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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2022
OR
|
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File Number: 0-21810
GENTHERM INCORPORATED
(Exact name of registrant as specified in its charter)
|
|
|
Michigan |
|
95-4318554 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
21680 Haggerty Road, Northville, MI |
|
48167 |
(Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number, including area code: (248) 504-0500
Securities registered pursuant to Section 12(b) of the Act:
|
|
|
Title of each class |
Trading Symbol |
Name of each exchange on which registered |
Common Stock, no par value |
THRM |
Nasdaq |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
|
|
|
|
Large accelerated filer |
☒ |
|
Accelerated filer |
☐ |
Non-accelerated filer |
☐ |
|
Smaller reporting company |
☐ |
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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
At October 28, 2022, there were 33,198,067 issued and outstanding shares of Common Stock of the registrant.
GENTHERM INCORPORATED
TABLE OF CONTENTS
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENTHERM INCORPORATED
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
ASSETS |
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
139,163 |
|
|
$ |
190,606 |
|
Accounts receivable, net |
|
|
248,570 |
|
|
|
182,987 |
|
Inventory: |
|
|
|
|
|
|
Raw materials |
|
|
154,273 |
|
|
|
96,426 |
|
Work in process |
|
|
17,157 |
|
|
|
9,495 |
|
Finished goods |
|
|
62,465 |
|
|
|
53,556 |
|
Inventory, net |
|
|
233,895 |
|
|
|
159,477 |
|
Other current assets |
|
|
84,344 |
|
|
|
32,775 |
|
Total current assets |
|
|
705,972 |
|
|
|
565,845 |
|
Property and equipment, net |
|
|
228,056 |
|
|
|
155,270 |
|
Goodwill |
|
|
125,273 |
|
|
|
66,033 |
|
Other intangible assets, net |
|
|
68,639 |
|
|
|
37,554 |
|
Operating lease right-of-use assets |
|
|
30,214 |
|
|
|
24,387 |
|
Deferred income tax assets |
|
|
66,322 |
|
|
|
69,630 |
|
Other non-current assets |
|
|
16,857 |
|
|
|
16,624 |
|
Total assets |
|
$ |
1,241,333 |
|
|
$ |
935,343 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
208,338 |
|
|
$ |
122,727 |
|
Current lease liabilities |
|
|
7,448 |
|
|
|
5,669 |
|
Current maturities of long-term debt |
|
|
3,540 |
|
|
|
2,500 |
|
Other current liabilities |
|
|
100,898 |
|
|
|
82,193 |
|
Total current liabilities |
|
|
320,224 |
|
|
|
213,089 |
|
Long-term debt, less current maturities |
|
|
232,000 |
|
|
|
36,250 |
|
Non-current lease liabilities |
|
|
22,013 |
|
|
|
19,789 |
|
Pension benefit obligation |
|
|
5,850 |
|
|
|
6,832 |
|
Other non-current liabilities |
|
|
37,157 |
|
|
|
5,577 |
|
Total liabilities |
|
$ |
617,244 |
|
|
$ |
281,537 |
|
Shareholders’ equity: |
|
|
|
|
|
|
Common Stock: |
|
|
|
|
|
|
No par value; 55,000,000 shares authorized 33,196,404 and 33,008,185 issued and outstanding at September 30, 2022 and December 31, 2021, respectively |
|
|
119,801 |
|
|
|
118,646 |
|
