Exhibit 99.1

   

Gentherm Reports 2018 Third Quarter Results

 

Achieved Quarterly Revenue Growth Despite Industry Headwinds

Updates Full Year 2018 Guidance and Reaffirms 2021 Outlook

 

NORTHVILLE, Michigan, October 25, 2018 /Global Newswire/ -- Gentherm (NASDAQ:THRM), the global market leader and developer of innovative thermal management technologies, today announced its financial results for the third quarter ended September 30, 2018.

Third Quarter Highlights

 

Product revenues of $258.9 million increased 9.8% from $235.9 million in the third quarter of 2017

 

GAAP loss per share was $0.01 as compared to GAAP earnings per share of $0.18 for the prior-year period

 

Adjusted earnings per share, excluding impairment loss, restructuring expenses, unrealized currency loss, and expenses and other impacts related to acquisitions (see table herein), was $0.54. Adjusted earnings per share in the prior-year period was $0.36

 

Secured record automotive new business awards totaling approximately $470 million in the quarter, of which 50% represents Climate Control Seat (CCS®)

 

Repurchased $43.9 million of the Company’s stock

Phil Eyler, the company's President and CEO, said “I am excited about the continued progress we are making with our focused growth strategy. Despite the production headwinds in the industry, we achieved organic growth in automotive, outperforming our key markets by over 600 basis points. For the first time in six quarters, we delivered sequential and year-over- year revenue growth in CCS®. We had many exciting launches in the quarter, of note were the BMW X5 and 8 Series, comprised of significant incremental Gentherm content. We secured nearly $1.3 billion of new awards from top auto makers around the world year to date. In just three quarters, we have already surpassed our record of $1.2 billion in awards in 2017. In Medical, we delivered strong double-digit growth both sequentially and year over year.”

Continued Eyler, "In addition, we continue to lower operating expenses through the Fit-for-Growth program, which gives us confidence in achieving the adjusted EBITDA guidance for the year. The momentum we are seeing in new awards and the increased focus on margin position us well to achieve our 2021 outlook.”

2018 Third Quarter Financial Review

Product revenues for the third quarter of 2018 of $258.9 million grew $23.1 million, or 9.8%, as compared to the prior-year period.  The year-over-year growth was comprised of a $21.4 million, or 9.9%, increase in the Automotive segment and a $1.7 million, or 8.1%, increase in the Industrial segment. Adjusting for the Etratech acquisition and foreign currency translation, organic product revenues increased 3.9% year over year.  

Product revenues grew despite lower than expected automotive production in the Company’s key markets which include North America, Europe, Japan, Korea and China. When compared with IHS Markit's mid-July forecast for the third quarter of 2018, actual light vehicle production was approximately 6 percentage points

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below forecast. In addition, when compared to the third quarter of 2017, actual light vehicle production declined by approximately 3% in the Company’s key markets.

The $21.4 million, or 9.9%, increase in automotive revenue was driven by growth in all products except Seat Heaters. This amount included $12.0 million from the acquisition of Etratech and a small negative impact from currency translation.  Adjusting for those factors, the organic growth in the automotive segment was 3.5%. Importantly CCS® returned to growth increasing 4.5% to $97.9 million. Battery Thermal Management (BTM) also increased significantly, growing $4.7 million, or 170.9%, due to the continued rollout of the new thermoelectric based technology launched during the year.  Partially offsetting these were declines in seat heaters and lower revenue at Etratech.  Seat heater revenue, which was more impacted by lower European automotive production due to Worldwide Harmonized Light Vehicle Test Procedure (WLTP) and the declining vehicle production in China than the Company’s other products, decreased by $7.0 million, or 9.0%. On a pro-forma basis, Etratech revenue declined by $2.5 million, or 17.1%. The lower shipments of electronic modules was due to the softening recreational vehicle market and OEM discontinuations of two sedan models. Excluding Etratech, the automotive segment organic growth was 4.9%.

The $1.7 million increase in Industrial segment revenue was driven by an increase of $2.4 million, or 39.7%, in Cincinnati Sub-Zero (CSZ) medical revenue, resulting from the positive momentum from the new direct sales model. This increase was partially offset by lower revenue from the CSZ industrial chamber business and Global Power Technologies (GPT), which are classified as assets held for sale.

See the “Revenue by Product Category” table enclosed herein for additional detail.

