8-K
false000090312900009031292023-10-262023-10-26

 

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): October 26, 2023

 

 

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:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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.

 


 

Item 2.02 Results of Operations and Financial Condition.

On October 26, 2023, Gentherm Incorporated (the “Company”) publicly announced its financial results for the third quarter of 2023, and provided an update on its full year 2023 guidance. 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 October 26, 2023 at 8:00 a.m. Eastern Time, the Company will host a conference call to discuss the third quarter of 2023 financial results and provide an update on its full year 2023 guidance. 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 October 26, 2023 concerning financial results

Exhibit 99.2

Supplemental materials dated October 26, 2023

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: October 26, 2023

 

 

 

 


EX-99.1

 

 

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Exhibit 99.1

Gentherm Reports 2023 Third Quarter Results

Delivered Highest Quarterly Adjusted EBITDA in Ten Quarters

Secured $520M in New Automotive Business Awards, a Third Quarter Record

Updates 2023 Guidance

NORTHVILLE, Michigan, October 26, 2023 /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 third quarter ending September 30, 2023.

Third Quarter Highlights

 

Product revenues of $366.2 million increased 10.0% from $333.0 million in the third quarter of 2022. Excluding the impact of foreign currency translation, product revenues increased 8.5% year over year
Automotive revenues increased 10.0% year over year; excluding the impact of foreign currency translation and contributions from the Alfmeier acquisition, increased 3.1% year over year
GAAP diluted earnings per share was $0.48 as compared with $0.29 for the prior year period
Adjusted diluted earnings per share (1) was $0.64. Adjusted diluted earnings per share in the prior year period was $0.70
Secured new automotive business awards totaling $520 million in the quarter
Repurchased $11.1 million of the Company’s common stock
(1)
We provide adjusted diluted earnings per share and other 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 reconciliations below to the most directly comparable GAAP financial measures.

 

Phil Eyler, the Company's President and CEO, said “I am pleased with the continued strong execution by the global Gentherm team, enabling us to deliver record quarterly Climate Control Seat and Steering Wheel Heaters revenues as well as the highest quarterly Adjusted EBITDA in ten quarters. In addition, we secured $520 million in new automotive business awards in the third quarter, including a breakthrough multi-function electronic control unit award from General Motors. We also recently won our first combined thermal and pneumatic massage comfort award with Li Auto, one of the rising EV manufacturers in China.

He concluded: “While the automotive production environment remains challenging including the UAW strike, our relentless focus on strong operational execution, innovation and cash flow generation along with our record performance on new business awards position us well to continue to drive shareholder value over the long term.”

 

 


 

 

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2023 Third Quarter Financial Review

Product revenues for the third quarter of 2023 increased by $33.2 million, or 10.0%, as compared with the prior year period. Excluding the impact of foreign currency translation, product revenues increased 8.5% year over year.

Automotive revenues increased 10.0% year over year as a result of the contribution from Alfmeier, as well as record quarterly revenues in Climate Control Seat and Steering Wheel Heaters, partially offset by decreased revenue in Electronics, Battery Performance Solutions and Other Automotive product categories year-over-year. Adjusting for foreign currency translation and excluding the contribution from Alfmeier, organic Automotive revenues increased 3.1% year over year. According to S&P Global Mobility’s mid-October report, actual light vehicle production increased by 4.6% in the current year’s third quarter when compared with the third quarter of 2022 in the Company’s key markets of North America, Europe, China, Japan and Korea.

Gentherm Medical revenue increased 9.7% year over year, primarily as a result of increased revenues from its Dacheng air warming blankets.

See the “Revenues by Product Category” table included below for additional detail.

Gross margin rate decreased to 23.5% in the current year period, as compared with 24.1% in the prior year period. The decrease from the prior year period resulted from the acquired Alfmeier business having a lower gross margin rate relative to the Company’s organic Automotive business, non-automotive electronics inventory charge, material and wage inflation, and lower price recoveries from customers. These were partially offset by lower freight costs, increased productivity at the factories, and fixed cost leverage from higher unit volume.

Net research and development expenses of $23.2 million in the third quarter increased $0.5 million, or 2.1% over the prior year period, primarily as a result of the additional expenses from the Alfmeier business, partially offset by higher customer reimbursements for research and development expenses.

Selling, general and administrative expenses of $38.2 million in the third quarter increased $3.4 million, or 9.6%, versus the prior year period.The year-over-year increase was primarily driven by additional expenses from the acquired businesses and higher compensation expenses.

Acquisition and integration expenses of $1.6 million in the current year period were $9.7 million lower than the prior year period as a result of reduced expenses associated with the Alfmeier acquisition. Restructuring expenses were $1.1 million in the current year period.