Paid-in capital |
|
|
5,477 |
|
|
|
5,866 |
|
Accumulated other comprehensive loss |
|
|
(96,051 |
) |
|
|
(36,922 |
) |
Accumulated earnings |
|
|
594,862 |
|
|
|
566,216 |
|
Total shareholders’ equity |
|
|
624,089 |
|
|
|
653,806 |
|
Total liabilities and shareholders’ equity |
|
$ |
1,241,333 |
|
|
$ |
935,343 |
|
3
GENTHERM INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Product revenues |
|
$ |
332,962 |
|
|
$ |
243,384 |
|
|
$ |
861,334 |
|
|
$ |
797,924 |
|
Cost of sales |
|
|
252,610 |
|
|
|
173,997 |
|
|
|
657,492 |
|
|
|
561,655 |
|
Gross margin |
|
|
80,352 |
|
|
|
69,387 |
|
|
|
203,842 |
|
|
|
236,269 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Net research and development expenses |
|
|
22,666 |
|
|
|
20,590 |
|
|
|
62,425 |
|
|
|
56,420 |
|
Selling, general and administrative expenses |
|
|
34,859 |
|
|
|
27,344 |
|
|
|
96,109 |
|
|
|
83,093 |
|
Restructuring expenses |
|
|
6 |
|
|
|
749 |
|
|
|
561 |
|
|
|
3,631 |
|
Total operating expenses |
|
|
57,531 |
|
|
|
48,683 |
|
|
|
159,095 |
|
|
|
143,144 |
|
Operating income |
|
|
22,821 |
|
|
|
20,704 |
|
|
|
44,747 |
|
|
|
93,125 |
|
Interest income (expense), net |
|
|
714 |
|
|
|
(515 |
) |
|
|
(1,285 |
) |
|
|
(2,184 |
) |
Foreign currency (loss) gain |
|
|
(8,285 |
) |
|
|
133 |
|
|
|
(1,516 |
) |
|
|
391 |
|
Other income |
|
|
361 |
|
|
|
10 |
|
|
|
698 |
|
|
|
13 |
|
Earnings before income tax |
|
|
15,611 |
|
|
|
20,332 |
|
|
|
42,644 |
|
|
|
91,345 |
|
Income tax expense |
|
|
5,784 |
|
|
|
4,646 |
|
|
|
13,998 |
|
|
|
17,959 |
|
Net income |
|
$ |
9,827 |
|
|
$ |
15,686 |
|
|
$ |
28,646 |
|
|
$ |
73,386 |
|
Basic earnings per share |
|
$ |
0.30 |
|
|
$ |
0.47 |
|
|
$ |
0.87 |
|
|
$ |
2.22 |
|
Diluted earnings per share |
|
$ |
0.29 |
|
|
$ |
0.47 |
|
|
$ |
0.86 |
|
|
$ |
2.19 |
|
Weighted average number of shares – basic |
|
|
33,162 |
|
|
|
33,178 |
|
|
|
33,106 |
|
|
|
33,075 |
|
Weighted average number of shares – diluted |
|
|
33,470 |
|
|
|
33,609 |
|
|
|
33,460 |
|
|
|
33,489 |
|
See accompanying notes to the consolidated condensed financial statements.
4
GENTHERM INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Net income |
|
$ |
9,827 |
|
|
$ |
15,686 |
|
|
$ |
28,646 |
|
|
$ |
73,386 |
|
Other comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
Pension benefit obligations |
|
|
6 |
|
|
|
— |
|
|
|
62 |
|
|
|
— |
|
Foreign currency translation adjustments |
|
|
(28,682 |
) |
|
|
(7,432 |
) |
|
|
(60,676 |
) |
|
|
(16,056 |
) |
Unrealized gain (loss) on foreign currency derivative securities, net of tax |
|
|
1,273 |
|
|
|
(474 |
) |
|
|
1,490 |
|
|
|
(1,044 |
) |
Unrealized loss on commodity derivative securities, net of tax |
|
|
— |
|
|
|
(35 |
) |
|
|
(5 |
) |
|
|
(35 |
) |
Other comprehensive loss, net of tax |
|
|
(27,403 |
) |
|
|
(7,941 |
) |
|
|
(59,129 |
) |
|
|
(17,135 |
) |
Comprehensive (loss) income |
|
$ |
(17,576 |
) |
|
$ |
7,745 |
|
|
$ |
(30,483 |
) |
|
$ |
56,251 |
|
See accompanying notes to the consolidated condensed financial statements.