The gross margin rate declined to 28.2% in the current year period, as compared to 29.8% in the prior-year period, primarily as a result of the lower margin on product revenues of Etratech, lower margin on BTM associated with the launch phase of the new actively cooled technology programs and the initial impact from tariffs which became effective during the quarter. These were partially offset by improved product mix and fixed cost leverage from higher unit volume.  

Net research and development expenses of $19.1 million in the third quarter of 2018 declined $0.7 million, or 3.4%, year over year. R&D expenses continue to steadily decrease during the year and were down 18.2% from the 2018 first quarter and down 9.4% from the 2018 second quarter. These sequential decreases are the direct result of the Company’s focused portfolio and Fit-for-Growth cost reduction initiatives. The decline for the quarter was partially offset by an increase of $1.5 million associated with both the acquisition-related research and development costs of Etratech and higher costs for product development activities related to new products for both automotive and medical businesses.

Selling, general and administrative expenses of $32.6 million in the third quarter of 2018 decreased $1.8 million, or 5.2%, versus the prior-year period. Early stage cost savings from the Fit-for-Growth program more than offset increased costs associated with the acquisition of Etratech and the mark-to-market impact of stock compensation. On a sequential basis, SG&A decreased 3.2% from the 2018 second quarter and 11.7% from the 2018 first quarter after adjusting for the higher mark-to-market adjustment on cash settled stock options.

During the quarter, the Company recognized $5.8 million in restructuring expenses which resulted from completed actions associated with its Fit-for-Growth initiatives. Total implemented actions to date are expected to deliver annualized savings of approximately $30 million. The Company has now identified a total of $65 million of savings against its annualized target of $75 million by 2021. In addition to the restructuring expenses, the Company recorded an impairment loss totaling $11.5 million, or $0.31 per share, associated with the Company’s plans to divest GPT and the CSZ industrial chamber business, both of which are included in the Industrial segment. The loss is not expected to be deductible for income tax purposes.

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As described more fully in the table included below, “Reconciliation of Net Income to Adjusted EBITDA,” the Company recorded Adjusted EBITDA of $35.7 million during the third quarter of 2018 compared to $25.9 million in the prior year, a year-over-year increase of $9.8 million.  

Income tax expense in the third quarter of 2018 was $3.7 million on pre-tax earnings of $3.3 million. Adjusting for the $11.5 million non-deductible impairment loss, the effective tax rate for the quarter was 25%. This rate differed from the Federal statutory rate of 21%, primarily due to higher tax rates in foreign tax jurisdictions. The Company expects its effective tax rate to be approximately 24% during the 2018 fourth quarter.  

During the third quarter, the Company incurred a net foreign currency gain of $0.1 million, which included a net realized gain of $1.1 million, partially offset by a net unrealized loss of $1.0 million. This unrealized loss was primarily the result of holding a portion of its U.S. Dollar cash at the Company’s subsidiaries in Europe, as well as certain intercompany relationships. In the prior-year period, the Company recognized a net foreign currency loss of $7.3 million, which primarily represented a net unrealized foreign currency loss also related to the Company’s cash held at its European subsidiaries and intercompany cash balances.

 

The Company reported a loss per share for the third quarter of 2018 of $0.01, compared to earnings per share of $0.18 for the prior-year period, mainly driven by the aforementioned impairment loss. Adjusted earnings per share, excluding restructuring expenses, impairment loss, unrealized currency loss, acquisition transaction expenses and other items (see table included below), was $0.54. Adjusted earnings per share in the prior-year period was $0.36.

 

During the third quarter of 2018, the Company repurchased approximately 938,000 shares of its stock at a cost of $43.9 million. The Company repurchased an additional 701,000 shares at a cost of $29.1 million in October through October 24, pursuant to a plan adopted in accordance with Rule 10b5-1, bringing program-to-date repurchases to $101.8 million. As a result, there remains $198.2 million available under the current repurchase authorization.

Guidance

Based on IHS Markit's October automotive production forecasts, current forecasted product mix and other estimates, the Company updated its 2018 guidance as follows:

 

Product revenues is expected to grow approximately 7% to approximately $1.05 billion, reflecting approximately 1% organic growth and the full-year contribution from Etratech, which was acquired in November 2017

 

Operating expense is expected to be approximately 20% of product revenues

 

Gross margin rate is expected to be approximately 29%

 

Adjusted EBITDA is expected to be approximately 14% of product revenues

 

Capital expenditures are expected to be approximately $50 million

 

ROIC is expected to be approximately 12%

Additionally, the Company reaffirmed its 2021 outlook previously provided on June 25, 2018.

