Gentherm Earnings 2020-09-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

thrm-10q_20200930.htm

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, 2020

☐ 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 26, 2020, there were 32,690,280 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 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	27
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
	Item 4.	Controls and Procedures	43
Part II. Other Information			44
	Item 1.	Legal Proceedings	44
	Item 1A.	Risk Factors	44
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
	Item 6.	Exhibits	48
Signatures			49

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

GENTHERM INCORPORATED

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

	September 30, 2020			December 31, 2019
ASSETS
Current Assets:
Cash and cash equivalents	$	226,533		$	50,443
Restricted cash		2,506			2,505
Accounts receivable, net		193,249			159,710
Inventory:
Raw materials		62,970			61,323
Work in process		7,708			7,444
Finished goods		43,958			49,712
Inventory, net		114,636			118,479
Other current assets		37,988			42,726
Total current assets		574,912			373,863
Property and equipment, net		150,801			160,605
Goodwill		66,266			64,572
Other intangible assets, net		47,429			49,783
Operating lease right-of-use assets		18,844			11,587
Deferred income tax assets		55,641			57,650
Other non-current assets		7,554			9,326
Total assets	$	921,447		$	727,386
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	108,452		$	83,035
Current lease liabilities		5,206			4,586
Current maturities of long-term debt		2,500			2,500
Other current liabilities		74,443			66,583
Total current liabilities		190,601			156,704
Long-term debt, less current maturities		193,061			78,124
Non-current lease liabilities		15,046			6,751
Pension benefit obligation		7,864			8,057
Other non-current liabilities		3,079			5,100
Total liabilities	$	409,651		$	254,736
Shareholders’ equity:
Common Stock:
No par value; 55,000,000 shares authorized 32,680,013 and 32,674,354 issued and outstanding at September 30, 2020 and December 31, 2019, respectively		107,055			102,507
Paid-in capital		9,798			10,852
Accumulated other comprehensive loss		(32,486	)		(42,441	)
Accumulated earnings		427,429			401,732
Total shareholders’ equity		511,796			472,650
Total liabilities and shareholders’ equity	$	921,447		$	727,386

See accompanying notes to the consolidated condensed financial statements.

GENTHERM INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
Product revenues	$	259,540		$	240,056		$	624,214		$	741,303
Cost of sales		176,935			165,364			448,807			518,590
Gross margin		82,605			74,692			175,407			222,713
Operating expenses:
Net research and development expenses		18,070			18,838			51,171			56,990
Selling, general and administrative expenses		25,745			26,861			73,474			91,683
Restructuring expenses		284			8,664			3,452			11,809
Total operating expenses		44,099			54,363			128,097			160,482
Operating income		38,506			20,329			47,310			62,231
Interest expense, net		(1,259	)		(1,148	)		(3,368	)		(3,756	)
Foreign currency (loss) gain		(2,883	)		4,083			(5,562	)		3,482
Gain on sale of business		—			—			—			4,970
Impairment loss		—			(837	)		—			(21,206	)
Other (loss) income		(615	)		231			2,531			545
Earnings before income tax		33,749			22,658			40,911			46,266
Income tax expense		9,603			6,771			15,214			19,214
Net income	$	24,146		$	15,887		$	25,697		$	27,052
Basic earnings per share	$	0.74		$	0.48		$	0.79		$	0.81
Diluted earnings per share	$	0.73		$	0.48		$	0.78		$	0.81
Weighted average number of shares – basic		32,624			32,839			32,631			33,283
Weighted average number of shares – diluted		32,958			32,933			32,924			33,419

See accompanying notes to the consolidated condensed financial statements.

GENTHERM INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2020		2019			2020			2019
Net income	$	24,146	$	15,887		$	25,697		$	27,052
Other comprehensive income (loss):
Foreign currency translation adjustments		14,362		(15,172	)		11,569			(15,943	)
Unrealized gain (loss) on foreign currency derivative securities, net of tax		997		(202	)		(1,614	)		629
Other comprehensive income (loss), net of tax		15,359		(15,374	)		9,955			(15,314	)
Comprehensive income	$	39,505	$	513		$	35,652		$	11,738

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,
	2020			2019
Operating Activities:
Net income	$	25,697		$	27,052
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		30,777			33,281
Deferred income taxes		3,583			5,072
Non-cash stock based compensation		6,569			5,268
Defined benefit pension plan income		(433	)		(754	)
Loss on sale of property and equipment		562			319
Operating lease expense		5,156			4,477
Gain on sale of patents		(1,978	)		—
Impairment loss		—			21,206
Gain on sale of business		—			(4,970	)
Other		—			189
Changes in assets and liabilities:
Accounts receivable, net		(33,250	)		(5,961	)
Inventory		4,645			(5,512	)
Other assets		(4,655	)		9,594
Accounts payable		24,272			(3,097	)
Other liabilities		12,356			(2,172	)
Net cash provided by operating activities		73,301			83,992
Investing Activities:
Purchases of property and equipment		(11,613	)		(18,340	)
Acquisition of intangible assets		(3,141	)		—
Proceeds from the sale of patents and property and equipment		1,068			137
Proceeds from divestiture of business		—			47,500
Acquisition of subsidiary, net of cash acquired		—			(14,823	)
Net cash (used in) provided by investing activities		(13,686	)		14,474
Financing Activities:
Borrowing of debt		201,193			29,470
Repayments of debt		(87,688	)		(69,049	)
Cash paid for the repurchase of Common Stock		(9,092	)		(58,040	)
Proceeds from the exercise of Common Stock options		6,828			13,879
Cash paid for the cancellation of restricted stock		(811	)		(1,213	)
Acquisition contingent consideration payment		(618	)		—
Cash paid for financing costs		—			(1,278	)
Net cash provided by (used in) financing activities		109,812			(86,231	)
Foreign currency effect		6,664			(4,151	)
Net increase in cash, cash equivalents and restricted cash		176,091			8,084
Cash, cash equivalents and restricted cash at beginning of period		52,948			39,620
Cash, cash equivalents and restricted cash at end of period	$	229,039		$	47,704
Supplemental disclosure of cash flow information:
Cash (refund) paid for taxes	$	(252	)	$	6,676
Cash paid for interest	$	3,006		$	3,437

