Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At October ~~28, 2022,~~20, 2023, there were ~~33,198,067~~32,796,297 issued and outstanding shares of Common Stock of the registrant.


	September 30, 2022			December 31, 2021			September 30, 2023			December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents	$	139,163		$	190,606		$	154,354		$	153,891
Accounts receivable, net		248,570			182,987			263,765			247,131
Inventory:
Raw materials		154,273			96,426			122,919			136,217
Work in process		17,157			9,495			16,745			17,695
Finished goods		62,465			53,556			66,192			64,336
Inventory, net		233,895			159,477			205,856			218,248
Other current assets		84,344			32,775			76,651			64,597
Total current assets		705,972			565,845			700,626			683,867
Property and equipment, net		228,056			155,270			236,660			244,480
Goodwill		125,273			66,033			100,633			119,774
Other intangible assets, net		68,639			37,554			66,427			73,933
Operating lease right-of-use assets		30,214			24,387			27,442			29,945
Deferred income tax assets		66,322			69,630			73,177			69,840
Other non-current assets		16,857			16,624			20,632			17,461
Total assets	$	1,241,333		$	935,343		$	1,225,597		$	1,239,300
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	208,338		$	122,727		$	213,851		$	182,225
Current lease liabilities		7,448			5,669			7,633			7,143
Current maturities of long-term debt		3,540			2,500			620			2,443
Other current liabilities		100,898			82,193			90,199			93,814
Total current liabilities		320,224			213,089			312,303			285,625
Long-term debt, less current maturities		232,000			36,250			207,302			232,653
Non-current lease liabilities		22,013			19,789			16,451			20,538
Pension benefit obligation		5,850			6,832			3,165			3,638
Other non-current liabilities		37,157			5,577			26,324			24,573
Total liabilities	$	617,244		$	281,537		$	565,545		$	567,027
Shareholders’ equity:
Common Stock:
No par value; 55,000,000 shares authorized 33,196,404 and 33,008,185 issued and outstanding at September 30, 2022 and December 31, 2021, respectively		119,801			118,646
No par value; 55,000,000 shares authorized 32,795,093 and 33,202,082 issued and outstanding at September 30, 2023 and December 31, 2022, respectively								97,715			122,658
Paid-in capital		5,477			5,866			5,379			5,447
Accumulated other comprehensive loss		(96,051	)		(36,922	)		(55,955	)		(46,489	)
Accumulated earnings		594,862			566,216			612,913			590,657
Total shareholders’ equity		624,089			653,806			660,052			672,273
Total liabilities and shareholders’ equity	$	1,241,333		$	935,343		$	1,225,597		$	1,239,300


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021			2023			2022			2023			2022
Product revenues	$	332,962		$	243,384		$	861,334		$	797,924		$	366,195		$	332,962		$	1,102,143		$	861,334
Cost of sales		252,610			173,997			657,492			561,655			279,985			252,610			846,815			657,492
Gross margin		80,352			69,387			203,842			236,269			86,210			80,352			255,328			203,842
Operating expenses:
Net research and development expenses		22,666			20,590			62,425			56,420			23,150			22,666			72,991			62,425
Selling, general and administrative expenses		34,859			27,344			96,109			83,093			38,220			34,859			113,680			96,109
Impairment of goodwill														—			—			19,509			—
Restructuring expenses		6			749			561			3,631			1,099			6			3,412			561
Total operating expenses		57,531			48,683			159,095			143,144			62,469			57,531			209,592			159,095
Operating income		22,821			20,704			44,747			93,125			23,741			22,821			45,736			44,747
Interest income (expense), net		714			(515	)		(1,285	)		(2,184	)
Foreign currency (loss) gain		(8,285	)		133			(1,516	)		391
Interest (expense) income, net														(3,368	)		714			(9,444	)		(1,285	)
Foreign currency gain (loss)														2,107			(8,285	)		384			(1,516	)
Other income		361			10			698			13			272			361			1,058			698
Earnings before income tax		15,611			20,332			42,644			91,345			22,752			15,611			37,734			42,644
Income tax expense		5,784			4,646			13,998			17,959			6,908			5,784			15,478			13,998
Net income	$	9,827		$	15,686		$	28,646		$	73,386		$	15,844		$	9,827		$	22,256		$	28,646
Basic earnings per share	$	0.30		$	0.47		$	0.87		$	2.22		$	0.48		$	0.30		$	0.67		$	0.87
Diluted earnings per share	$	0.29		$	0.47		$	0.86		$	2.19		$	0.48		$	0.29		$	0.67		$	0.86
Weighted average number of shares – basic		33,162			33,178			33,106			33,075			32,944			33,162			33,049			33,106
Weighted average number of shares – diluted		33,470			33,609			33,460			33,489			33,196			33,470			33,311			33,460


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2023			2022
Operating Activities:
Net income	$	28,646		$	73,386		$	22,256		$	28,646
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		30,470			29,430			38,531			30,470
Deferred income taxes		(1,207	)		3,867			(3,017	)		(1,207	)
Non-cash stock based compensation		3,383			11,760
Stock based compensation								8,451			3,383
Loss on disposition of property and equipment		620			638			873			620
Provisions for inventory								6,597			4,293
Impairment of goodwill								19,509			—
Other		881			(650	)		81			881
Changes in assets and liabilities:
Accounts receivable, net		(55,780	)		26,162			(19,813	)		(55,780	)
Inventory		(48,930	)		(34,019	)		3,733			(53,223	)
Other assets		(10,868	)		597			(19,218	)		(10,868	)
Accounts payable		60,983			9,231			32,158			60,983
Other liabilities		4,759			(3,296	)		(10,099	)		4,759
Net cash provided by operating activities		12,957			117,106			80,042			12,957
Investing Activities:
Purchases of property and equipment		(25,737	)		(29,585	)		(26,526	)		(25,737	)
Proceeds from the sale of property and equipment		175			11			72			175
Acquisition of businesses, net of cash acquired		(224,097	)		(2,827	)		—			(224,097	)
Proceeds from deferred purchase price of factored receivables		2,168			—			10,139			2,168
Cost of technology investments		(350	)		(7,557	)		(630	)		(350	)
Net cash used in investing activities		(247,841	)		(39,958	)		(16,945	)		(247,841	)
Financing Activities:
Borrowings on debt		207,000			—			—			207,000
Repayments of debt		(11,559	)		(151,993	)		(27,166	)		(11,559	)
Proceeds from the exercise of Common Stock options		1,556			7,467			263			1,556
Taxes withheld and paid on employees' share-based payment awards		(5,415	)		(3,991	)		(2,754	)		(5,415	)
Acquisition contingent consideration payment		—			(69	)
Net cash provided by (used in) financing activities		191,582			(148,586	)
Cash paid for the repurchase of Common Stock								(31,094	)		—
Net cash (used in) provided by financing activities								(60,751	)		191,582
Foreign currency effect		(8,141	)		(1,821	)		(1,883	)		(8,141	)
Net decrease in cash and cash equivalents		(51,443	)		(73,259	)
Net cash increase (decrease) in cash and cash equivalents								463			(51,443	)
Cash and cash equivalents at beginning of period		190,606			268,345			153,891			190,606
Cash and cash equivalents at end of period	$	139,163		$	195,086		$	154,354		$	139,163
Supplemental disclosure of cash flow information:
Cash paid for taxes	$	13,509		$	12,348		$	18,893		$	13,509
Cash paid for interest	$	3,334		$	1,823			9,737			3,334
Non-Cash Investing Activities:
Period-end balance of accounts payable for property and equipment							$	4,501		$	2,848
Deferred purchase price of receivables factored in the period							$	11,344		$	2,801


																										Accumulated
																										Other
																	Common Stock						Paid-in			Comprehensive			Accumulated
																	Shares			Amount			Capital			Loss			Earnings			Total
Balance at December 31, 2022																		33,202		$	122,658		$	5,447		$	(46,489	)	$	590,657		$	672,273
Net income																		—			—			—			—			7,963			7,963
Other comprehensive income																		—			—			—			10,388			—			10,388
Stock compensation, net																		94			(241	)		(68	)		—			—			(309	)
Stock repurchase																		(169	)		(9,997	)		—			—			—			(9,997	)
Balance at March 31, 2023																		33,127		$	112,420		$	5,379		$	(36,101	)	$	598,620		$	680,318
Net loss																		—			—			—			—			(1,551	)		(1,551	)
Other comprehensive loss																		—			—			—			(1,312	)		—			(1,312	)
Stock compensation, net																		28			3,101			—			—			—			3,101
Stock repurchase																		(167	)		(9,996	)		—			—			—			(9,996	)
Balance at June 30, 2023																		32,988		$	105,525		$	5,379		$	(37,413	)	$	597,069		$	670,560
Net income																		—			—			—			—			15,844			15,844
Other comprehensive loss																		—			—			—			(18,542	)		—			(18,542	)
Stock compensation, net																		2			3,291			—			—			—			3,291
Stock repurchase																		(195	)		(11,101	)		—			—			—			(11,101	)
Balance at September 30, 2023																		32,795		$	97,715		$	5,379		$	(55,955	)	$	612,913		$	660,052


									Accumulated																	Accumulated
									Other																	Other
	Common Stock					Paid-in			Comprehensive			Accumulated					Common Stock						Paid-in			Comprehensive			Accumulated
	Shares		Amount			Capital			Loss			Earnings		Total			Shares			Amount			Capital			Loss			Earnings			Total
Balance at December 31, 2021		33,008	$	118,646		$	5,866		$	(36,922	)	$	566,216	$	653,806			33,008		$	118,646		$	5,866		$	(36,922	)	$	566,216		$	653,806
Net income		—		—			—			—			11,747		11,747			—			—			—			—			11,747			11,747
Other comprehensive loss		—		—			—			(8,806	)		—		(8,806	)		—			—			—			(8,806	)					(8,806	)
Stock compensation, net		119		(814	)		(146	)		—			—		(960	)		119			(814	)		(146	)		—						(960	)
Balance at March 31, 2022		33,127		117,832			5,720			(45,728	)		577,963		655,787			33,127		$	117,832		$	5,720		$	(45,728	)	$	577,963		$	655,787
Net income		—		—			—			—			7,072		7,072			—			—			—			—			7,072			7,072
Other comprehensive loss		—		—			—			(22,920	)		—		(22,920	)		—			—			—			(22,920	)		—			(22,920	)
Stock compensation, net		6		3,256			—			—			—		3,256			6			3,256			—			—			—			3,256
Balance at June 30, 2022		33,133	$	121,088		$	5,720		$	(68,648	)	$	585,035	$	643,195			33,133		$	121,088		$	5,720		$	(68,648	)	$	585,035		$	643,195
Net income		—		—			—			—			9,827		9,827			—			—			—			—			9,827			9,827
Other comprehensive loss		—		—			—			(27,403	)		—		(27,403	)		—			—			—			(27,403	)		—			(27,403	)
Stock compensation, net		63		(1,287	)		(243	)		—			—		(1,530	)		63			(1,287	)		(243	)		—			—			(1,530	)
Balance at September 30, 2022		33,196	$	119,801		$	5,477		$	(96,051	)	$	594,862	$	624,089			33,196		$	119,801		$	5,477		$	(96,051	)	$	594,862		$	624,089


									Accumulated
									Other
	Common Stock					Paid-in			Comprehensive			Accumulated
	Shares		Amount			Capital			Loss			Earnings		Total
Balance at December 31, 2020		32,921	$	121,073		$	7,458		$	(14,982	)	$	472,782	$	586,331
Net income		—		—			—			—			32,909		32,909
Other comprehensive loss		—		—			—			(13,674	)		—		(13,674	)
Stock compensation, net		190		8,527			(1,335	)		—			—		7,192
Balance at March 31, 2021		33,111		129,600			6,123			(28,656	)		505,691		612,758
Net income		—		—			—			—			24,791		24,791
Other comprehensive income		—		—			—			4,480			—		4,480
Stock compensation, net		34		3,142			39			—			—		3,181
Balance at June 30, 2021		33,145	$	132,742		$	6,162		$	(24,176	)	$	530,482	$	645,210
Net income		—		—			—			—			15,686		15,686
Other comprehensive income		—		—			—			(7,941	)		—		(7,941	)
Stock compensation, net		80		2,707			(182	)		—			—		2,525
Balance at September 30, 2021		33,225	$	135,449		$	5,980		$	(32,117	)	$	546,168	$	655,480

~~Note 3 –~~ Acquisitions

Alfmeier Präzision SE

On ~~July 29,~~August 1, 2022, the Company ~~transferred consideration to acquire~~acquired 100% of the equity interests of Alfmeier Präzision SE (“Alfmeier”), a global leader in automotive lumbar and massage comfort solutions and a leading provider of advanced valve systems, ~~technology,~~ integrated electronics and software. The acquisition further ~~expands~~expanded the Company's ~~current~~ value proposition beyond thermal in comfort, health, wellness, and energy efficiency and ~~aligns~~aligned with global consumer demand for expanded offerings in vehicle passenger comfort.

The ~~acquisition date for accounting purposes was determined to be August 1, 2022 and the~~ total consideration transferred was $~~164,887~~170,700. ~~On the closing date, the Company made cash payments of $188,941, net of cash acquired. We expect to receive cash from the seller of $24,054~~ (“Purchase Consideration Receivable”) in connection with the finalization and settlement of post-closing adjustments in accordance with the purchase agreement. Substantially all of the adjustments known as of this filing relate to lower cash on hand as of the closing date than estimated and a pre-closing reorganization transaction. We expect additional adjustments for actual working capital, cash and cash-like items and debt and debt-like items as of the closing date. All post-closing adjustments are expected to be finalized within 120 days of the closing date, provided there are no disputes. Potential disputes shall be resolved in accordance with the purchase agreement. The Purchase Consideration Receivable is recorded in Other current assets in the consolidated condensed balance sheets as of September 30, 2022. The results of Alfmeier's operations are reported within the Automotive segment from the acquisition date.

~~The following table provides product revenues and operating income from Alfmeier that are included in our consolidated condensed financial statements:~~

Three Months Ended September 30, 2022

Nine Months Ended September 30, 2022

Product revenues

$
41,281

$
41,281

Operating loss

(3,104
)

(3,104
)

The acquisition was accounted for as a business ~~combination with~~combination. The following table summarizes the final purchase consideration and estimated fair values of assets acquired and liabilities assumed as of the acquisition date:


	Initial Allocation as of August 1, 2022			Measurement Period Adjustments			Final Allocation
Purchase price, cash consideration, net of cash acquired	$	164,887		$	5,813		$	170,700
								—
Accounts receivable		24,988			(121	)		24,867
Inventory		36,026			417			36,443
Prepaid expenses and other assets		20,920			(74	)		20,846
Operating lease right-of-use assets		4,608			—			4,608
Property and equipment		89,942			1,242			91,184
Other intangible assets		22,668			8,791			31,459
Goodwill		43,678			(9,707	)		33,971
Assumed liabilities		(55,994	)		975			(55,019	)
Deferred tax liabilities		(21,949	)		4,290			(17,659	)
Net assets acquired	$	164,887		$	5,813		$	170,700

The following table summarizes the final allocation of the purchase ~~price allocated on a preliminary basis using information available as of September 30, 2022.~~ consideration to the other intangible assets acquired:


	Final Fair Value		Weighted Average Life (in years)
Definite-lived:
Customer related	$	19,812		14
Technology		11,647		9
Total	$	31,459

Assets acquired and liabilities assumed were recorded at estimated fair values based on third-party valuations, management’s estimates, available information, and supportable assumptions that management considered reasonable. The purchase price and related allocation are preliminary and could be revised as a result of: adjustments made to the purchase price; additional information obtained regarding liabilities assumed, including, but not limited to, contingent liabilities, revisions of provisional estimates of fair values, including, but not limited to, the completion of independent appraisals and valuations related to property, plant and equipment and intangible assets and certain tax attributes. The final valuation of assets acquired and liabilities assumed may be materially different from the estimated values shown below.