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 13683747.  

 

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A simultaneous webcast of the call can be accessed on the Events page of the Investor section of Gentherm's website at www.gentherm.com.

 

For those unable to listen to the live broadcast, a webcast replay will also be available on the Company’s website as noted above.

 

A telephonic replay will be available at approximately 2 hours after the call until 11:59 p.m. Eastern Time on November 8, 2018. 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 13683747.

 

Investor Relations Contact
Yijing Brentano

investors@gentherm.com
(248) 308-1702

 

Media Contact

Melissa Fischer

media@gentherm.com

248.289.9702

About Gentherm

 

Gentherm (NASDAQ:THRM) is a global developer and marketer of innovative thermal management technologies for a broad range of heating and cooling and temperature control applications. Automotive products include variable temperature Climate Control Seats, heated automotive interior systems (including heated seats, steering wheels, armrests and other components), battery thermal management systems, cable systems 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 over 13,000 employees in facilities in the United States, Germany, Canada, China, Hungary, Japan, Korea, Macedonia, Malta, Mexico, United Kingdom, Ukraine, and Vietnam.  For more information, go to www.gentherm.com.

 

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 and are based on management's current expectations and beliefs.  Such statements are subject to a number of important assumptions, risks, uncertainties and other factors that may cause the Company's actual performance to differ materially from that described in or indicated by the forward-looking statements. Those risks include, but are not limited to, risks that new products may not be feasible, sales may not increase, additional financing requirements may not be available, new competitors may arise or customers may develop their own products to replace the Company’s products, currency exchange rates may change unfavorably, pricing pressures from customers may increase, the Company’s workforce and operations could be disrupted by civil or political unrest in the countries in which the Company operates, free trade agreements may be altered in a manner adverse to the Company, cost-savings measures may not be achievable or may need to be reversed, assets held for sale may not be sold quickly or at all, the Company may be unable to repurchase its shares of common stock at favorable prices or at all, due to market conditions, applicable legal requirements, debt covenants or other restrictions, compliance with covenants and other restrictions under the Company’s credit facility, medical device regulations could change in an unfavorable manner, oil and gas prices could fluctuate causing adverse consequences, and other

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adverse conditions in the industries in which the Company operates may negatively affect its results.  In addition, such forward-looking statements do 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.

 

The foregoing risks should be read in conjunction with other cautionary statements included herein, as well as in the Company's annual report on Form 10-K for the year ended December 31, 2017 and subsequent reports filed with the Securities and Exchange Commission. 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.

 

 

TABLES FOLLOW

 


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GENTHERM INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended

September 30,

 

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

Product revenues

 

$

258,939

 

 

$

235,853

 

 

 

784,607

 

 

$

728,498

 

 

Cost of sales

 

 

185,800

 

 

 

165,667

 

 

 

558,452

 

 

 

494,843

 

 

Gross margin

 

 

73,139

 

 

 

70,186

 

 

 

226,155

 

 

 

233,655

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net research and development expenses

 

 

19,056

 

 

 

19,721

 

 

 

63,382

 

 

 

60,633

 

 

Selling, general and administrative expenses

 

 

32,552

 

 

 

34,331

 

 

 

97,920

 

 

 

96,912

 

 

Restructuring expenses

 

 

5,818

 

 

 

 

 

 

12,898

 

 

 

 

 

Total operating expenses

 

 

57,426

 

 

 

54,052

 

 

 

174,200

 

 

 

157,545

 

 

Operating income

 

 

15,713

 

 

 

16,134

 

 

 

51,955

 

 

 

76,110

 

 

Interest expense

 

 

(1,241

)

 

 

(1,250

)

 

 

(3,661

)

 

 

(3,633

)

 

Foreign currency gain (loss)

 

 

125

 

 

 

(7,340

)

 

 

721

 

 

 

(21,920

)

 

Impairment loss

 

 

(11,476

)

 

 

 

 

 

(11,476

)

 

 

 

 

Other income (loss)

 

 

212

 

 

 

(360

)

 

 

1,538

 

 

 

145

 

 

Earnings before income tax

 

 

3,333

 

 

 

7,184

 

 

 

39,077

 

 

 

50,702

 

 

Income tax expense

 

 

3,688

 

 

 

630

 

 

 

9,807

 

 

 

10,233

 

 

Net income (loss)

 

$

(355

)

 

$

6,554

 

