THRM Gentherm Inc

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 31, 2024

 

 

GENTHERM INCORPORATED

(Exact name of Registrant as Specified in Its Charter)

 

 

Michigan			0-21810	95-4318554
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
21680 Haggerty Road
Northville, Michigan				48167
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (248) 504-0500

 

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, no par value		THRM		The Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

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Item 2.02 Results of Operations and Financial Condition.

On July 31, 2024, Gentherm Incorporated (the “Company”) publicly announced its financial results for the second quarter of 2024. A copy of the Company’s news release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 7.01 Regulation FD Disclosure.

On July 31, 2024 at 8:00 a.m. Eastern Time, the Company will host a conference call to discuss the second quarter of 2024 financial results. A copy of the supplemental materials that will be used during the conference call is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

The information in Items 2.02 and 7.01 herein and the attached exhibits 99.1 and 99.2 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly stated by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit 99.1		Company news release dated July 31, 2024 concerning financial results
Exhibit 99.2		Supplemental materials dated July 31, 2024
Exhibit 104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	GENTHERM INCORPORATED
	By:		/s/ Wayne Kauffman
			Wayne Kauffman
			Senior Vice President, General Counsel and Secretary
Date: July 31, 2024

 

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Exhibit 99.1

Gentherm Reports 2024 Second Quarter Results

Record Quarterly Revenue of $376 Million

Highest Quarterly Operating Income in Three Years

Secured $660 Million in Automotive New Business Awards

NORTHVILLE, Michigan, July 31, 2024 /Global Newswire/ -- Gentherm (NASDAQ:THRM), the global market leader of innovative thermal management and pneumatic comfort technologies for the automotive industry and a leader in medical patient temperature management systems, today announced its financial results for the second quarter ending June 30, 2024.

Second Quarter Highlights

 

 

Phil Eyler, the Company's President and CEO, said, “The financial and operating results of the second quarter demonstrate the continued strong execution of our growth strategy. With record quarterly revenue, the highest quarterly operating income in three years, a 190 basis point year-over-year expansion in Adjusted EBITDA margin rate, and $660 million in automotive new business awards – including our first proprietary Puls.A™ massage solution award, the Gentherm team continues to deliver solid results in this challenging environment.

He continued, “Our Automotive Climate and Comfort Solutions revenue outperformed actual light vehicle production in our key markets by 500 basis points, fueled by double-digit growth in our Lumbar and Massage Comfort Solutions, validating our investment thesis for the strategic acquisition of Alfmeier.”

He concluded, “We continue to make significant strides in the development of our next generation technologies, including ClimateSense®, WellSense™, and ComfortScale™. Our second quarter automotive new business awards brought our year-to-date total to $1.2 billion. This momentum, and our continued progress on Fit-For-Growth 2.0, make us confident in our ability to reach high-teens Adjusted EBITDA margin rate over time.”

2024 Second Quarter Financial Review

 

Product revenues for the second quarter of 2024 increased by $3.4 million, or 0.9%, as compared with the prior-year period. Excluding the impact of foreign currency translation, product revenues increased 2.0% year over year.

Automotive revenues increased 0.7% year over year. Adjusting for foreign currency translation, phasing out the non-automotive electronics business as well as one-time benefits from recoveries in both periods, Automotive revenues increased 2.8% year over year. Revenues from Automotive Climate and Comfort Solutions increased 4.8% in the second quarter compared to the prior year period.

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According to S&P Global’s mid-July report, actual light vehicle production decreased by 0.2% in the second quarter when compared with the same quarter of 2023 in the Company’s key markets of North America, Europe, China, Japan, and Korea.

Gentherm Medical revenue increased 8.3% year over year, primarily as a result of higher Blanketrol® sales. Adjusting for the impact of foreign currency translation, Medical revenues increased 8.7%.

See the “Revenues by Product Category and Reconciliation of Foreign Currency Translation Impact” table included below for additional detail.

Gross margin rate increased to 25.7% in the current-year period, as compared with 23.6% in the prior-year period. The increase from the prior-year period was driven by Fit-for-Growth 2.0 initiatives including supplier cost reductions, value engineering activities, and net productivity at the factories as well the impact of our previously announced exit of the non-automotive electronics business. These were partially offset by annual price reductions and start-up costs from our new plants opening in Tangier, Morrocco and Monterrey, Mexico.