~~The following table summarizes the preliminary allocation of the purchase consideration to the estimated fair values of assets acquired and liabilities assumed as of the acquisition date:~~

Purchase price, cash consideration, net of cash acquired

$
188,941

Purchase price, Purchase Consideration Receivable

$
(24,054
)
Total purchase price, net of cash acquired

$
164,887

Accounts receivable

24,988

Inventory

36,026

Prepaid expenses and other assets

20,920

Operating lease right-of-use assets

4,608

Property and equipment

89,942

Other intangible assets

22,668

Goodwill

43,678

Assumed liabilities

(55,994
)
Deferred tax liabilities

(21,949
)
Net assets acquired

$
164,887

~~The following table summarizes the preliminary allocation of the purchase consideration to the other intangible assets acquired:~~

Preliminary Fair Value

Weighted Average Life (in years)

Definite-lived:

Customer related

$
11,233

13

Technology

11,435

9

Total

$
22,668

The ~~estimated~~ fair value of the ~~Intangible~~intangible assets was based on third-party valuations and management’s estimates, generally utilizing income and market approaches. Goodwill recognized in this transaction is primarily attributable to the Company’s expected future economic benefits from combining operations to offer more compelling and high-value solutions across complementary customer relationships as well as expected future synergies. The goodwill is not expected to be deductible for tax purposes.

The following unaudited pro forma information represents our product revenues as if the acquisition of Alfmeier had occurred as of January 1, ~~2021:~~2022:

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

2022

2021

Product revenues

$
352,946

$
300,520

$
1,005,337

$
992,403


	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Product revenues	$	352,877	$	1,004,974
Net income		9,033		21,330

Jiangmen Dacheng Medical Equipment Co. Ltd

On July 13, 2022, the Company acquired 100% of the equity interests of Jiangmen Dacheng Medical Equipment Co. Ltd (“Dacheng”) and its wholly owned subsidiary, IOB Medical, Inc. ~~(“IOB”).~~ Dacheng is a privately held manufacturer of medical materials and medical equipment, including patient temperature management solutions, for numerous local and international customers. The acquisition ~~provides~~provided Gentherm Medical a local presence in China’s high-growth market for patient warming devices and other medical device products, ~~while also expanding~~and expanded overall manufacturing capacity to include a low-cost manufacturing site.

The total consideration transferred was $35,048~~, which is comprised of cash payments, net of cash acquired.~~. The purchase agreement also ~~includes future~~included potential cash payments ~~of up to $3,000~~, contingent upon the achievement of certain performance metrics and continued employment of the former majority shareholder through a series of defined dates. The achievement of these performance metrics resulted in cash payments of $500. These ~~contingent~~cash payments ~~will be~~were accounted for as compensation expense and ~~will be~~ recorded as a component of ~~selling,~~Selling, general and ~~administrative.~~administrative expenses ratably over the service period.

The results of Dacheng's operations are reported within the Medical segment from the date of acquisition. The following table provides product revenues and operating income from Dacheng that are included in our consolidated condensed financial statements:

Three Months Ended September 30, 2022

Nine Months Ended September 30, 2022

Product revenues

$
1,234

$
1,234

Operating loss

(153
)

(153
)


	Initial Allocation as of July 13, 2022			Measurement Period Adjustments			Final Allocation
Purchase price, cash consideration, net of cash acquired	$	35,048		$	—		$	35,048
								—
Accounts receivable		746			(124	)		622
Inventory		1,942			(177	)		1,765
Prepaid expenses and other assets		152			22			174
Operating lease right-of-use assets		841			—			841
Property and equipment		684			—			684
Other intangible assets		19,094			965			20,059
Goodwill		22,995			(3,464	)		19,531
Assumed liabilities		(2,799	)		(515	)		(3,314	)
Deferred tax liabilities		(8,607	)		3,293			(5,314	)
Net assets acquired	$	35,048		$	—		$	35,048


	Final Fair Value		Weighted Average Life (in years)
Definite-lived:
Customer related	$	12,837		12
Technology		4,749		12
Indefinite-lived:
Tradenames		2,473		—
Total	$	20,059

The ~~following table summarizes the preliminary allocation of the purchase consideration to the estimated fair values of assets acquired and liabilities assumed as of the acquisition date:~~

Purchase price, cash consideration, net of cash acquired

$
35,048

Accounts receivable

746

Inventory

1,942

Prepaid expenses and other assets

152

Operating lease right-of-use assets

841

Property and equipment

684

Other intangible assets

19,094

Goodwill

22,995

Assumed liabilities

(2,799
)
Deferred tax liabilities

(8,607
)
Net assets acquired

$
35,048

~~The following table summarizes the preliminary allocation of the purchase consideration to the other intangible assets acquired:~~

Preliminary Fair Value

Weighted Average Life (in years)

Definite-lived:

Customer related

$
11,873

12

Technology

4,749

12

Indefinite-lived:

Tradenames

2,472

—

Total

$
19,094

~~The estimated~~ fair value of the intangible assets was based on third-party valuations and management’s estimates, generally utilizing income and market approaches. Goodwill recognized in this transaction is primarily attributable to the Company’s expected future economic benefits from the enhanced access to high-growth markets including private label opportunities through Dacheng’s innovative patient temperature management devices. The goodwill is not expected to be deductible for tax purposes.

The pro forma effects of this acquisition would not materially impact the Company’s reported results for any period presented, and as a result no pro forma financial statements ~~were~~are presented.

Note 43 – Restructuring and Impairments

The Company continuously monitors market developments, industry trends and changing customer needs and in response, may undertake restructuring actions, as necessary, to execute management’s strategy, streamline operations and optimize the Company’s cost structure. Restructuring actions may include the realignment of existing manufacturing footprint, facility closures, or similar actions, either in the normal course of business or pursuant to significant restructuring programs.

These actions may result in employees receiving voluntary or involuntary employee termination benefits, which are mainly statutory requirements or other contractual agreements. Voluntary termination benefits are accrued when an employee accepts the related offer. Involuntary termination benefits are accrued upon the commitment to a termination plan and when the benefit arrangement is communicated to affected employees, or when liabilities are determined to be probable and estimable, depending on the existence of a substantive plan for severance or termination.

2023 Manufacturing Footprint Rationalization

InOn September ~~2019,~~19, 2023, the Company committed to a restructuring plan (“2023 Plan”) to improve the Company’s manufacturing productivity and rationalize its footprint. Under this 2023 Plan, the Company ~~is relocating~~will relocate certain existing manufacturing and ~~consolidating certain automotive electronics manufacturing plants~~related activities in ~~North America and China. During 2021, the Company completed the closures and relocation of~~ its ~~automotive electronics manufacturing operations from Burlington, Canada~~Greenville, South Carolina facility to ~~Celaya, Mexico and from Longgang, Shenzhen, China to Bantian, Shenzhen, China. As of September 30, 2022, the electronics manufacturing~~a new facility in ~~Acuña, Mexico continues to transition to Celaya,~~Monterrey, Mexico.

The Company expects to incur total costs of between $14,000 and $18,000, of which between $13,000 and $17,000 are expected to be cash expenditures. The total expected costs include employee severance, retention and termination costs of between $2,000 and $4,000, capital expenditures of between $7,000 and $8,000 and non-cash expenses for accelerated depreciation and impairment of fixed assets of approximately $1,000. The Company also expects to incur other transition costs including recruiting, relocation, and machinery and equipment move and set up costs of between $4,000 and $5,000. The actions under this 2023 Plan are expected to be substantially completed by the end of 2025. The actual timing, costs and savings of the 2023 Plan may differ materially from the Company’s current expectations and estimates.

During the three and nine months ended September 30, 2023, the Company did not recognize any material amounts of restructuring expense.

Other Restructuring Activities

The Company has undertaken several discrete restructuring actions. During the three and nine months ended September 30, 2023, the Company recognized $1,099 and $2,642, respectively, for employee separation costs and $0 and $770, respectively, of other costs. During the three and nine months ended September 30, 2022, the Company recognized ~~restructuring expense of~~ $0 and $50, respectively, for employee separation costs and $06 and $~~198~~511, respectively, for other ~~costs. During the three and nine months ended September 30, 2021, the Company recognized restructuring expense of $294~~ ~~and $1,259~~ ~~for employee separation costs, respectively, $~~26 ~~and $218~~ ~~for accelerated depreciation, respectively, and $617~~ ~~and $1,269~~ ~~for other costs, respectively.~~

~~The Company has recorded approximately $10,353~~ ~~of restructuring expenses since the inception of this program and as of September 30, 2022, $538~~ ~~remains accrued.~~ ~~Actions under the Plan are expected to be substantially completed by the end of 2022~~ ~~and future expenses are expected to be less than $1,000~~.

~~Other Restructuring Activities~~

As part of the Company’s continued efforts to optimize its cost structure, the Company has undertaken several discrete restructuring actions. During the three and nine months ended September 30, 2022, the Company recognized $6 ~~and $313~~,

~~respectively, for other costs. During the three and nine months ended September 30, 2021, the Company recognized $(188) and $885, respectively, of employee separation~~ costs. These restructuring expenses were primarily associated with restructuring actions focused on ~~the rotation of our manufacturing footprint to best cost locations and~~ the reduction of global overhead costs.

Restructuring Expenses By Reporting Segment

The following table summarizes restructuring expense for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 by reporting segment:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021		2023		2022		2023		2022
Automotive	$	6	$	701	$	561	$	2,567	$	852	$	6	$	2,222	$	561
Medical		—		—		—		—		—		—		—		—
Corporate		—		48		—		1,064		247		—		1,190		—
Total	$	6	$	749	$	561	$	3,631	$	1,099	$	6	$	3,412	$	561

Restructuring Liability

Restructuring liabilities are classified as other current liabilities in the consolidated condensed balance sheets. The following table summarizes restructuring liability for the nine months ended September 30, ~~2022:~~2023:


	Employee Separation Costs			Other Related Costs			Total
Balance at December 31, 2022	$	588		$	—		$	588
Additions, charged to restructuring expenses		1,206			63			1,269
Cash payments		—			(63	)		(63	)
Currency translation		16			—			16
Balance at March 31, 2023	$	1,810		$	—		$	1,810
Additions, charged to restructuring expenses		337			707			1,044
Cash payments		(565	)		(707	)		(1,272	)
Currency translation		6			—			6
Balance at June 30, 2023	$	1,588		$	—		$	1,588
Additions, charged to restructuring expenses		1,099			—			1,099
Cash payments		(728	)		—			(728	)
Currency translation		(21	)		—			(21	)
Balance at September 30, 2023	$	1,938		$	—		$	1,938

Impairments

Non-Automotive Electronics Business

Employee Separation Costs

Other Related Costs

Total

Balance at December 31, 2021

$
1,494

$
—

$
1,494

Additions, charged to restructuring expenses

—

131

131

Cash payments

(544
)

(131
)

(675
)
Change in estimate

50

—

50

Currency translation

(18
)

—

(18
)
Balance at March 31, 2022

$
982

$
—

$
982

Additions, charged to restructuring expenses

—

374

374

Cash payments

(83
)

(97
)

(180
)
Currency translation

(32
)

—

(32
)
Balance at June 30, 2022

$
867

$
277

$
1,144

Additions, charged to restructuring expenses

—

6

6

Cash payments

(248
)

(6
)

(254
)
Currency translation

(31
)

—

(31
)
Balance As of September 30, 2022

$
588

$
277

$
865

On December 31, 2022, the Company approved a plan to exit its non-automotive electronics business to strengthen the Company’s core business and focus its resources and equipment with businesses and investments that are more strategic and profitable. The Company will continue to sell certain non-automotive electronics products until the exit is complete. During the year ended December 31, 2022, the Company recorded non-cash impairment charges of $9,378, $5,601 and $690 for write downs of inventory, intangible assets and property and equipment, respectively, within the Automotive segment.

During the three and nine months ended September 30, 2023, the Company recorded non-cash impairment charges of $3,426 and $5,489, respectively, for the write down of inventory within the Automotive segment. These charges were recorded in Cost of sales.

The Company is no longer pursuing a sale of the business and intends to wind-down the operations of the business by the end of 2023, subject to discussions with customers and suppliers.

Medical Segment

During the three months ended June 30, 2023, the Company determined that there were impairment indicators for its Medical reporting unit and conducted an impairment analysis, following which the Company concluded that $19,509 of goodwill was impaired. Such non-cash impairment charge was recorded in Impairment of goodwill. See Note 5 for additional information about the goodwill impairment analysis.

Note 65 – Goodwill and Other Intangibles

Goodwill

Changes in the carrying amount of goodwill, by reportable segment, for the nine months ended September 30, ~~2022~~2023 was as follows:

Automotive

Medical

Total

Balance as of December 31, 2021

$
37,329

$
28,704

$
66,033

Exchange rate impact

(4,825
)

(2,608
)

(7,433
)
Acquisition of Alfmeier

43,678

—

43,678

Acquisition of Dacheng

—

22,995

22,995

Balance as of September 30, 2022

$
76,182

$
49,091

$
125,273


	Automotive		Medical			Total
Balance as of December 31, 2022	$	73,069	$	46,705		$	119,774
Impairment of goodwill		—		(19,509	)		(19,509	)
Currency translation and other		768		(400	)		368
Balance as of September 30, 2023	$	73,837	$	26,796		$	100,633

Other Intangible Assets

Other intangible assets and accumulated amortization balances as of September 30, ~~2022~~2023 and December 31, ~~2021~~2022 were as follows:


	September 30, 2022							December 31, 2021							September 30, 2023							December 31, 2022
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
Definite-lived:
Customer relationships	$	99,318	$	(57,718	)	$	41,600	$	90,448	$	(64,105	)	$	26,343	$	110,845	$	(69,163	)	$	41,682	$	112,286	$	(65,748	)	$	46,538
Technology		36,640		(22,502	)		14,138		29,464		(24,487	)		4,977		44,042		(27,443	)		16,599		44,745		(25,709	)		19,036
Product development costs		21,250		(16,390	)		4,860		20,329		(19,772	)		557		18,389		(18,224	)		165		18,774		(18,456	)		318
Software development		1,007		—			1,007		1,007		—			1,007		1,007		—			1,007		1,007		—			1,007
Indefinite-lived:
Tradenames		7,034		—			7,034		4,670		—			4,670		6,974		—			6,974		7,034		—			7,034
Total	$	165,249	$	(96,610	)	$	68,639	$	145,918	$	(108,364	)	$	37,554	$	181,257	$	(114,830	)	$	66,427	$	183,846	$	(109,913	)	$	73,933

~~In addition to annual impairment testing, which is performed in~~As of December 31, 2022, the ~~fourth~~estimated fair value of the Medical reporting unit exceeded its carrying value by less than 10%. During the second quarter of ~~each fiscal year,~~2023, the Company’s Medical reporting unit did not perform in-line with forecasted results primarily driven by slower than anticipated revenue growth. As a result, an indicator of impairment was identified and the Company ~~continuously monitors for events and circumstances that could negatively impact the key assumptions used in determining fair value and therefore require~~performed an interim impairment testing, including long-term revenue growth projections, profitability, discount rates, recent market valuations from transactions by comparable companies, volatility in the Company's market capitalization, and general industry, market and macroeconomic conditions. We are not presently awarequantitative assessment as of ~~any events or circumstances that would require us to revise~~June 30, 2023. The results of this quantitative analysis indicated the carrying value of ~~our assets or liabilities as~~the reporting unit exceeded the fair value of ~~September 30, 2022.~~the reporting unit, and accordingly an impairment expense was recorded for $19,509.

