GENTHERM Inc [THRM] Filings

10-Q 1 thrm-20220930.htm 10-Q 10-Q

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

☐  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




Part I. Financial Information			3
	Item 1.	Financial Statements (Unaudited)	3
		Consolidated Condensed Balance Sheets	3
		Consolidated Condensed Statements of Income	4
		Consolidated Condensed Statements of Comprehensive (Loss) Income	5
		Consolidated Condensed Statements of Cash Flows	6
		Consolidated Condensed Statements of Changes in Shareholders’ Equity	7
		Notes to Unaudited Consolidated Condensed Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
	Item 4.	Controls and Procedures	41
Part II. Other Information			42
	Item 1.	Legal Proceedings	42
	Item 1A.	Risk Factors	42
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
	Item 6.	Exhibits	43
Signatures			44

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

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.

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.

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.

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		—		—			—

GENTHERM Inc [THRM] Filings
10-Q	[2022-11-03]
10-Q	[2022-08-02]
10-Q	[2022-05-04]
10-K	[2022-02-17]
10-Q	[2021-10-29]
10-Q	[2021-07-30]
10-Q	[2021-04-30]
10-K	[2021-03-01]
10-Q	[2020-10-30]
10-Q	[2020-08-04]
10-Q	[2020-05-07]
10-K	[2020-02-20]
10-Q	[2019-10-29]
10-Q	[2019-07-26]
10-Q	[2019-05-01]
10-K	[2019-02-26]
10-Q	[2018-11-01]
10-Q	[2018-07-31]
10-Q	[2018-04-27]
10-K	[2018-02-23]
10-Q	[2017-10-30]
10-Q	[2017-07-31]
10-Q	[2017-05-01]
10-K	[2017-02-23]
10-Q	[2016-10-28]
10-Q	[2016-07-29]
10-Q	[2016-04-29]
10-K	[2016-02-25]
10-Q	[2015-10-30]
10-Q	[2015-07-31]
10-Q	[2015-05-01]
10-K	[2015-03-02]
10-Q	[2014-11-10]
10-Q	[2014-08-05]
10-Q	[2014-05-09]
10-K	[2014-03-11]
10-Q	[2013-11-05]
10-Q	[2013-08-05]
10-Q	[2013-05-09]
10-K	[2013-03-15]
10-Q	[2012-11-05]
10-Q	[2012-08-06]
10-Q	[2012-05-08]
10-K	[2012-03-15]