THRM 8-K
Gentherm Inc (THRM)
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 August 1, 2023, Gentherm Incorporated (the “Company”) publicly announced its financial results for the second quarter of 2023. 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 August 1, 2023 at 8:00 a.m. Eastern Time, the Company will host a conference call to discuss the second quarter of 2023 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 August 1, 2023 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: August 1, 2023 |
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Exhibit 99.1
Gentherm Reports 2023 Second Quarter Results
Achieved Record Quarterly Revenue
Secured Record $670M in New Automotive Awards
Reaffirms 2023 Guidance
NORTHVILLE, Michigan, August 1, 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 second quarter ending June 30, 2023.
Second Quarter Highlights
Phil Eyler, the Company's President and CEO, said “I am proud of the global Gentherm team for continued strong momentum in winning awards, delivering record revenue and expanding profitability. In the second quarter we secured a record $670 million dollars in new automotive business awards, bringing us to nearly $1.2 billion in the first half. Leveraging Alfmeier’s industry leading technologies and Gentherm’s strong customer relationships, we have also won six conquest pneumatic lumbar and massage awards since the close of the acquisition, including a breakthrough award from Stellantis in July.
Eyler continued, “In addition, we are investing in two new manufacturing plants and implementing our Fit for Growth 2.0 initiatives to deliver high teens Adjusted EBITDA Margin by 2026 as part of our previously announced profitability improvement roadmap. The momentum on revenue and awards combined with the steps we are taking to optimize our footprint and cost structure, will drive Gentherm’s flywheel of profitable growth.”
2023 Second Quarter Financial Review
Product revenues for the second quarter of 2023 increased by $111.6 million, or 42.8%, as compared with the prior-year period. Excluding the impact of foreign currency translation, product revenues increased 43.4% year over year.
Automotive revenues increased 45.1% year over year, with revenue increases in all product categories except Electronics and Other Automotive product categories. Adjusting for foreign currency translation and the contribution from Alfmeier, organic Automotive revenues increased 19.6% year over year. According to S&P Global’s mid-July report, actual light vehicle production increased by 18.4% in the current year’s second
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quarter when compared with the second quarter of 2022 in the Company’s key markets of North America, Europe, China, Japan and Korea.
Gentherm Medical revenue decreased 6.7% year over year, primarily as a result of lower demand in the U.S. and Asia as well as a large one-time order in the prior year period in Europe.
See the “Revenues by Product Category” table included below for additional detail.
Gross margin rate increased to 23.6% in the current-year period, as compared with 22.8% in the prior-year period. The increase from the prior-year period resulted from fixed cost leverage from higher unit volume, inflationary customer price adjustments, lower freight costs and productivity at the factories. These were partially offset by the impact of the acquired Alfmeier business, which has a lower gross margin rate relative to the Company’s organic business, as well as wage inflation and the negative impact from foreign currency translation.
Net research and development expenses of $24.7 million in the 2023 second quarter increased $5.4 million, or 27.8% over the prior-year period, primarily as a result of the additional expenses from the Alfmeier business and lower customer reimbursements for research and development costs on an organic basis.
Selling, general and administrative expenses of $38.4 million in the 2023 second quarter increased $6.5 million, or 20.3%, 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 $1.5 million in the current year period were $2.3 million lower than the prior-year period as a result of reduced expenses associated with the Alfmeier acquisition. Restructuring expenses were $1.0 million in the current-year period as compared to $0.4 million in the prior-year period.
The Company recorded non-cash impairment charges of $19.5 million, or $0.52 per share after tax, to write down goodwill for its Medical business in order to align the reporting unit’s book value with its fair value.
As described more fully in the “Reconciliation of Net Income (Loss) to Adjusted EBITDA” table included below, the Company recorded Adjusted EBITDA of $42.4 million in the 2023 second quarter compared with $24.8 million in the prior-year period, an increase of $17.5 million or 70.6%.
Income tax expense in the second quarter of 2023 was $4.8 million, as compared with $3.9 million in the prior-year period. The effective tax rate was 147.1% in the 2023 second quarter. Excluding the impact of the non-cash goodwill impairment charge the adjusted effective tax rate was 31.9%.