The Company utilized an income approach to estimate the fair value of the reporting unit and a market valuation approach to further support this analysis (level 3). The income approach was based on projected debt-free cash flow that was discounted to the present value using discount factors that considered the timing and risk of cash flows. Fair value was estimated using internally developed forecasts, as well as commercial and discount rate assumptions. The discount rate used was the value-weighted average of our estimated cost of equity and of debt (“cost of capital”) derived using both known and estimated customary market metrics. Our weighted average cost of capital includes a company specific risk premium to address the risks associated with achieving the projected revenue and profitability growth rates. Other significant assumptions included terminal value growth rates and terminal value margin rates. Our ability to realize the future cash flows used in our calculations is affected by factors such as the success of strategic initiatives, changes in economic conditions, changes in our operating performance and changes in our business strategies. To further support the fair value estimate determined by the income approach, the Company utilized a market valuation approach to estimate the fair value of the Medical reporting unit. The market approach considered historical and anticipated financial metrics of the Medical reporting unit and applied valuation multiples based on recent observed transactions involving companies similar enough to the Medical reporting unit from which to draw meaningful conclusions.

Note 76 – Debt

The following table summarizes the Company’s debt as of September 30, ~~2022~~2023 and December 31, ~~2021:~~2022:


	September 30, 2022						December 31, 2021						September 30, 2023						December 31, 2022
	Interest Rate			Principal Balance			Interest Rate			Principal Balance			Interest Rate			Principal Balance			Interest Rate			Principal Balance
Credit Agreement:
U.S. Revolving Note (U.S. Dollar denominations)		4.26	%	$	232,000			1.35	%	$	35,000
Revolving Credit Facility (U.S. Dollar denominations)														6.79	%	$	207,000			5.80	%	$	232,000
Other loans	3.93% - 5.21%				3,540			5.21	%		3,750			3.90	%		247		3.89% - 5.21%				2,011
Finance leases														3.54	%		675			3.57	%		1,085
Total debt					235,540						38,750						207,922						235,096
Current maturities					(3,540	)					(2,500	)					(620	)					(2,443	)
Long-term debt, less current maturities				$	232,000					$	36,250					$	207,302					$	232,653

Credit Agreement

On June 10, 2022, the Company entered into a Second Amended and Restated Credit Agreement (the “Second Amended and Restated Credit Agreement”) with a consortium of lenders and Bank of America, N.A., as administrative agent (the “Agent”). The Second Amended and Restated Credit Agreement amends and restates in its entirety the Amended and Restated Credit Agreement dated June 27, 2019, by and among Gentherm, certain of its direct and indirect subsidiaries, the lenders party thereto and the Agent.

The Second Amended and Restated Credit Agreement provides for a $500,000 secured revolving credit facility (the “Revolving Credit Facility”) ~~(a $25,000~~ ~~increase from the revolving credit facility under the Amended and Restated Credit Agreement)~~, with a $50,000 sublimit for swing line loans and a $15,000 sublimit for the issuance of standby letters of credit. Any amount of the facility utilized for swing line loans or letters of credit outstanding will reduce the amount available under the Second Amended and Restated Credit Agreement. The Company had no outstanding letters of credit issued as of September 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

Subject to specified conditions, Gentherm can increase the Revolving Credit Facility or incur secured term loans in an aggregate amount of up to $200,000. The Second Amended and Restated Credit Agreement ~~extends the maturity of the Revolving Credit Facility from~~ ~~June 27, 2024~~ tomatures on June 10, 2027. ~~The outstanding principal and interest (of approximately $35,000~~ ~~as of June 10, 2022) under the Amended and Restated Credit Agreement continued and remained obligations under the Second Amended and Restated Credit Agreement..~~

The U.S. borrowers and guarantors participating in the Second Amended and Restated Credit Agreement also entered into a Second Amended and Restated Pledge and Security Agreement (the “Second Amended and Restated Security Agreement”). The Second Amended and Restated Security Agreement grants a security interest to the Agent in substantially all of the personal property of the Company and its U.S. subsidiaries designated as borrowers to secure their respective obligations under the Second Amended and Restated Security Agreement, including the stock and membership interests of specified subsidiaries (limited to 66% of the stock in the case of certain non-U.S. subsidiaries). In addition to the security obligations, all obligations under the Second Amended and Restated Credit Agreement (including all obligations of any U.S. or non-U.S. loan party) are unconditionally guaranteed by certain of Gentherm’s domestic subsidiaries, and the German subsidiary borrowers and certain other foreign subsidiaries guarantee all obligations of the non-U.S. loan parties under the Second Amended and Restated Credit Agreement. The Second Amended and Restated Credit Agreement restricts, among other things, the amount of dividend payments the Company can make to shareholders.

The Second Amended and Restated Credit Agreement contains covenants, that, among other things, (i) prohibit or limit the ability of the borrowers and any material subsidiary to incur additional indebtedness, create liens, pay dividends, make certain types of investments (including acquisitions), enter into certain types of transactions with affiliates, prepay other indebtedness, sell assets or enter into certain other transactions outside the ordinary course of business, and (ii) require that Gentherm maintain a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Net Leverage Ratio (based on consolidated EBITDA for the applicable trailing four fiscal quarters) as of the end of any fiscal quarter. The Second Amended and Restated Credit Agreement also contains customary events of default. As of September 30, ~~2022,~~2023, the Company was in compliance with the terms of the Second Amended and Restated Credit Agreement. The Second Amended and Restated Credit Agreement additionally contains customary events of default. Upon the occurrence of an event of default, the amounts outstanding under the Revolving Credit Facility may be accelerated and may become immediately due and payable.

Under the Second Amended and Restated Credit Agreement, U.S. Dollar denominated loans bear interest at either a base rate (“Base Rate Loans”) or Term SOFR rate (“Term SOFR Rate Loans”), plus a margin (“Applicable Rate”). The rate for Base Rate Loans is equal to the highest of the Federal Funds Rate plus 0.50%, Bank of America’s prime rate, or the Term SOFR rate plus 1.00%. The rate for Term SOFR Rate Loans denominated in U.S. Dollars is equal to the forward-looking Secured Overnight Financing Rate (“SOFR”) term rate administered by the CME with a term of one month. All loans denominated in a currency other than the U.S. Dollar must be Term SOFR Rate Loans. Interest is payable at least quarterly. Additionally, a commitment fee of between 0.175% to 0.300%, which will vary based on the Consolidated Net Leverage Ratio, as defined in the Second Amended and Restated Credit Agreement, is payable on the average daily unused amounts under the Revolving Credit Facility.

The Applicable Rate varies based on the Consolidated Net Leverage Ratio reported by the Company. As long as the Company is not in default of the terms and conditions of the Second Amended and Restated Credit Agreement, the lowest and highest possible Applicable Rate is 1.125% and 2.125%, respectively, for Term SOFR Rate Loans and 0.125% and 1.125%, respectively, for Base Rate Loans.

Borrowing availability is subject to, among other things, the Company’s compliance with the minimum Consolidated Interest Coverage Ratio and the maximum Consolidated Net Leverage Ratio as of the end of any fiscal quarter. Based upon consolidated EBITDA for the trailing four fiscal quarters calculated for purposes of the Consolidated Net Leverage Ratio, $~~264,460~~293,000 remained available as of September 30, ~~2022~~2023 for additional borrowings under the Second Amended and Restated Credit Agreement subject to specified conditions that Gentherm currently satisfies.

In connection with the Second Amended and Restated Credit Agreement, the Company incurred debt issuance costs of $1,417, which have been capitalized and ~~will be~~are being amortized into ~~interest~~Interest expense, net over the term of the credit facility. ~~In addition, unamortized deferred debt issuance costs of $144~~ ~~were written-off and recognized in Interest expense, net during the nine months ended September 30, 2022.~~

The scheduled principal maturities of our debt as of September 30, ~~2022~~2023 were as follows:


	U.S. Revolving Note		Other Debt		Total		U.S. Revolving Note		Other Debt		Total
2022	$	—	$	1,271	$	1,271
2023		—		2,269		2,269	$	—	$	345	$	345
2024		—		—		—		—		365		365
2025		—		—		—		—		146		146
2026		—		—		—		—		66		66
2027		232,000		—		232,000		207,000		—		207,000
2028								—		—		—
Total	$	232,000	$	3,540	$	235,540	$	207,000	$	922	$	207,922

Derivative Financial Instruments

The Company is exposed to various market risks including, but not limited to, changes in foreign currency exchange rates, changes in interest rates and price fluctuations of certain material commodities such as copper. Market risks for changes in interest rates relate primarily to its debt obligations under the Second Amended and Restated Credit Agreement. Foreign currency exchange risks are attributable to sales to foreign customers and purchases from foreign suppliers not denominated in a location’s functional currency, foreign plant operations, intercompany indebtedness, ~~acquisitions denominated in foreign currencies,~~ intercompany investments and include exposures to the Euro, Mexican Peso, Canadian Dollar, Hungarian Forint, North Macedonian Denar, Ukrainian Hryvnia, Japanese Yen, Chinese Renminbi, Korean Won, Czech Koruna and Vietnamese Dong.

The Company regularly enters into derivative contracts with the objective of managing its financial and operational exposure arising from these risks by offsetting gains and losses on the underlying exposures with gains and losses on the financial instruments used to hedge them. The decision of whether and when to execute derivative financial instruments, along with the duration of the instrument, may vary from period to period depending on market conditions, the relative costs of the instruments and capacity to hedge. The duration is linked to the timing of the underlying exposure, with the connection between the two being regularly monitored. The Company does not enter into derivative financial instruments for speculative or trading purposes. Some derivative contracts do not qualify for hedge accounting; for other derivative contracts, we elect to not apply hedge accounting.

The Company’s designated hedging relationships are formally documented at the inception of the hedge, and hedges must be highly effective in offsetting changes to future cash flows on hedged transactions both at the inception of a hedge and on an ongoing basis to be designated for hedge accounting treatment. For derivative contracts which can be classified as a cash flow hedge, the effective portion of the change in the fair value of the derivative is recorded to Accumulated other comprehensive loss in the consolidated condensed balance sheets. When the underlying hedge transaction is realized, the gain or loss included in Accumulated other comprehensive loss is recorded in earnings in the consolidated condensed statements of income on the same line as the gain or loss on the hedged item attributable to the hedged risk. The Company records the ineffective portion of designated foreign currency and copper commodity hedging instruments, if any, to ~~cost~~Cost of sales in the consolidated condensed statements of income. Cash flows associated with derivatives are reported in ~~net~~Net cash provided by operating activities in the ~~Company’s~~ consolidated condensed statements of cash flows.

The Company uses an income approach to value derivative instruments, analyzing quoted market prices to calculate the forward values and then discounting such forward values to the present value using benchmark rates at commonly quoted intervals for the instrument’s full term.

~~In the second quarter of 2022, the~~The Company ~~entered into~~is party to a floating-to-fixed interest rate swap agreement with a notional amount of $100,000 and a maturity date of July 2025. This interest rate swap is an undesignated hedge of the Company’s exposure to interest payment fluctuations on a portion of the Revolving Credit Facility borrowings that were drawn for the acquisitions of Alfmeier and Dacheng. The periodic changes in fair value is recognized in Interest expense, net.

~~In the second and third quarter of 2022, the Company entered into forward contracts with a notional amount of $~~17~~128,319~~

to hedge the foreign currency risk associated with the forecasted purchase of Alfmeier. These contracts matured and were settled in the third quarter of 2022. During the three and nine months ended September 30, 2022 the Company recognized expense of $~~4,288~~ ~~and $3,806, respectively, in Foreign currency (loss) gain within the consolidated condensed income statement.~~

Information related to the recurring fair value measurement of derivative instruments in our consolidated condensed balance sheet as of September 30, ~~2022~~2023 is as follows:

Asset Derivatives

Liability Derivatives

Fair Value
Hierarchy

Notional Amount

Balance Sheet
Location

Fair
Value

Balance Sheet
Location

Fair
Value

Net Asset/
(Liabilities)

Derivatives Designated as Cash Flow Hedges

Foreign currency derivatives

Level 2

$
47,040

Other current assets

$
2,216

Other current liabilities

$
—

$
2,216

Derivatives Not Designated as Hedging Instruments

Interest rate contracts

Level 2

$
100,000

Other current assets

$
2,498

Other current liabilities

$
—

$
2,498


				Asset Derivatives			Liability Derivatives
	Fair Value Hierarchy	Notional Amount		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Net Asset/ (Liabilities)
Derivatives Designated as Cash Flow Hedges
Foreign currency derivatives	Level 2	$	103,771	Other current assets	$	6,706	Other current liabilities	$	—	$	6,706
Derivatives Not Designated as Hedging Instruments
Interest rate contracts	Level 2	$	100,000	Other current assets	$	3,506	Other current liabilities	$	—	$	3,506

Information related to the recurring fair value measurement of derivative instruments in our consolidated condensed balance sheet as of December 31, ~~2021~~2022 is as follows:


				Asset Derivatives			Liability Derivatives								Asset Derivatives			Liability Derivatives
	Fair Value Hierarchy	Notional Amount		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Net Asset/ (Liabilities)		Fair Value Hierarchy	Notional Amount		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Net Asset/ (Liabilities)
Derivatives Designated as Cash Flow Hedges
Foreign currency derivatives	Level 2	$	13,974	Other current assets	$	294	Other current liabilities	$	—	$	294	Level 2	$	40,063	Other current assets	$	3,791	Other current liabilities	$	—	$	3,791
Commodity hedges	Level 2	$	309	Other current assets	$	6	Other current liabilities	$	—	$	6
Derivatives Not Designated as Hedging Instruments
Interest rate contracts												Level 2	$	100,000	Other current assets	$	2,772	Other current liabilities	$	—	$	2,772

Information relating to the effect of derivative instruments on our consolidated condensed statements of income and the consolidated condensed statements of comprehensive income is as follows:


		Three Months Ended September 30,						Nine Months Ended September 30,
	Location (Income/(Loss))	2023			2022			2023		2022
Derivatives Designated as Cash Flow Hedges
Foreign currency derivatives	Cost of sales – income	$	2,771		$	321		$	5,814	$	807
	Other comprehensive income (loss)		(2,673	)		1,627			2,915		1,921
Total foreign currency derivatives		$	98		$	1,948		$	8,729	$	2,728

Commodity derivatives	Cost of sales – income	$	—		$	—		$	—	$	19
	Other comprehensive loss		—			—			—		(6	)
Total commodity derivatives		$	—		$	—		$	—	$	13

Derivatives Not Designated as Hedging Instruments
Foreign currency derivatives	Foreign currency gain	$	—		$	(4,288	)	$	—	$	(3,806	)
Total foreign currency derivatives		$	—		$	(4,288	)	$	—	$	(3,806	)

Interest rate contracts	Interest expense, net	$	62		$	3,191		$	734	$	2,498
Total interest rate derivatives		$	62		$	3,191		$	734	$	2,498

The Company did not incur any hedge ineffectiveness during the three and nine months ended September 30, 2023 and 2022.

