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
fourth quarter and full year ended December 31, 2023.
Fourth Quarter 2023 Highlights
- Product revenues of
$366.9 million increased 6.9% from $343.3 million in the 2022
fourth quarter. Excluding the impact of foreign currency
translation, product revenues increased 5.2% year over year
- Automotive revenues
increased 6.6% year over year; excluding the impact of foreign
currency translation, increased 4.9% year over year
- GAAP diluted
earnings per share was $0.56 as compared with loss per share of
$(0.13) for the prior year period
- Adjusted diluted
earnings per share (see table herein) was $0.90. Adjusted diluted
earnings per share in the prior year period was $0.47
- Secured new automotive business awards
totaling approximately $900 million
- Repurchased $61.4 million of the
Company’s common stock
Full Year 2023 Highlights
- Product revenues of
$1,469.1 million increased 21.9% from $1,204.7 million in 2022.
Excluding the impact of foreign currency translation and
contributions from acquisitions, product revenues increased 10.0%
year over year
- Automotive revenues increased 22.5% year over year; excluding
the impact of foreign currency translation and contributions from
the Alfmeier acquisition, automotive revenues increased 10.4% year
over year
- GAAP diluted
earnings per share was $1.22 as compared with $0.73 for the prior
year period
- Adjusted diluted
earnings per share (see table herein) was $2.59. Adjusted diluted
earnings per share in the prior year was $1.82
- Secured new
automotive business awards totaling $2.6 billion
- Repurchased $92.5 million of the
Company’s common stock
“Our financial results for 2023 reflect the continued strong
execution by the global Gentherm team, enabling us to deliver
record annual revenue in both Automotive and Medical as well as
record adjusted EBITDA. In addition, we secured an unprecedented
$2.6 billion dollars in new automotive awards. Of note, we won a
breakthrough scalable ClimateSense® software award for nearly all
future architecture General Motors ICE and electric vehicles. Our
climate and comfort wins across the globe demonstrate our clear
industry leading position. In addition, we have effectively
leveraged the Alfmeier acquisition and won conquest pneumatic
lumbar and massage awards with a growing number of OEMs, securing
our position as the global leader,” said Phil Eyler, Gentherm’s
President and Chief Executive Officer.
Eyler continued, “We continue to lead the industry with
differentiated, proprietary technologies such as ClimateSense® and
WellSense™. We were excited to unveil WellSense™ at the
Consumer Electronics Show in January. This software defined
consumer experience delivers customized in-cabin wellness,
alertness and well-being sensations. These proprietary innovations
are expected to significantly increase Gentherm’s content per
vehicle and position us to be a strong contributor to software
defined vehicles of the future.”
He concluded: “We remained disciplined in managing operating
expenses and are making good progress on our Fit-for-Growth 2.0
initiatives as well as our footprint expansion in Tangier, Morocco
and Monterrey, Mexico. With these actions, we continue to build
momentum on our margin expansion.”
2023 Fourth Quarter Financial Review
Product revenues of $366.9 million increased $23.6 million, or
6.9%, in the fourth quarter of 2023 compared with the prior year
period. Excluding the impact of foreign currency translation,
product revenues increased 5.2% year over year.
Automotive revenue increased 6.6% year over year with revenue
increases in all product categories except Electronics and Other
Automotive. Adjusting for foreign currency translation, Automotive
revenue increased 4.9% year over year. Excluding the impact from
the UAW strike, phasing out the non-automotive electronics business
as well as one-time benefits from recoveries in both periods,
Automotive revenue increased 10.1% year over year. According to
S&P Global’s mid-February 2024 report, actual light vehicle
production in the fourth quarter of 2023 increased by 12.8%
compared to the fourth quarter of 2022 in the Company’s key markets
of North America, Europe, China, Japan and Korea.
Gentherm Medical revenue increased 15.2% year over year, or
13.1% excluding the impact of foreign currency translation,
primarily as a result of higher Blanketrol® sales.
See the “Revenues by Product Category” table included below for
additional detail.
Gross margin rate was 26.2% in the current year period versus
20.3% in the prior year period, primarily as a result of lower
freight costs, fixed cost leverage from higher unit volume,
increased productivity at the manufacturing facilities and supplier
cost reductions, as well as the impairment charge related to the
exit of the non-automotive electronics business in the prior year
period. These were partially offset by wage inflation and lower
price recoveries.