 

$

29,270

 

 

$

40,469

 

 

Basic earnings (loss) per share

 

$

(0.01

)

 

$

0.18

 

 

$

0.80

 

 

$

1.10

 

 

Diluted earnings (loss) per share

 

$

(0.01

)

 

$

0.18

 

 

$

0.80

 

 

$

1.10

 

 

Weighted average number of shares – basic

 

 

36,104

 

 

 

36,742

 

 

 

36,364

 

 

 

36,713

 

 

Weighted average number of shares – diluted

 

 

36,448

 

 

 

36,805

 

 

 

36,470

 

 

 

36,831

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


6

 


 

GENTHERM INCORPORATED

REVENUE BY PRODUCT CATEGORY

(Unaudited, in thousands)

 

 

 

Three Months Ended
September 30,

 

 

 

 

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

 

2018

 

 

2017

 

 

%
Diff.

 

2018

 

 

2017

 

 

%
Diff.

Climate Control Seat (CCS)

 

$

97,885

 

 

$

93,703

 

 

 

4.5

%

 

$

276,783

 

 

$

294,564

 

 

 

-6.0

%

Seat Heaters

 

 

70,768

 

 

 

77,793

 

 

 

-9.0

%

 

 

235,164

 

 

 

229,242

 

 

 

2.6

%

Steering Wheel Heaters

 

 

18,095

 

 

 

16,439

 

 

 

10.1

%

 

 

53,192

 

 

 

45,983

 

 

 

15.7

%

Automotive Cables

 

 

24,961

 

 

 

23,645

 

 

 

5.6

%

 

 

77,471

 

 

 

67,329

 

 

 

15.1

%

Battery Thermal Management (BTM)

 

 

7,461

 

 

 

2,754

 

 

 

170.9

%

 

 

18,863

 

 

 

7,181

 

 

 

162.7

%

Etratech

 

 

12,038

 

 

 

 

 

 

-17.1

%(1)

 

 

42,427

 

 

 

 

 

 

2.6

%(1)

Other Automotive

 

 

5,368

 

 

 

841

 

 

 

539

%

 

 

13,518

 

 

 

8,521

 

 

 

58.7

%

Subtotal Automotive

 

$

236,576

 

 

$

215,175

 

 

 

9.9

%

 

$

717,418

 

 

$

652,820

 

 

 

9.9

%

Remote Power Generation (GPT)

 

 

4,280

 

 

 

4,492

 

 

 

-4.7

%

 

 

14,013

 

 

 

19,405

 

 

 

-27.8

%

Cincinnati Sub-Zero Products (CSZ)

 

 

18,083

 

 

 

16,186

 

 

 

11.7

%

 

 

53,176

 

 

 

56,273

 

 

 

-5.5

%

Subtotal Industrial

 

$

22,363

 

 

$

20,678

 

 

 

8.1

%

 

$

67,189

 

 

$

75,678

 

 

 

-11.2

%

Total Company

 

$

258,939

 

 

$

235,853

 

 

 

9.8

%

 

$

784,607

 

 

$

728,498

 

 

 

7.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)Amount represents the pro-forma growth for Etratech by comparing the amount of revenue during the 2018 period to Etratech’s revenue during the prior year period which totaled $14,516 and $41,347, respectively, which is not included in Gentherm’s revenue since the acquisition did not occur until November 1, 2017.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


7

 


GENTHERM INCORPORATED

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

(Unaudited, in thousands)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended

September 30,

 

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

Net income (loss)

 

$

(355

)

 

$

6,554

 

 

$

29,270

 

 

$

40,469

 

 

Add Back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Income tax expense

 

 

3,688

 

 

 

630

 

 

 

9,807

 

 

 

10,233

 

 

     Interest expense

 

 

1,241

 

 

 

1,250

 

 

 

3,661

 

 

 

3,633

 

 

     Depreciation and amortization

 

 

12,826

 

 

 

11,399

 

 

 

38,505

 

 

 

32,447

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring expenses

 

 

5,818

 

 

 

 

 

 

12,898

 

 

 

 

 

Impairment loss

 

 

11,476

 

 

 

 

 

 

11,476

 

 

 

 

 

     Unrealized currency loss

 

 

991

 

 

 

6,039

 

 

 

101

 

 

 

19,425

 

 

Adjusted EBITDA

 

$

35,685

 

 

$

25,872

 

 

$

105,718

 

 

$

106,207

 

 

 

Use of Non-GAAP Financial Measures

In evaluating its business, Gentherm considers and uses Adjusted EBITDA as a supplemental measure of its operating performance.  The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, deferred financing cost amortization, transaction expenses, debt retirement expenses, impairment loss, restructuring expenses, unrealized currency gain or loss and unrealized revaluation of derivatives.  Management believes that Adjusted EBITDA is a meaningful measure of liquidity and the Company's ability to service debt because it provides a measure of cash available for such purposes. Management provides an Adjusted EBITDA measure 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.