Net research and development expenses of $21.9 million in the quarter decreased $2.8 million, or 11.5% over the prior-year period, primarily related to the reduction in resources allocated to certain battery performance solutions products and higher R&D reimbursements.

Selling, general and administrative expenses of $39.4 million in the quarter increased $1.0 million, or 2.6%, versus the prior-year period. The year-over-year increase was primarily driven by higher compensation expenses.

Restructuring expenses of $2.4 million in the current-year period increased $1.4 million, versus the prior-year period primarily as a result of discrete restructuring activities associated with the Company’s Fit-for-Growth 2.0 initiatives and previously announced footprint optimization.

As described more fully in the “Reconciliation of Net Income (Loss) to Adjusted EBITDA and Adjusted EBITDA Margin” table included below, the Company recorded Adjusted EBITDA of $49.9 million in the quarter compared with $42.4 million in the prior-year period, an increase of $7.5 million or 17.7%.

Income tax expense in the quarter was $9.5 million, as compared with $4.8 million in the prior-year period. The effective tax rate was approximately 34% in the quarter.

GAAP diluted earnings per share for the quarter was $0.60 compared with a loss of $0.05 for the prior-year period. Adjusted diluted earnings per share, excluding restructuring expenses, non-cash purchase accounting impact, non-automotive electronics inventory benefit, unrealized currency gain, and other items specified on the table below, was $0.66. Adjusted diluted earnings per share in the prior-year period was $0.58.

The Company provides various non-GAAP financial measures in this release. See “Use of Non-GAAP Measures” below for additional information, including definitions, usefulness for investors and limitations, as well as reconciliations below to the most directly comparable GAAP financial measures.

 

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Guidance

 

The Company’s full-year 2024 guidance as of July 31, 2024 is shown below:

		Initial 2024 Guidance		Latest Estimate(1)
Product Revenues		$1.5B – $1.6B		Low end of range
Adjusted EBITDA Margin Rate		12.5% – 13.5%		Above mid-point of range
Full-year Adjusted Effective Tax Rate		26% – 29%		No change
Capital Expenditures		$65M – $75M		No change

Conference Call

As previously announced, Gentherm will conduct a conference call today at 8:00 am Eastern Time to review these results. The dial-in number for the call is 1-877-407-4018 (callers in the U.S.) or +1-201-689-8471 (callers outside this U.S.). The passcode for the live call is 13747799.

A live webcast and one-year archived replay of the call can be accessed on the Events page of the Investor section of Gentherm's website at www.gentherm.com.

A telephonic replay will be available at approximately two hours after the call until 11:59 pm Eastern Time on August 14, 2024. The replay can be accessed by dialing 1-844-512-2921 (callers in the U.S.), or +1-412-317-6671 (callers outside the U.S.). The passcode for the replay is 13747799.

Investor Contact
Gregory Blanchette
investors@gentherm.com 
248.308.1702

Media Contact
Melissa Fischer
media@gentherm.com 
248.289.9702

 

About Gentherm

Gentherm (NASDAQ: THRM) is the global market leader of innovative thermal management and pneumatic comfort technologies for the automotive industry and a leader in medical patient temperature management systems. Automotive products include variable temperature Climate Control Seats, heated automotive interior systems (including heated seats, steering wheels, armrests and other components), battery performance solutions, cable systems, lumbar and massage comfort solutions, valve system technologies, and other electronic devices. Medical products include patient temperature management systems. The Company is also developing a number of new technologies and products that will help enable improvements to existing products and to create new product applications for existing and new markets. Gentherm has more than 14,000 employees in facilities in the United States, Germany, China, Czech Republic, Hungary, Japan, Malta, Mexico, Morocco, North Macedonia, South Korea, United Kingdom, Ukraine, and Vietnam. For more information, go to www.gentherm.com.