Net research and development expenses of $21.4 million in the
2023 fourth quarter decreased $1.9 million, or 8.3% over the prior
year period, primarily as a result of higher reimbursement for
design and development costs.
Selling, general and administrative expenses of $41.9 million in
the 2023 fourth quarter increased $5.3 million, or 14.5%, versus
the prior year period. The year-over-year increase was primarily
driven by higher incentive compensation.
Acquisition and integration expenses of $0.6 million in the
current year period were $3.7 million lower than the prior year
period as a result of fewer expenses associated with the Alfmeier
and Dacheng acquisitions. Restructuring expenses were $1.3 million
in the current year period.
As described more fully in the “Reconciliation of Net Income
(Loss) to Adjusted EBITDA” table included below, the Company
recorded Adjusted EBITDA of $49.0 million in the 2023 fourth
quarter compared with $40.9 million in the prior year period, an
increase of $8.1 million or 19.7%.
Income tax benefit in the 2023 fourth quarter was $0.9 million,
as compared with $0.06 million in the prior year period.
GAAP diluted earnings per share for the fourth quarter of 2023
was $0.56 compared with a loss of $(0.13) for the prior year
period. Adjusted diluted earnings per share, excluding unrealized
currency loss, non-cash purchasing accounting impact, restructuring
expenses, acquisition and integration expenses, and other impacts
(see table herein), was $0.90. Adjusted diluted earnings per share
in the prior year period was $0.47.
2023 Full Year Financial Review
For full year 2023, the Company reported product revenues of
$1,469.1 million, a 21.9% increase over the prior year. Excluding
the impact of foreign currency translation and contributions from
acquisitions, product revenues increased 10.0% year over year.
In the Automotive segment, 2023 full-year revenue was $1,423.0
million, a 22.5% increase compared to the prior year. Revenue
increased in all product categories except Electronics and Other
Automotive. Adjusting for foreign currency translation and the
impact of the Alfmeier acquisition, organic Automotive revenue
increased 10.4% year over year. Excluding the impact from the UAW
strike, phasing out the non-automotive electronics business as well
as one-time benefits from recoveries in both years, organic
Automotive revenue increased 13.4% year over year. According to IHS
Markit's mid-February 2024 report for full-year 2023, actual light
vehicle production increased 11.4% compared to full year 2022 in
the Company’s key markets of North America, Europe, China, Japan
and Korea.
The Medical segment revenue was $46.1 million for full year
2023, a 7.2% increase compared to the prior year. Adjusting for
foreign currency translation, Medical revenues increased 6.9%,
primarily as a result of increased revenues from its Dacheng air
warming blankets.
Gross margin rate was 23.9% in 2023, a 120 basis point increase
from 2022, primarily as a result of fixed cost leverage from higher
unit volume, lower freight costs, increased productivity at the
manufacturing facilities, as well as the impairment charge related
to the exit of the non-automotive electronics business in the prior
year period. These were partially offset by wage inflation.
Net research and development expenses of $94.4 million in 2023
increased 10.1% primarily as a result of the additional expenses
from the Alfmeier business as well as increased investments to
support new automotive business awards.
Selling, general and administrative expenses of $155.6 million
in 2023 increased $22.9 million, or 17.2%, versus the prior year
period. The year over year increase was primarily driven by
additional expenses from acquired businesses and higher
compensation expenses, partially offset by lower acquisition
expenses.
Acquisition and integration expenses of $5.3 million in 2023
were $17.3 million lower than the prior year as a result of
expenses associated with the Alfmeier and Dacheng acquisitions and
realized foreign currency loss in the prior year. The Company
incurred $4.7 million restructuring expenses in 2023, compared to
$0.6 million in the prior year period. The Company recorded
impairment of goodwill charges of $19.5 million for the year.
As described more fully in the “Reconciliation of Net Income
(Loss) to Adjusted EBITDA” table included below, the Company
recorded Adjusted EBITDA of $180.6 million in 2023 compared with
$137.2 million in the prior year, an increase of $43.4 million or
31.6%.
Income tax expense in 2023 was $14.6 million, as compared with
$13.9 million in the prior year. The effective tax rate was 26.6%
for 2023. This rate differed from the Federal statutory rate of
21%, primarily due to unfavorable geographic mix of earnings as
well as the impact of the goodwill impairment recorded in the
second quarter.