5
GENTHERM INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
Operating Activities: |
|
|
|
|
|
|
Net income |
|
$ |
28,646 |
|
|
$ |
73,386 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
30,470 |
|
|
|
29,430 |
|
Deferred income taxes |
|
|
(1,207 |
) |
|
|
3,867 |
|
Non-cash stock based compensation |
|
|
3,383 |
|
|
|
11,760 |
|
Loss on disposition of property and equipment |
|
|
620 |
|
|
|
638 |
|
Other |
|
|
881 |
|
|
|
(650 |
) |
Changes in assets and liabilities: |
|
|
|
|
|
|
Accounts receivable, net |
|
|
(55,780 |
) |
|
|
26,162 |
|
Inventory |
|
|
(48,930 |
) |
|
|
(34,019 |
) |
Other assets |
|
|
(10,868 |
) |
|
|
597 |
|
Accounts payable |
|
|
60,983 |
|
|
|
9,231 |
|
Other liabilities |
|
|
4,759 |
|
|
|
(3,296 |
) |
Net cash provided by operating activities |
|
|
12,957 |
|
|
|
117,106 |
|
Investing Activities: |
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(25,737 |
) |
|
|
(29,585 |
) |
Proceeds from the sale of property and equipment |
|
|
175 |
|
|
|
11 |
|
Acquisition of businesses, net of cash acquired |
|
|
(224,097 |
) |
|
|
(2,827 |
) |
Proceeds from deferred purchase price of factored receivables |
|
|
2,168 |
|
|
|
— |
|
Cost of technology investments |
|
|
(350 |
) |
|
|
(7,557 |
) |
Net cash used in investing activities |
|
|
(247,841 |
) |
|
|
(39,958 |
) |
Financing Activities: |
|
|
|
|
|
|
Borrowings on debt |
|
|
207,000 |
|
|
|
— |
|
Repayments of debt |
|
|
(11,559 |
) |
|
|
(151,993 |
) |
Proceeds from the exercise of Common Stock options |
|
|
1,556 |
|
|
|
7,467 |
|
Taxes withheld and paid on employees' share-based payment awards |
|
|
(5,415 |
) |
|
|
(3,991 |
) |
Acquisition contingent consideration payment |
|
|
— |
|
|
|
(69 |
) |
Net cash provided by (used in) financing activities |
|
|
191,582 |
|
|
|
(148,586 |
) |
Foreign currency effect |
|
|
(8,141 |
) |
|
|
(1,821 |
) |
Net decrease in cash and cash equivalents |
|
|
(51,443 |
) |
|
|
(73,259 |
) |
Cash and cash equivalents at beginning of period |
|
|
190,606 |
|
|
|
268,345 |
|
Cash and cash equivalents at end of period |
|
$ |
139,163 |
|
|
$ |
195,086 |
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
Cash paid for taxes |
|
$ |
13,509 |
|
|
$ |
12,348 |
|
Cash paid for interest |
|
$ |
3,334 |
|
|
$ |
1,823 |
|
See accompanying notes to the consolidated condensed financial statements.
6
GENTHERM INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Paid-in |
|
|
Comprehensive |
|
|
Accumulated |
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Loss |
|
|
Earnings |
|
|
Total |
|
Balance at December 31, 2021 |
|
|
33,008 |
|
|
$ |
118,646 |
|
|
$ |
5,866 |
|
|
$ |
(36,922 |
) |
|
$ |
566,216 |
|
|
$ |
653,806 |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,747 |
|
|
|
11,747 |
|
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(8,806 |
) |
|
|
— |
|
|
|
(8,806 |
) |
Stock compensation, net |
|
|
119 |
|
|
|
(814 |
) |
|
|
(146 |
) |
|
|
— |
|
|
|
— |
|
|
|
(960 |
) |
Balance at March 31, 2022 |
|
|
33,127 |
|
|
|
117,832 |
|
|
|
5,720 |
|
|
|
(45,728 |
) |
|
|
577,963 |
|
|
|
655,787 |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,072 |
|
|
|
7,072 |
|
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|