Gentherm Incorporated (NASDAQ:THRM) Q3 2023 Earnings Conference Call October 26, 2023 8:00 AM ET Company Participants Yijing Brentano – Senior Vice President of Strategy, Corporate Development and IR Phil Eyler – President and Chief Executive Officer Matteo Anversa – Chief Financial Officer Conference Call Participants Mike Zabran – Roth Capital Partners Ryan Sigdahl – Craig-Hallum Capital Group Operator Ladies and Gentlemen, good morning and welcome to the Gentherm Third Quarter 2023 Earnings Conference Ca ...

Part I. Financial Information [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited statements show a Q2 net loss of $1.6M due to a goodwill impairment, despite a 42.8% revenue increase Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $168,671 | $153,891 | | Accounts receivable, net | $258,157 | $247,131 | | Inventory, net | $207,940 | $218,248 | | Goodwill | $100,885 | $119,774 | | **Total assets** | **$1,244,047** | **$1,239,300** | | Accounts payable | $207,655 | $182,225 | | Long-term debt, less current maturities | $217,441 | $232,653 | | **Total liabilities** | **$573,487** | **$567,027** | | **Total shareholders' equity** | **$670,560** | **$672,273** | Consolidated Statement of (Loss) Income Highlights (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | 6 Months 2023 | 6 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Product revenues | $372,323 | $260,715 | $735,948 | $528,372 | | Gross margin | $87,988 | $59,377 | $169,118 | $123,490 | | Operating income | $4,321 | $7,735 | $21,995 | $21,925 | | Impairment of goodwill | $19,509 | $— | $19,509 | $— | | Net (loss) income | $(1,551) | $7,072 | $6,412 | $18,819 | | Diluted (loss) earnings per share | $(0.05) | $0.21 | $0.19 | $0.56 | Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $58,612 | $(3,686) | | Net cash used in investing activities | $(6,776) | $(15,717) | | Net cash used in financing activities | $(39,356) | $(5,145) | | Net increase (decrease) in cash | $14,780 | $(33,348) | [Notes to Unaudited Consolidated Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Condensed%20Financial%20Statements) Notes detail key accounting events including acquisitions, a $19.5M goodwill impairment, and restructuring activities - On August 1, 2022, the Company acquired 100% of Alfmeier Präzision SE for a total consideration of **$170.7 million** to expand its automotive lumbar, massage, and valve system solutions[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) - On July 13, 2022, the Company acquired 100% of Jiangmen Dacheng Medical Equipment Co Ltd for a total consideration of **$35.0 million** to gain a local presence in China's patient warming device market[33](index=33&type=chunk)[34](index=34&type=chunk) - In Q2 2023, the company recorded a **$19.5 million goodwill impairment charge** for its Medical reporting unit, triggered by the unit's underperformance relative to forecasts[46](index=46&type=chunk)[50](index=50&type=chunk) - The company is winding down its non-automotive electronics business and recorded inventory impairment charges of **$0.6 million** and **$2.1 million** in the three and six months ended June 30, 2023, respectively[44](index=44&type=chunk)[45](index=45&type=chunk)[120](index=120&type=chunk) - The company has entered into agreements to purchase semiconductor chips, with total commitments of **$34.6 million** as of June 30, 2023, to ensure priority access amidst supply shortages[67](index=67&type=chunk) - The effective tax rate for Q2 2023 was **147.1%**, significantly different from the U.S. statutory rate of 21%, primarily due to the tax impact of the **$19.5 million impairment loss**[99](index=99&type=chunk) Product Revenues by Segment (in thousands) | Segment | Q2 2023 | Q2 2022 | 6 Months 2023 | 6 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Automotive | $361,533 | $249,152 | $714,225 | $507,016 | | Medical | $10,790 | $11,563 | $21,723 | $21,356 | | **Total** | **$372,323** | **$260,715** | **$735,948** | **$528,372** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue grew 42.8% from automotive strength, but a medical goodwill impairment led to a net loss - The company launched 'Fit-for-Growth 2.0' in early 2023, a profitability improvement initiative aiming for a **high teens Adjusted EBITDA margin rate by 2026**[115](index=115&type=chunk) - In Q2 2023, the company secured **$670 million in new automotive business awards**, which represent the projected lifetime revenue of new programs[124](index=124&type=chunk) - The company repurchased **$10.0 million** of its common stock in Q2 2023, with **$110.0 million** remaining under the current authorization which expires in December 2023[125](index=125&type=chunk) Light Vehicle Production Volume Change in Key Markets (YoY) | Region | Q2 2023 vs Q2 2022 | 6 Months 2023 vs 6 Months 2022 | | :--- | :--- | :--- | | North America | +14.9% | +12.2% | | Europe | +14.3% | +16.1% | | Greater China | +20.4% | +7.1% | | Japan / South Korea | +25.3% | +21.0% | | **Total Key Markets** | **+18.4%** | **+12.7%** | [Consolidated Results of