 

 

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Forward-Looking Statements

Except for historical information contained herein, statements in this release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent Gentherm Incorporated's goals, beliefs, plans and expectations about its prospects for the future and other future events. The forward-looking statements included in this release 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 analysis based on our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we consider appropriate under the circumstances. Such statements are subject to a number of important assumptions, significant risks and uncertainties (some of which are beyond our control) and other factors that may cause actual results or performance to differ materially from that described in or indicated by the forward-looking statements, including but not limited to:

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The foregoing risks should be read in conjunction with the Company's reports filed with or furnished to the Securities and Exchange Commission (the “SEC”), including “Risk Factors,” in its most recent Annual Report on Form 10-K and subsequent SEC filings, for a discussion of these and other risks and uncertainties. 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, the Company expressly disclaims any obligation or undertaking to update any forward-looking statements to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Use of Non-GAAP Financial Measures

 

In addition to the results reported in accordance with GAAP throughout this release, the Company has provided here or elsewhere information regarding: adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”); Adjusted EBITDA margin; adjusted earnings per share (“Adjusted earnings per share” or “Adjusted EPS”); free cash flow; Net Debt, revenue, segment revenue and product revenue excluding foreign currency translation and other specified gains and losses; Automotive Climate and Comfort Solutions revenues; and adjusted operating expenses, each a non-GAAP financial measure. The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, deferred financing cost amortization, non-cash stock-based compensation expenses, and other gains and losses not reflective of the Company’s ongoing operations and related tax effects including transaction expenses, debt retirement expenses, impairment of assets held for sale, impairment of goodwill, gain or loss on sale of business, restructuring expense, unrealized currency gain or loss and unrealized revaluation of derivatives. The Company defines Adjusted EBITDA margin as Adjusted EBITDA divided by product revenues. The Company defines Adjusted EPS as earnings adjusted by gains and losses not reflective of the Company’s ongoing operations and related tax effects including transaction expenses, debt retirement expenses, impairment of assets held for sale, impairment of goodwill, gain or loss on sale of business, restructuring expense, unrealized currency gain or loss and unrealized revaluation of derivatives. The Company defines Free Cash Flow as Net cash provided by operating activities less Purchases of property and equipment. The Company defines Net Debt as the principal amount of all Consolidated Funded Indebtedness (as defined in the Credit Agreement) less cash and cash equivalents. The Company defines revenue, segment revenue or product revenue excluding foreign currency translation and other specified gains and losses as such revenue, excluding the estimated effects of foreign currency exchange on revenue by translating actual revenue using the prior period foreign currency exchange rates and excluding the other items specified in the reconciliation tables herein. The Company defines Automotive Climate and Comfort Solutions revenues as Automotive revenue excluding specified product revenues and the impact of non-automotive electronics and contract manufacturing electronics revenues. The Company defines adjusted operating expenses as operating expenses excluding impairment of intangible assets and property and equipment, restructuring, related non-cash stock-based compensation, acquisition, integration and divestiture expenses.

The Company’s reconciliations are included in this release or can be found in the supplemental materials furnished as Exhibit 99.2 to the Company’s Form 8-K dated July 31, 2024.

In evaluating its business, the Company considers and uses Free Cash Flow and Net Debt as supplemental measures of its liquidity and the other non-GAAP financial measures as supplemental measures of its operating performance. Management provides such non-GAAP financial measures so that investors will have the same financial information that management uses with the belief that it will assist investors in properly

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assessing the Company's performance on a period-over-period basis by excluding matters not indicative of the Company’s ongoing operating or liquidity results and therefore enhance the comparability of the Company's results and provide additional information for analyzing trends in the business. In evaluating our non-GAAP financial measures, you should be aware that in the future we may incur revenues, expenses, and cash and non-cash obligations that are the same as or similar to some of the adjustments in our presentation of non-GAAP financial measures. Our presentation of non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There also can be no assurance that we will not modify the presentation of our non-GAAP financial measures in the future, and any such modification may be material. Other companies in our industry may define and calculate these non-GAAP financial measures differently than we do and those calculations may not be comparable to our metrics. These non-GAAP measures have limitations as analytical tools, and when assessing the Company's operating performance or liquidity, investors should not consider these non-GAAP measures in isolation, or as a substitute for net income (loss), revenue or other consolidated income statement or cash flow statement data prepared in accordance with GAAP.

Non-GAAP measures referenced in this release and other public communications may include estimates of future Adjusted EBITDA, Adjusted EBITDA margin and Adjusted EPS. The Company has not reconciled the non-GAAP forward-looking guidance included in this release to the most directly comparable GAAP measures because this cannot be done without unreasonable effort due to the variability and low visibility with respect to taxes and non-recurring items, which are potential adjustments to future earnings. We expect the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results.

