UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
(Exact name of Registrant as Specified in Its Charter)
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(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:
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Trading |
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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 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 |
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Company news release dated July 31, 2024 concerning financial results |
Exhibit 99.2 |
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Exhibit 104 |
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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.
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GENTHERM INCORPORATED |
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By: |
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/s/ Wayne Kauffman |
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Wayne Kauffman |
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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:
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Initial 2024 Guidance |
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Latest Estimate(1) |
Product Revenues |
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$1.5B – $1.6B |
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Low end of range |
Adjusted EBITDA Margin Rate |
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12.5% – 13.5% |
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Above mid-point of range |
Full-year Adjusted Effective Tax Rate |
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26% – 29% |
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No change |
Capital Expenditures |
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$65M – $75M |
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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)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Product revenues |
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$ |
375,683 |
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$ |
372,323 |
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$ |
731,698 |
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$ |
735,948 |
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Cost of sales |
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278,982 |
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284,335 |
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546,244 |
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566,830 |
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Gross margin |
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96,701 |
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87,988 |
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185,454 |
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169,118 |
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Operating expenses: |
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Net research and development expenses |
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21,861 |
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24,696 |
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44,606 |
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49,841 |
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Selling, general and administrative expenses |
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39,410 |
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38,418 |
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80,131 |
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75,460 |
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Restructuring expenses |
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2,442 |
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1,044 |
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9,680 |
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2,313 |
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Impairment of goodwill |
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— |
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19,509 |
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— |
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19,509 |
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Total operating expenses |
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63,713 |
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83,667 |
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134,417 |
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147,123 |
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Operating income |
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32,988 |
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4,321 |
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51,037 |
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21,995 |
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Interest expense, net |
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(4,002 |
) |
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(1,932 |
) |
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(7,246 |
) |
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(6,076 |
) |
Foreign currency (loss) gain |
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(282 |
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346 |
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2,267 |
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(1,723 |
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Other (loss) income |
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(284 |
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556 |
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689 |
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786 |
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Earnings before income tax |
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28,420 |
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3,291 |
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46,747 |
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14,982 |
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Income tax expense |
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9,544 |
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4,842 |
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13,086 |
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8,570 |
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Net income (loss) |
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$ |
18,876 |
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$ |
(1,551 |
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$ |
33,661 |
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$ |
6,412 |
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Basic earnings (loss) per share |
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$ |
0.60 |
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$ |
(0.05 |
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$ |
1.07 |
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$ |
0.19 |
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Diluted earnings (loss) per share |
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$ |
0.60 |
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$ |
(0.05 |
) |
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$ |
1.06 |
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$ |
0.19 |
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Weighted average number of shares – basic |
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31,534 |
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33,019 |
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31,539 |
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33,100 |
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Weighted average number of shares – diluted |
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31,710 |
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33,019 |
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31,714 |
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33,328 |
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GENTHERM INCORPORATED
REVENUE BY PRODUCT CATEGORY AND RECONCILIATION OF FOREIGN CURRENCY TRANSLATION IMPACT
(Dollars in thousands)
(Unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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% Change |
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2024 |
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2023 |
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% Change |
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Climate Control Seat |
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$ |
121,701 |
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$ |
121,210 |
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0.4 |
% |
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$ |
237,291 |
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$ |
235,963 |
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0.6 |
% |
Seat Heaters |
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77,056 |
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78,258 |
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(1.5 |
)% |
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154,132 |
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153,894 |
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0.2 |
% |
Lumbar and Massage Comfort Solutions |
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45,869 |
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37,604 |
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22.0 |
% |
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84,120 |
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76,342 |
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10.2 |
% |
Steering Wheel Heaters |
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42,414 |
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38,958 |
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8.9 |
% |
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82,228 |
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75,305 |
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9.2 |
% |
Valve Systems |
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29,267 |
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27,692 |
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5.7 |
% |
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55,892 |
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54,686 |
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2.2 |
% |
Automotive Cables |
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18,832 |
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20,243 |
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(7.0 |
)% |
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40,351 |
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40,463 |
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(0.3 |
)% |
Battery Performance Solutions |
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16,063 |
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19,587 |
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(18.0 |
)% |
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29,671 |
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39,896 |
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(25.6 |
)% |
Electronics |
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7,171 |
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9,323 |
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(23.1 |
)% |
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15,356 |
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20,293 |
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(24.3 |
)% |
Other Automotive |
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5,629 |
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8,658 |
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(35.0 |
)% |
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9,599 |
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17,383 |
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(44.8 |
)% |
Subtotal Automotive segment |
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364,002 |
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361,533 |
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0.7 |
% |
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708,640 |
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714,225 |
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(0.8 |
)% |
Medical segment |
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11,681 |
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10,790 |
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8.3 |
% |
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23,058 |
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21,723 |
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6.1 |
% |
Total Company |
|
$ |
375,683 |
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$ |
372,323 |
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0.9 |
% |
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$ |
731,698 |
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|
$ |
735,948 |
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|
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(0.6 |
)% |
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Foreign currency translation impact (a) |
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(3,936 |
) |
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— |
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(6,733 |
) |
|
|
— |
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Total Company, excluding foreign |
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$ |
379,619 |
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$ |
372,323 |
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|
2.0 |
% |
|
$ |
738,431 |
|
|
$ |
735,948 |
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|
|
0.3 |
% |
|
|
|
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(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)
|
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Three Months Ended June 30, |
|
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Six Months Ended June 30, |
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|
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2024 |
|
|
2023 |
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|
2024 |
|
|
2023 |
|
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Net income (loss) |
|
$ |
18,876 |
|
|
$ |
(1,551 |
) |
|
$ |
33,661 |
|
|
$ |
6,412 |
|
Add back: |
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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: |
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|
|
|
|
|
|
|
|
|
|
|
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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. |
|
|||||||||||||||
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
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 |
|
|
|
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 |
|
|
|
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. |
|
|||||||
Proprietary © Gentherm 2024 2024 Second Quarter Results July 31, 2024 Exhibit 99.2
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 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
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.
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
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
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
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
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
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
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)
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
Appendix Proprietary © Gentherm 2024
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)
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