 

The term Adjusted EBITDA is not defined under GAAP, and is not a measure of operating income, operating performance or liquidity presented in accordance with GAAP.  Adjusted EBITDA has limitations as an analytical tool, and when assessing the Company's operating performance, investors should not consider Adjusted EBITDA in isolation, or as a substitute for net income or other consolidated income statement data prepared in accordance with GAAP.  Gentherm compensates for these limitations by relying primarily on its GAAP results and using Adjusted EBITDA only supplementally.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


8

 


GENTHERM INCORPORATED

ACQUISITION TRANSACTION EXPENSES, PURCHASE ACCOUNTING IMPACTS

AND OTHER EFFECTS

(Unaudited and in thousands, except per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

September 30,

 

 

Future Full Year Periods (estimated)

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

2018

 

 

2019

 

 

2020

 

 

Thereafter

 

 

Non-cash purchase accounting impacts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships amortization

 

 

2,607

 

 

 

2,057

 

 

 

6,043

 

 

 

5,883

 

 

 

10,243

 

 

 

8,103

 

 

 

6,820

 

 

 

34,505

 

 

Technology amortization

 

 

985

 

 

 

937

 

 

 

2,387

 

 

 

2,151

 

 

 

2,975

 

 

 

2,419

 

 

 

2,419

 

 

 

4,768

 

 

Trade name amortization

 

 

 

 

 

46

 

 

 

 

 

 

131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inventory fair value adjustment

 

 

30

 

 

 

 

 

 

89

 

 

 

 

 

 

118

 

 

 

39

 

 

 

 

 

 

 

 

Other effects

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized currency loss

 

 

990

 

 

 

6,039

 

 

 

100

 

 

 

19,422

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring expenses

 

 

5,886

 

 

 

 

 

 

13,027

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment loss

 

 

11,476

 

 

 

 

 

 

11,476

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total acquisition transaction expenses, purchase

accounting impacts and other effects

 

$

21,974

 

 

$

9,079

 

 

 

$

33,122

 

 

$

27,587

 

 

$

13,336

 

 

$

10,561

 

 

$

9,239

 

 

$

39,273

 

 

Tax effect of above

 

 

(2,111

)

 

 

(2,374

)

 

 

(4,048

)

 

 

(7,250

)

 

 

(2,172

)

 

 

(1,548

)

 

 

(1,251

)

 

 

(4,072

)

 

Net income effect

 

$

19,863

 

 

$

6,705

 

 

$

29,074

 

 

$

20,337

 

 

$

11,164

 

 

$

9,013

 

 

$

7,988

 

 

$

35,201

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - difference

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.55

 

 

$

0.18

 

 

$

0.80

 

 

$

0.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

0.55

 

 

$

0.18

 

 

$

0.80

 

 

$

0.55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.54

 

 

$

0.36

 

 

$

1.60

 

 

$

1.66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

0.54

 

 

$

0.36

 

 

$

1.60

 

 

$

1.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


9

 


GENTHERM INCORPORATED

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

 

September 30,
2018

 

 

December 31,
2017

 

ASSETS

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

47,152

 

 

$

103,172

 

Accounts receivable, less allowance of $1,114 and $973, respectively

 

183,476

 

 

 

185,058

 

Inventory:

 

 

 

 

 

 

 

Raw materials

 

61,770

 

 

 

64,175

 

Work in process

 

6,671

 

 

 

16,139

 

Finished goods

 

40,148

 

 

 

41,095

 

Inventory, net

 

108,589

 

 

 

121,409

 

Derivative financial instruments

 

1,299

 

 

 

213

 

Prepaid expenses and other assets

 

57,846

 

 

 

51,217

 

Assets held for sale

 

56,184

 

 

 

 

Total current assets

 

454,546

 

 

 

461,069

 

Property and equipment, net

 

189,005

 

 

 

200,294

 

Goodwill

 

55,705

 

 

 