 

 

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GENTHERM INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF INCOME (LOSS)

(Dollars in thousands, except per share data)

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Product revenues		$	375,683			$	372,323			$	731,698			$	735,948
Cost of sales			278,982				284,335				546,244				566,830
Gross margin			96,701				87,988				185,454				169,118
Operating expenses:
Net research and development expenses			21,861				24,696				44,606				49,841
Selling, general and administrative expenses			39,410				38,418				80,131				75,460
Restructuring expenses			2,442				1,044				9,680				2,313
Impairment of goodwill			—				19,509				—				19,509
Total operating expenses			63,713				83,667				134,417				147,123
Operating income			32,988				4,321				51,037				21,995
Interest expense, net			(4,002	)			(1,932	)			(7,246	)			(6,076	)
Foreign currency (loss) gain			(282	)			346				2,267				(1,723	)
Other (loss) income			(284	)			556				689				786
Earnings before income tax			28,420				3,291				46,747				14,982
Income tax expense			9,544				4,842				13,086				8,570
Net income (loss)		$	18,876			$	(1,551	)		$	33,661			$	6,412
Basic earnings (loss) per share		$	0.60			$	(0.05	)		$	1.07			$	0.19
Diluted earnings (loss) per share		$	0.60			$	(0.05	)		$	1.06			$	0.19
Weighted average number of shares – basic			31,534				33,019				31,539				33,100
Weighted average number of shares – diluted			31,710				33,019				31,714				33,328

 

 

 

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GENTHERM INCORPORATED

REVENUE BY PRODUCT CATEGORY AND RECONCILIATION OF FOREIGN CURRENCY TRANSLATION IMPACT

(Dollars in thousands)

(Unaudited)

 

		Three Months Ended June 30,											Six Months Ended June 30,
		2024				2023			% Change				2024				2023				% Change
Climate Control Seat		$	121,701			$	121,210			0.4	%		$	237,291			$	235,963				0.6	%
Seat Heaters			77,056				78,258			(1.5	)%			154,132				153,894				0.2	%
Lumbar and Massage Comfort Solutions			45,869				37,604			22.0	%			84,120				76,342				10.2	%
Steering Wheel Heaters			42,414				38,958			8.9	%			82,228				75,305				9.2	%
Valve Systems			29,267				27,692			5.7	%			55,892				54,686				2.2	%
Automotive Cables			18,832				20,243			(7.0	)%			40,351				40,463				(0.3	)%
Battery Performance Solutions			16,063				19,587			(18.0	)%			29,671				39,896				(25.6	)%
Electronics			7,171				9,323			(23.1	)%			15,356				20,293				(24.3	)%
Other Automotive			5,629				8,658			(35.0	)%			9,599				17,383				(44.8	)%
Subtotal Automotive segment			364,002				361,533			0.7	%			708,640				714,225				(0.8	)%
Medical segment			11,681				10,790			8.3	%			23,058				21,723				6.1	%
Total Company		$	375,683			$	372,323			0.9	%		$	731,698			$	735,948				(0.6	)%
Foreign currency translation impact (a)			(3,936	)			—							(6,733	)			—
Total Company, excluding foreign currency translation impact		$	379,619			$	372,323			2.0	%		$	738,431			$	735,948				0.3	%
(a) Foreign currency translation impacts for the Automotive segment and Medical segment were $(3,891) and $(45) respectively, for the three months ended June 30, 2024. Foreign currency translation impacts for the Automotive segment and Medical segment were $(6,617) and $(116) respectively, for the six months ended June 30, 2024.

 

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GENTHERM INCORPORATED

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

AND ADJUSTED EBITDA MARGIN

(Dollars in thousands)

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net income (loss)		$	18,876			$	(1,551	)		$	33,661			$	6,412
Add back:
Depreciation and amortization			12,811				12,393				26,391				25,838
Income tax expense (a)			9,544				4,842				13,086				8,570
Interest expense, net (b)			4,002				1,932				7,246				6,076
Adjustments:
Non-cash stock-based compensation (c)			3,610				3,076				7,407				5,171
Acquisition and integration expenses			—				1,480				—				3,112
Restructuring expense			2,442				1,044				9,680				2,313
Non-automotive electronics inventory (benefit) charge			(712	)			644				(1,772	)			2,063
Unrealized currency (gain) loss			(497	)			(740	)			(2,353	)			5,125
Impairment of goodwill			—				19,509				—				19,509
Other			(203	)			(251	)			69				(301	)
Adjusted EBITDA		$	49,873			$	42,378			$	93,415			$	83,888
Product revenues		$	375,683			$	372,323			$	731,698			$	735,948
Adjusted EBITDA Margin			13.3	%			11.4	%			12.8	%			11.4	%
(a) Includes $2,423 of deferred income tax benefit associated with goodwill impairment of the Medical reporting unit for the three and six months ended June 30, 2023.
(b) Includes $308 and $4 of interest expense for the three and six months ended June 30, 2024, respectively, related to mark-to-market adjustment of our floating-to-fixed interest rate swap agreement with a notional amount of $100,000.
(c) Includes operating expenses of $3,519 and $3,076 for the three months ended June 30, 2024 and 2023, respectively. Includes operating expenses of $7,009 and $4,834 for the six months ended June 30, 2024 and 2023, respectively.