As described more fully in the “Reconciliation of Net Income to Adjusted EBITDA” table included below, the Company recorded Adjusted EBITDA of $47.7 million in the 2023 third quarter compared with $41.6 million in the prior year period, an increase of $6.1 million or 14.6%.

Income tax expense in the third quarter was $6.9 million, as compared with $5.8 million in the prior year period. The effective tax rate was 30.4% in the 2023 third quarter.

GAAP diluted earnings per share for the third quarter was $0.48 compared with earnings per share of $0.29 for the prior year period. Adjusted diluted earnings per share, excluding non-automotive electronics inventory charge, acquisition and integration expenses, restructuring expenses, and unrealized currency gain (see table herein), was $0.64. Adjusted diluted earnings per share in the prior year period was $0.70.

 


 

 

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Guidance

The Company updates its full year 2023 guidance that was initially provided in its year-end 2022 earnings release on February 22, 2023:

 

 

Revised Outlook for FY 2023

 

Prior Outlook

 

 

Low

 

High

 

Low

 

High

Product revenues (1)(2)

 

$1.45B

 

$1.47B

 

$1.45B

 

$1.55B

Adjusted EBITDA Margin Rate (3)

 

11.5%

 

12.5%

 

11.5%

 

13.5%

Full-year Adjusted Effective Tax Rate (4)

 

28%

 

32%

 

28%

 

32%

Capital Expenditures

 

$40M

 

$50M

 

$60M

 

$70M

(1)
Based on the current forecast of customer orders, inflation and pricing recovery, and a EUR to USD exchange rate of $1.05/Euro
(2)
Assumes OEM plants impacted by the UAW strike as of October 25th will remain idled through the end of November
(3)
Starting with 2023 reporting, the Company excludes the impact of non-cash stock-based compensation from the Adjusted EBITDA results
(4)
Excluding the impact of non-cash goodwill impairment on earnings before income tax of $19.5 million reported in the second quarter of 2023, which includes the associated deferred tax effect, and income tax benefit of $2.4 million.

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 13741956.

 

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 approximately two hours after the call until 11:59 pm Eastern Time on November 9, 2023. 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 13741956.

Investor Contact
Yijing Brentano
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,

 


 

 

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Mexico, North Macedonia, South Korea, United Kingdom, Ukraine, and Vietnam. For more information, go to www.gentherm.com.

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. 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:

 

macroeconomic, geopolitical and similar global factors on the cyclical Automotive industry;
the production levels of our major customers and OEMs in our key markets and sudden fluctuations in such production levels, in particular with respect to models for which we supply significant amounts of product;
our ability to integrate our recent acquisitions and realize synergies, as well as to consummate additional strategic acquisitions, investments and exits;
our implementation activities to execute our long-term strategy of Fit-for-Growth 2.0, including profitability improvement and cost reductions;
our ability to effectively manage new product launches and research and development;
increasing competition, including with non-traditional entrants;
the ongoing supply-constrained environment, including raw material and component shortages, manufacturing disruptions and delays, logistics challenges, inflationary and other cost pressures;
the impact of our global operations, including our global supply chain, operations within Ukraine, economic and trade policies by various jurisdictions, and foreign currency risk and foreign exchange exposure;
our business in China, which is subject to unique operational, competitive, regulatory and economic risks;
a tightening labor market, labor shortages or work stoppages impacting us, our customers or our suppliers, including the potential impact of ongoing and future labor strikes among certain OEMs and suppliers;
our achievement of product cost reductions to offset customer-imposed price reductions or other pricing pressures;
any security breaches and other disruptions to our information technology networks and systems, as well as privacy, data security and data protection risks;
our product quality and safety;
the evolution of the automotive industry towards electric vehicles, autonomous vehicles and mobility on demand services, and related consumer behaviors and preferences;
the development of and market acceptance of our existing and future products;
our borrowing availability under our revolving credit facility, as well as our ability to access the capital markets, to support our planned growth;
our indebtedness and compliance with our debt covenants;
the effects of climate change and catastrophic events, as well as regulatory and stakeholder-imposed requirements to address climate change and other sustainability issues;
our efforts to optimize our global supply chain and manufacturing footprint;
our ability to project future sales volume based on third-party information, based on which we manage our business;

 


 

 

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our ability to convert new business awards into product revenues;
any loss or insolvency of our key customers and OEMs, or key suppliers;
risks associated with our manufacturing processes;
the extensive regulation of our patient temperature management business;
the protection of our intellectual property in certain jurisdictions;
our compliance with anti-corruption laws and regulations; and
legal and regulatory proceedings and claims involving us or one of our major customers.

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.