Three Months Ended September 30,

Nine Months Ended September 30,

Location

2022

2021

2022

2021

Derivatives Designated as Cash Flow Hedges

Foreign currency derivatives

Cost of sales – income

$
321

$
448

$
807

$
1,455

Other comprehensive (loss) income

1,627

(606
)

1,921

(1,335
)
Total foreign currency derivatives

$
1,948

$
(158
)

$
2,728

$
120

Commodity derivatives

Cost of sales – income

$
—

$
2

$
19

$
2

Other comprehensive loss

—

(44
)

(6
)

(44
)
Total commodity derivatives

$
—

$
(42
)

$
13

$
(42
)

Derivatives Not Designated as Hedging Instruments

Foreign currency derivatives

Foreign currency (loss) gain

$
(4,288
)

$
—

$
(3,806
)

$
—

Total foreign currency derivatives

$
(4,288
)

$
—

$
(3,806
)

$
—

Interest rate contracts

Interest income (expense), net

$
3,191

$
—

$
2,498

$
—

Total interest rate derivatives

$
3,191

$
—

$
2,498

$
—

The Company ~~is party to receivable factoring agreements with unrelated third parties under which we can sell~~sells certain customer trade receivables ~~for certain account debtors,~~ on a ~~revolving~~non-recourse basis ~~subject to outstanding balances and concentration limits.~~under factoring arrangements with designated financial institutions. The ~~receivable factoring~~sale of receivables under these agreements ~~are transferred in their entirety~~is considered an off-balance sheet arrangement to the ~~acquiring entities~~ Company

and ~~are~~is accounted for as a ~~sale. Some~~true sale and excluded from accounts receivable in the consolidated condensed balance sheets. These factoring arrangements include a deferred purchase price component in which a portion of the purchase price for the receivable is paid by the financial institution in cash upon sale and the remaining portion is recorded as a deferred purchase price receivable and paid at a later date. Deferred purchase price receivables are recorded in Other current assets within the consolidated condensed balance sheets. Cash proceeds received upon the sale of the receivables are included in Net cash provided by operating activities and the cash proceeds received on the deferred purchase price receivables are included in Net cash used in investing activities. All factoring arrangements incorporate customary representations, including representations as to validity of amounts due, completeness of performance obligations and absence of commercial disputes.

Note 1312 – Reclassifications Out of Accumulated Other Comprehensive Loss

Reclassification adjustments and other activities impacting Accumulated other comprehensive loss during the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 were as follows:


	Defined Benefit Pension Plans			Foreign Currency Translation Adjustments			Foreign Currency Hedge Derivatives				Commodity Hedge Derivatives			Total
Balance at June 30, 2023	$	(1,059	)	$	(43,602	)	$	7,248			$	—		$	(37,413	)
Other comprehensive (loss) income before reclassifications		—			(16,321	)		98				—			(16,223	)
Income tax effect of other comprehensive (loss) income before reclassifications		—			(135	)		(21	)			—			(156	)
Amounts reclassified from accumulated other comprehensive loss into net income		5			—			(2,771	)	a		—	a		(2,766	)
Income taxes reclassified into net income		(1	)		—			604				—			603
Net current period other comprehensive income (loss)		4			(16,456	)		(2,090	)			—			(18,542	)
Balance at September 30, 2023	$	(1,055	)	$	(60,058	)	$	5,158			$	—		$	(55,955	)

(a)

The amounts reclassified from Accumulated other comprehensive loss were included in Cost of sales.


	Defined Benefit Pension Plans			Foreign Currency Translation Adjustments			Foreign Currency Hedge Derivatives				Commodity Hedge Derivatives			Total
Balance at June 30, 2022	$	(2,837	)	$	(66,182	)	$	371			$	—		$	(68,648	)
Other comprehensive (loss) income before reclassifications		—			(28,411	)		1,948				—			(26,463	)
Income tax effect of other comprehensive (loss) income before reclassifications		—			(271	)		(423	)			—			(694	)
Amounts reclassified from accumulated other comprehensive loss into net income		6			—			(321	)	a		—	a		(315	)
Income taxes reclassified into net income		—			—			69				—			69
Net current period other comprehensive income (loss)		6			(28,682	)		1,273				—			(27,403	)
Balance at September 30, 2022	$	(2,831	)	$	(94,864	)	$	1,644			$	—		$	(96,051	)

(a)

The amounts reclassified from ~~accumulated~~Accumulated other comprehensive loss were included in ~~cost~~Cost of sales.

Defined
Benefit
Pension
Plans

Foreign
Currency
Translation
Adjustments

Foreign
Currency
Hedge
Derivatives

Commodity Hedge
Derivatives

Total

Balance at June 30, 2021

$
(3,451
)

$
(21,261
)

$
536

$
—

$
(24,176
)
Other comprehensive loss before reclassifications

—

(7,267
)

(158
)

(42
)

(7,467
)
Income tax effect of other comprehensive loss before reclassifications

—

(165
)

35

9

(121
)
Amounts reclassified from accumulated other comprehensive loss into net income

—

—

(448
)
a

(2
)
a

(450
)
Income taxes reclassified into net income

—

—

97

—

97

Net current period other comprehensive loss

—

(7,432
)

(474
)

(35
)

(7,941
)
Balance at September 30, 2021

$
(3,451
)

$
(28,693
)

$
62

$
(35
)

$
(32,117
)


	Defined Benefit Pension Plans			Foreign Currency Translation Adjustments			Foreign Currency Hedge Derivatives				Commodity Hedge Derivatives			Total
Balance at December 31, 2022	$	(1,067	)	$	(48,269	)	$	2,847			$	—		$	(46,489	)
Other comprehensive (loss) income before reclassifications		—			(11,741	)		8,729				—			(3,012	)
Income tax effect of other comprehensive (loss) income before reclassifications		—			(48	)		(1,901	)			—			(1,949	)
Amounts reclassified from accumulated other comprehensive loss into net income		17			—			(5,814	)	a		—	a		(5,797	)
Income taxes reclassified into net income		(5	)		—			1,297				—			1,292
Net current period other comprehensive income (loss)		12			(11,789	)		2,311				—			(9,466	)
Balance at September 30, 2023	$	(1,055	)	$	(60,058	)	$	5,158			$	—		$	(55,955	)

(a)

The amounts reclassified from ~~accumulated~~Accumulated other comprehensive loss were included in ~~cost~~Cost of sales.


	Defined Benefit Pension Plans			Foreign Currency Translation Adjustments			Foreign Currency Hedge Derivatives				Commodity Hedge Derivatives				Total
Balance at December 31, 2021	$	(2,893	)	$	(34,188	)	$	154			$	5			$	(36,922	)
Other comprehensive (loss) income before reclassifications		—			(60,023	)		2,728				13				(57,282	)
Income tax effect of other comprehensive (loss) income before reclassifications		—			(653	)		(606	)			(3	)			(1,262	)
Amounts reclassified from accumulated other comprehensive loss into net income		76			—			(807	)	a		(19	)	a		(750	)
Income taxes reclassified into net income		(14	)		—			175				4				165
Net current period other comprehensive income (loss)		62			(60,676	)		1,490				(5	)			(59,129	)
Balance at September 30, 2022	$	(2,831	)	$	(94,864	)	$	1,644			$	—			$	(96,051	)

(a)

The amounts reclassified from ~~accumulated~~Accumulated other comprehensive loss were included in ~~cost of sales.~~

Defined
Benefit
Pension
Plans

Foreign
Currency
Translation
Adjustments

Foreign
Currency
Hedge
Derivatives

Commodity Hedge
Derivatives

Total

Balance at December 31, 2020

$
(3,451
)

$
(12,637
)

$
1,106

$
—

$
(14,982
)
Other comprehensive (loss) income before reclassifications

—

(15,608
)

120

(42
)

(15,530
)
Income tax effect of other comprehensive (loss) income before reclassifications

—

(448
)

(26
)

9

(465
)
Amounts reclassified from accumulated other comprehensive loss into net income

—

—

(1,455
)
a

(2
)
a

(1,457
)
Income taxes reclassified into net income

—

—

317

—

317

Net current period other comprehensive loss

—

(16,056
)

(1,044
)

(35
)

(17,135
)
Balance at September 30, 2021

$
(3,451
)

$
(28,693
)

$
62

$
(35
)

$
(32,117
)

~~(a)~~

~~The amounts reclassified from accumulated other comprehensive loss were included in cost~~Cost of sales.

The Company expects that substantially all of the existing gains and losses related to foreign currency derivatives reported in Accumulated other comprehensive loss as of September 30, ~~2022~~2023 to be reclassified into earnings during the next twelve months. See Note 109 for additional information about derivative financial instruments and the effects from reclassification to ~~net~~Net income.

Note 1514 – Segment Reporting

Segment information is used by management for making ~~strategic~~ operating decisions for the Company. Management evaluates the performance of the Company’s segments based primarily on operating income or loss.

The Company’s reportable segments are as follows:

•

Automotive – this segment represents the design, development, manufacturing and sales of automotive climate comfort systems, automotive cable systems, lumbar and massage comfort solutions, valve ~~system technologies,~~systems, battery performance solutions, and automotive electronic and software systems.

•

Medical – this segment represents the results from our patient temperature management business within the medical industry.

The Corporate category includes unallocated costs related to our corporate headquarter activities, including selling, general and administrative costs and acquisition transaction costs, which do not meet the requirements for being classified as an operating segment.

The tables below present segment information about the reported ~~product~~Product revenues, ~~depreciation~~Depreciation and amortization and ~~operating~~Operating income (loss) of the Company for the three and nine months ended September 30, ~~2022~~2023 and ~~2021.~~2022.

Three Months Ended September 30,

Automotive

Medical

Corporate

Total

2022

Product revenues

$
322,555

$
10,407

$
—

$
332,962

Depreciation and amortization

10,499

1,035

302

$
11,836

Operating income (loss)

43,067

(2,232
)

(18,014
)

$
22,821

2021

Product revenues

$
233,028

$
10,356

$
—

$
243,384

Depreciation and amortization

8,977

654

228

$
9,859

Operating income (loss)

33,129

(974
)

(11,451
)

$
20,704


Nine Months Ended September 30,	Automotive		Medical			Corporate			Total
Three Months Ended September 30,											Automotive		Medical			Corporate			Total
2023
Product revenues											$	354,782	$	11,413		$	—		$	366,195
Depreciation and amortization												11,399		882			173		$	12,454
Operating income (loss)												41,690		(805	)		(17,144	)	$	23,741
2022
Product revenues	$	829,570	$	31,764		$	—		$	861,334	$	322,555	$	10,407		$	—		$	332,962
Depreciation and amortization		27,333		2,224			913		$	30,470		10,499		1,035			302		$	11,836
Operating income (loss)		98,367		(3,264	)		(50,356	)	$	44,747		43,067		(2,232	)		(18,014	)	$	22,821
2021

Nine Months Ended September 30,											Automotive		Medical			Corporate			Total
2023
Product revenues	$	767,503	$	30,421		$	—		$	797,924	$	1,069,007	$	33,136		$	—		$	1,102,143
Depreciation and amortization		26,923		1,818			689		$	29,430		34,910		2,756			865		$	38,531
Operating income (loss)		129,788		(1,392	)		(35,271	)	$	93,125		126,630		(21,838	)		(59,056	)	$	45,736
2022
Product revenues											$	829,570	$	31,764		$	—		$	861,334
Depreciation and amortization												27,333		2,224			913		$	30,470
Operating income (loss)												98,367		(3,264	)		(50,356	)	$	44,747

Automotive and Medical segment ~~product~~Product revenues by product category for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021		2023		2022		2023		2022
Climate Control Seat	$	112,059	$	89,991	$	311,281	$	297,393	$	124,905	$	112,059	$	360,868	$	311,281
Seat Heaters		75,568		61,516		210,367		208,101		77,238		75,568		231,132		210,367
Steering Wheel Heaters		31,482		24,578		89,169		80,139		39,861		31,482		115,166		89,169
Lumbar and Massage Comfort Solutions (a)										33,260		22,740		109,602		22,740
Valve Systems (a)										27,830		18,542		82,516		18,542
Automotive Cables		18,338		19,465		59,662		66,686		19,668		18,338		60,131		59,662
Battery Performance Solutions		20,331		16,928		55,395		52,265		17,242		20,331		57,138		55,395
Electronics		12,083		11,567		33,190		41,324		10,163		12,083		30,456		33,190
Lumbar and Massage Comfort Solutions (a)		22,740		—		22,740		—
Valve System Technologies (a)		18,542		—		18,542		—
Other Automotive		11,412		8,983		29,224		21,595		4,615		11,412		21,998		29,224
Subtotal Automotive segment		322,555		233,028		829,570		767,503		354,782		322,555		1,069,007		829,570
Medical segment ~~(a)~~(b)		10,407		10,356		31,764		30,421		11,413		10,407		33,136		31,764
Total Company	$	332,962	$	243,384	$	861,334	$	797,924	$	366,195	$	332,962	$	1,102,143	$	861,334

(a)

~~Includes product~~Represents Product revenues from ~~acquisitions since their respective acquisition dates~~Alfmeier (acquired on August 1, 2022) - (see Note ~~3).~~
2)

(b)

Includes Product revenues of $1,988 and $4,939 for the three and nine months ended September 30, 2023, respectively, and $1,234 for the three and nine months ended September 30, 2022 from Dacheng (acquired on July 13, 2022) - (see Note 2)

Total ~~product~~Product revenues information by geographic area for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 is as follows (based on shipment destination):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021		2023		2022		2023		2022
United States	$	131,021	$	96,683	$	337,759	$	314,144	$	134,588	$	131,021	$	414,359	$	337,759
China		57,439		32,198		127,183		99,570		61,004		57,439		161,530		127,183
South Korea		22,751		20,894		67,632		71,050		27,369		22,751		86,102		67,632
Germany		19,454		16,011		54,805		51,541		24,456		19,454		77,007		54,805
Czech Republic										16,684		13,247		51,706		35,630
Japan		17,603		17,054		42,305		52,607		16,906		17,603		44,995		42,305
Romania		11,592		10,850		35,866		40,801		13,828		11,592		39,797		35,866
Czech Republic		13,247		7,650		35,630		33,460
Slovakia										10,946		8,109		35,254		25,755
Mexico										15,251		7,062		34,701		16,171
Finland		9,757		7,866		26,244		21,780		8,286		9,757		29,558		26,244
Slovakia		8,109		6,294		25,755		23,655
Canada		5,093		4,704		17,047		14,403
Other		36,896		23,180		91,108		74,913		36,877		34,927		127,134		91,984
Total Non-U.S.		201,941		146,701		523,575		483,780		231,607		201,941		687,784		523,575
Total Company	$	332,962	$	243,384	$	861,334	$	797,924	$	366,195	$	332,962	$	1,102,143	$	861,334