Operations](index=29&type=section&id=Consolidated%20Results%20of%20Operations) Q2 revenue rose 42.8%, but a goodwill impairment drove operating income down and resulted in a net loss Q2 2023 vs Q2 2022 Results (in thousands) | Line Item | Q2 2023 | Q2 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Product revenues | $372,323 | $260,715 | $111,608 | 42.8% | | Gross margin | $87,988 | $59,377 | $28,611 | 48.2% | | Operating income | $4,321 | $7,735 | $(3,414) | -44.1% | | Net (loss) income | $(1,551) | $7,072 | $(8,623) | -122.0% | - The **$111.6 million increase in Q2 2023 revenue** was primarily due to **$67.0 million from acquisitions** and **$49.0 million from increased automotive volume**[130](index=130&type=chunk) - Cost of sales in Q2 2023 increased by **41.2% YoY**, driven by higher volumes, expenses from acquired businesses, wage inflation, and an inventory charge[133](index=133&type=chunk) - Net R&D expenses increased **27.8%** in Q2 2023, primarily due to the inclusion of expenses from the Alfmeier acquisition[135](index=135&type=chunk) - SG&A expenses increased **20.3%** in Q2 2023, mainly due to expenses from acquired businesses and higher compensation costs[137](index=137&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a solid liquidity position with $168.7M in cash and improved operating cash flow of $58.6M - As of June 30, 2023, the company had **$168.7 million in cash and cash equivalents** and **$282.7 million of availability** under its credit facility[157](index=157&type=chunk) - Cash used in financing activities for the first six months of 2023 included **$20.0 million for common stock repurchases** and **$17.0 million for debt repayments**[163](index=163&type=chunk) Cash Flow Summary (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $58,612 | $(3,686) | | Net cash used in investing activities | $(6,776) | $(15,717) | | Net cash used in financing activities | $(39,356) | $(5,145) | Debt Summary (in thousands) | Debt Component | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Revolving Credit Facility | $217,000 | $232,000 | | Other loans & Finance leases | $1,125 | $3,096 | | **Total debt** | **$218,125** | **$235,096** | [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages foreign currency and interest rate risks using derivative instruments like swaps and forward contracts - The company is exposed to market risks from foreign currency exchange rates and interest rates, and uses derivative contracts to manage these exposures[175](index=175&type=chunk)[176](index=176&type=chunk) - A hypothetical **100 basis point change in interest rates** would impact annual interest expense by **$2.2 million**[180](index=180&type=chunk) - The company has a floating-to-fixed interest rate swap with a notional amount of **$100.0 million** to hedge against interest rate fluctuations[180](index=180&type=chunk) - The company uses foreign currency forward contracts to hedge its exposure, with outstanding contracts to sell Mexican Pesos for U.S. Dollars having a notional value of **$54.9 million**[182](index=182&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in internal controls - Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were **effective as of June 30, 2023**[185](index=185&type=chunk) - There were **no changes in internal control over financial reporting** during the three months ended June 30, 2023, that have materially affected the company's internal controls[186](index=186&type=chunk) Part II. Other Information [Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is not a party to any material pending legal proceedings as of the end of the second quarter - There is **no material pending litigation** to which the company is a party as of June 30, 2023[188](index=188&type=chunk) [Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the last Annual Report on Form 10-K - The Company's risk factors have **not materially changed** from those previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[189](index=189&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased $10.0 million of its common stock in Q2 2023 under its existing repurchase program - As of May 31, 2023, approximately **$110.0 million remained available for repurchase** under the 2020 Stock Repurchase Program, which expires on December 15, 2023[91](index=91&type=chunk)[190](index=190&type=chunk) Issuer Purchases of Equity Securities (Q2 2023) | Period | Total Shares Purchased | Average Price Paid Per Share | Total Cost (approx.) | | :--- | :--- | :--- | :--- | | April 2023 | — | $— | $— | | May 2023 | 167,406 | $59.71 | $10,000,000 | | June 2023 | — | $— | $— | [Other Information](index=42&type=section&id=Item%205.%20Other%20Information) No directors or Section 16 officers adopted or terminated Rule 10b5-1 trading plans during the quarter - During Q2 2023, **no directors or Section 16 officers adopted or terminated a Rule 10b5-1 trading plan** or any other trading arrangement[191](index=191&type=chunk) [Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including required certifications and XBRL data