 

 

 


 

 

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GENTHERM INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Product revenues

 

$

366,195

 

 

$

332,962

 

 

$

1,102,143

 

 

$

861,334

 

Cost of sales

 

 

279,985

 

 

 

252,610

 

 

 

846,815

 

 

 

657,492

 

Gross margin

 

 

86,210

 

 

 

80,352

 

 

 

255,328

 

 

 

203,842

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Net research and development expenses

 

 

23,150

 

 

 

22,666

 

 

 

72,991

 

 

 

62,425

 

Selling, general and administrative expenses

 

 

38,220

 

 

 

34,859

 

 

 

113,680

 

 

 

96,109

 

Impairment of goodwill

 

 

 

 

 

 

 

 

19,509

 

 

 

 

Restructuring expenses

 

 

1,099

 

 

 

6

 

 

 

3,412

 

 

 

561

 

Total operating expenses

 

 

62,469

 

 

 

57,531

 

 

 

209,592

 

 

 

159,095

 

Operating income

 

 

23,741

 

 

 

22,821

 

 

 

45,736

 

 

 

44,747

 

Interest (expense) income, net

 

 

(3,368

)

 

 

714

 

 

 

(9,444

)

 

 

(1,285

)

Foreign currency gain (loss)

 

 

2,107

 

 

 

(8,285

)

 

 

384

 

 

 

(1,516

)

Other income

 

 

272

 

 

 

361

 

 

 

1,058

 

 

 

698

 

Earnings before income tax

 

 

22,752

 

 

 

15,611

 

 

 

37,734

 

 

 

42,644

 

Income tax expense

 

 

6,908

 

 

 

5,784

 

 

 

15,478

 

 

 

13,998

 

Net income

 

$

15,844

 

 

$

9,827

 

 

$

22,256

 

 

$

28,646

 

Basic earnings per share

 

$

0.48

 

 

$

0.30

 

 

$

0.67

 

 

$

0.87

 

Diluted earnings per share

 

$

0.48

 

 

$

0.29

 

 

$

0.67

 

 

$

0.86

 

Weighted average number of shares – basic

 

 

32,944

 

 

 

33,162

 

 

 

33,049

 

 

 

33,106

 

Weighted average number of shares – diluted

 

 

33,196

 

 

 

33,470

 

 

 

33,311

 

 

 

33,460

 

 

 

 

 


 

 

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GENTHERM INCORPORATED

REVENUE BY PRODUCT CATEGORY AND RECONCILIATION OF FOREIGN CURRENCY TRANSLATION IMPACT

(In thousands)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

% Change

 

 

2023

 

 

2022

 

 

% Change

 

Climate Control Seat

 

$

124,905

 

 

$

112,059

 

 

11.5

%

 

$

360,868

 

 

$

311,281

 

 

 

15.9

%

Seat Heaters

 

 

77,238

 

 

 

75,568

 

 

2.2

%

 

 

231,132

 

 

 

210,367

 

 

 

9.9

%

Steering Wheel Heaters

 

 

39,861

 

 

 

31,482

 

 

26.6

%

 

 

115,166

 

 

 

89,169

 

 

 

29.2

%

Lumbar and Massage Comfort Solutions (a)

 

 

33,260

 

 

 

22,740

 

 

46.3

%

 

 

109,602

 

 

 

22,740

 

 

 

382.0

%

Valve Systems (a)

 

 

27,830

 

 

 

18,542

 

 

50.1

%

 

 

82,516

 

 

 

18,542

 

 

 

345.0

%

Automotive Cables

 

 

19,668

 

 

 

18,338

 

 

7.3

%

 

 

60,131

 

 

 

59,662

 

 

 

0.8

%

Battery Performance Solutions

 

 

17,242

 

 

 

20,331

 

 

(15.2

)%

 

 

57,138

 

 

 

55,395

 

 

 

3.1

%

Electronics

 

 

10,163

 

 

 

12,083

 

 

(15.9

)%

 

 

30,456

 

 

 

33,190

 

 

 

(8.2

)%

Other Automotive

 

 

4,615

 

 

 

11,412

 

 

(59.6

)%

 

 

21,998

 

 

 

29,224

 

 

 

(24.7

)%

Subtotal Automotive segment

 

 

354,782

 

 

 

322,555

 

 

10.0

%

 

 

1,069,007

 

 

 

829,570

 

 

 

28.9

%

Medical segment (b)

 

 

11,413

 

 

 

10,407

 

 

9.7

%

 

 

33,136

 

 

 

31,764

 

 

 

4.3

%

Total Company

 

$

366,195

 

 

$

332,962

 

 

10.0

%

 

$

1,102,143

 

 

$

861,334

 

 

 

28.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation impact (c)

 

 

4,825

 

 

 

 

 

 

 

 

(4,962

)

 

 

 

 

 

 

Total Company, excluding foreign
currency translation impact

 

$

361,370

 

 

$

332,962

 

 

8.5

%

 

$

1,107,105

 

 

$

861,334

 

 

 

28.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Represents product revenues from Alfmeier (acquired on August 1, 2022).