GAAP diluted loss per share for the second quarter of 2023 was $(0.05) compared with earnings per share of $0.21 for the prior-year period. Adjusted diluted earnings per share, excluding the impairment of goodwill, non-cash purchase accounting impact, acquisition and integration expenses, restructuring expenses, and other items specified on the table below, was $0.58. Adjusted diluted earnings per share in the prior-year period was $0.25.
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Guidance
The Company reaffirms its full-year 2023 guidance that was initially provided in its year-end 2022 earnings release on February 22, 2023:
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 13739903.
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 15, 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 13739903.
Investor Contact
Yijing Brentano
[email protected]
248.308.1702
Media Contact
Melissa Fischer
[email protected]
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, North Macedonia, South Korea, United Kingdom, Ukraine, and Vietnam. For more information, go to www.gentherm.com.
Forward-Looking Statements
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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:
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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.
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GENTHERM INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF (LOSS) INCOME
(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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2023 |
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2022 |
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2023 |
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2022 |
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Product revenues |
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$ |
372,323 |
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$ |
260,715 |
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$ |
735,948 |
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$ |
528,372 |
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Cost of sales |
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284,335 |
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201,338 |
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566,830 |
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404,882 |
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Gross margin |
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87,988 |
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59,377 |
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169,118 |
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123,490 |
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Operating expenses: |
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Net research and development expenses |
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24,696 |
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19,325 |
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49,841 |
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39,759 |
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Selling, general and administrative expenses |
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38,418 |
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31,943 |
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75,460 |
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61,251 |
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Impairment of goodwill |
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19,509 |
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— |
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19,509 |
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— |
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Restructuring expenses |
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1,044 |
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374 |
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2,313 |
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555 |
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Total operating expenses |
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83,667 |
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51,642 |
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147,123 |
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101,565 |
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Operating income |
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4,321 |
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7,735 |
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21,995 |
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21,925 |
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Interest expense, net |
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(1,932 |
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(1,430 |
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(6,076 |
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(1,999 |
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Foreign currency gain (loss) |
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346 |
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4,552 |
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(1,723 |
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6,769 |
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Other income |
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556 |
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134 |
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786 |
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338 |