GAAP diluted earnings per share for full year 2023 was $1.22, as
compared with $0.73 for the prior year. Adjusted diluted earnings
per share, excluding impairment of goodwill, unrealized currency
loss, non-cash purchasing accounting impact, non-automotive
electronics inventory charge and other impacts (see table herein),
was $2.59. Adjusted diluted earnings per share in the prior year
were $1.82.
Guidance
The Company is providing the following guidance for full year
2024:
- Product revenues
between $1.5 billion and $1.6 billion, based on the current
forecast of customer orders, light vehicle production in the
Company’s key markets declining at a low single digit rate, and a
EUR to USD exchange rate of $1.10/Euro
- Adjusted EBITDA
between 12.5% and 13.5% of product revenues
- Full year effective
tax rate between 26% and 29%
- Capital expenditures between $65
million and $75 million
As a result of the Company’s decision to pause the pursuit of
certain Battery Performance Solutions products, Gentherm is
updating its 2026 outlook:
- Product Revenues
between $1.9 billion and $2.0 billion
- Adjusted EBITDA
margin rate of approximately 16%
Webcast and Conference Call
As previously announced, Gentherm will conduct a live audio
webcast with a presentation at 8:00 AM Eastern Time to review these
results. The 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.
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 13744168.
A telephonic replay will be available approximately two hours
after the call until 11:59 PM Eastern Time on March 6, 2024. The
replay can be accessed by dialing 1-844-512-2921 (callers in the
U.S.), or +1-412-317-6671 (callers outside the U.S.). The passcode
for the replay is 13744168.
Investor Relations ContactYijing
Brentanoinvestors@gentherm.com248.308.1702
Media ContactMelissa
Fischermedia@gentherm.com248.289.9702
About GenthermGentherm (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
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:
- macroeconomic, geopolitical and similar global factors in the
cyclical Automotive industry;
- increasing U.S. and global competition, including with
non-traditional entrants;
- our ability to effectively manage new product launches and
research and development, and the market acceptance of such
products and technologies;
- the evolution and recent challenges of the automotive industry
towards electric vehicles, autonomous vehicles and mobility on
demand services, and related consumer behaviors and
preferences;
- our ability to convert new business awards into product
revenues;
- the ongoing supply constrained environment, and inflationary
and other cost pressures;
- the production levels of our major customers and OEMs in our
key markets and sudden fluctuations in such production levels;
- our ability to attract and retain highly skilled employees and
wage inflation;
- a tightening labor market, labor shortages or work stoppages
impacting us, our customers or our suppliers, including labor
strikes among certain OEMs and suppliers;
- our achievement of product cost reductions to offset customer
imposed price reductions or other pricing pressures;
- our ability to integrate our recent acquisitions, as well as to
consummate additional strategic acquisitions, investments and
exits, and achieve planned benefits;
- any security breaches and other disruptions to our information
technology networks and systems, as well as privacy, data security
and data protection risks;
- the impact of our global operations, including our global
supply chain, operations within Ukraine, economic and trade
policies, and foreign currency and exchange risk;
- any loss or insolvency of our key customers and OEMs, or key
suppliers;
- our efforts to optimize our global supply chain and
manufacturing footprint;
- our ability to project future sales volume based on third-party
information, based on which we manage our business;
- the protection of our intellectual property in certain
jurisdictions;
- our compliance with anti-corruption laws and regulations;
- legal and regulatory proceedings and claims involving us or one
of our major customers;
- the extensive regulation of our patient temperature management
business;
- risks associated with our manufacturing processes;
- the effects of climate change and catastrophic events, as well
as regulatory and stakeholder-imposed requirements and expectations
to address climate change and other sustainability issues;
- our product quality and safety;
- our borrowing availability under our revolving credit facility,
as well as our ability to access the capital markets, to support
our planned growth; and
- our indebtedness and compliance with our debt covenants.
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.