 

(b) Includes product revenues of $1,988 and $4,939 for the three and nine months ended September 30, 2023, respectively, and $1,234 for the three and nine months ended September 30, 2022 from Dacheng (acquired on July 13, 2022).

 

(c) Foreign currency translation impacts for the Automotive segment and Medical segment were $4,654 and $171, respectively, for the three months ended September 30, 2023. Foreign currency translation impacts for the Automotive segment and Medical segment were $(4,843) and $119, respectively, for the nine months ended September 30, 2023.

 

 

 


 

 

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GENTHERM INCORPORATED

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

(In thousands)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income

 

$

15,844

 

 

$

9,827

 

 

$

22,256

 

 

$

28,646

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

12,516

 

 

 

11,774

 

 

 

38,354

 

 

 

30,259

 

Income tax expense (a)

 

 

6,908

 

 

 

5,784

 

 

 

15,478

 

 

 

13,998

 

Interest expense (income), net (b)

 

 

3,368

 

 

 

(714

)

 

 

9,444

 

 

 

1,285

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Impairment of goodwill

 

 

 

 

 

 

 

 

19,509

 

 

 

 

Non-cash stock-based compensation (c)

 

 

3,421

 

 

 

(1,568

)

 

 

8,592

 

 

 

4,622

 

Acquisition and integration expenses

 

 

1,618

 

 

 

11,349

 

 

 

4,730

 

 

 

18,357

 

Restructuring expense

 

 

1,099

 

 

 

6

 

 

 

3,412

 

 

 

561

 

Non-automotive electronics inventory charge

 

 

3,426

 

 

 

 

 

 

5,489

 

 

 

 

Unrealized currency (gain) loss

 

 

(898

)

 

 

5,308

 

 

 

4,227

 

 

 

(1,032

)

Other

 

 

372

 

 

 

(157

)

 

 

71

 

 

 

(483

)

Adjusted EBITDA

 

$

47,674

 

 

$

41,609

 

 

$

131,562

 

 

$

96,213

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product revenues

 

$

366,195

 

 

$

332,962

 

 

$

1,102,143

 

 

$

861,334

 

Adjusted EBITDA Margin

 

 

13.0

%

 

 

12.5

%

 

 

11.9

%

 

 

11.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Includes $2,423 of deferred income tax benefit associated with the goodwill impairment of the Medical Reporting Unit for the nine months ended September 30, 2023.

 

(b) Includes $62 and $734 of interest income for the three months and nine months ended September 30, 2023, 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 $3,384 and $(1,933) for the three months ended September 30, 2023 and 2022, respectively. Includes operating expenses of $8,218 and $4,506 for the nine months ended September 30, 2023 and 2022, respectively.

 

 

 


 

 

https://cdn.kscope.io/a6ee1c5696c9f289f58d24a6dc20a067-img17760854_0.jpg 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

 

2022

 

 

2022

 

 

Adjusted EBITDA

 

$

41,609

 

 

$

96,213

 

 

Non-cash stock-based compensation

 

 

1,568

 

 

 

(4,622

)

 

Adjusted EBITDA as reported in Q3 2022 (1)

 

$

43,177

 

 

$

91,591

 

 

Adjusted EBITDA Margin as reported in Q3 2022 (1)

 

 

13.0

%

 

 

10.6

%

 

 

 

 

 

 

 

 

 

(1) Includes the impact of non-cash stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

 

2022

 

 

2022

 

 

Adjusted EBITDA

 

$

41,609

 

 

$

96,213

 

 

Pro forma EBITDA impact of Alfmeier acquisition

 

 

603

 

 

 

2,425

 

 

Pro forma Adjusted EBITDA

 

$

42,212

 

 

$

98,638

 

 

Pro forma Adjusted EBITDA Margin

 

 

12.0

%

 

 

9.8

%

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

 

2022

 

 

2022

 

 

Product revenues

 

$

332,962

 

 

$

861,334

 

 

Pro forma revenue impact of Alfmeier acquisition

 

 

19,915

 

 

 

143,640

 

 

Pro forma product revenues

 

$

352,877

 

 

$

1,004,974

 

 

 

 

 

Adjusted EBITDA
as reported
(1)

 

 

Non-Cash
Stock-based Compensation

 

 

Adjusted EBITDA (1)

 

 

Product Revenues

 

 