 

 

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GENTHERM INCORPORATED

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME

AND ADJUSTED EARNINGS PER SHARE

(Dollars in thousands, except per share data)

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net income (loss)		$	18,876			$	(1,551	)		$	33,661			$	6,412
Non-cash purchase accounting impact			1,584				2,330				3,189				4,180
Restructuring expenses			2,442				1,044				9,680				2,313
Unrealized currency (gain) loss			(497	)			(740	)			(2,353	)			5,125
Acquisition and integration expenses			—				1,480				—				3,112
Non-automotive electronics inventory (benefit) charge			(712	)			644				(1,772	)			2,063
Impairment of goodwill			—				19,509				—				19,509
Other			(203	)			(251	)			69				(301	)
Tax effect of above			(454	)			(3,425	)			(1,851	)			(6,942	)
Adjusted net income		$	21,036			$	19,040			$	40,623			$	35,471
Weighted average shares outstanding:
Basic			31,534				33,019				31,539				33,100
Diluted			31,710				33,019				31,714				33,328
Earnings (loss) per share, as reported:
Basic		$	0.60			$	(0.05	)		$	1.07			$	0.19
Diluted		$	0.60			$	(0.05	)		$	1.06			$	0.19
Adjusted earnings per share:
Basic		$	0.67			$	0.58			$	1.29			$	1.07
Diluted		$	0.66			$	0.58			$	1.28			$	1.06

 

 

 

 

 

 

 

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GENTHERM INCORPORATED

CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in thousands, except share data)

(Unaudited)

 

		June 30, 2024				December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents		$	123,466			$	149,673
Accounts receivable, net			264,759				253,579
Inventory:
Raw materials			129,752				126,013
Work in process			17,890				15,704
Finished goods			66,728				64,175
Inventory, net			214,370				205,892
Other current assets			87,091				78,420
Total current assets			689,686				687,564
Property and equipment, net			246,304				245,234
Goodwill			101,822				104,073
Other intangible assets, net			62,082				66,482
Operating lease right-of-use assets			30,631				27,358
Deferred income tax assets			80,264				81,930
Other non-current assets			29,764				21,730
Total assets		$	1,240,553			$	1,234,371
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	222,039			$	215,827
Current lease liabilities			7,087				7,700
Current maturities of long-term debt			268				621
Other current liabilities			96,724				100,805
Total current liabilities			326,118				324,953
Long-term debt, less current maturities			222,134				222,217
Non-current lease liabilities			21,920				16,175
Pension benefit obligation			2,758				3,209
Other non-current liabilities			27,319				23,095
Total liabilities		$	600,249			$	589,649
Shareholders’ equity:
Common Stock:
No par value; 55,000,000 shares authorized 31,318,444 and 31,542,001 issued and outstanding at June 30, 2024 and December 31, 2023, respectively			26,539				50,503
Paid-in capital			4,949				—
Accumulated other comprehensive loss			(55,699	)			(30,160	)
Accumulated earnings			664,515				624,379
Total shareholders’ equity			640,304				644,722
Total liabilities and shareholders’ equity		$	1,240,553			$	1,234,371

 

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GENTHERM INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

