ZEELAND, MI--(Marketwire - October 21, 2008) - Gentex Corporation (
NASDAQ:
GNTX), the Zeeland,
Michigan-based manufacturer of automatic-dimming rearview mirrors and
commercial fire protection products, today reported results for the third
quarter ended September 30, 2008. The Company also announced that it
repurchased approximately 2.5 million shares of its stock during the third
quarter of 2008.
For the third quarter of 2008, the Company's net sales declined by six
percent to $153.1 million compared with $162.5 million in the third quarter
of 2007. The gross margin declined on a year-over-year basis from 35.1
percent in the third quarter of 2007 to 30.5 percent in the third quarter
of 2008, primarily due to decreased top line revenues, resulting in the
Company's inability to leverage its fixed overhead costs, annual customer
price reductions, and production inefficiencies as a result of last-minute
customer order reductions, which were partially offset by purchasing cost
reductions. Each negative and positive factor is estimated to have
impacted the gross profit margin by approximately one to two percentage
points.
Net income in the third quarter of 2008 declined by 49 percent compared
with the same quarter last year, primarily due to the reduced operating
margin and decrease in total other income (expense), as a result of the
performance of the Company's investment portfolio in current market
conditions. The Company reported net income of $15.1 million compared with
$29.8 million for the third quarters of 2008 and 2007, respectively.
Earnings per diluted share were 11 cents in the third quarter of 2008
compared with 21 cents in the third quarter of 2007.
For the first nine months of 2008, net sales increased by four percent to
$501.5 million compared with $483.2 million in the first nine months of
2007. Net income decreased by 20 percent for the first nine months of
2008 compared with the same period in 2007, primarily due to the decrease
in total other income (expense) and the reduced operating margin. Net
income for the first nine months of 2008 was $72.5 million compared with
$90.3 million for the first nine months of 2007. Earnings per diluted
share were 51 cents for the first nine months of 2008 compared with 63
cents for the first nine months of 2007.
"The third quarter of 2008 is one of the toughest quarters that Gentex has
experienced since the early '90s," said Gentex Chairman and Chief Executive
Officer Fred Bauer. "The 'perfect storm' has been created with the global
automotive industry experiencing record declines in sales levels, resulting
in significant production cuts on their part, coupled with the global
financial credit crisis.
"However, while we are operating in an industry that is experiencing the
most significant production declines in nearly 20 years, particularly at
the 'Detroit Three,' the Company's global diversification was its saving
grace during the quarter," said Bauer. "Our auto-dimming mirror units
shipped overseas increased by 13 percent in the third quarter, offset by a
27 percent decline in North American auto-dimming mirror unit shipments.
"Even though the Company reported lower revenues and net income, I'm
pleased that the Company began to diversify globally long before it was
'the thing to do,'" said Bauer. "For the first nine months of the year,
our unit shipments to automakers headquartered outside North America
represented 76 percent of our total automotive unit shipments."
Bauer said that despite the very volatile market conditions, the Company
plans to continue investing for the future.
"Our engineering, research and development expenses increased by about 12
percent (excluding Muth litigation expense of $1.6 million in the third
quarter of 2007) in the third quarter of 2008 compared with the same period
in the prior year, and we estimate that those expenses will continue to
increase by approximately 10-15 percent on an annualized basis," said
Bauer. "We have to continue to invest for the future, otherwise we will
not have new products or programs in the upcoming years. We have always
managed the Company with a long-term perspective for our shareholders. The
economic environment that we are experiencing will pass, and the Company
has some exciting products that are in production or in the development
stages. Our strong balance sheet speaks for itself, including the fact
that we remain debt free, and we continue to believe that we have a great
future ahead of us," Bauer concluded.
Share Repurchase Plan
During the third quarter, the Company repurchased 2.5 million shares at a
cost of approximately $39.7 million. The Company has a share repurchase
plan in place with authorization to repurchase up to 28 million shares of
the Company's stock. To date, including the prior share repurchases, the
Company has repurchased approximately 23.9 million shares, leaving
approximately 4.1 million shares authorized to be repurchased under the
plan.
Unit Shipments and Revenues
Total auto-dimming mirror unit shipments for the third quarter of 2008
decreased by five percent and the Company's top line growth decreased by
six percent for that same period, when comparing each with the third
quarter of 2007. Automotive revenues decreased by six percent in the third
quarter to $147.3 million and increased by four percent for the first nine
months of 2008, compared with the same prior-year period.
For the third quarter of 2008, automatic-dimming mirror unit shipments in
North America decreased by 27% compared with the same period in 2007,
primarily as a result of significantly lower light vehicle production.
North American light vehicle production decreased by 16% in the third
quarter of 2008 compared with the same prior-year period. The declines in
light vehicle production were highly concentrated in the light truck and
sport/utility vehicle segment of the market. During the third quarter of
2008, vehicle production was down by 45 percent on a major truck/SUV
platform that offers both interior and exterior Gentex auto-dimming
mirrors, and total light truck/SUV production in North America declined by
32 percent during the quarter as certain manufacturers significantly
reduced or ceased production at several plants in response to poor sales of
those vehicles.