GENTHERM INCORPORATEDCONSOLIDATED
STATEMENTS OF INCOME (LOSS)(In thousands, except
per share data) (Unaudited) |
|
|
|
Three Months
EndedDecember 31, |
|
|
Year EndedDecember 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Product revenues |
|
$ |
366,933 |
|
|
$ |
343,322 |
|
|
$ |
1,469,076 |
|
|
$ |
1,204,656 |
|
Cost of sales |
|
|
270,637 |
|
|
|
273,514 |
|
|
|
1,117,452 |
|
|
|
931,006 |
|
Gross margin |
|
|
96,296 |
|
|
|
69,808 |
|
|
|
351,624 |
|
|
|
273,650 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Net research and development expenses |
|
|
21,367 |
|
|
|
23,297 |
|
|
|
94,358 |
|
|
|
85,722 |
|
Selling, general and administrative expenses |
|
|
41,899 |
|
|
|
36,584 |
|
|
|
155,579 |
|
|
|
132,693 |
|
Impairment of goodwill |
|
|
— |
|
|
|
— |
|
|
|
19,509 |
|
|
|
— |
|
Restructuring expenses |
|
|
1,327 |
|
|
|
76 |
|
|
|
4,739 |
|
|
|
637 |
|
Impairment of intangible assets and property and equipment |
|
|
— |
|
|
|
6,291 |
|
|
|
— |
|
|
|
6,291 |
|
Total operating expenses |
|
|
64,593 |
|
|
|
66,248 |
|
|
|
274,185 |
|
|
|
225,343 |
|
Operating income |
|
|
31,703 |
|
|
|
3,560 |
|
|
|
77,439 |
|
|
|
48,307 |
|
Interest expense, net |
|
|
(5,197 |
) |
|
|
(3,009 |
) |
|
|
(14,641 |
) |
|
|
(4,294 |
) |
Foreign currency loss |
|
|
(6,302 |
) |
|
|
(5,262 |
) |
|
|
(5,918 |
) |
|
|
(6,778 |
) |
Other (loss) income |
|
|
(2,984 |
) |
|
|
449 |
|
|
|
(1,926 |
) |
|
|
1,147 |
|
Earnings (loss) before income tax |
|
|
17,220 |
|
|
|
(4,262 |
) |
|
|
54,954 |
|
|
|
38,382 |
|
Income tax (gain) expense |
|
|
(867 |
) |
|
|
(57 |
) |
|
|
14,611 |
|
|
|
13,941 |
|
Net
income (loss) |
|
$ |
18,087 |
|
|
$ |
(4,205 |
) |
|
$ |
40,343 |
|
|
$ |
24,441 |
|
Basic earnings (loss) per share |
|
$ |
0.57 |
|
|
$ |
(0.13 |
) |
|
$ |
1.23 |
|
|
$ |
0.74 |
|
Diluted earnings (loss) per share |
|
$ |
0.56 |
|
|
$ |
(0.13 |
) |
|
$ |
1.22 |
|
|
$ |
0.73 |
|
Weighted average number of shares – basic |
|
|
31,974 |
|
|
|
33,186 |
|
|
|
32,778 |
|
|
|
33,126 |
|
Weighted average number of shares – diluted |
|
|
32,200 |
|
|
|
33,186 |
|
|
|
33,067 |
|
|
|
33,503 |
|
GENTHERM INCORPORATEDREVENUE BY PRODUCT
CATEGORY AND RECONCILIATION OF FOREIGN CURRENCY TRANSLATION
IMPACT(In
thousands)(Unaudited) |
|
|
|
Three Months
EndedDecember 31, |
|
|
Year EndedDecember 31, |
|
|
|
2023 |
|
|
2022 |
|
% Change |
|
|
2023 |
|
|
2022 |
|
% Change |
|
Climate Control Seat |
|
$ |
121,797 |
|
|
$ |
114,765 |
|
|
6.1 |
% |
|
$ |
482,665 |
|
|
$ |
426,046 |
|
|
13.3 |
% |
Seat Heaters |
|
|
77,456 |
|
|
|
73,603 |
|
|
5.2 |
% |
|
|
308,588 |
|
|
|
283,970 |
|
|
8.7 |
% |
Steering Wheel Heaters |
|
|
38,777 |
|
|
|
31,780 |
|
|
22.0 |
% |
|
|
153,943 |
|
|
|
120,949 |
|
|
27.3 |
% |
Lumbar and Massage Comfort Solutions (a) |
|
|
35,321 |
|
|
|
34,240 |
|
|
3.2 |
% |
|
|
144,923 |
|
|
|
56,980 |
|
|
154.3 |
% |
Valve Systems (a) |
|
|
23,746 |
|
|
|
23,438 |
|
|
1.3 |
% |
|
|
106,262 |
|
|
|
41,980 |
|
|
153.1 |
% |
Automotive Cables |
|
|
19,862 |
|
|
|
17,300 |
|
|
14.8 |
% |
|
|
79,993 |
|
|
|
76,962 |
|
|
3.9 |
% |
Battery Performance Solutions |
|
|
18,346 |
|
|
|
16,512 |
|
|
11.1 |
% |
|
|
75,484 |
|
|
|
71,907 |
|
|
5.0 |
% |
Electronics |
|
|
9,931 |
|
|
|
10,916 |
|
|
(9.0 |
)% |
|
|
40,387 |
|
|
|