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our goals, beliefs, plans and expectations about our prospects for the future and other future events, such asas: the expected light vehicle production in the Company’s key markets; the integration of acquisitions; the impact of macroeconomic and geopolitical conditions; the ~~COVID-19 pandemic on our financial statements, liquidity, and business as well as the global economy, global supply chain and automotive and medical industries, the~~potential impact of ~~sustained price increases for various material~~ongoing and future labor strikes among certain original equipment manufacturers (“OEMs”) and suppliers; the components of and ~~shipping costs, the impact of the conflict in Ukraine on~~ our ~~operations, the expected synergies~~ability to execute our updated strategic plan; long-term consumer and ~~growth prospects following the closing of recent acquisitions, the significant supply disruptions and shifts~~technological trends in the ~~labor market currently faced by the automotive and medical industries, our ability~~Automotive industry and our ~~customers’ ability to maintain production levels,~~related market opportunity for our existing and new products and technologies; the ~~amount of borrowing availability under the Second Amended and Restated Credit Agreement and~~competitive landscape; the sufficiency of our cash balances and cash generated from operating, investing and financing activities for our future liquidity and capital resource ~~needs~~needs; and our ability to finance sufficient working capital. Reference is made in particular to forward-looking statements included in this “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Such statements may be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “believe”, “estimate”, “anticipate”, “intend”, “continue”, or similar terms, variations of such terms or the negative of such terms. The forward-looking statements included in this Report are made as of the date hereof or as of the date specified herein and are based on management’s ~~current~~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. Such statements are subject to a number of assumptions, risks, uncertainties and other factors, which are set forth in “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, ~~2021, as amended by Part II “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the three months ended March 31,~~ 2022 and subsequent reports filed with or furnished to the Securities and Exchange Commission, and which could cause actual results to differ materially from that described in the forward-looking statements. In addition, ~~except for the recently consummated~~with reasonable frequency, we have entered into business combinations, acquisitions, ~~such~~divestitures, strategic investments and other significant transactions. Such forward-looking statements do not include the potential impact of any ~~other business combinations, acquisitions, divestitures, strategic investments and other significant~~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, we expressly disclaim any obligation or undertaking to update any forward-looking statements to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by, our consolidated condensed financial statements and related notes thereto included elsewhere in this Report and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Gentherm Incorporated is the global market leader of innovative thermal management and pneumatic comfort technologies for the automotive ~~industry.~~and medical industries. 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,~~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. Our automotive products can be found on vehicles manufactured by nearly all the major OEMs operating in North America and Europe, and several major OEMs in Asia. We operate in locations aligned with our major customers’ product strategies to provide locally enhanced design, integration and production capabilities. Medical products include patient temperature management systems. Our medical products can be found in hospitals throughout the world, primarily in the U.S., China, Germany and Brazil. The Company is also developing a number of new technologies and products that ~~are expected to~~will help enable improvements to existing products, improve health, wellness and patient outcomes and will lead to ~~create~~ new product applications for existing and new and adjacent markets.

Our Automotive sales are driven by the number of vehicles produced by the OEMs, which is ultimately dependent on consumer demand for automotive vehicles, our product content per vehicle, and other factors that may limit or otherwise impact production by us, our supply chain and our customers. Historically, new vehicle demand and product content (i.e. vehicle features) have been driven by ~~macro-economic~~macroeconomic and other factors, such as interest rates, automotive manufacturer and dealer sales incentives, fuel prices, consumer confidence, employment levels, income growth trends and government and tax incentives. Vehicle content has also been driven by trends in consumer preferences, such as preferences for smart devices and features, personalized user experience, and comfort, health and wellness. Economic volatility or weakness ~~as well as geopolitical factors,~~ in North America, Europe or Asia, as well as global geopolitical factors, have had and could result in a significant reduction in automotive sales and production by our customers, which have had and would have an adverse effect on our business, results of operations and financial condition. In 2020 and 2021, and continuing into 2022, the automotive industry has experienced fluctuating demand and production disruptions related to supply chain challenges, facility closures, labor shortages, work stoppages and inflationary pressures, as described below. We believe our diversified OEM customer base and geographic revenue base, along with our flexible cost structure, have well positioned us to withstand the impact of industry downturns

and benefit from industry upturns in the ordinary course. However, shifts in the mix of global automotive production to higher cost regions or to vehicles ~~with~~that contain less of our product content as well as continuing production challenges and inflationary pressures could adversely impact our profitability. In addition, we may be adversely impacted by volatility ~~weakness~~ or ~~accelerated growth~~weakness in markets for hybrid or electric vehicles specifically. We believe our products offer certain advantages for hybrid and electric vehicles, including improved energy efficiency, and position us well to withstand changes in the volume mix between vehicles driven by internal combustion engines and hybrid and other electric vehicles. We ~~also~~believe our industry is increasingly progressing towards a focus on human comfort and health, which is evidenced by increasing adoption rates for comfort products. We believe that products we are developing, such as ClimateSense® and our acquisition of Alfmeier’s pneumatic comfort solutions, position us well to address trends in consumer preferences such as personalized user experience, comfort, health and wellness.

~~The COVID-19 pandemic that began around December 2019 introduced significant volatility to~~Since 2020, the global economy ~~disrupted~~has experienced significant volatility and supply ~~chains and~~chain disruption, which has had a widespread adverse effect on the global automotive ~~industry in the first half of 2020, with various direct and indirect adverse impacts continuing throughout 2021 and into 2022.~~

Beginning in February 2020 and continuing into June 2020, substantially all of the Company’s major OEM and Tier 1 customers temporarily ceased or significantly reduced production as a result of restrictions that were requested or mandated by governmental authorities. As a result, substantially all of our manufacturing facilities either temporarily suspended production or experienced significant reductions in volumes during this period. By the end of the second quarter of 2020, the Company had reopened all of its manufacturing facilities, in line with industry demand, and in accordance with local government requirements. Although global automotive industry production has improved relative to the first half of 2020, production remains below recent historic levels.

The lingering impacts of COVID-19 throughout 2021 and into 2022 have impeded global supply chains, resulted in longer lead times and delays in procuring component parts and raw materials, and resulted in inflationary cost increases in certain raw materials, labor and transportation.industry. These broad-based inflationary impacts have negatively impacted the Company’s financial condition, results of operations and cash flows throughout 2021 and into 2022. We expect these inflationary impacts to continue for the foreseeable future.

~~Supply shortages of semiconductor chips and other components~~macroeconomic conditions have resulted in ~~decreases~~fluctuating demand and production disruptions, facility closures, labor shortages and work stoppages. In addition, global inflation has increased significantly beginning in ~~global automotive vehicle production~~2021. Rising costs of materials, labor, equipment and ~~significant volatility~~other inputs used to manufacture and sell our products, including freight and logistics costs, have impacted, and may in ~~customer vehicle production schedules. The Company's semiconductor suppliers, along with most automotive component supply companies that use semiconductors, including Gentherm,~~the future impact, operating costs and operating results. We continue to employ measures to mitigate the impact of cost increases through identification of sourcing and manufacturing efficiencies where possible. However, we have been unable to fully ~~meet~~mitigate or pass through the ~~vehicle production demands of the OEMs due to events~~increases in our operating costs, which are outside the Company's control, including but not limited to, the COVID-19 pandemic, the global semiconductor shortage, fires at suppliers’ facilities, significant weather events impacting semiconductor supplier facilitiesmay continue in the ~~southern United States,~~future.

The direct and indirect impacts on our markets, operations, and financial performance remain unpredictable. As a result of this continued uncertainty, there may still be impacts on our industry, operations, workforce, supply chains, distribution systems, and demand for our products in the future which cannot be reasonably estimated at this time.

Beginning in the third quarter of 2023 and continuing into the fourth quarter, several North American OEMs have experienced union-led labor strikes at certain of their facilities. As the automotive industry relies heavily on “just-in-time” delivery of components, these strikes have led to labor shortages, work stoppages and other ~~extraordinary events. The Company was able~~related disruptions, which have limited and continue to ~~mitigate~~limit purchases of our products. During the ~~impacts~~three and nine months ended September 30, 2023, we experienced an insignificant impact on product revenues resulting from the labor strikes. We estimate that if the current strike actions known as of ~~supply chain disruptions~~October 25, 2023, were to continue to be idled through the end of November, it would result in ~~order~~approximately $15 million to ~~satisfy customer orders during the first three quarters~~$20 million of ~~2021; however, during~~revenue loss for Gentherm in the fourth quarter of ~~2021~~2023. On October 25, 2023, it was announced that a tentative agreement was reached between union leaders and ~~continuing into 2022 we~~Ford. Ford represents approximately 25-30% of the impact of the estimated Gentherm revenue loss in the fourth quarter. If the labor strikes are prolonged or expanded, they would have ~~experienced and may continue to experience direct~~further adverse impacts of ongoing shortages of semiconductors. Our ability to meet customer orders without significant delay and/or expense for the remainder of 2022 and beyond remains subject to significant uncertainty.

In response to the global supply chain instability and inflationary cost increases the Company has taken several actions to minimize any potential and actual adverse impacts by working closely with its suppliers and customers to closely monitor the availability of semiconductor microchips and other component parts and raw materials, customer vehicle production schedules and any other supply chain inefficiencies that may arise. We expect global supply chain instability will continue to have an adverse impacteffects on our business and financial ~~performance for~~results, and may result in the ~~foreseeable future, and such adverse impact may be material. The consequences~~temporary shutdown of the pandemic, global supply chain instability and inflationary cost increases and their adverse impact to the global economy continue to evolve. Accordingly, the significance of the future adverse impact on our business and financial statements remains subject to significant uncertainty as of the date of this filing.

In addition to the direct and indirect impacts of COVID-19, the United States and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the military conflict between Russia and Ukraine. In February 2022, Russia launched a full-scale military invasion of Ukraine. As a result of the conflict, the United States, United Kingdom, European Union and other countries have levied economic sanctions and bans on Russia and Russia has responded with its own retaliatory measures. These measures have impacted the price of certain raw materials and energy and could have a lasting impact on regional and global economies.

Our facility in Vynohradiv is on the far western corner of Ukraine near the Hungary border. In 2021, products manufactured at our Ukraine facility represented approximately 11% of the Company’s total revenue, including automotive cables, seat heaters and steering wheel heaters. At this time, our Ukraine facility is operating and we are in process of executing contingency plans and, in coordination with certain customers, specific equipment andrelated Gentherm production relocations leveraging our flexible global manufacturing footprint. Our response to the escalating situation is based on a severity level contingency response plan that has been developed with certain customers. As the situation in Ukraine is very fluid, we continue to monitor its effects on our business and we continue to work closely with our customers to adjust our contingency response as necessary.

On ~~July 29,~~December 15, 2022, the ~~Company transferred consideration to acquire 100%~~European Union (“EU”) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development Pillar Two Framework. The effective dates for different aspects of the ~~equity interests~~directive are January 1, 2024, and January 1, 2025. The Company will continue to evaluate the potential impact on future periods of ~~Alfmeier Präzision SE (“Alfmeier”)~~these tax regulations.

During the first half of 2023, we launched Fit-for-Growth 2.0 to execute our long-term strategy that includes a ~~global leader in automotive lumbar~~profitability improvement initiative with a plan to achieve high teens Adjusted EBITDA margin rate by 2026. Fit-for-Growth 2.0 is expected to deliver cost reductions through manufacturing productivity, manufacturing footprint optimization, value engineering, sourcing excellence and massage comfort solutions and a leading provider of advanced valve systems technology, integrated electronics and software. The acquisition further expands the Company's current value proposition beyond thermal in comfort, health, wellness, and energy efficiency and aligns well with global consumer demand for expanded offerings in vehicle passenger comfort. The total consideration for this acquisition was $164.9 million. On the closing date, the Company made cash payments of approximately $188.9 million, net of cash acquired. We expect to receive cashcost synergies from the ~~seller~~Alfmeier acquisition. Additionally, the program is intended to drive operating expense efficiency to leverage scale as we continue our growth path towards our target of $24.1 million (“Purchase Consideration Receivable”) in connection with the finalization and settlement of post-closing adjustments in accordance with the purchase agreement. Substantially all of the adjustments known as of this filing relate to lower cash on hand as of the closing date than estimated and a pre-closing reorganization transaction. We expect additional adjustments for actual working capital, cash and cash-like items and debt and debt-like items as of the closing date. All post-closing adjustments are expected to be finalized within 120 days of the closing date, provided there are no disputes. Potential disputes shall be resolved in accordance with the purchase agreement. The Purchase Consideration Receivable is recorded in Other current assets in the consolidated condensed balance sheets as of September 30, 2022.over $2 billion dollars by 2026.

On July 13, 2022, the Company completed the acquisition of Jiangmen Dacheng Medical Equipment Co. Ltd (“Dacheng”) and its wholly owned subsidiary, IOB Medical, Inc. ~~(“IOB”).~~ Dacheng is a ~~privately held~~ manufacturer of medical materials and medical equipment, including patient temperature management solutions, for numerous local and international customers. The acquisition ~~provides~~provided Gentherm

Medical a local presence in China’s high-growth market for patient warming devices and other medical device products, ~~while also expanding~~and expanded overall manufacturing capacity to include a low-cost manufacturing site. The total consideration transferred was $35.0 million.

On August 1, 2022, the Company acquired 100% of the equity interests of Alfmeier Präzision SE (“Alfmeier”), a global leader in automotive lumbar and massage comfort solutions and a leading provider of advanced valve systems, integrated electronics and software. The acquisition further expanded the Company's value proposition beyond thermal in comfort, health, wellness, and energy efficiency and aligned well with global consumer demand for expanded offerings in vehicle passenger comfort. The total consideration for this acquisition was $35.0 million, which is comprised of cash payments, net of cash acquired. The purchase agreement also includes future cash payments of up to $3.0 million, contingent upon the achievement of certain performance metrics and continued employment of the former majority shareholder through a series of defined dates. These contingent payments will be accounted for as compensation expense and will be recorded as a component of selling, general and administrative.$170.7 million.

See Note 3,2, “Acquisitions” ofto the consolidated condensed financial statements included in this Report for additional information.

On December 31, 2022, the Company approved a plan to exit its non-automotive electronics business to strengthen the Company’s core business and focus its resources and equipment with businesses and investments that are more strategic and profitable. The Company will continue to sell certain non-automotive electronics products until the exit is complete. During the year ended December 31, 2022, the Company recorded non-cash impairment charges of $9.4 million, $5.6 million and $0.7 million for write downs of inventory, intangible assets and property and equipment, respectively, within the Automotive segment.

During the three and nine months ended September 30, 2023, the Company recorded non-cash impairment charges of $3.4 million and $5.5 million for the write down of inventory within the Automotive segment. This charge is recorded in Cost of sales.