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Earnings before income tax |
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3,291 |
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10,991 |
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14,982 |
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27,033 |
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Income tax expense |
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4,842 |
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3,919 |
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8,570 |
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8,214 |
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Net (loss) income |
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$ |
(1,551 |
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$ |
7,072 |
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$ |
6,412 |
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$ |
18,819 |
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Basic (loss) earnings per share |
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$ |
(0.05 |
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$ |
0.21 |
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$ |
0.19 |
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$ |
0.57 |
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Diluted (loss) earnings per share |
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$ |
(0.05 |
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$ |
0.21 |
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$ |
0.19 |
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$ |
0.56 |
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Weighted average number of shares – basic |
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33,019 |
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33,119 |
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33,100 |
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33,077 |
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Weighted average number of shares – diluted |
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33,019 |
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33,426 |
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33,328 |
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33,422 |
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GENTHERM INCORPORATED
REVENUE BY PRODUCT CATEGORY AND RECONCILIATION OF FOREIGN CURRENCY TRANSLATION IMPACT
(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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2023 |
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2022 |
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% Change |
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2023 |
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2022 |
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% Change |
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Climate Control Seat |
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$ |
121,210 |
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$ |
96,488 |
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25.6 |
% |
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$ |
235,963 |
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$ |
199,222 |
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18.4 |
% |
Seat Heaters |
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78,258 |
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65,903 |
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18.7 |
% |
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153,894 |
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134,799 |
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14.2 |
% |
Steering Wheel Heaters |
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38,958 |
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28,951 |
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34.6 |
% |
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75,305 |
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57,687 |
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30.5 |
% |
Lumbar and Massage Comfort Solutions (a) |
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37,604 |
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— |
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100.0 |
% |
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76,342 |
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— |
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100.0 |
% |
Valve Systems (a) |
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27,692 |
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— |
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100.0 |
% |
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54,686 |
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— |
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100.0 |
% |
Automotive Cables |
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20,243 |
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19,280 |
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5.0 |
% |
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40,463 |
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41,325 |
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(2.1 |
)% |
Battery Performance Solutions |
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19,587 |
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17,451 |
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12.2 |
% |
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39,896 |
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35,064 |
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13.8 |