See accompanying notes to the consolidated condensed financial statements.

GENTHERM INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)

Nine Months Ended September 30, 2020

Accumulated

Other

Common Stock

Paid-in

Comprehensive

Accumulated

Amount

Capital

Loss

Price	40.75	EPS	1
Shares	33	P/E	50
MCap	1,362	P/FCF	16
Net Debt	52	EBIT	46
TEV	1,414	TEV/EBIT	31
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-09-30	Filed 2020-10-30
10-Q	2020-06-30	Filed 2020-08-04
10-Q	2020-03-31	Filed 2020-05-07
10-K	2019-12-31	Filed 2020-02-20
10-Q	2019-09-30	Filed 2019-10-30
10-Q	2019-06-30	Filed 2019-07-26
10-Q	2019-03-31	Filed 2019-05-01
10-K	2018-12-31	Filed 2019-02-26
10-Q	2018-09-30	Filed 2018-11-01
10-Q	2018-06-30	Filed 2018-07-31
10-Q	2018-03-31	Filed 2018-04-27
10-K	2017-12-31	Filed 2018-02-23
10-Q	2017-09-30	Filed 2017-10-30
10-Q	2017-06-30	Filed 2017-07-31
10-Q	2017-03-31	Filed 2017-05-01
10-K	2016-12-31	Filed 2017-02-23
10-Q	2016-09-30	Filed 2016-10-28
10-Q	2016-06-30	Filed 2016-07-29
10-Q	2016-03-31	Filed 2016-04-29
10-K	2015-12-31	Filed 2016-02-25
10-Q	2015-09-30	Filed 2015-10-30
10-Q	2015-06-30	Filed 2015-07-31
10-Q	2015-03-31	Filed 2015-05-01
10-K	2014-12-31	Filed 2015-03-02
10-Q	2014-09-30	Filed 2014-11-10
10-Q	2014-06-30	Filed 2014-08-05
10-Q	2014-03-31	Filed 2014-05-09
10-K	2013-12-31	Filed 2014-03-11
10-Q	2013-09-30	Filed 2013-11-05
10-Q	2013-06-30	Filed 2013-08-05
10-Q	2013-03-31	Filed 2013-05-09
10-K	2012-12-31	Filed 2013-03-15
10-Q	2012-09-30	Filed 2012-11-05
10-Q	2012-06-30	Filed 2012-08-06
10-Q	2012-03-31	Filed 2012-05-08
10-K	2011-12-31	Filed 2012-03-15
10-Q	2011-09-30	Filed 2011-11-09
10-Q	2011-06-30	Filed 2011-08-09
10-Q	2011-03-31	Filed 2011-05-02
10-K	2010-12-31	Filed 2011-02-17
10-Q	2010-09-30	Filed 2010-10-28
10-Q	2010-06-30	Filed 2010-08-06
10-Q	2010-03-31	Filed 2010-04-30
10-K	2009-12-31	Filed 2010-02-19

8-K	2020-10-29
8-K	2020-10-29
8-K	2020-09-30
8-K	2020-08-04
8-K	2020-06-23
8-K	2020-06-22
8-K	2020-05-21
8-K	2020-05-07
8-K	2020-04-21
8-K	2020-04-02
8-K	2020-03-19
8-K	2020-02-19
8-K	2020-01-27
8-K	2020-01-14
8-K	2019-10-29
8-K	2019-10-28
8-K	2019-09-23
8-K	2019-07-25
8-K	2019-07-05
8-K	2019-06-27
8-K	2019-05-31
8-K	2019-05-16
8-K	2019-05-06
8-K	2019-04-30
8-K	2019-03-04
8-K	2019-02-21
8-K	2018-12-31
8-K	2018-12-11
8-K	2018-12-07
8-K	2018-10-25
8-K	2018-08-01
8-K	2018-07-26
8-K	2018-06-25
8-K	2018-06-11
8-K	2018-05-18
8-K	2018-04-26
8-K	2018-04-24
8-K	2018-03-05
8-K	2018-02-20
8-K	2018-02-12

EX-31.1	thrm-ex311_15.htm
EX-31.2	thrm-ex312_12.htm
EX-32.1	thrm-ex321_14.htm
EX-32.2	thrm-ex322_6.htm

THRM 10Q Quarterly Report

Gentherm Earnings 2020-09-30