For the first nine months of 2008, total auto-dimming mirror unit shipments
increased by two percent and automotive revenues increased by four percent
to $484.2 million. The primary reason for the lower growth rate during
that period was due to the light truck/SUV production declines mentioned
above, plus the impact of the UAW strikes in the first and second quarters
of calendar 2008. The strikes impacted automotive revenues by
approximately $8.3 million for those periods.
Increased unit shipments to European and Asian automakers partially offset
those two negative factors. Increased penetration of interior auto-dimming
mirrors at certain of the Company's European and Asian automotive customers
was the primary factor in achieving a 13 percent increase in offshore
auto-dimming mirror unit shipments during the third quarter of 2008, when
comparing it with the third quarter of 2007. Light vehicle production in
Europe decreased by one percent in the third quarter of 2008, and increased
by one percent in Japan and Korea in the third quarter of 2008, compared
with the same period last year.
Automatic-dimming mirror unit shipments to offshore customers increased by
14 percent in the first nine months of 2008 compared with the same period
last year. Light vehicle production in Europe increased by three percent
for the first nine months of 2008 compared with the same period last year.
Light vehicle production in Japan and Korea also increased by three percent
for the first nine months of 2008 compared with the same prior-year period.
Fire Protection revenues decreased by seven percent to $5.6 million for the
third quarter of 2008 compared with the same period last year. Fire
Protection revenues decreased by seven percent to $17.1 million for the
first nine months of 2008 compared with the same period last year. The
decreased revenues during both periods were primarily due to the weak
commercial construction market.
Future Estimates
Gentex Senior Vice President Enoch Jen provided certain guidance for the
fourth quarter of 2008.
"Unfortunately, it seems that the automotive environment is going to get
worse before it gets better," said Jen. "Based on CSM Worldwide's
mid-October light vehicle production forecast, we currently expect our top
line revenue to decline by approximately 15 percent in the fourth quarter
of 2008 compared with the fourth quarter of 2007. Light vehicle production
is expected to decline by 19 percent in North America (including a 32
percent decline in light truck/SUV production), 11 percent in Europe and
seven percent in Japan and Korea for the fourth quarter of 2008.
"A number of our automotive customers are planning significant extended
holiday plant shutdowns, and given the significant uncertainties in the
marketplace, we believe that there is potentially more downside than upside
to current forecasted global light vehicle production levels," said Jen.
"Our hope is that the actions that have recently been taken by the Federal
Government will help the global financial crisis and banks will begin to
make it easier for many people to obtain auto and housing loans. Until
macroeconomic factors improve and consumer confidence is restored, we
expect that conditions in the automotive markets will not markedly
improve."
Jen said that the Company currently expects its gross margin in the fourth
quarter to be approximately 29 percent, primarily depending upon top line
revenues, purchasing cost reductions, and the depth of global light vehicle
production cuts.
The Company's current fourth quarter 2008 forecast is based on CSM's
mid-October forecast for light vehicle production of 3.0 million units for
North America, 5.0 million units for Europe and 3.8 million units for Japan
and Korea. The Company's current calendar year 2008 forecast is based on
CSM's 2008 calendar year projection of 12.9 million units for North
America, a 15 percent decline compared to calendar year 2007; 21.5 million
units for Europe, which is down one percent year-over-year; and flat
production of 14.8 million units for Japan and Korea.
Safe Harbor Statement
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act, as amended, that are based on
management's belief, assumptions, current expectations, estimates and
projections about the global automotive industry, the economy, the impact
of stock option expense, the ability to leverage fixed manufacturing
overhead costs, unit shipment and revenue growth rates, the ability to
control E,R&D and S,G&A expenses, gross margins, and the Company itself.
Words like "anticipates," "believes," "confident," "estimates," "expects,"
"forecast," "likely," "plans," "projects," and "should," and variations of
such words and similar expressions identify forward-looking statements.
These statements do not guarantee future performance and involve certain
risks, uncertainties, and assumptions that are difficult to predict with
regard to timing, expense, likelihood and degree of occurrence. These
risks include, without limitation, employment and general economic
conditions, the pace of automotive production worldwide, the maintenance of
the Company's market share, competitive pricing pressures, the ability to
achieve purchasing cost reductions, currency fluctuations, interest rates,
equity prices, the financial strength of the Company's customers, supply
chain disruptions, potential sale of OEM business segments or suppliers,
the mix of products purchased by customers, the ability to continue to make
product innovations, the success of certain newer products (e.g.
SmartBeam®, Z-Nav® and Rear Camera Display Mirror), and other risks
identified in the Company's filings with the Securities and Exchange
Commission. Therefore, actual results and outcomes may materially differ
from what is expressed or forecasted. Furthermore, the Company undertakes
no obligation to update, amend, or clarify forward-looking statements,
whether as a result of new information, future events, or otherwise.