Gentherm Incorporated (NASDAQ:THRM) Q2 2023 Earnings Conference Call August 1, 2023 8:00 AM ET Company Participants Yijing Brentano - Corporate Development and Investor Relations Phil Eyler - President and Chief Executive Officer Matteo Anversa - Chief Financial Officer Conference Call Participants Ryan Sigdahl - Craig-Hallum Capital Group Glenn Chin - Seaport Research Partners Matt Koranda - ROTH MKM Luke Junk - Baird Operator Greetings, and welcome to the Gentherm Second Quarter Earnings Conference Call. ...

Financial Performance - For the three months ended June 30, 2023, Gentherm's product revenues reached $372.323 million, compared to $260.715 million in 2022 [16] - Automotive product revenues for the three months ended June 30, 2023, were $361.533 million, up from $249.152 million in 2022 [16] - Adjusted EBITDA for the three months ended June 30, 2023, was $42.378 million, compared to $24.836 million in 2022, with an Adjusted EBITDA Margin of 11.4% versus 9.5% [16] - For the six months ended June 30, 2023, product revenues were $735.948 million, compared to $528.372 million in 2022 [16] - Adjusted EBITDA for the six months ended June 30, 2023, was $83.888 million, compared to $54.604 million in 2022, with an Adjusted EBITDA Margin of 11.4% versus 10.3% [16] - The company is excluding the impact of non-cash stock-based compensation in its calculation of Adjusted EBITDA Margin starting in 2023 [4] Business Highlights - Gentherm secured $670 million in new automotive business awards in the second quarter [13] - The company is strengthening its partnership with SourceMark Medical and expanding hospital accounts in China [15] - Gentherm anticipates product revenue between $1.45 billion and $1.55 billion for 2023 [18] - The company projects an Adjusted EBITDA Margin between 11.5% and 13.5% for 2023 [18]

Gentherm Incorporated (NASDAQ:THRM) Q1 2023 Earnings Conference Call April 27, 2023 8:00 AM ET Company Participants Yijing Brentano - SVP of Strategy, Corporate Development and IR Phillip Eyler - President and Chief Executive Officer Matteo Anversa - Executive Vice President of Finance, Chief Financial Officer and Treasurer Conference Call Participants Matt Koranda - ROTH MKM Operator Greetings, and welcome to the Gentherm First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number: 0-21810 GENTHERM INCORPORATED (Exact name of registrant as specified in its charter) Michigan 95-4318554 (State or other jurisdic ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2022 or ☐ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to . Commission file number 0-21810 GENTHERM INCORPORATED (Exact name of registrant as specified in its charter) | Michigan | | 95-4318554 | | --- | --- | --- | | ...

Gentherm Incorporated (NASDAQ:THRM) Q4 2022 Earnings Conference Call February 22, 2023 8:00 AM ET Company Participants Yijing Brentano - SVP of Strategy, Corporate Development and IR Phil Eyler - President and CEO Matteo Anversa - CFO Conference Call Participants Luke Junk - Baird Matt Koranda - Roth Ryan Sigdahl - Craig-Hallum Glenn Chin - Seaport Research Partners Operator Greetings, and welcome to the Gentherm Fourth Quarter and Year End 2022 Earnings Conference Call and Strategy Update. At this time, al ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number: 0-21810 GENTHERM INCORPORATED (Exact name of registrant as specified in its charter) Michigan 95-4318554 (State or other jurisdict ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number: 0-21810 GENTHERM INCORPORATED (Exact name of registrant as specified in its charter) Michigan 95-4318554 (State or other jurisdic ...