The Company is no longer pursuing a sale of the business and intends to wind-down the operations of the business by the end of 2023, subject to discussions with customers and suppliers.

As of December 31, 2022, the estimated fair value of the Medical reporting unit exceeded its carrying value by less than 10%. During the second quarter of 2023, the Company’s Medical reporting unit did not perform in-line with forecasted results primarily driven by slower than anticipated revenue growth. As a result, an indicator of impairment was identified and the Company performed an interim quantitative assessment as of June 30, 2023. The results of this quantitative analysis indicated the carrying value of the reporting unit exceeded the fair value, and accordingly an impairment expense was recorded for $19.5 million.

The primary factors leading to the decline in value from the analysis performed at December 31, 2022 were a reduction in expected future cash flows, due to the Company re-evaluating our forecasted results and an increase in the discount rate which is based on the Medical reporting unit’s weighted average cost of capital. The decline in expected future cash flows resulted primarily from a reduction of forecasted revenue growth rates. If the Company’s revised expectation of revenue growth is not achieved or if the estimated growth rates are reduced because of new information or experience, the fair value of the Medical reporting unit could decrease, which could result in further impairment of goodwill.

On September 19, 2023, the Company committed to a restructuring plan (“2023 Plan”) to improve the Company’s manufacturing productivity and rationalize its footprint. Under this 2023 Plan, the Company will relocate certain existing manufacturing and related activities in its Greenville, South Carolina facility to a new facility in Monterrey, Mexico.

The Company expects to incur total costs of between $14 million and $18 million, of which between $13 million and $17 million are expected to be cash expenditures. The actions under the Plan are expected to be substantially completed by the end of 2025 and generate annual benefits of between $5 million and $6 million. The actual timing, costs and savings of the Plan may differ materially from the Company’s current expectations and estimates.

See Note 3, “Restructuring and Impairments” to the consolidated condensed financial statements included in this Report for additional information.

Our sales are driven by the number of vehicles produced by the automotive manufacturers, which is ultimately dependent on consumer demand for automotive vehicles, and our content per vehicle, and other factors that may limit or otherwise impact

production by us, our supply chain and our customers. According to the forecasting firm S&P Global Mobility (October ~~2022~~2023 release), ~~actual~~global light vehicle production in the three and nine months ended September 30, ~~2022~~2023 in the Company’s key markets of North America, Europe, China, Japan and Korea, as compared to the three and nine months ended September 30, ~~2021,~~2022, are shown below (in millions of units):

The S&P Global Mobility (October ~~2022~~2023 release) forecasted light vehicle production volume in the Company’s key markets for full year ~~2022~~2023 to increase to ~~67.6~~73.5 million units, ~~a 4.5%~~an 8.6% increase from full year ~~2021~~2022 light vehicle production volumes. Forecasted light vehicle production volumes are a component of the data we use in forecasting future business. However, these forecasts generally are updated monthly, and future forecasts may be significantly different from period to period due to changes in macroeconomic and geopolitical conditions or matters specific to the automotive ~~industry, such as the fluctuations that occurred in 2020 and remain ongoing due to the direct and indirect impacts of the COVID-19 pandemic.~~industry. Further, due to differences in regional product mix at our manufacturing facilities, as well as material production schedules from our customers for our products on specific vehicle programs, our future forecasted results do not directly correlate with the global and/or regional light vehicle production forecasts of S&P Global Mobility or other third-party sources.

We believe that innovation is an important element to gaining market acceptance of our products and strengthening our market position. During the third quarter of ~~2022,~~2023, we secured new automotive business awards totaling ~~$430~~$520 million, inbringing the ~~quarter.~~year-to-date total as of September 30, 2023 to $1.7 billion. Also, through the date of this filing we have reached a year-to-date total of $2 billion. Automotive new business awards represent the aggregate projected lifetime revenue of new awards provided by our customers to Gentherm in the applicable period, with the value based on the price and volume projections received from each customer as of the award date. Although automotive new business awards are not firm customer orders, we believe that new business awards are an indicator of future revenue. New business awards are not projections of revenue or future business as of September 30, ~~2022,~~2023, the date of this Report or any other date. Customer projections regularly change over time and we do not update our calculation of any new business award after the date initially communicated. Automotive new business awards in the third quarter ~~2022~~2023 also do not reflect, in particular, the impact of macroeconomic and geopolitical challenges or the ~~COVID-19 pandemic and related macroeconomic challenges~~labor strikes on future business. Revenues resulting from automotive new business awards also are subject to additional risks and uncertainties that are included in this Report or incorporated by reference in “Forward-Looking Statements” above.

OnIn December ~~11,~~ 2020, the Board of Directors authorized a ~~new~~ stock repurchase program (the “2020 Stock Repurchase Program”) ~~to commence upon expiration of the prior stock repurchase program on December 15, 2020.~~. Under the 2020 Stock Repurchase Program, the Company is authorized to repurchase up to $150.0 million of its issued and outstanding Common Stock over a three-year period, expiring December 15, 2023. Repurchases under the 2020 Stock Repurchase Program may be made, from time to time, in amounts and at prices the Company deems appropriate, subject to market conditions, applicable legal requirements, debt covenants and other considerations. During the three and nine months ended September 30, ~~2022, we did not make any repurchases~~2023, the Company repurchased $11.1 million and $31.1 million, respectively, of shares under the 2020 Stock Repurchase Program with an average price paid per share of $56.91 and ~~have a remaining~~$58.54, respectively. The 2020 Stock Repurchase Program had $98.9 million repurchase authorization ~~of $130.0 million~~remaining as of September 30, ~~2022.~~2023.

The Company has two reportable segments for financial reporting purposes: Automotive and Medical.

See Note ~~15,~~14, “Segment Reporting”, to the consolidated condensed financial statements included in this Report for a description of our reportable segments as well as their proportional contribution to the Company’s reported product revenues and operating ~~income (loss).~~income. The financial information used by our chief operating decision maker to assess operating performance and allocate resources is based on these reportable segments.

The results of operations for the three and nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, in thousands, were as follows:


	Three Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended September 30,									Nine Months Ended September 30,
	2022			2021			Favorable / (Unfavorable)			2022			2021			Favorable / (Unfavorable)			2023			2022			Favorable / (Unfavorable)			2023			2022			Favorable / (Unfavorable)
Product revenues	$	332,962		$	243,384		$	89,578		$	861,334		$	797,924		$	63,410		$	366,195		$	332,962		$	33,233		$	1,102,143		$	861,334		$	240,809
Cost of sales		252,610			173,997			(78,613	)		657,492			561,655			(95,837	)		279,985			252,610			(27,375	)		846,815			657,492			(189,323	)
Gross margin		80,352			69,387			10,965			203,842			236,269			(32,427	)		86,210			80,352			5,858			255,328			203,842			51,486
Operating expenses:
Net research and development expenses		22,666			20,590			(2,076	)		62,425			56,420			(6,005	)		23,150			22,666			(484	)		72,991			62,425			(10,566	)
Selling, general and administrative expenses		34,859			27,344			(7,515	)		96,109			83,093			(13,016	)		38,220			34,859			(3,361	)		113,680			96,109			(17,571	)
Impairment of goodwill																				—			—			—			19,509			—			(19,509	)
Restructuring expenses		6			749			743			561			3,631			3,070			1,099			6			(1,093	)		3,412			561			(2,851	)
Total operating expenses		57,531			48,683			(8,848	)		159,095			143,144			(15,951	)		62,469			57,531			(4,938	)		209,592			159,095			(50,497	)
Operating income		22,821			20,704			2,117			44,747			93,125			(48,378	)		23,741			22,821			920			45,736			44,747			989
Interest income (expense), net		714			(515	)		1,229			(1,285	)		(2,184	)		899
Foreign currency (loss) gain		(8,285	)		133			(8,418	)		(1,516	)		391			(1,907	)
Interest (expense) income, net																				(3,368	)		714			(4,082	)		(9,444	)		(1,285	)		(8,159	)
Foreign currency gain (loss)																				2,107			(8,285	)		10,392			384			(1,516	)		1,900
Other income		361			10			351			698			13			685			272			361			(89	)		1,058			698			360
Earnings before income tax		15,611			20,332			(4,721	)		42,644			91,345			(48,701	)		22,752			15,611			7,141			37,734			42,644			(4,910	)
Income tax expense		5,784			4,646			(1,138	)		13,998			17,959			3,961			6,908			5,784			(1,124	)		15,478			13,998			(1,480	)
Net income	$	9,827		$	15,686		$	(5,859	)	$	28,646		$	73,386		$	(44,740	)	$	15,844		$	9,827		$	6,017		$	22,256		$	28,646		$	(6,390	)

Product revenues by product category, in thousands, for the three and nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, were as follows:

Below is a summary of our product revenues, in thousands, for the three months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

Product revenues for the three months ended September 30, ~~2022~~2023 increased ~~36.8%~~10.0% as compared to the three months ended September 30, ~~2021.~~2022. The increase in product revenues is ~~related~~due to ~~increased~~favorable volumes in ~~our~~several product lines within the Automotive segment, favorable foreign currency impacts primarily attributable to the Euro and the Korean Won, and the inclusion of sales from Alfmeier and Dacheng since the ~~acquisitions. These increases were~~acquisitions, partially offset by unfavorable pricing, other, and unfavorable foreign currency impacts primarily ~~related~~attributable to the ~~Euro,~~ Chinese Renminbi and Korean Won. The decrease in product revenues included in Variance Due To Pricing/Other is primarily attributable to decreases in customer pricing in our Automotive segment and a decrease in product revenues in our legacy Medical business. Automotive customer pricing was impacted by negotiated lower annual price reductions and cost recoveries from customers.Renminbi.

Below is a summary of our product revenues, in thousands, for the nine months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

Product revenues for the nine months ended September 30, ~~2022~~2023 increased ~~7.9%~~28.0% as compared to the nine months ended September 30, ~~2021.~~2022. The increase in product revenues is ~~primarily related~~due to ~~increased~~favorable volumes in ~~our~~several product lines within the Automotive segment, favorable foreign currency impacts primarily attributable to the Euro, and the inclusion of sales from Alfmeier and Dacheng since the ~~acquisitions. These increases were~~acquisitions, partially offset by lower cost recoveries from customers and unfavorable foreign currency impacts primarily ~~related~~attributable to the ~~Euro,~~ Chinese Renminbi, the Korean Won, and ~~Korean Won. Automotive customer pricing was flat as a result of negotiated lower annual price reductions and cost recoveries from customers.~~the Japanese Yen.

Below is a summary of our cost of sales and gross margin, in thousands, for the three months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

Cost of sales for the three months ended September 30, ~~2022~~2023 increased ~~45.2%~~10.8% as compared to the three months ended September 30, ~~2021.~~2022. The increase in cost of sales is primarily due to increased volumes in our Automotive segment, ~~the inclusion of sales from Alfmeier and Dacheng since the acquisitions and~~ inflation associated with wages, ~~higher freight costs~~a non-automotive electronics inventory charge related to the exit of the business, the full inclusion of expenses from the acquired businesses and ~~material costs. These increases were partially offset by favorable~~unfavorable foreign currency impacts primarily attributable to the Euro and the Mexican Peso. These increases were partially offset by lower freight, duties, and material costs, and favorable foreign currency impacts primarily attributable to the Chinese Renminbi.

Below is a summary of our cost of sales and gross margin, in thousands, for the nine months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

Cost of sales for the nine months ended September 30, ~~2022~~2023 increased ~~17.1%~~28.8% as compared to the nine months ended September 30, ~~2021.~~2022. The increase in cost of sales is primarily due to increased volumes in our Automotive segment, ~~the inclusion of sales from Alfmeier and Dacheng since the acquisitions and~~ inflation associated with ~~higher freight costs~~wages and material ~~costs.~~costs, non-automotive electronics inventory charges related to the exit of the business, the full inclusion of expenses from the acquired businesses and unfavorable foreign currency impacts primarily attributable to the Mexican Peso and the Euro. These increases were partially offset by lower freight and duties costs, and favorable foreign currency impacts primarily attributable to the ~~Euro~~Chinese Renminbi and ~~Chinese Renminbi.~~the Ukranian Hryvnia.

Below is a summary of our net research and development expenses, in thousands, for the three months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

Net research and development expenses for the three months ended September 30, ~~2022~~2023 increased ~~10.1%~~2.1% as compared to the three months ended September 30, ~~2021.The~~2022. The increase in net research and development expenses is primarily related to the full inclusion of net expenses from Alfmeier, ~~since the acquisition and increased investments in ClimateSense and battery performance solutions,~~ partially offset by ~~favorable foreign currency impacts.~~higher customer reimbursements, excluding those from Alfmeier.

Below is a summary of our net research and development expenses, in thousands, for the nine months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

Net research and development expenses for the nine months ended September 30, ~~2022~~2023 increased ~~10.6%~~16.9% as compared to the nine months ended September 30, ~~2021.~~2022. The increase in net research and development expenses is primarily related to the full inclusion of net expenses from Alfmeier, ~~since the acquisition and~~ increased investments ~~in ClimateSense~~to support new program wins, and ~~battery performance solutions, partially offset by favorable foreign currency impacts.~~lower customer reimbursements, excluding those from Alfmeier.

Below is a summary of our selling, general and administrative expenses, in thousands, for the three months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

Selling, general and administrative expenses for the three months ended September 30, ~~2022~~2023 increased ~~27.5%~~9.6% as compared to the three months ended September 30, ~~2021.~~2022. The increase in selling, general and administrative expenses is primarily related to the full inclusion of expenses from ~~Alfmeier since the acquisition~~acquired businesses and ~~increases in acquisition related costs, partly~~higher compensation expenses, partially offset by lower ~~incentive compensation.~~acquisition costs.

Below is a summary of our selling, general and administrative expenses, in thousands, for the nine months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

Selling, general and administrative expenses for the nine months ended September 30, ~~2022~~2023 increased ~~15.7%~~18.3% as compared to the nine months ended September 30, ~~2021.~~2022. The increase in selling, general and administrative expenses is primarily related to the full inclusion of expenses from ~~Alfmeier since the acquisition~~acquired businesses and ~~increases in acquisition related costs, partly~~higher compensation expenses, partially offset by lower ~~incentive compensation.~~acquisition costs.

There was no impairment of goodwill for the three months ended September 30, 2023 and 2022.

Below is a summary of our impairment of goodwill, in thousands, for the nine months ended September 30, 2023 and 2022:

Impairment of goodwill for the nine months ended September 30, 2023 related to the recorded Medical reporting unit goodwill impairment.

Restructuring expenses primarily relate to the Manufacturing Footprint Rationalization restructuring program and other discrete restructuring actions focused on the rotation of our manufacturing footprint to lower cost locations and the reduction of global overhead expenses.

Below is a summary of our restructuring expenses, in thousands, for the three months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

During the three months ended September 30, 2023, the Company recognized expenses of $1.1 million for employee separation costs and $0 million for other costs. These restructuring expenses primarily relate to discrete restructuring actions focused on the reduction of global overhead expenses.

During the three months ended September 30, 2022, the Company recognized expenses of less than $0.1 million for other costs.