		Six Months Ended June 30,
		2024				2023
Operating Activities:
Net income		$	33,661			$	6,412
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			26,733				26,077
Deferred income taxes			4,365				(2,812	)
Stock based compensation			7,392				5,053
(Gain) loss on disposition of property and equipment			(42	)			828
Provisions for inventory			793				1,930
Impairment of goodwill			—				19,509
Other			(863	)			(259	)
Changes in assets and liabilities:
Accounts receivable, net			(14,310	)			(11,624	)
Inventory			(12,338	)			9,417
Other assets			(36,874	)			(12,241	)
Accounts payable			8,436				24,518
Other liabilities			9,871				(8,196	)
Net cash provided by operating activities			26,824				58,612
Investing Activities:
Purchases of property and equipment			(30,704	)			(13,667	)
Proceeds from the sale of property and equipment			81				40
Proceeds from deferred purchase price of factored receivables			6,208				7,351
Cost of technology investments			(265	)			(500	)
Net cash used in investing activities			(24,680	)			(6,776	)
Financing Activities:
Borrowings on debt			35,000				—
Repayments of debt			(35,420	)			(16,982	)
Proceeds from the exercise of Common Stock options			2,763				263
Taxes withheld and paid on employees' stock-based compensation			(2,417	)			(2,644	)
Cash paid for the repurchase of Common Stock			(21,703	)			(19,993	)
Net cash used in financing activities			(21,777	)			(39,356	)
Foreign currency effect			(6,574	)			2,300
Net (decrease) increase in cash and cash equivalents			(26,207	)			14,780
Cash and cash equivalents at beginning of period			149,673				153,891
Cash and cash equivalents at end of period		$	123,466			$	168,671
Supplemental disclosure of cash flow information:
Cash paid for taxes		$	12,300			$	11,619
Cash paid for interest			6,723				6,640

 

 

 

 

 

 

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GENTHERM INCORPORATED

OTHER NON-GAAP RECONCILIATIONS

(Dollars in thousands)

(Unaudited)

 

		Three Months Ended June 30,
		2024				2023
Automotive revenues		$	364,002			$	361,533
Non-automotive electronics revenues			346				3,609
One-time benefits from recoveries and retrofits			—				269
Adjusted Automotive revenues			363,656				357,655
Foreign currency translation impact			(3,870	)			—
Adjusted Automotive revenues, excluding foreign currency translation impact		$	367,526			$	357,655
Year over Year % change			2.8	%

 

		Three Months Ended June 30,
		2024				2023
Automotive revenues		$	364,002			$	361,533
Less: Valve Systems			29,267				27,692
Less: Automotive Cables			18,832				20,243
Less: Battery Performance Solutions			16,063				19,587
Less: Non-automotive and contract manufacturing electronics (a)			3,017				7,385
Automotive Climate and Comfort Solutions revenues			296,823				286,626
Less: One-time benefits from recoveries and retrofits			—				269
Adjusted Automotive Climate and Comfort Solutions revenues			296,823				286,357
Foreign currency translation impact			(3,187	)			—
Adjusted Automotive Climate and Comfort Solutions revenues, excluding foreign currency translation impact		$	300,010			$	286,357
Year over Year % change			4.8	%
(a) In Q1 2024 we did not exclude contract manufacturing electronics revenues from Automotive Climate and Comfort Solutions revenues. Contract manufacturing electronics revenues were $2,699 and $3,850 in Q1 2024 and Q1 2023, respectively.

 

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Proprietary © Gentherm 2024 2024 Second Quarter Results July 31, 2024 Exhibit 99.2

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Use of Non-GAAP Financial Measures* In addition to the results reported herein in accordance with GAAP, the Company has provided here or may discuss on the related conference call adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”); Adjusted EBITDA margin; adjusted earnings per share (“Adjusted earnings per share” or “Adjusted EPS”); free cash flow; Net Debt; revenue, segment revenue and product revenue excluding foreign currency translation and other specified gains and losses; Automotive Climate and Comfort Solutions revenues; and adjusted operating expenses, each a non-GAAP financial measure. See the Company’s earnings release dated July 31, 2024, for the definitions of each non-GAAP financial measure, information regarding why the Company utilizes such non-GAAP measures as supplemental measures of performance or liquidity, and their limitations, and for certain reconciliations of GAAP to non-GAAP historical financial measures. * See Appendix for certain reconciliations of GAAP to non-GAAP historical financial measures. Proprietary © Gentherm 2024

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Forward-Looking Statement Proprietary © Gentherm 2024 Except for historical information contained herein, statements in this presentation are forward-looking statements that are made by Gentherm Incorporated (the “Company”) pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements that address future operating, financial or business performance or strategies or expectations are forward-looking statements. The forward-looking statements included in this presentation are made as of the date hereof or as of the specified herein and are based on management's reasonable expectations and beliefs. In making these statements we rely on assumptions and analysis based on our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we consider appropriate under the circumstances. Except as required by law, the Company expressly disclaims any obligation or undertaking to update any forward-looking statements to reflect any change in its strategies or expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. The forward-looking statements are subject to a number of important assumptions, risks, uncertainties and other factors that may cause actual results or performance to differ materially from that expressed or implied by such statements. For a discussion of these risks and uncertainties and other factors, please see the Company’s most recent Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission, including “Risk Factors.” In addition, the business outlook discussed in this presentation does not include the potential impact of any business combinations, acquisitions, divestitures, strategic investments and other significant 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. 