Adjusted EBITDA Margin (1)

 

Three months ended September 30, 2023

 

$

-

 

 

$

-

 

 

$

47,674

 

 

$

366,195

 

 

 

13.0

%

Three months ended June 30, 2023

 

 

-

 

 

 

-

 

 

 

42,378

 

 

 

372,323

 

 

 

11.4

%

Three months ended March 31, 2023

 

 

-

 

 

 

-

 

 

 

41,510

 

 

 

363,625

 

 

 

11.4

%

Three months ended December 31, 2022

 

 

38,178

 

 

 

2,771

 

 

 

40,949

 

 

 

343,322

 

 

 

11.9

%

Three months ended September 30, 2022

 

 

43,177

 

 

 

(1,568

)

 

 

41,609

 

 

 

332,962

 

 

 

12.5

%

Three months ended June 30, 2022

 

 

21,435

 

 

 

3,401

 

 

 

24,836

 

 

 

260,715

 

 

 

9.5

%

Three months ended March 31, 2022

 

 

26,979

 

 

 

2,789

 

 

 

29,768

 

 

 

267,657

 

 

 

11.1

%

Three months ended December 31, 2021

 

 

30,932

 

 

 

2,386

 

 

 

33,318

 

 

 

248,226

 

 

 

13.4

%

Three months ended September 30, 2021

 

 

30,481

 

 

 

3,223

 

 

 

33,704

 

 

 

243,384

 

 

 

13.8

%

Three months ended June 30, 2021

 

 

43,721

 

 

 

3,459

 

 

 

47,180

 

 

 

266,005

 

 

 

17.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Beginning in 2023 the definition of Adjusted EBITDA and Adjusted EBITDA margin was updated to exclude the impact of stock-based compensation.

 

 

 

 


 

 

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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, organic revenue, revenue (for the Company and by each reporting segment) excluding acquired businesses and foreign currency translation, revenue excluding foreign currency translation, adjusted operating expenses, pro forma product revenues, pro forma Adjusted EBITDA, pro forma Adjusted EBITDA margin and adjusted effective tax rate, 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. Note that in recent prior periods, the Company did not exclude non-cash stock-based compensation expenses in the definition of Adjusted EBITDA. Forward-looking references to Adjusted EBITDA and Adjusted EBITDA margin herein exclude the impact of stock-based compensation as newly defined. 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 organic revenue as revenue, excluding revenue from acquired businesses. Note that in recent prior periods, the Company used organic revenue instead to be revenue excluding foreign currency translation (see below). The Company defines revenue excluding acquired businesses and foreign currency translation as revenue, excluding the revenue from acquired businesses and the estimated effects of foreign currency exchange on revenue by translating actual revenue using the prior period foreign currency exchange rates. The Company defines revenue excluding foreign currency translation as revenue, excluding the estimated effects of foreign currency exchange on revenue by translating actual revenue using the prior period foreign currency exchange rates. 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 defines pro forma product revenues as product revenues including the product revenues of Alfmeier as if the acquisition had occurred as of January 1, 2022. The Company defines pro forma Adjusted EBITDA as Adjusted EBITDA, as defined above, including the results of Alfmeier as if the acquisition had occurred as of January 1, 2022. The Company defines pro forma Adjusted EBITDA margin as pro forma Adjusted EBITDA, as defined above, divided by pro forma product revenues. The Company defines adjusted effective tax rate as income tax expense excluding the tax benefit from non-cash goodwill impairment divided by earnings before income tax excluding the impact of non-cash goodwill impairment.

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 October 26, 2023.

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 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

 


 

 

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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, 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

ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income

 

$

15,844

 

 

$

9,827

 

 

$

22,256

 

 

$

28,646

 

Non-cash purchase accounting impact

 

 

1,613

 

 

 

2,842

 

 

 

5,793

 

 

 

6,426

 

Restructuring expenses

 

 

1,099

 

 

 

6

 

 

 

3,412

 

 

 

561

 

Unrealized currency (gain) loss

 

 

(898

)

 

 

5,308

 

 

 

4,227

 

 

 

(1,032

)

Acquisition and integration expenses

 

 

1,618

 

 

 

11,349

 

 

 

4,730

 

 

 

18,357

 

Non-automotive electronics inventory charge

 

 

3,426

 

 

 

 

 

 

5,489

 

 

 

 

Impairment of goodwill

 

 

 

 

 

 

 

 

19,509

 

 

 

 

Other

 

 

372

 

 

 

(157

)

 

 

71

 

 

 

(483

)

Tax effect of above

 

 

(1,693

)

 

 

(5,822

)

 

 

(8,635

)

 

 

(7,020

)

Adjusted net income

 

$

21,381

 

 