Third Quarter Conference Call
A conference call related to this news release will be simulcast live
on the Internet beginning at 10:30 a.m. Eastern Daylight Saving Time today.
To access that call, go to
www.gentex.com and select the "Audio Webcast"
icon in the lower right-hand corner of the page. Other conference calls
hosted by the Company will also be available at that site in the future.
About the Company
Founded in 1974, Gentex Corporation (
NASDAQ:
GNTX) is an international
company that provides high-quality products to the worldwide automotive
industry and North American fire protection market. Based in Zeeland,
Michigan, the Company develops, manufactures and markets interior and
exterior automatic-dimming automotive rearview mirrors that utilize
proprietary electrochromic technology to dim in proportion to the amount of
headlight glare from trailing vehicle headlamps. Many of the mirrors are
sold with advanced electronic features, and approximately 97 percent of the
Company's revenues are derived from the sales of auto-dimming mirrors to
nearly every major automaker in the world.
GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
-------------- ------------- ------------- -------------
Net Sales $ 153,056,570 $ 162,524,803 $ 501,518,401 $ 483,210,597
Costs and
Expenses
Cost of Goods
Sold 106,359,938 105,522,931 333,094,524 313,933,117
Engineering,
Research &
Development 13,101,431 13,251,945 39,236,174 37,974,076
Selling,
General &
Administrative 10,324,190 9,112,808 30,139,806 26,212,009
Other Expense
(Income) 566,184 (9,215,954) (9,139,607) (27,197,260)
-------------- ------------- ------------- -------------
Total Costs and
Expenses 130,351,743 118,671,730 393,330,897 350,921,942
-------------- ------------- ------------- -------------
Income Before
Provision
for Income
Taxes 22,704,827 43,853,073 108,187,504 132,288,655
Provision for
Income Taxes 7,558,271 14,026,590 35,734,452 42,008,356
-------------- ------------- ------------- -------------
Net Income $ 15,146,556 $ 29,826,483 $ 72,453,052 $ 90,280,299
============== ============= ============= =============
Earnings Per
Share
Basic $ 0.11 $ 0.21 $ 0.51 $ 0.63
Diluted $ 0.11 $ 0.21 $ 0.51 $ 0.63
Weighted
Average
Shares:
Basic 140,233,348 143,496,082 141,913,581 142,740,287
Diluted 140,443,652 144,842,628 142,214,993 143,699,262
Cash Dividends
Declared per
Share $ 0.110 $ 0.105 $ 0.320 $ 0.295
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
Sept 30, Dec 31,
2008 2007
-------------- --------------
ASSETS
Cash and Short-Term Investments $ 338,247,331 $ 397,988,781
Other Current Assets 146,217,549 130,505,167
-------------- --------------
Total Current Assets 484,464,880 528,493,948
Plant and Equipment - Net 216,243,386 205,609,671
Long-Term Investments and Other Assets 115,669,406 163,919,061
-------------- --------------
Total Assets $ 816,377,672 $ 898,022,680
============== ==============
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities $ 61,944,180 $ 68,362,705
Long-Term Debt 0 0
Deferred Income Taxes 15,690,716 22,847,779
Shareholders' Investment 738,742,776 806,812,196
-------------- --------------
Total Liabilities & Shareholders' Investment $ 816,377,672 $ 898,022,680
============== ==============
AUTO-DIMMING MIRROR UNIT SHIPMENTS
(Thousands)
Third Quarter Nine Months
Ended Ended
September 30, September 30,
----------- -------- ------------ --------
2008 2007 % Change 2008 2007 % Change
----- ----- -------- ----- ----- --------
Domestic Interior 946 1,235 -23% 3,264 3,661 -11%
----- ----- ---- ----- ----- ----
Domestic Exterior 258 412 -37% 1,061 1,322 -20%
----- ----- ---- ----- ----- ----
Total Domestic Units 1,204 1,647 -27% 4,325 4,983 -13%
----- ----- ---- ----- ----- ----
----- ----- ---- ----- ----- ----
Foreign Interior 1,695 1,443 17% 5,213 4,503 16%
----- ----- ---- ----- ----- ----
Foreign Exterior 629 615 2% 2,055 1,872 10%
----- ----- ---- ----- ----- ----
Total Foreign Units 2,324 2,059 13% 7,268 6,375 14%
----- ----- ---- ----- ----- ----
----- ----- ---- ----- ----- ----
Total Interior Mirrors 2,641 2,678 -1% 8,477 8,164 4%
----- ----- ---- ----- ----- ----
Total Exterior Mirrors 887 1,028 -14% 3,116 3,193 -2%
----- ----- ---- ----- ----- ----
Total Mirror Units 3,528 3,706 -5% 11,593 11,358 2%
----- ----- ---- ----- ----- ----
Contact Information: CONTACT:
Connie Hamblin
(616) 772-1800