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Multiple CCS® Launches  Buick Enclave Chevrolet Equinox Kia EV9 Toyota Camry Automotive Highlights Record quarterly revenue led by double-digit growth in Lumbar and Massage Comfort Solutions 22 Vehicle launches with 11 OEMs Proprietary © Gentherm 2024 4 Named 2024 Top North American Supplier by Honda Buick Enclave Chevrolet Equinox Kia EV9 Toyota Camry

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New Automotive Business Awards $660M in awards in 2Q 7 Steering Wheel Heater Awards, including hands-on-detection enabled heater award with Volvo and Li Auto  First production vehicle Award for Puls.A™ technology on a future Hyundai Genesis full-size SUV Proprietary © Gentherm 2024 5 CCS® Awards from: Audi | Great Wall | Honda | Huawei Kia | Li Auto | Porsche Lumbar and Massage Awards from: Audi | BMW | General Motors | Hyundai | Large Global EV Manufacturer Continue to see strong demand from OEMs for our thermal comfort, massage and lumbar solutions

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Winning with Innovation Puls.A™ Combines massage with frequency pulsation Works deeper into muscles at light physical contact Supports relaxation, pain relief and counteracts poor posture Modular system allows for customization Enables full-suite of WellSense™ solutions Increasing content per vehicle with differentiated and proprietary solutions CCS® CompactVent™ Combines low profile blower with a novel air distribution module Significant packaging space reduction enables thinner seats Integrated CCS® system accelerates customer seat assembly time Improved performance with lower noise leads to faster time to comfort Cross-platform modular design enables seat design standardization across multiple seat makers Proprietary © Gentherm 2024 6

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Industry Leading Innovations Well positioned to capitalize on the software defined vehicles of the future ClimateSense® ComfortScale™ Combines thermal, lumbar and massage Proprietary software driven wellness and alertness features Enabling software defined vehicles Best-in-class software controlled thermal comfort Enhances energy efficiency and vehicle range Personalized microclimate Modular and scalable hardware Easy to integrate across OEMs and Tier 1 suppliers Enhanced cost efficiency WellSense™ Proprietary © Gentherm 2024 7

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Medical Highlights Driving profitable growth through large partnerships, distribution channels, and white label opportunities Proprietary © Gentherm 2024 8 Proprietary © Gentherm 2024 8 Strong flagship Blanketrol® growth in the US, enabled by new channel strategy and recent US MedEquip partnership New major hospital account expansion in China, including Jinzhou Medical University in Liaoning Province 25 Year-over-year revenue growth Quarterly revenue increased 9%, ex-fx

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Select Income Statement Data 2024 2023 2024 2023 Product Revenues $ 375,683 $ 372,323 $ 731,698 $ 735,948   Automotive 364,002 361,533 708,640 714,225   Medical 11,681 10,790 23,058 21,723 Gross Margin 96,701 87,988 185,454 169,118 Gross Margin % 25.7 % 23.6 % 25.3 % 23.0 % Operating Expenses 63,713 83,667 134,417 147,123 Operating Income 32,988 4,321 51,037 21,995 Adjusted EBITDA 49,873 42,378 93,415 83,888 Adjusted EBITDA Margin 13.3 % 11.4 % 12.8 % 11.4 % Diluted EPS - As Adjusted $ 0.66 $ 0.58 $ 1.28 $ 1.06 (Dollars in thousands, except per share data) Three Months Ended June 30 Proprietary © Gentherm 2024 9 Six Months Ended June 30

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Select Balance Sheet Data June 30, 2024 June 30, 2023 December 31, 2023 December 31, 2022 December 31, 2022 Cash and Cash Equivalents $ 123,466 $ 149,673 Total Assets  1,240,553 1,234,371 Debt 222,402 222,838    Current 268 621    Non-Current 222,134 222,217 Revolving LOC Availability 278,000 278,000 Total Liquidity 401,466 427,673 Proprietary © Gentherm 2024 10 (Dollars in thousands)