~~During the three months ended September 30, 2021, the Company recognized expenses of $0.1 million for employee separation costs and $0.6 million of other costs.~~

Below is a summary of our restructuring expenses, in thousands, for the nine months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

During the nine months ended September 30, 2023, the Company recognized expenses of $2.6 million for employee separation costs and $0.8 million for other costs. These restructuring expenses primarily relate to discrete restructuring actions focused on the reduction of global overhead expenses.

During the nine months ended September 30, 2022, the Company recognized expenses of less than $0.1 million for employee separation costs and $0.5 million for other costs.

~~During~~Below is a summary of our interest (expense) income, net, in thousands, for the three months ended September 30, 2023 and 2022:

Interest expense, net for the three months ended September 30, 2023 increased 571.7% as compared to the three months ended September 30, 2022. The increase is primarily related to less benefit from the change in fair value of the interest rate swap derivative and higher interest rates on the revolving credit agreement, partially offset by decreased interest from a lower balance on the revolving credit agreement during the three months ended September 30, 2023.

Below is a summary of our interest expense, net, in thousands, for the nine months ended September 30, ~~2021,~~2023 and 2022:

Interest expense, net for the ~~Company recognized expenses~~nine months ended September 30, 2023 increased 634.9% as compared to the nine months ended September 30, 2022. The increase is primarily related to less benefit from the change in fair value of ~~$2.7 million for employee separation costs~~the interest rate swap derivative and ~~$0.8 million of accelerated depreciation and other costs.~~

higher interest rates on the revolving credit agreement, partially offset by decreased interest from a lower balance on the revolving credit agreement during the nine months ended September 30, 2023. See Note ~~4, “Restructuring” of~~6, "Debt," to the consolidated condensed financial statements included in this Report for additional information.

~~Below is a summary of our interest income (expense), net, in thousands, for the three months ended September 30, 2022 and 2021:~~

Interest income (expense), net for the three months ended September 30, 2022 decreased 238.6% as compared to the three months ended September 30, 2021. The decrease is primarily due to the change in fair value of the interest rate swap derivative during the three months ended September 30, 2022, partially offset by increased interest from a higher balance on our revolving credit agreement during the three months ended September 30, 2022, as compared to the three months ended September 30, 2021.

~~Below is a summary of our interest income (expense), net, in thousands, for the nine months ended September 30, 2022 and 2021:~~

Interest income (expense), net for the nine months ended September 30, 2022 decreased 41.2% as compared to the nine months ended September 30, 2021. The decrease is primarily due to the change in fair value of the interest rate swap derivative during the nine months ended September 30, 2022, partially offset by increased interest from a higher balance on our revolving credit agreement during the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021.

Below is a summary of our foreign currency gain (loss), in thousands, for the three months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

Foreign currency ~~(loss)~~ gain for the three months ended September 30, 2023 included net realized foreign currency gain of $1.2 million and net unrealized foreign currency gain of $0.9 million.

Foreign currency loss for the three months ended September 30, 2022 primarily included net realized foreign currency loss of $3.0 million and net unrealized foreign currency loss of $5.3 million.

Foreign currency (loss) gain for the three months ended September 30, 2021 primarily included net realized foreign currency loss of $0.9 million and net unrealized foreign currency gain of $1.0 million

Below is a summary of our foreign currency gain (loss), in thousands, for the nine months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

Foreign currency ~~(loss)~~ gain for the nine months ended September 30, 2023 included net realized foreign currency gain of $4.6 million and net unrealized foreign currency loss of $4.2 million.

Foreign currency loss for the nine months ended September 30, 2022 primarily included net realized foreign currency loss of $2.6 million and net unrealized foreign currency gain of $1.1 ~~million.~~

~~Foreign currency (loss) gain for the nine months ended September 30, 2021 primarily included net realized foreign currency loss of $0.9 million and net unrealized foreign currency gain of $1.3~~ million.

Below is a summary of our other income, in thousands, for the three months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

Other income for the three months ended September 30, 2023 decreased as compared to the three months ended September 30, 2022. The ~~increase~~decrease in ~~other~~Other income is due to ~~an increase~~a decrease in miscellaneous income.

Below is a summary of our other income, in thousands, for the nine months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

Other income for the nine months ended September 30, 2023 increased as compared to the nine months ended September 30, 2022. The increase in ~~other~~Other income is due to an increase in miscellaneous income.

Below is a summary of our income tax expense, in thousands, for the three months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

Income tax expense was $6.9 million for the three months ended September 30, 2023, on earnings before income tax of $22.8 million, representing an effective tax rate of 30.4%. The effective tax rate differed from the U.S. Federal statutory rate of 21.0% primarily due to the impact of income taxes on foreign earnings taxed at rates varying from the U.S. statutory rate and the unfavorable impact of the global intangible low-tax income (“GILTI”), partially offset by the impact of the release of accruals for uncertain tax positions.

Income tax expense was $5.8 million for the three months ended September 30, 2022 on earnings before income tax of $15.6 million representing an effective tax rate of 37.1%. The effective tax rate differed from the U.S. Federal statutory rate of 21.0% primarily due to the impact of income taxes on foreign earnings taxed at rates varying from the U.S. statutory rate, the unfavorable impact of the ~~global intangible low-tax income (“GILTI”),~~GILTI, and the quarterly accrual for uncertain tax positions, partially offset by the impact of certain favorable tax effects on equity vesting.

Income tax expense was $4.6 million for the three months ended September 30, 2021 on earnings before income tax of $20.3 million representing an effective tax rate of 22.9%. The effective tax rate differed from the U.S. Federal statutory rate of 21.0% primarily due to the unfavorable impact of quarterly accrual for uncertain tax positions, GILTI, withholding taxes and other non-deductible expenses, partially offset by the impact of income taxes on foreign earnings taxed at rates varying from the U.S. statutory rate in the third quarter of 2021.

Below is a summary of our income tax expense, in thousands, for the nine months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

Income tax expense was $15.5 million for the nine months ended September 30, 2023, on earnings before income tax of $37.7 million, representing an effective tax rate of 41.0%. The pre-tax earnings included the effect of an impairment loss of $19.5 million with a tax benefit of $2.5 million. Adjusted for the impairment impacts, the effective rate was 31.0%. The effective tax rate differed from the U.S. Federal statutory rate of 21% primarily due to the impact of income taxes on foreign earnings taxed at rates varying from the U.S. statutory rate and the unfavorable impact of the GILTI, partially offset by the impact of research and development credits in various jurisdictions, certain favorable tax effects of equity vesting and the release of accruals for uncertain tax positions.

Income tax expense was $14.0 million for the nine months ended September 30, 2022 on earnings before income tax of $42.6 million representing an effective tax rate of 32.8%. The effective tax rate differed from the U.S. Federal statutory rate of 21.0% primarily due to the impact of income taxes on foreign earnings taxed at rates varying from the U.S. statutory rate, the unfavorable impact of GILTI, and the quarterly accrual for uncertain tax positions, partially offset by the impact of certain favorable tax effects of equity vesting.

Income tax expense was $18.0 million for the nine months ended September 30, 2021 on earnings before income tax of $91.3 million representing an effective tax rate of 19.7%. The effective tax rate differed from the U.S. Federal statutory rate of 21.0% primarily due to certain favorable tax effect on equity vesting, intercompany transactions in 2021 and the impact of income taxes on foreign earnings taxed at rates varying from the U.S. statutory rate, partially offset by the unfavorable impact of uncertain tax positions, GILTI, withholding taxes and other non-deductible expenses.34

Our primary sources of liquidity and capital resources are cash flows from operations and borrowings available under our Second Amended and Restated Credit Agreement. Our cash requirements consist principally of working capital, capital expenditures, research and development, operating lease payments, income tax payments and general corporate purposes. We generally reinvest available cash flows from operations into our business, while opportunistically utilizing our authorized stock repurchase program. Further, we continuously evaluate acquisition, disposition, exits, and investment opportunities that will enhance our business strategies.

As of September 30, ~~2022,~~2023, the Company had ~~$139.2~~$154.4 million of cash and cash equivalents ~~$264.5~~and $293.0 million of availability under our Second Amended and Restated Credit Agreement and $38.0 million of availability under our receivables factoring arrangements. Significant changes in liquidity occurred during July 2022 in connection with the close of the Alfmeier and Dacheng acquisitions. See "Material Cash Requirements" below for further information.Agreement. We ~~continue to maintain access to the capital markets and~~ may issue debt or equity securities, which may provide an additional source of liquidity. ~~There~~However, there can be no assurance equity or debt financing will be available to us when we need it or, if available, the terms will be satisfactory to us and not dilutive to our then-current shareholders.

We continue to expect to be able to move funds between different countries to manage our global liquidity needs without material adverse tax implications, subject to current monetary policies and the terms of the Second Amended and Restated Credit Agreement. We utilize a combination of strategies, including dividends, cash pooling arrangements, intercompany loan repayments and other distributions and advances to provide the funds necessary to meet our global liquidity needs. There are no significant restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Gentherm Incorporated. As of September 30, ~~2022,~~2023, the Company’s cash and cash equivalents held by our non-U.S. subsidiaries totaled approximately ~~$117.8~~$114.7 million. If additional non-U.S. cash was needed for our U.S. operations, we may be required to accrue and pay withholding if we were to distribute such funds from non-U.S. subsidiaries to the U.S.; however, based on our current liquidity needs and strategies, we do not anticipate a need to accrue and pay such additional amounts.

We currently believe that our cash and cash equivalents, ~~and~~ borrowings available under our Second Amended and Restated Credit Agreement and receivables factoring arrangements, and cash flows from operations will be adequate to meet anticipated cash requirements for at least the next twelve months and the foreseeable future.

~~Cash~~Net cash provided by operating activities totaled ~~$13.0~~$80.0 million during the nine months ended September 30, ~~2022~~2023 primarily reflecting net income of ~~$28.6~~$22.3 million, ~~and $35.3~~$19.5 million for non-cash goodwill impairment, $47.9 million for non-cash charges for depreciation, amortization, ~~non-cash~~ stock based compensation and loss on disposition of property, and ~~equipment and pension plan adjustments,~~non-cash charges of $6.6 million for inventory provisions, partially offset by ~~non-cash adjustments of $1.8 million for gains on revaluation of derivatives, $1.2 million for deferred income taxes and $47.9~~$13.2 million related to changes in assets and ~~liabilities.~~liabilities, and non-cash charges of $3.0 million for deferred income taxes.

~~Cash~~Net cash used in investing activities was ~~$247.8~~$16.9 million during the nine months ended September 30, ~~2022,~~2023, reflecting ~~payments for the Alfmeier and Dacheng acquisitions of $224.1 million and~~ purchases of property and equipment of ~~$25.7~~$26.5 million and investments in technology companies of $0.6 million, partially offset by proceeds from deferred purchase price of factored receivables of ~~$2.2 million and the sale of property and equipment of $0.2~~$10.1 million.

~~Cash provided by~~Net cash used in financing activities was ~~$191.6~~$60.8 million during the nine months ended September 30, ~~2022,~~2023, reflecting ~~net borrowings~~$31.0 million paid to repurchase common stock, $27.2 million of debt repayments and $2.8 million paid for employee taxes related to the net settlement of ~~$195.4 million and~~restricted stock units that vested during the year, partially offset by the proceeds from the exercise of Common Stock options totaling ~~$1.6 million, partially offset by taxes withheld and paid on employees' share based payment awards totaling $5.4~~$0.3 million.

The following table summarizes the Company’s debt, in thousands, as of September 30, ~~2022~~2023 and ~~2021:~~December 31, 2022:

Gentherm, together with certain of its subsidiaries, maintain a revolving credit note ~~(“U.S. Revolving Note”~~(the “Revolving Credit Facility”) under its Second Amended and Restated Credit Agreement (the “Second Amended and Restated Credit Agreement”) with a consortium of lenders and Bank of America, N.A. as administrative agent. The Second Amended and Restated Credit Agreement was entered into on June 10, 2022 and ~~amends~~amended and ~~restates~~restated in its entirety the Amended and Restated Credit Agreement dated June 27, 2019, by and among Gentherm, certain of its direct and indirect subsidiaries, the lenders party thereto and the Agent. The Second Amended and Restated Credit Agreement has a maximum borrowing capacity of $500 million and matures on June 10, 2027. The Second Amended and Restated Credit Agreement contains covenants, that, among other things, (i) prohibit or limit the ability of the borrowers and any material subsidiary to incur additional indebtedness, create liens, pay dividends, make certain types of investments (including acquisitions), enter into certain types of transactions with affiliates, prepay other indebtedness, sell assets or enter into certain other transactions outside the ordinary course of business, and (ii) require that Gentherm maintain a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Net Leverage Ratio (based on consolidated EBITDA for the applicable trailing four fiscal quarters) as of the end of any fiscal quarter. As of September 30, 2023, the Company was in compliance with the terms of the Second Amended and Restated Credit Agreement.

~~The Company also has a fixed interest rate loan with the German Investment Corporation (“DEG”), a subsidiary~~As of ~~KfW Banking Group, a Germany government-owned development bank. The fixed interest rate senior loan agreement with DEG~~September 30, 2023 and December 31, 2022, there was ~~used to~~$0.7 million and $1.1 million, respectively, of outstanding finance the construction and set up of the Vietnam production facility (“DEG Vietnam Loan”). The DEG Vietnam Loan is subject to semi-annual principal payments that began November, 2017 and will end May, 2023.leases.

The Company is party to receivable factoring agreements with unrelated third parties under which we can sell receivables for certain account debtors, on a revolving basis, subject to outstanding balances and concentration limits. The receivable factoring agreements are transferred in their entirety to the acquiring entities and are accounted for as a sale. Some of the agreements, including those assumed through the acquisition of Alfmeier, have deferred purchase price arrangements. As of September 30, ~~2022,~~2023, there were ~~$20.2~~$1.2 million ~~outstanding receivables transferred~~available under the receivable factoring ~~agreements and our availability under the receivables factoring agreements was $38.0 million.~~agreement.

Significant liquidity was required during July 2022 to close the Alfmeier and Dacheng acquisitions. In connection with these acquisitions, we drew $202.0 million from the U.S. Revolving Note and made cash payments totaling approximately $224.1 million, including amounts placed in escrow. Additional cash payments may be required for contingent payments of up to $3.0 million related to the Dacheng acquisition. See "Acquisitions" above for additional information about the purchase prices associated with these transactions.

The Company continues to enter into agreements with suppliers to reserve the right to purchase certain semiconductor chips over periods of 12-24 months. As of September 30, ~~2022,~~2023, the Company’s total commitments for these semiconductor chip agreements was ~~$37.3~~$25.6 million. See Note 8,7, “Commitments and Contingencies” to the consolidated condensed financial statements included in this Report for additional information.

In September 2023, the Company committed to a restructuring plan to improve the Company’s manufacturing productivity and rationalize its footprint. As of September 30, 2023, the Company expects to incur total costs of between $14 million and $18 million, of which between $14 million and $17 million are expected to be cash expenditures. See Note 3, “Restructuring and Impairments” to the consolidated condensed financial statements included in this Report for additional information.

Except as described above, there have been no material changes in our cash requirements since December 31, ~~2021,~~2022, the end of fiscal year ~~2021.~~2022. See Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 for additional information regarding our material cash requirements.

