonathan Douyard

Yes. I think what we put out on the legacy Gentherm business, we put out a $1.7 billion revenue number for 2027. We're still very confident in what that looks like. And I think it will be a continued trend with what you're seeing, right? We've had a number of key launches. We talked about Puls.A entering the market today. We've got some medical launches and some favorability from the small acquisition we did there. And then the Lumbar and Massage products continue to operate well. I think on the Modine side, there's been some anticipation of power generation growth in that business and what they've been preparing for.

We really start to see that pick up as well. So that will be a nice addition. We're also seeing early signs of commercial vehicle recoveries through indications from our customers. And so there are some nice tailwinds from that perspective. Overall, from an automotive market standpoint, we're still not anticipating growth. And so we think as we look at the year, we've got a strong growth profile and what's overall a relatively flat market.

Rajat Gupta

And on the margin side, anything to call out there? Obviously, some of the inflation and recoveries are not entirely in your control, but just from a cost standpoint and footprint action benefit standpoint, are those on track?

Jonathan Douyard

Yes. Completely fair. I think inflation, the recovery lag that will continue -- it appears like it will continue into '27. We do see the benefit from footprint actions in the legacy Gentherm business, the benefit of that in '27. So we are largely through those actions here in the fourth quarter. So we would anticipate an increase from that perspective. And beyond that, we're really looking to -- Bill talked about some of the operational items that we're really driving the teams on, and we look to continue to see productivity and efficiency out of the business. The one other piece I would point to, Bill made the comment in his prepared remarks, is just on the 80/20 mindset in general. We are early stages within the Gentherm business, but we do have teams together who are mobilized on specifically looking for margin opportunities and efficiency to ultimately reallocate resources to drive growth in the company. We may see some of that benefit as we get into 2026 and 2027 as well. So a lot going on, but we think there's a lot of positive momentum in the company.

Rajat Gupta

Understood. Great. Thanks for all the color and good luck.

Operator

Our next question is from Justin Ages with CJS Securities.

Justin Ages

Hi, morning all.

William Presley

Hey, Justin.

Justin Ages

As I look at comparison to last year, SG&A was up pretty significantly. And I know you talked about some of the cost pressures, but maybe you could give us a little more detail on that, please?

Jonathan Douyard

Yes. I mean, I think if you're looking at -- you've got a couple of drivers in there. There's a lot of transaction-related costs, but to the extent that you're looking at an adjusted number, you do have an increase in -- related to the acquisition of IME. You'll see some additional depreciation in there as well from some of the systems that we put in place.

There has been an increase in personnel costs as well in the quarter. So those, I would say, are the big drivers.

Justin Ages

Okay. That's helpful. And then you mentioned good outlook remains on home and office getting to that $100 million business in 2028. Can you give us any more color on where the business kind of sits today in terms of size?

Jonathan Douyard

Yes. I would say based on awards to date with the OEMs, and it's a different model, obviously, than light vehicles, Justin, we have very strong visibility to $30 million in annualized revenue by 2028 with a pipeline that supports the $100 million target that we've been putting out there. So I would say 12 months in, right? I mean, we started this venture kind of in the middle of last year. The team has built a significant pipeline with significant engagement. As mentioned, we signed a differentiated commercial model with a component distributor during the quarter. So that allows us to service smaller customers that we might not otherwise service just due to scale.

Justin Ages

That's helpful. All right. I appreciate the answers. Thank you.

Jonathan Douyard

Thanks, Justin.

William Presley

All right. Thank you. Thanks, Justin.

Operator

Our next question is from Ryan Sigdahl with Craig-Hallum Capital Group.

Ryan Sigdahl

I want to start with, Jon, something you said of anticipation of some big things coming from power generation growth and preparing for that. Maybe more specifically, I know backup power and data centers, if that's what you're referring to, what you see in the pipeline is inside the data center, an opportunity, and then other industries.

Jonathan Douyard

Yes. I think on the power generation side, a lot of what they're doing is supporting diesel generation, which is after meter power. A lot of that is going into the data center. And so the business has been building up a backlog associated with that now for a number of months. We've been working on capacity, and that's really in place to execute at this point. I think when we look at opportunities inside the data center, I mean, Bill gave an example early on that could certainly be applied from an energy storage perspective or even a heat exchanger plate technology that could be inside the data center. I think as we look at the business, there continues to be a view of broad application of Modine's products outside of their traditional markets.

We alluded to it in the call. But even things like the medical industry and medical products have heat exchangers. If you look at what we're working with the team on now is things in, like, industrial HVAC potentially, which is not a place they played historically. So there's really broad opportunities for their products, and we're going to take a pretty broad view on how we go after the markets there.

Ryan Sigdahl

Helpful. Light vehicle expectations moved a little lower in Q3. Good to hear you guys reiterate higher end of guidance for legacy Gentherm. But maybe talk through end markets specifically where there is opportunity where maybe there are changes in expectations from an industry standpoint?

Jonathan Douyard

Yes. I think, Ryan, as you said, the industry moved down, the demand for our products remains strong. It actually remains strong in all regions. So we don't see any regional dependency on the demand for our products. I would say China continues to be strong for us. Third quarter was the first quarter in the history of the company that our domestic sales outpaced our global sales. So we officially sold more to Chinese OEMs in China than we did to the global customers over there, which has been part of our strategy. So we expect that to continue strong.

We expect the automotive segment to continue to grow, and we see no weakness there from a demand standpoint.

Ryan Sigdahl

Great. Congrats on closing the merger and kudos on having the buyback in place to execute.

Operator

[Operator Instructions]

Our next question is from Nathan Jones with Stifel.

Nathan Jones

I'll do another couple. On the revenue synergy front, those are typically longer dated.

It takes longer to get the awards. It takes longer to engineer the products, it takes longer for them to generate revenue.

I know you talked about the one in India starting 4Q '27. When should we start to think about revenue synergy generation as a driver of growth? How do you see that progressing towards the longer-term goal?

William Presley

Yes. I think, Nathan, you're right. It's going to be very hockey stick, right? It's going to have a very pronounced tail end. So I mean, I think appreciably, we'll start seeing some revenue flow through in '29. We'll start seeing green shoots of that in '28, but the bulk of that will hit in 2030. As you highlight, the win that we had in India really reinforced our thesis that having footprint and presence there would open up that market, and that's a market that we're excited about.

And I would say there's a very aggressive hunger between the teams working together on product development. And you heard John allude to some of the things that they're working through that would put us together into markets that we're not in today separately.

Nathan Jones

And the other one I wanted to ask about was the restructuring program, footprint consolidation stuff that you guys have been doing over the last year, 1.5 years. I think that was supposed to be complete by the end of 2026. Can you talk about -- is it on schedule and what the expected savings are in 2027?

Jonathan Douyard

Yes.

We talked -- as you look at North America, we've largely consolidated our facilities in Mexico at this point. So there's some cleanup in the fourth quarter. When you look at our European footprint consolidation, closing of the Czech Republic, that is on track to be completed this quarter as well. And so we should be relatively clean as we get into January of next year. We haven't put out a '27 number necessarily on that. We did talk about it as being a key driver for us as we look to get back to the 15% margin in the legacy Gentherm business. And so we should see a step function change as we get into '27.

Operator

We have reached the end of the question-and-answer session. This concludes today's teleconference. You may disconnect your lines at this time.

Thank you for your participation.