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Proprietary © Gentherm 2024 11 Based on the current forecast of customer orders, and light vehicle production in the Company’s key markets declining at a low single digit rate in 2024 versus 2023, and a EUR to USD exchange rate of $1.08/Euro for the remainder of the year. Due to the inherent difficulty of forecasting the timing and amount of certain items that would impact net income margin, such as foreign currency gains and losses, we are unable to reasonably estimate net income margin, the GAAP financial measure most directly comparable to Adjusted EBITDA margin. Accordingly, we are unable to provide a reconciliation of Adjusted EBITDA margin to net income margin with respect to the guidance provided. 2024 Guidance Initial 2024 Guidance Latest Estimate(1) Product Revenues $1.5B - $1.6B Low end of range Adjusted EBITDA Margin Rate 12.5% - 13.5% Above mid-point of range Adjusted Effective Tax Rate 26% - 29% No change Capital Expenditures $65M - $75M No change

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Appendix Proprietary © Gentherm 2024

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Proprietary © Gentherm 2024 13 Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin Six Months Ended June 30 2024 2023 2024 2023 Net Income (Loss) $ 18,876 $ (1,551 ) $ 33,661 $ 6,412 Add Back:      Income Tax Expense  9,544 4,842 13,086 8,570      Interest Expense, net 4,002 1,932 7,246 6,076      Depreciation and Amortization  12,811 12,393 26,391 25,838 Adjustments:      Restructuring Expenses  2,442 1,044 9,680 2,313      Unrealized Currency (Gain) Loss  (497 ) (740 ) (2,353 ) 5,125      Acquisition and Integration Expenses ─ 1,480 ─ 3,112      Non-Automotive Electronics Inventory (Benefit) Charge (712 ) 644 (1,772 ) 2,063     Non-Cash Stock-Based Compensation 3,610 3,076 7,407 5,171 Impairment of Goodwill ─ 19,509 ─ 19,509 Other (203 ) (251 ) 69 (301 ) Adjusted EBITDA  $ 49,873 $ 42,378 $ 93,415 $ 83,888 Product Revenues $ 375,683 $ 372,323 $ 731,698 $ 735,948 Net Income (Loss) Margin 5.0 % (0.4) % 4.6 % 0.9 % Adjusted EBITDA Margin 13.3 % 11.4 % 12.8 % 11.4 % Three Months Ended June 30 (Dollars in thousands)

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Proprietary © Gentherm 2024 14 Reconciliation of Adjusted EPS 2024 2023 2024 2023 Diluted EPS - As Reported $ 0.60 $ (0.05 ) $ 1.06 $ 0.19 Acquisition and Integration Expenses ─ 0.04 ─ 0.09 Non-Cash Purchase Accounting Impacts 0.05 0.07 0.10 0.13 Unrealized Currency (Gain) Loss  (0.02 ) (0.02 ) (0.07 ) 0.15 Restructuring Expenses 0.08 0.03 0.31 0.07 Non-Automotive Electronics Inventory (Benefit) Charge (0.02 ) 0.02 (0.06 ) 0.06 Impairment of Goodwill ─ 0.59 ─ 0.59 Other (0.01 ) (0.01 ) ─ (0.01 ) Tax Effect of Above (0.01 ) (0.10 ) (0.06 ) (0.21 ) Rounding (0.01 ) 0.01 ─ ─ Diluted EPS - As Adjusted $ 0.66 $ 0.58 $ 1.28 $ 1.06 Six Months Ended June 30 Three Months Ended June 30

v3.24.2

Document And Entity Information	Jul. 31, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jul. 31, 2024
Entity Registrant Name	GENTHERM INCORPORATED
Entity Central Index Key	0000903129
Entity Emerging Growth Company	false
Entity File Number	0-21810
Entity Incorporation, State or Country Code	MI
Entity Tax Identification Number	95-4318554
Entity Address, Address Line One	21680 Haggerty Road
Entity Address, City or Town	Northville
Entity Address, State or Province	MI
Entity Address, Postal Zip Code	48167
City Area Code	(248)
Local Phone Number	504-0500
Entity Information, Former Legal or Registered Name	N/A
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	THRM
Security Exchange Name	NASDAQ

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