% |
Electronics |
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9,323 |
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10,278 |
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(9.3 |
)% |
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20,293 |
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21,106 |
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(3.9 |
)% |
Other Automotive |
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8,658 |
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10,801 |
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(19.8 |
)% |
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17,383 |
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17,813 |
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(2.4 |
)% |
Subtotal Automotive segment |
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361,533 |
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249,152 |
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45.1 |
% |
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714,225 |
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507,016 |
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40.9 |
% |
Medical segment (b) |
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10,790 |
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11,563 |
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(6.7 |
)% |
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21,723 |
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21,356 |
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1.7 |
% |
Total Company |
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$ |
372,323 |
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$ |
260,715 |
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42.8 |
% |
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$ |
735,948 |
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$ |
528,372 |
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39.3 |
% |
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Foreign currency translation impact (c) |
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(1,656 |
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— |
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(9,787 |
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— |
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Total Company, excluding foreign |
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$ |
373,979 |
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$ |
260,715 |
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43.4 |
% |
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$ |
745,735 |
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$ |
528,372 |
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41.1 |
% |
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(a) Represents product revenues from Alfmeier (acquired on August 1, 2022). |
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(b) Includes product revenues of $1,672 and $2,951 for the three and six months ended June 30, 2023, from Dacheng (acquired on July 13, 2022). |
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(c) Foreign currency translation impacts for the Automotive segment and Medical segment were $(1,714) and $58, respectively, for the three months ended June 30, 2023. Foreign currency translation impacts for the Automotive segment and Medical segment were $(9,735) and $(52), respectively, for the six months ended June 30, 2023. |
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GENTHERM INCORPORATED
RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA
(In thousands)
(Unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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Net (loss) income |
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$ |
(1,551 |
) |
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$ |
7,072 |
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$ |
6,412 |
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$ |
18,819 |
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Add back: |
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Depreciation and amortization |
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12,393 |
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8,998 |
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25,838 |
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18,485 |
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Income tax expense (a) |
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4,842 |
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3,919 |
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8,570 |
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8,214 |
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Interest expense, net (b) |
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1,932 |
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1,430 |
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6,076 |
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1,999 |
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Adjustments: |
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Impairment of goodwill |
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19,509 |
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— |
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19,509 |
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— |
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Non-cash stock-based compensation (c) |
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3,076 |
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3,401 |
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5,171 |