44,106 |
|
|
(8.4 |
)% |
Other Automotive |
|
|
8,709 |
|
|
|
9,492 |
|
|
(8.2 |
)% |
|
|
30,707 |
|
|
|
38,716 |
|
|
(20.7 |
)% |
Subtotal Automotive segment |
|
|
353,945 |
|
|
|
332,046 |
|
|
6.6 |
% |
|
|
1,422,952 |
|
|
|
1,161,616 |
|
|
22.5 |
% |
Medical segment (b) |
|
|
12,988 |
|
|
|
11,276 |
|
|
15.2 |
% |
|
|
46,124 |
|
|
|
43,040 |
|
|
7.2 |
% |
Total Company |
|
$ |
366,933 |
|
|
$ |
343,322 |
|
|
6.9 |
% |
|
$ |
1,469,076 |
|
|
$ |
1,204,656 |
|
|
21.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation impact (c) |
|
|
5,841 |
|
|
|
— |
|
|
|
|
|
879 |
|
|
|
— |
|
|
|
Total Company, excluding foreign currency translation impact |
|
$ |
361,092 |
|
|
$ |
343,322 |
|
|
5.2 |
% |
|
$ |
1,468,197 |
|
|
$ |
1,204,656 |
|
|
21.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Represents product revenues from Alfmeier since the acquisition
date of August 1, 2022. |
|
(b)
Includes product revenues of $2,224 and $7,163 for the three and
twelve months ended December 31, 2023, respectively, and $2,128 and
$3,362 for the three and twelve months ended December 31, 2022,
respectively, from Dacheng since the acquisition date of July 13,
2022. |
|
(c)
Foreign currency translation impacts for the Automotive segment and
Medical segment were $5,603 and $238, respectively, for the three
months ended December 31, 2023. Foreign currency translation
impacts for the Automotive segment and Medical segment were $760
and $119, respectively, for the twelve months ended December 31,
2023. Foreign currency translation impacts for Alfmeier and Dacheng
were $2,445 and $(106), respectively, for the twelve months ended
December 31, 2023. |
|
|
|
Three Months Ended December 31, |
|
|
|
2023 |
|
|
2022 |
|
Automotive revenues |
|
$ |
353,945 |
|
|
$ |
332,046 |
|
UAW
strike impact |
|
|
(9,319 |
) |
|
|
— |
|
Non-automotive electronics revenues |
|
|
2,742 |
|
|
|
3,102 |
|
One-time customer recoveries |
|
|
3,732 |
|
|
|
10,003 |
|
Adjusted Automotive revenues |
|
|
356,790 |
|
|
|
318,941 |
|
Foreign currency translation impact |
|
|
5,619 |
|
|
|
— |
|
Adjusted Automotive revenues, excluding foreign currency
translation impact |
|
$ |
351,171 |
|
|
$ |
318,941 |
|
Year over Year % change |
|
|
10.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
2023 |
|
|
2022 |
|
Automotive revenues |
|
$ |
1,422,952 |
|
|
$ |
1,161,616 |
|
Lumbar and Massage Comfort Solutions |
|
|
144,923 |
|
|
|
56,980 |
|
Valve Systems |
|
|
106,262 |
|
|
|
41,980 |
|
Organic Automotive revenues |
|
|
1,171,767 |
|
|
|
1,062,656 |
|
UAW
strike impact |
|
|
(9,001 |
) |
|
|
— |
|
Non-automotive electronics revenues |
|
|
13,091 |
|
|
|
15,758 |
|
One-time customer recoveries |
|
|
5,332 |
|
|
|
20,501 |
|
Adjusted organic Automotive revenues |
|
|
1,162,345 |
|
|
|
1,026,397 |
|
Foreign currency translation impact |
|
|
(1,369 |
) |
|
|
— |
|
Adjusted organic Automotive revenues, excluding foreign currency
translation impact |
|
$ |
1,163,714 |
|
|
$ |
1,026,397 |
|
Year over Year % change |
|
|
13.4 |
% |
|
|
|
GENTHERM INCORPORATEDRECONCILIATION OF NET
INCOME (LOSS) TO ADJUSTED EBITDA(In
thousands)(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months
EndedDecember 31, |
|
|
Year EndedDecember 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income (loss) |