69,685

 

Other intangible assets, net

 

60,202

 

 

 

83,286

 

Deferred financing costs

 

733

 

 

 

936

 

Deferred income tax assets

 

73,221

 

 

 

30,152

 

Other non-current assets

 

11,617

 

 

 

37,983

 

Total assets

$

845,029

 

 

$

883,405

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

Accounts payable

$

88,991

 

 

$

89,596

 

Accrued liabilities

 

72,544

 

 

 

77,209

 

Current maturities of long-term debt

 

3,429

 

 

 

3,460

 

Derivative financial instruments

 

 

 

 

1,050

 

Liabilities held for sale

 

13,473

 

 

 

 

Total current liabilities

 

178,437

 

 

 

171,315

 

Pension benefit obligation

 

7,312

 

 

 

7,913

 

Other liabilities

 

7,488

 

 

 

2,747

 

Long-term debt, less current maturities

 

98,000

 

 

 

141,209

 

Deferred income tax liabilities

 

3,471

 

 

 

6,347

 

Total liabilities

 

294,708

 

 

 

329,531

 

Shareholders’ equity:

 

 

 

 

 

 

 

Common Stock:

 

 

 

 

 

 

 

No par value; 55,000,000 shares authorized, 35,748,829 and 36,761,362 issued and outstanding at September 30, 2018 and December 31, 2017, respectively

 

 

218,569

 

 

 

265,048

 

Paid-in capital

 

14,293

 

 

 

15,625

 

Accumulated other comprehensive loss

 

(33,877

)

 

 

(20,444

)

Accumulated earnings

 

351,336

 

 

 

293,645

 

Total shareholders’ equity

 

550,321

    

 

 

553,874

 

Total liabilities and shareholders’ equity

$

845,029

 

 

$

883,405

 


10

 


GENTHERM INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Nine Months Ended September 30,

 

 

2018

 

  

2017

 

Operating Activities:

 

 

 

 

 

 

 

Net income

$

29,270

 

 

$

40,469

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

38,721

 

 

 

32,663

 

Deferred income taxes

 

(19

)

 

 

(9,059

)

Stock compensation

 

6,360

 

 

 

8,559

 

Defined benefit plan (income) expense

 

(219

)

 

 

96

 

Provision of doubtful accounts

 

247

 

 

 

(353

)

Loss on sale of property and equipment

 

2,273

 

 

 

868

 

Impairment loss

 

11,476

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

(13,855

)

 

 

(5,581

)

Inventory

 

(3,510

)

 

 

(4,407

)

Prepaid expenses and other assets

 

(7,867

)

 

 

(555

)

Accounts payable

 

8,376

 

 

 

(7,433

)

Accrued liabilities

 

(712

)

 

 

(39,896

)

Net cash provided by operating activities

 

70,541

 

 

 

15,371

 

Investing Activities:

 

 

 

 

 

 

 

Proceeds from the sale of property and equipment

 

703

 

 

 

41

 

Final payment for acquisition of subsidiary, net of cash acquired

 

(15

)

 

 

(2,000

)

Purchases of property and equipment

 

(31,815

)

 

 

(37,181

)

Net cash used in investing activities

 

(31,127

)

 

 

(39,140

)

Financing Activities:

 

 

 

 

 

 

 

Borrowing of debt

 

18,000

 

 

 

 

Repayments of debt

 

(61,210

)

 

 

(25,906

)

Cash paid for the cancellation of restricted stock

 

(882

)

 

 

(1,100

)

Proceeds from the exercise of Common Stock options

 

14,062

 

 

 

2,434

 

Cash paid for the repurchase of restricted stock

 

(64,151

)

 

 

(5,326

)

Net cash used in financing activities

 

(94,181

)

 

 

(29,898

)

Foreign currency effect

 

(1,253

)

 

 

24,106

 

Net decrease in cash and cash equivalents

 

(56,020

)

 

 

(29,561

)

Cash and cash equivalents at beginning of period

 

103,172

 

 

 

177,187

 

Cash and cash equivalents at end of period

$

47,152

 

 

$

147,626

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

Cash paid for taxes

$

19,255

 

 

$

67,160

 

Cash paid for interest

$

3,617

 

 

$

3,171

 

Supplemental disclosure of non-cash transactions:

 

 

 

 

 

 

 

Common Stock issued to Board of Directors and employees

$

3,893

 

 

$

3,873

 

 

 

 

 

# # # #

 

11

 

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