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6,190 |
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Acquisition and integration expenses |
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1,480 |
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3,794 |
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3,112 |
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7,008 |
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Restructuring expense |
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1,044 |
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374 |
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2,313 |
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555 |
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Non-automotive electronics inventory charge |
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644 |
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— |
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2,063 |
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— |
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Unrealized currency (gain) loss |
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(740 |
) |
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(4,024 |
) |
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5,125 |
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(6,340 |
) |
Other |
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(251 |
) |
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(128 |
) |
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(301 |
) |
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(326 |
) |
Adjusted EBITDA |
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$ |
42,378 |
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$ |
24,836 |
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$ |
83,888 |
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$ |
54,604 |
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Product revenues |
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$ |
372,323 |
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$ |
260,715 |
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$ |
735,948 |
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$ |
528,372 |
|
Adjusted EBITDA Margin |
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11.4 |
% |
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9.5 |
% |
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11.4 |
% |
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10.3 |
% |
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(a) Includes $2,423 of deferred income tax benefit associated with the goodwill impairment of the Medical Reporting Unit. |
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(b) Includes $1,371 and $672 of interest income for the three months and six months ended June 30, 2023, related to mark-to-market adjustment of our floating-to-fixed interest rate swap agreement with a notional amount of $100,000. |
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(c) Includes operating expenses of $3,076 and $3,401 for the three months ended June 30, 2023 and 2022, respectively. Includes operating expenses of $4,834 and $6,074 for the six months ended June 30, 2023 and 2022, respectively. |
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2022 |
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2022 |
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Adjusted EBITDA |
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$ |
24,836 |
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$ |
54,604 |
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Non-cash stock-based compensation |
|
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(3,401 |
) |
|
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(6,190 |
) |
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Adjusted EBITDA as reported in Q2 2022 (1) |
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$ |
21,435 |
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$ |
48,414 |
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Adjusted EBITDA Margin as reported in Q2 2022 (1) |
|
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8.2 |
% |
|
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9.2 |
% |
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(1) Includes the impact of non-cash stock-based compensation |
|
|
|||||||
|
|
|
|
|
|
|
|
||
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
||
|
|
2022 |
|
|
2022 |
|
|
||
Adjusted EBITDA |
|
$ |
24,836 |
|
|
$ |
54,604 |
|
|
Pro forma EBITDA impact of Alfmeier acquisition |
|
|
1,233 |
|
|
|
1,822 |
|
|
Pro forma Adjusted EBITDA |
|
$ |
26,069 |
|
|
$ |
56,426 |
|
|
Pro forma Adjusted EBITDA Margin |
|
|
8.2 |
% |
|
|
8.7 |
% |
|
|
|
|
|
|
|
|
|
||
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
||
|
|
2022 |
|
|
2022 |
|
|
||
Product revenues |
|
$ |
260,715 |
|
|
$ |
528,372 |
|
|
Pro forma revenue impact of Alfmeier acquisition |
|
|
57,626 |
|
|
|
123,725 |
|
|
Pro forma product revenues |
|
$ |
318,341 |
|
|
$ |
652,097 |
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
|
|
|
2023 |
|
|
|
|
Effective Tax Rate |
|
|
147.1 |
% |
|
|
Impact of non-cash goodwill impairment (2) |
|
|
-115.3 |
% |
|
|
Adjusted Effective Tax Rate |
|
|
31.9 |
% |
|
|
|
|
|
|
|
|
|
(2) Adjustment to remove the impact of $19.5 million on earnings before income tax, which includes the associated deferred tax effect, and $2.4 million of income tax benefit. |
||||||
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 August 1, 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 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.
|
|
GENTHERM INCORPORATED
ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE
(In thousands, except per share data)
(Unaudited)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Net (loss) income |
|
$ |
(1,551 |
) |
|
$ |
7,072 |
|
|
$ |
6,412 |
|
|
$ |
18,819 |
|
Non-cash purchase accounting impact |
|
|
2,330 |
|
|
|
1,749 |
|
|
|
4,180 |
|
|
|
3,584 |
|
Restructuring expenses |
|
|
1,044 |
|
|
|
374 |
|
|
|
2,313 |
|
|
|
555 |
|
Unrealized currency (gain) loss |
|
|
(740 |
) |
|
|
(4,024 |
) |
|
|
5,125 |
|
|
|
(6,340 |
) |
Acquisition and integration expenses |
|
|
1,480 |
|
|
|
3,794 |
|
|
|
3,112 |
|
|
|
7,008 |
|
Non-automotive electronics inventory charge |
|
|
644 |
|
|
|
— |
|
|
|
2,063 |
|
|
|
— |
|
Impairment of goodwill |
|
|
19,509 |
|
|
|
— |
|
|
|
19,509 |
|
|
|
— |
|
Other |
|
|
(251 |
) |
|
|
(128 |
) |
|
|
(301 |
) |
|
|
(326 |
) |
Tax effect of above |
|
|
(3,425 |
) |
|
|
(462 |
) |
|
|
(6,942 |
) |
|
|
(1,198 |
) |
Adjusted net income |
|
$ |
19,040 |
|
|
$ |
8,375 |
|
|
$ |
35,471 |
|
|
$ |
22,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
33,019 |
|
|
|
33,119 |
|
|
|
33,100 |
|
|
|
33,077 |
|
Diluted |
|
|
33,019 |
|
|
|
33,426 |
|
|
|
33,328 |
|
|
|
33,422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(Loss) Earnings per share, as reported: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
(0.05 |
) |
|
$ |
0.21 |
|
|
$ |
0.19 |
|
|
$ |
0.57 |
|
Diluted |
|
$ |
(0.05 |
) |
|
$ |
0.21 |
|
|
$ |
0.19 |
|
|
$ |
0.56 |
|
Adjusted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
0.58 |
|
|
$ |
0.25 |
|
|
$ |
1.07 |
|
|
$ |
0.67 |
|
Diluted |
|
$ |
0.58 |
|
|
$ |
0.25 |
|
|
$ |
1.06 |
|
|
$ |
0.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
GENTHERM INCORPORATED
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
||
ASSETS |
|
|
|
|
|
|
||
Current Assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
168,671 |
|
|
$ |
153,891 |
|
Accounts receivable, net |
|
|
258,157 |
|
|
|
247,131 |
|
Inventory: |
|
|
|
|
|
|
||
Raw materials |
|
|
129,972 |
|
|
|
136,217 |
|
Work in process |
|
|
15,673 |
|
|
|
17,695 |
|
Finished goods |
|
|
62,295 |
|
|
|
64,336 |
|
Inventory, net |
|
|
207,940 |
|
|
|
218,248 |
|
Other current assets |
|
|
74,781 |
|
|
|
64,597 |
|
Total current assets |
|
|
709,549 |
|
|
|
683,867 |
|
Property and equipment, net |
|
|
239,920 |
|
|
|
244,480 |
|
Goodwill |
|
|
100,885 |
|
|
|
119,774 |
|
Other intangible assets, net |
|
|
69,096 |
|
|
|
73,933 |
|
Operating lease right-of-use assets |
|
|
29,925 |
|
|
|
29,945 |
|
Deferred income tax assets |
|
|
74,537 |
|
|
|
69,840 |
|
Other non-current assets |
|
|
20,135 |
|
|
|
17,461 |
|
Total assets |
|
$ |
1,244,047 |
|
|
$ |
1,239,300 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
||
Current Liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
207,655 |
|
|
$ |
182,225 |
|
Current lease liabilities |
|
|
8,005 |
|
|
|
7,143 |
|
Current maturities of long-term debt |
|
|
684 |
|
|
|
2,443 |
|
Other current liabilities |
|
|
91,278 |
|
|
|
93,814 |
|
Total current liabilities |
|
|
307,622 |
|
|
|
285,625 |
|
Long-term debt, less current maturities |
|
|
217,441 |
|
|
|
232,653 |
|
Non-current lease liabilities |
|
|
18,095 |
|
|
|
20,538 |
|
Pension benefit obligation |
|
|
3,229 |
|
|
|
3,638 |
|
Other non-current liabilities |
|
|
27,100 |
|
|
|
24,573 |
|
Total liabilities |
|
$ |
573,487 |
|
|
$ |
567,027 |
|
Shareholders’ equity: |
|
|
|
|
|
|
||
Common Stock: |
|
|
|
|
|
|
||
No par value; 55,000,000 shares authorized 32,987,809 and 33,202,082 issued and outstanding at June 30, 2023 and December 31, 2022, respectively |
|
|
105,525 |
|
|
|
122,658 |
|
Paid-in capital |
|
|
5,379 |
|
|
|
5,447 |
|
Accumulated other comprehensive loss |
|
|
(37,413 |
) |
|
|
(46,489 |
) |
Accumulated earnings |
|
|
597,069 |
|
|
|
590,657 |
|
Total shareholders’ equity |
|
|
670,560 |
|
|
|
672,273 |
|
Total liabilities and shareholders’ equity |
|
$ |
1,244,047 |
|
|
$ |
1,239,300 |
|
|
|
GENTHERM INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
Six Months Ended June 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Operating Activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
6,412 |
|
|
$ |
18,819 |
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
26,077 |
|
|
|
18,635 |
|
Deferred income taxes |
|
|
(2,812 |
) |
|
|
(997 |
) |
Stock based compensation |
|
|
5,053 |
|
|
|
5,263 |
|
Loss on disposition of property and equipment |
|
|
828 |
|
|
|
518 |
|
Provisions for inventory |
|
|
1,930 |
|
|
|
1,807 |
|
Impairment of goodwill |
|
|
19,509 |
|
|
|
— |
|
Other |
|
|
(259 |
) |
|
|
708 |
|
Changes in assets and liabilities: |
|
|
— |
|
|
|
— |
|
Accounts receivable, net |
|
|
(11,624 |
) |
|
|
(31,762 |
) |
Inventory |
|
|
9,417 |
|
|
|
(35,444 |
) |
Other assets |
|
|
(12,241 |
) |
|
|
(10,443 |
) |
Accounts payable |
|
|
24,518 |
|
|
|
27,768 |
|
Other liabilities |
|
|
(8,196 |
) |
|
|
1,442 |
|
Net cash provided by (used in) operating activities |
|
|
58,612 |
|
|
|
(3,686 |
) |
Investing Activities: |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
(13,667 |
) |
|
|
(15,448 |
) |
Proceeds from the sale of property and equipment |
|
|
40 |
|
|
|
81 |
|
Proceeds from deferred purchase price of factored receivables |
|
|
7,351 |
|
|
|
— |
|
Cost of technology investments |
|
|
(500 |
) |
|
|
(350 |
) |
Net cash used in investing activities |
|
|
(6,776 |
) |
|
|
(15,717 |
) |
Financing Activities: |
|
|
|
|
|
|
||
Repayments of debt |
|
|
(16,982 |
) |
|
|
(1,250 |
) |
Proceeds from the exercise of Common Stock options |
|
|
263 |
|
|
|
569 |
|
Taxes withheld and paid on employees' share-based payment awards |
|
|
(2,644 |
) |
|
|
(4,464 |
) |
Cash paid for the repurchase of Common Stock |
|
|
(19,993 |
) |
|
|
— |
|
Net cash used in financing activities |