|
$ |
18,087 |
|
|
$ |
(4,205 |
) |
|
$ |
40,343 |
|
|
$ |
24,441 |
|
Add
back: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
12,062 |
|
|
|
13,779 |
|
|
|
50,416 |
|
|
|
44,038 |
|
Income tax (benefit) expense (a) |
|
|
(867 |
) |
|
|
(57 |
) |
|
|
14,611 |
|
|
|
13,941 |
|
Interest expense, net (b) |
|
|
5,197 |
|
|
|
3,009 |
|
|
|
14,641 |
|
|
|
4,294 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash stock-based compensation (c) |
|
|
3,164 |
|
|
|
2,771 |
|
|
|
11,756 |
|
|
|
7,393 |
|
Restructuring expense |
|
|
1,327 |
|
|
|
76 |
|
|
|
4,739 |
|
|
|
637 |
|
Unrealized currency loss |
|
|
4,898 |
|
|
|
5,678 |
|
|
|
9,125 |
|
|
|
4,646 |
|
Acquisition and integration expenses |
|
|
578 |
|
|
|
4,261 |
|
|
|
5,308 |
|
|
|
22,618 |
|
Impairment of goodwill |
|
|
— |
|
|
|
— |
|
|
|
19,509 |
|
|
|
— |
|
Non-automotive electronics inventory charge |
|
|
575 |
|
|
|
— |
|
|
|
6,064 |
|
|
|
— |
|
Impairment of intangible assets and property and equipment |
|
|
— |
|
|
|
15,669 |
|
|
|
— |
|
|
|
15,669 |
|
Other (d) |
|
|
4,001 |
|
|
|
(32 |
) |
|
|
4,072 |
|
|
|
(515 |
) |
Adjusted EBITDA |
|
$ |
49,022 |
|
|
$ |
40,949 |
|
|
$ |
180,584 |
|
|
$ |
137,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues |
|
$ |
366,933 |
|
|
$ |
343,322 |
|
|
$ |
1,469,076 |
|
|
$ |
1,204,656 |
|
Adjusted EBITDA Margin |
|
|
13.4 |
% |
|
|
11.9 |
% |
|
|
12.3 |
% |
|
|
11.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Includes $2,423 of deferred income tax benefit associated with the
goodwill impairment of the Medical Reporting Unit for the twelve
months ended December 31, 2023. |
|
(b)
Includes $1,444 and $710 of interest expense for the three months
and twelve months ended December 31, 2023, related to
mark-to-market adjustment of our floating-to-fixed interest rate
swap agreement with a notional amount of $100,000. |
|
(c)
Includes operating expenses of $3,164 and $2,763 for the three
months ended December 31, 2023 and 2022, respectively. Includes
operating expenses of $11,382 and $6,904 for the twelve months
ended December 31, 2023 and 2022, respectively. |
|
(d)
Includes $2,900 of non-cash impairment charges related to our
Carrar Ltd. Investment for the three and twelve months ended
December 31, 2023. |
|
|
|
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, Automotive revenue
excluding the impact from the United Auto Workers strike,
non-automotive electronics, one-time customer recoveries and
foreign currency translation, organic Automotive revenue excluding
the impact from the United Auto Workers strike, non-automotive
electronics, one-time customer recoveries and 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 Automotive revenue excluding the impact from the United
Auto Workers strike, non-automotive electronics, one-time customer
recoveries and foreign currency translation as Automotive revenue
excluding the items specified. The Company defines organic
Automotive revenue excluding the impact from the United Auto
Workers strike, non-automotive electronics, one-time customer
recoveries and foreign currency translation as organic revenues
excluding the items specified. 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 February 21, 2024.