$

23,353

 

 

$

56,852

 

 

$

45,455

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

32,944

 

 

 

33,162

 

 

 

33,049

 

 

 

33,106

 

Diluted

 

 

33,196

 

 

 

33,470

 

 

 

33,311

 

 

 

33,460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share, as reported:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.48

 

 

$

0.30

 

 

$

0.67

 

 

$

0.87

 

Diluted

 

$

0.48

 

 

$

0.29

 

 

$

0.67

 

 

$

0.86

 

Adjusted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.65

 

 

$

0.70

 

 

$

1.72

 

 

$

1.37

 

Diluted

 

$

0.64

 

 

$

0.70

 

 

$

1.71

 

 

$

1.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

https://cdn.kscope.io/a6ee1c5696c9f289f58d24a6dc20a067-img17760854_0.jpg 

 

GENTHERM INCORPORATED

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

 

 

September 30, 2023

 

 

December 31, 2022

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

154,354

 

 

$

153,891

 

Accounts receivable, net

 

 

263,765

 

 

 

247,131

 

Inventory:

 

 

 

 

 

 

Raw materials

 

 

122,919

 

 

 

136,217

 

Work in process

 

 

16,745

 

 

 

17,695

 

Finished goods

 

 

66,192

 

 

 

64,336

 

Inventory, net

 

 

205,856

 

 

 

218,248

 

Other current assets

 

 

76,651

 

 

 

64,597

 

Total current assets

 

 

700,626

 

 

 

683,867

 

Property and equipment, net

 

 

236,660

 

 

 

244,480

 

Goodwill

 

 

100,633

 

 

 

119,774

 

Other intangible assets, net

 

 

66,427

 

 

 

73,933

 

Operating lease right-of-use assets

 

 

27,442

 

 

 

29,945

 

Deferred income tax assets

 

 

73,177

 

 

 

69,840

 

Other non-current assets

 

 

20,632

 

 

 

17,461

 

Total assets

 

$

1,225,597

 

 

$

1,239,300

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

213,851

 

 

$

182,225

 

Current lease liabilities

 

 

7,633

 

 

 

7,143

 

Current maturities of long-term debt

 

 

620

 

 

 

2,443

 

Other current liabilities

 

 

90,199

 

 

 

93,814

 

Total current liabilities

 

 

312,303

 

 

 

285,625

 

Long-term debt, less current maturities

 

 

207,302

 

 

 

232,653

 

Non-current lease liabilities

 

 

16,451

 

 

 

20,538

 

Pension benefit obligation

 

 

3,165

 

 

 

3,638

 

Other non-current liabilities

 

 

26,324

 

 

 

24,573

 

Total liabilities

 

$

565,545

 

 

$

567,027

 

Shareholders’ equity:

 

 

 

 

 

 

Common Stock:

 

 

 

 

 

 

No par value; 55,000,000 shares authorized 32,795,093 and 33,202,082 issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

 

97,715

 

 

 

122,658

 

Paid-in capital

 

 

5,379

 

 

 

5,447

 

Accumulated other comprehensive loss

 

 

(55,955

)

 

 

(46,489

)

Accumulated earnings

 

 

612,913

 

 

 

590,657

 

Total shareholders’ equity

 

 

660,052

 

 

 

672,273

 

Total liabilities and shareholders’ equity

 

$

1,225,597

 

 

$

1,239,300

 

 

 


 

 

https://cdn.kscope.io/a6ee1c5696c9f289f58d24a6dc20a067-img17760854_0.jpg 

 

GENTHERM INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

Operating Activities:

 

 

 

 

 

 

Net income

 

$

22,256

 

 

$

28,646

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

38,531

 

 

 

30,470

 

Deferred income taxes

 

 

(3,017

)

 

 

(1,207

)

Stock based compensation

 

 

8,451

 

 

 

3,383

 

Loss on disposition of property and equipment

 

 

873

 

 

 

620

 

Provisions for inventory

 

 

6,597

 

 

 

4,293

 

Impairment of goodwill

 

 

19,509

 

 

 

 

Other

 

 

81

 

 

 

881

 

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

(19,813

)

 

 

(55,780

)

Inventory

 

 

3,733

 

 

 

(53,223

)

Other assets

 

 

(19,218

)

 

 

(10,868

)

Accounts payable

 

 

32,158

 

 

 

60,983

 

Other liabilities

 

 

(10,099

)

 

 

4,759

 

Net cash provided by operating activities

 

 

80,042

 

 

 

12,957

 

Investing Activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(26,526

)

 

 

(25,737

)

Proceeds from the sale of property and equipment

 

 

72

 

 

 

175

 

Acquisition of businesses, net of cash acquired

 