|
|
(39,356 |
) |
|
|
(5,145 |
) |
Foreign currency effect |
|
|
2,300 |
|
|
|
(8,800 |
) |
Net increase (decrease) in cash and cash equivalents |
|
|
14,780 |
|
|
|
(33,348 |
) |
Cash and cash equivalents at beginning of period |
|
|
153,891 |
|
|
|
190,606 |
|
Cash and cash equivalents at end of period |
|
$ |
168,671 |
|
|
$ |
157,258 |
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Cash paid for taxes |
|
$ |
11,619 |
|
|
$ |
8,642 |
|
Cash paid for interest |
|
|
6,640 |
|
|
|
909 |
|
Proprietary © Gentherm 2023 2023 Second Quarter Results August 1, 2023 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 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 August 1, 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
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 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.
Tank 700 Automotive Highlights Delivered record revenue including record revenues for Climate Control Seats and Steering Wheel Heaters 20 Vehicle launches with 10 OEMs ClimateSense® launch preparation progressing well; driving incremental EV thermal content Multiple CCS® Launches Buick LaCrosse, Buick E4 EV, Hyundai Verna, Chevrolet Blazer EV, Ford Mustang, Great Wall Tank 700, Blue Mountain SUV Proprietary © Gentherm 2023 4 Blazer EV E4 EV Mustang Verna Blue Mountain SUV LaCrosse
New Automotive Business Awards Record quarterly new Automotive business awards, nearly $1.2B year to date $670M in awards in 2Q Steering Wheel Heater awards across 7 OEMs including hands-on-detection enabled heater award with Changan 11 Breakthrough lumbar and massage system awards with Stellantis Multiple CCS® Awards from: BMW | GM | Ford | Honda | Hyundai | Li Auto Subaru | Great Wall | VW | XPeng Expanding business with largest Chinese local OEMs BYD | Great Wall | Li Auto Air cooling battery thermal management award with Hyundai Proprietary © Gentherm 2023 5
Medical Highlights Adapting go-to-market model to leverage large partnerships, distribution, and white label opportunities 24 Strengthening our partnership with SourceMark Medical, a certified minority supplier headquartered in Nashville, Tennessee New hospital accounts in China as a result of the successful integration of Dacheng Medical Blanketrol III Awards with the Boston Children’s Hospital and Children’s Healthcare of Atlanta Proprietary © Gentherm 2023 6
(Dollars in thousands, except per share data) 2023 2022 Pro forma 2022 (1) 2023 2022 Pro forma 2022 (1) Product Revenues $ 372,323 $ 260,715 $ 318,341 $ 735,948 $ 528,372 $ 652,097 Automotive 361,533 249,152 306,778 714,225 507,016 630,741 Medical 10,790 11,563 21,723 21,356 Gross Margin 87,988 59,377 169,118 123,490 Gross Margin % 23.6 % 22.8 % 23.0 % 23.4 % Operating Expenses 83,667 51,642 147,123 101,565 Operating Income 4,321 7,735 21,995 21,925 Adjusted EBITDA 42,378 24,836 26,069 83,888 54,604 56,426 Adjusted EBITDA Margin 11.4 % 9.5 % 8.2 % 11.4 % 10.3 % 8.7 % Diluted EPS - As Adjusted $ 0.58 $ 0.25 $ 1.06 $ 0.66 Select Income Statement Data Six Months Ended June 30 Three Months Ended June 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
Select Balance Sheet Data June 30, 2023 June 30, 2023 December 31, 2022 December 31, 2022 December 31, 2022 Cash and Cash Equivalents $ 168,671 $ 153,891 Total Assets 1,244,047 1,239,300 Debt 218,125 235,096 Current 684 2,443 Non-Current 217,441 232,653 Revolving LOC Availability 282,732 264,904 Total Liquidity 451,403 418,795 Proprietary © Gentherm 2023 8 (Dollars in thousands)
2023 Guidance 2022 A 2022 Pro forma(4) 2023 E Product Revenue (1)(2) $1.2B $1.3B $1.45B - $1.55B Adjusted EBITDA Margin (1)(2)(3) 11.4% 10.4% 11.5% – 13.5% Adjusted Effective Tax Rate (5) 36% 28% - 32% Capital Expenditures $40M $46M $60M - $70M Based on the current forecast of customer orders, inflation and pricing recovery, and light vehicle production in the Company’s key markets growing at a mid single-digit rate in 2023 versus 2022. Foreign exchange rate assumed at current levels. 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. Proprietary © Gentherm 2023 9
Appendix Proprietary © Gentherm 2023
Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin (Dollars in thousands) 2023 2022 2023 2022 Net (Loss) Income $ (1,551 ) $ 7,072 $ 6,412 $ 18,819 Add Back: Income Tax Expense 4,842 3,919 8,570 8,214 Interest Expense, net 1,932 1,430 6,076 1,999 Depreciation and Amortization 12,393 8,998 25,838 18,485 Adjustments: Restructuring Expenses 1,044 374 2,313 555 Unrealized Currency (Gain) Loss (740 ) (4,024 ) 5,125 (6,340 ) Acquisition and Integration Expenses 1,480 3,794 3,112 7,008 Non-Automotive Electronics Inventory Charge 644 -- 2,063 -- Impairment of Goodwill 19,509 -- 19,509 -- Non-Cash Stock-Based Compensation 3,076 3,401 5,171 6,190 Other (251 ) (128 ) (301 ) (326 ) Adjusted EBITDA $ 42,378 $ 24,836 $ 83,888 $ 54,604 Product Revenues $ 372,323 $ 260,715 $ 735,948 $ 528,372 Net (Loss) Income Margin (0.4 )% 2.7 % 0.9 % 3.6 % Adjusted EBITDA Margin 11.4 % 9.5 % 11.4 % 10.3 % Six Months Ended June 30 Three Months Ended June 30 Proprietary © Gentherm 2023 11
Reconciliation of Adjusted EPS 2023 2022 2023 2022 Diluted EPS - As Reported $ (0.05 ) $ 0.21 $ 0.19 $ 0.56 Acquisition and Integration Expenses 0.04 0.11 0.09 0.21 Non-Cash Purchase Accounting Impacts 0.07 0.05 0.13 0.11 Unrealized Currency (Gain) Loss (0.02 ) (0.12 ) 0.15 (0.19 ) Restructuring Expenses 0.03 0.01 0.07 0.02 Non-Automotive Electronics Inventory Charge 0.02 -- 0.06 -- Impairment of Goodwill 0.59 -- 0.59 -- Other (0.01 ) (0.00 ) (0.01 ) (0.01 ) Tax Effect of Above (0.10 ) (0.01 ) (0.21 ) (0.04 ) Rounding 0.01 -- -- -- Diluted EPS - As Adjusted $ 0.58 $ 0.25 $ 1.06 $ 0.66 Three Months Ended June 30 Six Months Ended June 30 Proprietary © Gentherm 2023 12