In evaluating its business, the Company considers and uses Free
Cash Flow and Net Debt as supplemental measures of its liquidity
and the other non-GAAP financial measures as supplemental measures
of its operating performance. Management provides such non-GAAP
financial measures so that investors will have the same financial
information that management uses with the belief that it will
assist investors in properly 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 INCORPORATEDADJUSTED NET INCOME
AND ADJUSTED EARNINGS PER SHARE(In thousands,
except per share data)(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months
EndedDecember 31, |
|
|
Year EndedDecember 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income (loss) |
|
$ |
18,087 |
|
|
$ |
(4,205 |
) |
|
$ |
40,343 |
|
|
$ |
24,441 |
|
Non-cash purchase accounting impact |
|
|
1,604 |
|
|
|
3,369 |
|
|
|
7,397 |
|
|
|
9,795 |
|
Restructuring expenses |
|
|
1,327 |
|
|
|
76 |
|
|
|
4,739 |
|
|
|
637 |
|
Unrealized currency loss |
|
|
4,898 |
|
|
|
5,678 |
|
|
|
9,125 |
|
|
|
4,646 |
|
Acquisition and integration expenses |
|
|
578 |
|
|
|
4,261 |
|
|
|
5,308 |
|
|
|
22,618 |
|
Impairment of goodwill |
|
|
— |
|
|
|
— |
|
|
|
19,509 |
|
|
|
— |
|
Non-automotive electronics inventory charge |
|
|
575 |
|
|
|
— |
|
|
|
6,064 |
|
|
|
— |
|
Impairment of intangible assets and property and equipment |
|
|
— |
|
|
|
15,669 |
|
|
|
— |
|
|
|
15,669 |
|
Other (a) |
|
|
4,001 |
|
|
|
(32 |
) |
|
|
4,072 |
|
|
|
(515 |
) |
Tax effect of above |
|
|
(2,179 |
) |
|
|
(9,185 |
) |
|
|
(10,814 |
) |
|
|
(16,205 |
) |
Adjusted net income |
|
$ |
28,891 |
|
|
$ |
15,631 |
|
|
$ |
85,743 |
|
|
$ |
61,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
31,974 |
|
|
|
33,186 |
|
|
|
32,778 |
|
|
|
33,126 |
|
Diluted |
|
|
32,200 |
|
|
|
33,186 |
|
|
|
33,067 |
|
|
|
33,503 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share, as reported: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.57 |
|
|
$ |
(0.13 |
) |
|
$ |
1.23 |
|
|
$ |
0.74 |
|
Diluted |
|
$ |
0.56 |
|
|
$ |
(0.13 |
) |
|
$ |
1.22 |
|
|
$ |
0.73 |
|
Adjusted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.90 |
|
|
$ |
0.47 |
|
|
$ |
2.62 |
|
|
$ |
1.84 |
|
Diluted |
|
$ |
0.90 |
|
|
$ |
0.47 |
|
|
$ |
2.59 |
|
|
$ |
1.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Includes $2,900 of non-cash impairment charges related to our
Carrar Ltd. Investment for the three and twelve months ended
December 31, 2023. |
|
GENTHERM INCORPORATEDCONSOLIDATED BALANCE
SHEETS (In thousands, except share data)
(Unaudited) |
|
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
ASSETS |
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
149,673 |
|
|
$ |
153,891 |
|
Accounts receivable, net |
|
|
253,579 |
|
|
|
247,131 |
|
Inventory, net |
|
|
205,892 |
|
|
|
218,248 |
|
Other current assets |
|
|
78,420 |
|
|
|
64,597 |
|
Total current assets |
|
|
687,564 |
|
|
|
683,867 |
|
Property and equipment, net |
|
|
245,234 |
|
|
|
244,480 |
|
Goodwill |
|
|
104,073 |
|
|
|
119,774 |
|
Other intangible assets, net |
|
|
66,482 |
|
|
|
73,933 |
|
Operating lease right-of-use assets |
|
|
27,358 |
|
|
|
29,945 |
|
Deferred income tax assets |
|
|
81,930 |
|
|
|
69,840 |
|
Other non-current assets |
|
|
21,730 |
|
|
|
17,461 |
|
Total assets |
|
$ |
1,234,371 |
|
|
$ |
1,239,300 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
215,827 |
|
|
$ |
182,225 |
|
Current lease liabilities |
|
|
7,700 |
|
|
|
7,143 |
|
Current maturities of long-term debt |
|
|
621 |
|
|
|
2,443 |
|
Other current liabilities |
|
|