 

 

 

 

(224,097

)

Proceeds from deferred purchase price of factored receivables

 

 

10,139

 

 

 

2,168

 

Cost of technology investments

 

 

(630

)

 

 

(350

)

Net cash used in investing activities

 

 

(16,945

)

 

 

(247,841

)

Financing Activities:

 

 

 

 

 

 

Repayments of debt

 

 

(27,166

)

 

 

(11,559

)

Proceeds from the exercise of Common Stock options

 

 

263

 

 

 

1,556

 

Taxes withheld and paid on employees' share-based payment awards

 

 

(2,754

)

 

 

(5,415

)

Cash paid for the repurchase of Common Stock

 

 

(31,094

)

 

 

 

Net cash (used in) provided by financing activities

 

 

(60,751

)

 

 

191,582

 

Foreign currency effect

 

 

(1,883

)

 

 

(8,141

)

Net cash increase (decrease) in cash and cash equivalents

 

 

463

 

 

 

(51,443

)

Cash and cash equivalents at beginning of period

 

 

153,891

 

 

 

190,606

 

Cash and cash equivalents at end of period

 

$

154,354

 

 

$

139,163

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for taxes

 

$

18,893

 

 

$

13,509

 

Cash paid for interest

 

 

9,737

 

 

 

3,334

 

 

 

 

 

 

 


Slide 1

Proprietary © Gentherm 2023 2023 Third Quarter Results October 26, 2023 Exhibit 99.2


Slide 2

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 Operating Expense, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EPS, Free Cash Flow, Net Debt, organic revenue, revenue excluding acquired businesses and foreign currency translation, revenue excluding foreign currency translation, pro forma product revenues, pro forma Adjusted EBITDA, pro forma Adjusted EBITDA margin and Adjusted Effective Tax Rate, each a non-GAAP financial measure. Starting in 2023, the Company is excluding the impact of non-cash stock-based compensation from its definition of Adjusted EBITDA and Adjusted EBITDA margin. References to Adjusted EBITDA and Adjusted EBITDA margin for prior periods have been recast to exclude the impact of non-cash stock-based compensation. See the Company’s earnings release dated October 26, 2023, 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 2023


Slide 3

Forward-Looking Statement Proprietary © Gentherm 2023 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 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. 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 statement is 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. 


Slide 4

Automotive Highlights Record quarterly revenues for Climate Control Seat and Steering Wheel Heaters 16 Vehicle launches with 8 OEMs Multiple CCS® Launches   BMW 5 series, Chevrolet Equinox EV,  Great Wall Mecha Dragon, Hongqi eH5, Xpeng G9 EV Proprietary © Gentherm 2023 4 ClimateSense® won the 2023 Automotive D.R.I.V.E Honours for reducing emissions Great Wall Mecha Dragon BMW 5 Series Chevrolet Equinox EV Hongqi eH5 Xpeng G9 EV


Slide 5

New Automotive Business Awards $520M in awards in 3Q; a 3Q record Steering Wheel Heater awards across 8 OEMs including hands-on-detection enabled heater award with Audi, BMW, General Motors, Honda, Hongqi and Volvo 10 Multiple CCS® Awards from: Ford | General Motors | HKMC | Li Auto Mazda | Stellantis | Volkswagen Proprietary © Gentherm 2023 5 First combined thermal and pneumatic massage award from Li Auto in October First multi function ECU award with General Motors Accelerating demand for thermal comfort, and massage and lumbar solutions setting new annual record for Automotive Business Awards with more than two months left in the year


Slide 6

Medical Highlights Leveraging partnerships for revenue growth while focusing on improving returns Proprietary © Gentherm 2023 6 10% Revenue up 10 percent year over year 20 new major hospital customers added in China Awarded contract extensions with Premier and Vizient, two of the largest Group Purchasing Organizations in the U.S.


Slide 7

(Dollars in thousands, except per share data) 2023 2022 Pro forma 2022 (1) 2023 2022 Pro forma 2022 (1) Product Revenues $ 366,195 $ 332,962 $ 352,877 $ 1,102,143 $ 861,334 $ 1,004,974   Automotive 354,782 322,555 342,470 1,069,007 829,570 973,210   Medical 11,413 10,407 33,136 31,764 Gross Margin 86,210 80,352 255,328 203,842 Gross Margin % 23.5 % 24.1 % 23.2 % 23.7 % Operating Expenses 62,469 57,531 209,592 159,095 Operating Income 23,741 22,821 45,736 44,747 Adjusted EBITDA 47,674 41,609 42,212 131,562 96,213 98,638 Adjusted EBITDA Margin 13.0 % 12.5 % 12.0 % 11.9 % 11.2 % 9.8 % Diluted EPS - As Adjusted $0.64 $0.70 $1.71 $1.36 Select Income Statement Data Nine Months Ended September 30 Three Months Ended September 30 (1) Pro forma amounts include the results of Alfmeier as if the acquisition had occurred as of January 1, 2022. Proprietary © Gentherm 2023 7