The automotive component supply industry has historically been subject to inflationary pressures with respect to materials and labor. InBeginning in 2021 and continuing ~~in 2022, macroeconomic effects of~~through 2023, the ~~COVID-19 pandemic have resulted in~~industry has experienced inflationary cost increases in certain materials and components, labor and transportation. ~~These inflationary cost increases are expected to continue into the foreseeable future as demand remains elevated and supply remains constrained.~~ Although the Company has developed and implemented strategies to mitigate the impact of higher material component costs and transportation costs, these strategies, together with commercial

negotiations with Gentherm's customers and suppliers, have not fully offset to date and may not fully offset our future cost increases. Such inflationary cost increase may increase the cash required to fund our operations by a material amount.

The discussion and analysis of our financial condition and results of operations are based upon our consolidated condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. For discussion of our significant accounting policies, see Note 2, “Summary of Significant Accounting ~~Policies,”~~Policies” to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. There have been no significant changes in our critical accounting policies or critical accounting estimates during the three months ended September 30, ~~2022.~~2023. We are not presently aware of any events or circumstances that would require us to update our estimates, assumptions or revise the carrying value of our assets or ~~liabilities.~~liabilities, except for the impairment of the Medical segment goodwill, which was assessed in the second quarter of 2023. See Note 3, “Restructuring and Impairments” to the consolidated condensed financial statements included in this Report for additional information. Our estimates may change, however, as new events occur and additional information is obtained. As a result, actual results may differ significantly from our estimates, and any such differences may be material to our financial statements.

~~For information on the impact of recently issued~~There are no new accounting pronouncements ~~see Note 2, “New Accounting Pronouncements” in~~applicable to the ~~consolidated condensed financial statements included in this Report.~~Company as of September 30, 2023.

The Company is exposed to various market risks including, but not limited to, changes in foreign currency exchange rates, changes in interest rates and price fluctuations of certain material commodities such as copper. Market risks for changes in interest rates relate primarily to ~~its~~the Company's debt obligations under the Second Amended and Restated Credit Agreement. Foreign currency exchange risks are attributable to sales to foreign customers and purchases from foreign suppliers not denominated in a location’s functional currency, foreign plant operations, intercompany indebtedness, acquisitions denominated in foreign currencies, intercompany investments and include exposures to the Euro, Mexican Peso, Canadian Dollar, Hungarian Forint, North Macedonian Denar, Ukrainian Hryvnia, Japanese Yen, Chinese Renminbi, Korean Won, Czech Koruna and Vietnamese Dong.

The Company’s designated hedging relationships are formally documented at the inception of the hedge, and hedges must be highly effective in offsetting changes to future cash flows on hedged transactions both at the inception of a hedge and on an ongoing basis to be designated for hedge accounting treatment. For derivative contracts that can be classified as a cash flow hedge, the effective portion of the change in the fair value of the derivative is recorded to Accumulated other comprehensive loss in the consolidated condensed balance sheets. When the underlying hedge transaction is realized, the gain or loss included in Accumulated other comprehensive loss is recorded in earnings in the consolidated condensed statements of income on the same line as the gain or loss on the hedged item attributable to the hedged risk. The Company records the ineffective portion of foreign currency and copper commodity hedging instruments, if any, to ~~cost~~Cost of sales, and the ineffective portion of interest rate swaps, if any, to ~~interest~~Interest expense, net in the consolidated condensed statements of income. Cash flows associated with derivatives are reported in ~~net~~Net cash provided by (used in) ~~provided by~~ operating activities in the ~~Company’s~~ consolidated condensed statements of cash flows.

Information related to the fair values of all derivative instruments in our consolidated condensed balance sheet as of September 30, ~~2022~~2023 is set forth in Note ~~10,~~9, “Financial Instruments” in the consolidated condensed financial statements included in this Report.

The table below presents principal cash flows and related weighted average interest rates by expected maturity dates for each of the Company’s debt ~~obligations.~~obligations, excluding finance leases. The information is presented in U.S. dollar equivalents, which is the Company’s reporting currency. ~~The instruments actual cash flows are denominated in the currency indicated in parentheses.~~

Based on the amounts outstanding as of September 30, ~~2022,~~2023, a hypothetical 100 basis point change (increase or decrease) in interest rates would impact annual interest expense by ~~$2.3~~$2.1 million.

~~In connection with the acquisitions of Alfmeier and Dacheng, we drew $202.0 million from the U.S. Revolving Note in July 2022.~~ To hedge the Company's exposure to interest payment fluctuations on a portion of these borrowings, we entered into a floating-to-fixed interest rate swap agreement with a notional amount of $100.0 million.

The table below provides information about the Company’s foreign currency forward exchange rate agreements that are sensitive to changes in foreign currency exchange rates. The table presents the notional amounts and weighted average exchange rates by expected (contractual) maturity dates for each type of foreign currency forward exchange agreement. These notional amounts generally are used to calculate the contractual payments to be exchanged under the contract.

The table below presents the potential gain and loss in fair value for the foreign currency derivative contracts from a hypothetical 10% change in quoted currency exchange rates.

The model assumes a parallel shift in currency exchange rates; however, currency exchange rates rarely move in the same direction. The assumption that currency exchange rates change in a parallel fashion may overstate the impact of changing currency exchange rates on assets and liabilities denominated in currencies other than the U.S. dollar.

Management of the Company, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, ~~2022.~~2023. As defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (as amended, the “Exchange Act”), disclosure controls and procedures are controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported on a timely basis, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of September 30, ~~2022.~~2023.

In conjunction with our recent acquisition activity, we utilized our framework of internal control over financial reporting specific to business combinations. The applicable controls address the various elements of a business combination, including but not limited to: 1) calculation of the consideration transferred; 2) identifying and properly accounting for transactions that are separate from the business combination; 3) use and oversight of competent and qualified personnel in performing the valuation of assets acquired and liabilities assumed; 4) review of inputs and outputs to the valuation models; 5) identifying and disclosing provisional amounts; and 6) tracking measurement period adjustments.

Our acquisition of Dacheng became effective on July 13, 2022 and the acquisition of Alfmeier became effective on July 29, 2022. We are currently integrating policies, processes and operations for the combined companies and will continue to evaluate our internal control over financial reporting as we develop and execute our integration plans. We will exclude the acquired operations of Dacheng and Alfmeier from our assessment of Gentherm’s internal control over financial reporting for the year ended December 31, 2022 as permissible under rules and regulations of the Securities and Exchange Commission.

~~Except as described above with regard to the acquisition and integration of Alfmeier and Dacheng, there~~There were no changes in ~~our~~the Company’s internal control over financial reporting during the ~~quarter~~three months ended September 30, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, ~~our~~the Company’s internal control over financial reporting.

We are subject to litigation from time to time in the ordinary course of business, however there is no material pending litigation to which we are a party and no material legal proceeding was terminated, settled or otherwise resolved during the three months ended September 30, ~~2022.~~2023.

The Company’s risk factors have not materially changed from those previously disclosed in Part 1, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2021, as amended by Part II “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for~~2022. You should carefully consider the ~~three months ended March 31, 2022.~~risks and uncertainties described therein.

Issuer Purchases of Equity Securities During ~~First~~Third Quarter ~~2022~~2023

During the three months ended September 30, 2023, none of the Company's directors or Section 16 officers adopted or terminated (i) any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or (ii) any non-Rule 10b5-1 trading arrangement.

* ~~Schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish any omitted schedules~~Indicates management contract or exhibits upon the request of the SEC. A list of the omitted schedules and exhibits to Exhibit 10.1 is set forth in the agreement. A list of the omitted schedules and exhibits to Exhibit 10.2 is as follows: Schedule I – Pledged Equity Interests; Schedule II – Primary Location, Filing Locations, Trade Names, Changes in Names, State Organizational Numbers, Taxpayer Identification Numbers, Government Contracts, Deposit Accounts, Securities Accounts, Commodity Accounts, Letter of Credit Rights and Commercial Tort Claims; Schedule III – Intellectual Property; Annex I – Security Agreement Supplement.compensatory plan.

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 thereunto duly authorized.


Michigan		95-4318554
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
21680 Haggerty Road, Northville, MI		48167
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, no par value	THRM	Nasdaq





Part I. Financial Information				3
	Item 1.	Financial Statements (Unaudited)		3
		Consolidated Condensed Balance Sheets		3
		Consolidated Condensed Statements of Income		4
		Consolidated Condensed Statements of Comprehensive (Loss) Income		5
		Consolidated Condensed Statements of Cash Flows		6
		Consolidated Condensed Statements of Changes in Shareholders’ Equity		7
		Notes to Unaudited Consolidated Condensed Financial Statements		8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		3938
	Item 4.	Controls and Procedures		4140
Part II. Other Information				4241
	Item 1.	Legal Proceedings		4241
	Item 1A.	Risk Factors		4241
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		41
	Item 5.	Other Information		41
	Item 6.	Exhibits		42
			~~Item 6.~~		~~Exhibits~~	43
Signatures				4443


	September 30, 2022		December 31, 2021		September 30, 2023		December 31, 2022
Other current assets:
Purchase Consideration Receivable	$	23,526	$	—
Billable tooling					$	13,748	$	15,267
Income tax and other tax receivable						14,042		15,041
Notes receivable		11,228		13,033		16,766		12,127
Income tax and other tax receivable		16,837		10,681
Short-term derivative financial instruments						10,213		6,564
Prepaid expenses		10,224		3,407		9,503		6,239
Billable tooling		10,372		3,778
Receivables due from factor						6,688		5,490
Other		12,157		1,876		5,691		3,869
Total other current assets	$	84,344	$	32,775	$	76,651	$	64,597
Other current liabilities:
Accrued employee liabilities	$	34,631	$	28,818	$	39,363	$	32,031
Liabilities from discounts and rebates		22,764		27,343		24,790		26,640
Income tax and other taxes payable		16,265		17,068		11,385		14,459
Accrued warranty		3,590		1,916		3,206		2,380
Restructuring		865		1,494		1,938		588
Other		22,783		5,554		9,517		17,716
Total other current liabilities	$	100,898	$	82,193	$	90,199	$	93,814


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2023			2022
Balance at the beginning of the period	$	1,916		$	2,391		$	2,380		$	1,916
Warranty opening balance from acquired entities		907			—			—			907
Warranty claims paid		(890	)		(1,374	)		(1,979	)		(890	)
Warranty expense for products shipped during the current period		1,963			1,722			3,311			1,963
Adjustments to warranty estimates from prior periods		(200	)		318			(434	)		(200	)
Adjustments due to currency translation		(106	)		(44	)		(72	)		(106	)
Balance at the end of the period	$	3,590		$	3,013		$	3,206		$	3,590


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐



Purchase price, cash consideration, net of cash acquired	$	188,941
Purchase price, Purchase Consideration Receivable	$	(24,054	)
Total purchase price, net of cash acquired	$	164,887

Accounts receivable		24,988
Inventory		36,026
Prepaid expenses and other assets		20,920
Operating lease right-of-use assets		4,608
Property and equipment		89,942
Other intangible assets		22,668
Goodwill		43,678
Assumed liabilities		(55,994	)
Deferred tax liabilities		(21,949	)
Net assets acquired	$	164,887


	Preliminary Fair Value		Weighted Average Life (in years)
Definite-lived:
Customer related	$	11,233		13
Technology		11,435		9
Total	$	22,668


		Three Months Ended September 30,						Nine Months Ended September 30,
	Location	2022			2021			2022			2021
Derivatives Designated as Cash Flow Hedges
Foreign currency derivatives	Cost of sales – income	$	321		$	448		$	807		$	1,455
	Other comprehensive (loss) income		1,627			(606	)		1,921			(1,335	)
Total foreign currency derivatives		$	1,948		$	(158	)	$	2,728		$	120

Commodity derivatives	Cost of sales – income	$	—		$	2		$	19		$	2
	Other comprehensive loss		—			(44	)		(6	)		(44	)
Total commodity derivatives		$	—		$	(42	)	$	13		$	(42	)

Derivatives Not Designated as Hedging Instruments
Foreign currency derivatives	Foreign currency (loss) gain	$	(4,288	)	$	—		$	(3,806	)	$	—
Total foreign currency derivatives		$	(4,288	)	$	—		$	(3,806	)	$	—

Interest rate contracts	Interest income (expense), net	$	3,191		$	—		$	2,498		$	—
Total interest rate derivatives		$	3,191		$	—		$	2,498		$	—


	September 30, 2023		December 31, 2022
Receivables factored and outstanding	$	22,372	$	19,108
Amount available under the credit limit		1,169		5,034
Collective factoring limit	$	23,541	$	24,142


	Three Months Ended September 30,						Variance Due To:
	2022		2021		Favorable / (Unfavorable)		Automotive Volume		FX			Acquisition		Pricing/Other			Total
Product revenues	$	332,962	$	243,384	$	89,578	$	67,998	$	(18,438	)	$	42,515	$	(2,497	)	$	89,578


	September 30, 2022						September 30, 2021
	Interest Rate			Principal Balance			Interest Rate			Principal Balance
Credit Agreement:
U.S. Revolving Note (U.S. Dollar denominations)		4.26	%	$	232,000			1.35	%	$	35,000
Other loans	3.93% - 5.21%				3,540			5.21	%		5,000
Total debt					235,540						40,000
Current maturities					(3,540	)					(2,500	)
Long-term debt, less current maturities				$	232,000					$	37,500


	Expected Maturity Date
	2022		2023		2024		2025		2026		2027			Total			Fair Value
Liabilities
Long-Term Debt:
Variable rate ($USD)	$	—	$	—	$	—	$	—	$	—	$	232,000		$	232,000		$	232,000
Variable interest rate as of September 30, 2022												4.26	%		4.26	%
Fixed rate ($USD)	$	1,271	$	2,269	$	—	$	—	$	—	$	—		$	3,540		$	3,560
Fixed interest rate	3.93% -5.21%		3.93% -5.21%											3.93% -5.21%


	Expected Maturity or Transaction Date						Expected Maturity or Transaction Date
Anticipated Transactions and Related Derivatives	2022		2023		2024		2023		2024		2025		Total		Fair Value
USD Functional Currency
Forward Exchange Agreements:
(Receive $MXN / Pay $USD)
(Receive MXN / Pay USD)
Total contract amount	$	6,977	$	27,093	$	12,970	$	14,824	$	59,298	$	29,649	$	103,771	$	6,706
Average contract rate		21.50		22.15		23.13		19.23		19.23		19.23		19.23


Period	(a) Total Number of Shares Purchased		(b) Average Price Paid Per Share		(c) Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs		(d) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
July 1, 2022 to July 31, 2022		—	$	—		—	$	130,000,105
August 1, 2022 to August 31, 2022		—	$	—		—	$	130,000,105
September 1, 2022 to September 30, 2022		—	$	—		—	$	130,000,105


	Gentherm Incorporated

	/s/ PHILLIP EYLER
	Phillip Eyler
	President and Chief Executive Officer
	(Principal Executive Officer)

	Date: ~~November 3, 2022~~October 26, 2023


	/s/ MATTEO ANVERSA
	Matteo Anversa
	Executive Vice President, Chief Financial Officer and Treasurer
	(Principal Financial Officer)

	Date: ~~November 3, 2022~~October 26, 2023