100,805 |
|
|
|
93,814 |
|
Total current liabilities |
|
|
324,953 |
|
|
|
285,625 |
|
Long-term debt, less current maturities |
|
|
222,217 |
|
|
|
232,653 |
|
Non-current lease liabilities |
|
|
16,175 |
|
|
|
20,538 |
|
Pension benefit obligation |
|
|
3,209 |
|
|
|
3,638 |
|
Other non-current liabilities |
|
|
23,095 |
|
|
|
24,573 |
|
Total liabilities |
|
$ |
589,649 |
|
|
$ |
567,027 |
|
Shareholders’ equity: |
|
|
|
|
|
|
Common Stock: |
|
|
|
|
|
|
No par value; 55,000,000 shares authorized 31,542,001 and
33,202,082 issued and outstanding at December 31, 2023 and
December 31, 2022, respectively |
|
|
50,503 |
|
|
|
122,658 |
|
Paid-in capital |
|
|
— |
|
|
|
5,447 |
|
Accumulated other comprehensive loss |
|
|
(30,160 |
) |
|
|
(46,489 |
) |
Accumulated earnings |
|
|
624,379 |
|
|
|
590,657 |
|
Total shareholders’ equity |
|
|
644,722 |
|
|
|
672,273 |
|
Total liabilities and shareholders’ equity |
|
$ |
1,234,371 |
|
|
$ |
1,239,300 |
|
GENTHERM INCORPORATED CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited) |
|
|
|
Year Ended December 31, |
|
|
|
2023 |
|
|
2022 |
|
Operating Activities: |
|
|
|
|
|
|
Net income |
|
$ |
40,343 |
|
|
$ |
24,441 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
50,948 |
|
|
|
44,394 |
|
Deferred income taxes |
|
|
(13,072 |
) |
|
|
(7,322 |
) |
Stock based compensation |
|
|
11,627 |
|
|
|
6,599 |
|
Loss on disposition of property and equipment |
|
|
721 |
|
|
|
771 |
|
Impairment of intangible assets and property and equipment |
|
|
— |
|
|
|
6,291 |
|
Impairment of goodwill |
|
|
19,509 |
|
|
|
— |
|
Provisions for inventory |
|
|
6,867 |
|
|
|
15,923 |
|
Other |
|
|
2,920 |
|
|
|
721 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
Accounts receivable, net |
|
|
(4,195 |
) |
|
|
(44,221 |
) |
Inventory |
|
|
6,907 |
|
|
|
(40,322 |
) |
Other assets |
|
|
(26,179 |
) |
|
|
(11,906 |
) |
Accounts payable |
|
|
31,029 |
|
|
|
28,314 |
|
Other liabilities |
|
|
(8,160 |
) |
|
|
(8,736 |
) |
Net cash provided by operating activities |
|
|
119,265 |
|
|
|
14,947 |
|
Investing Activities: |
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(37,602 |
) |
|
|
(39,703 |
) |
Proceeds from the sale of property and equipment |
|
|
391 |
|
|
|
248 |
|
Acquisition of businesses, net of cash acquired |
|
|
— |
|
|
|
(205,487 |
) |
Proceeds from deferred purchase price of factored receivables |
|
|
13,903 |
|
|
|
5,538 |
|
Cost of technology investments |
|
|
(815 |
) |
|
|
(495 |
) |
Net cash used in investing activities |
|
|
(24,123 |
) |
|
|
(239,899 |
) |
Financing Activities: |
|
|
|
|
|
|
Borrowings on debt |
|
|
60,000 |
|
|
|
207,000 |
|
Repayments of debt |
|
|
(72,280 |
) |
|
|
(13,272 |
) |
Proceeds from the exercise of Common Stock options |
|
|
263 |
|
|
|
1,670 |
|
Taxes withheld and paid on employee's share-based payment
awards |
|
|
(2,940 |
) |
|
|
(5,471 |
) |
Cash paid for the repurchase of Common Stock |
|
|
(91,094 |
) |
|
|
— |
|
Net cash (used in) provided by financing activities |
|
|
(106,051 |
) |
|
|
189,927 |
|
Foreign currency effect |
|
|
6,691 |
|
|
|
(1,690 |
) |
Net decrease in cash and cash equivalents |
|
|
(4,218 |
) |
|
|
(36,715 |
) |
Cash and cash equivalents at beginning of period |
|
|
153,891 |
|
|
|
190,606 |
|
Cash and cash equivalents at end of period |
|
$ |
149,673 |
|
|
$ |
153,891 |
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
Cash paid for taxes |
|
$ |
23,273 |
|
|
$ |
21,645 |
|
Cash paid for interest |
|
$ |
13,242 |
|
|
$ |
6,338 |
|
Gentherm (NASDAQ:THRM)
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