Slide 8

Select Balance Sheet Data September 30, 2023 June 30, 2023 December 31, 2022 December 31, 2022 December 31, 2022 Cash and Cash Equivalents $ 154,354 $ 153,891 Total Assets  1,225,597 1,239,300 Debt 207,922 235,096    Current 620 2,443    Non-Current 207,302 232,653 Revolving LOC Availability 293,000 264,904 Total Liquidity 447,354 418,795 Proprietary © Gentherm 2023 8 (Dollars in thousands)


Slide 9

Proprietary © Gentherm 2023 9 2023 Guidance 2022 A 2022 Pro forma(4) Prior 2023 E 2023 E Product Revenue (1)(2) $1.2B $1.3B $1.45B - $1.55B $1.45B - $1.47B Adjusted EBITDA Margin (1)(2)(3) 11.4% 10.4% 11.5% – 13.5% 11.5% – 12.5% Adjusted Effective Tax Rate (5) 36% 28% - 32% 28% - 32% Capital Expenditures $40M $46M $60M - $70M $40M - $50M Based on the current forecast of customer orders, inflation and pricing recovery, and a EUR to USD exchange rate of $1.05/Euro. Assumes OEM plants impacted by the UAW strike as of October 25th will remain idled through the end of November. Starting in 2023, the company is excluding the impact of non-cash stock-based compensation in its calculation of Adjusted EBITDA Margin. Pro forma amounts include the results of Alfmeier as if the acquisition had occurred as of January 1, 2022. Unaudited pro forma information is provided for illustrative purposes only and should be read in conjunction with the consolidated financial statements to better facilitate the assessment and measurement of the Company's operating performance. Such information is not, and should not be assumed to be, an indication of the actual results of the combined company that would have been achieved or may be achieved in the future. Regarding 2023 guidance, excluding the impact of non-cash goodwill impairment on earnings before income tax of $19.5 million, which includes the associated deferred tax effect, and income tax benefit of $2.4 million. 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.


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Appendix Proprietary © Gentherm 2023


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Proprietary © Gentherm 2023 11 Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin (Dollars in thousands) 2023 2022 2023 2022 Net Income $ 15,844 $ 9,827 $ 22,256 $ 28,646 Add Back:      Income Tax Expense  6,908 5,784 15,478 13,998      Interest Expense (Income), net 3,368 (714 ) 9,444 1,285      Depreciation and Amortization  12,516 11,774 38,354 30,259 Adjustments:      Restructuring Expenses  1,099 6 3,412 561      Unrealized Currency (Gain) Loss  (898 ) 5,308 4,227 (1,032 )      Acquisition and Integration Expenses 1,618 11,349 4,730 18,357      Non-Automotive Electronics Inventory Charge 3,426 – 5,489 –      Impairment of Goodwill – – 19,509 –     Non-Cash Stock-Based Compensation 3,421 (1,568 ) 8,592 4,622 Other 372 (157 ) 71 (483 ) Adjusted EBITDA  $ 47,674 $ 41,609 $ 131,562 $ 96,213 Product Revenues $ 366,195 $ 332,962 $ 1,102,143 $ 861,334 Net Income Margin 4.3 % 3.0 % 2.0 % 3.3 % Adjusted EBITDA Margin 13.0 % 12.5 % 11.9 % 11.2 % Nine Months Ended September 30 Three Months Ended September 30


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Proprietary © Gentherm 2023 12 Reconciliation of Adjusted EPS 2023 2022 2023 2022 Diluted EPS - As Reported $ 0.48 $ 0.29 $ 0.67 $ 0.86 Acquisition and Integration Expenses 0.05 0.34 0.14 0.55 Non-Cash Purchase Accounting Impacts 0.05 0.08 0.17 0.19 Unrealized Currency (Gain) Loss  (0.03 ) 0.16 0.13 (0.03 ) Restructuring Expenses 0.03 0.00 0.10 0.02 Non-Automotive Electronics Inventory Charge 0.10 – 0.16 – Impairment of Goodwill – – 0.59 – Other 0.01 (0.00) 0.00 (0.01 ) Tax Effect of Above (0.05 ) (0.17) (0.26 ) (0.21 ) Rounding – – 0.01 (0.01 ) Diluted EPS - As Adjusted $  0.64 $ 0.70 $  1.71 $ 1.36 Three Months Ended September 30 Nine Months Ended September 30