Gentex Reports Fourth Quarter and Year End 2019 Financial Results
Fourth Quarter and Calendar Year 2019 Highlights
- Full Display Mirror® unit shipments increased 89% for calendar year 2019 to 739,000 units
- Revenue for the fourth quarter of 2019 declined 2% versus the fourth quarter of 2018, primarily impacted by the strike at
General Motors which created a 5% revenue headwind in the quarter, and global light vehicle production that declined approximately 5% versus the same quarter last year - Gross profit margin of 36.5% for the fourth quarter of 2019, which was significantly higher than the strike-impacted Company forecast of 35 - 36% for the quarter
- Gross profit margin of 37% for calendar year 2019, which includes 70 basis points of incremental tariff headwinds when compared to 2018, and total tariff costs of approximately 100 basis points for the full year
- Earnings per diluted share for 2019 increased 2% to
$1.66 in 2019 from$1.62 in 2018 - 2.4 million shares repurchased during the fourth quarter at an average price of
$28.55 per share and 13.8 million shares repurchased during calendar year 2019 at an average price of$24.06 per share
For the fourth quarter of 2019, the Company reported net sales of
For calendar year 2019, the Company’s net sales increased 1% to
The gross margin in the fourth quarter of 2019 was 36.5% compared with a gross margin of 37.9% in the fourth quarter of 2018. The impact of the strike at
For calendar year 2019, the gross margin was 37.0%, compared with a gross margin of 37.6% for calendar year 2018. The gross margin during 2019 was negatively impacted by approximately 70 basis points from tariffs versus 2018. Other factors that impacted the gross margin during the year included the Company’s inability to leverage fixed overhead costs on the lower than expected sales levels and annual customer price reductions that were not fully offset by purchasing cost reductions.
"Considering the very challenging global light vehicle production markets, the strike, and the fact that we were still dealing with some of our own product related headwinds in 2019, our team has done an excellent job maintaining the gross margin profile of the Company. All of our teams were focused on offsetting annual customer price reductions, addressing incremental tariff costs, and finding ways to minimize the impact of fixed overhead, through better than expected purchasing cost reductions, improved manufacturing efficiencies, design changes that led to cost improvements, and the success of our Full Display Mirror. In fact, if not for the incremental tariffs encountered in 2019, our gross margin would have been slightly better than 2018," said Downing.
Operating expenses during the fourth quarter of 2019 were up 9% to
Net income for the fourth quarter of 2019 was
Net income for calendar year 2019 was
Earnings per diluted share in the fourth quarter of 2019 were
Auto-dimming mirror unit shipments increased 3% in the fourth quarter of 2019 compared with the fourth quarter of 2018, and increased 3% for calendar year 2019 when compared to calendar year 2018. Automotive net sales in the fourth quarter of 2019 were
Other net sales were
Share Repurchases
The Company repurchased 2.4 million shares of its common stock during the fourth quarter of 2019 at an average price of
Future Estimates
The Company’s forecasts for light vehicle production for calendar year 2020 and 2021 are based on the
Based on the following light vehicle production forecasts for 2020 and 2021, the Company is giving certain annual guidance for 2020 and revenue guidance for 2021:
Light Vehicle Production (per IHS Markit January light vehicle production forecast) | ||||||||||
(in Millions) |
||||||||||
Region | Calendar Year 2021 |
Calendar Year 2020 |
Calendar Year 2019 |
2021 vs. 2020 % Change |
2020 vs. 2019 % Change |
|||||
North America | 16.5 | 16.5 | 16.3 | — | % | 1 | % | |||
Europe | 21.2 | 20.7 | 21.1 | 2 | % | (2 | )% | |||
Japan and Korea | 12.6 | 12.9 | 13.1 | (2 | )% | (2 | )% | |||
China | 25.3 | 24.4 | 24.6 | 4 | % | (1 | )% | |||
Total Light Vehicle Production | 75.6 | 74.5 | 75.1 | 1 | % | (1 | )% |
2020 Guidance |
|
Revenue | $1.91 - $2.0 billion |
Gross Margin | 36% - 37% |
Operating Expenses (E, R&D and S, G&A) | $205 - $215 million |
Estimated Annual Tax Rate | 15% - 17% |
Capital Expenditures | $85 - $95 million |
Depreciation & Amortization | $105 - $110 million |
Additionally, based on the Company’s forecasts for light vehicle production for calendar year 2021, the Company currently expects calendar year 2021 sales growth of approximately 3% - 8% above the 2020 sales estimates.
"While the current forecast for global light vehicle production appears to be stabilizing, it certainly does not provide any tailwind to our growth rate in 2020 or 2021. Additionally, although there have been some improvements in global trade relations, tariffs still remain on incoming materials and on our exports into the
Safe Harbor for Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements contained in this communication that are not purely historical are forward-looking statements. Forward-looking statements give the Company’s current expectations or forecasts of future events. These forward-looking statements generally can be identified by the use of words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “forecast”, “goal”, “hope”, “may”, “plan”, "poised", “project”, “will”, and variations of such words and similar expressions. Such statements are subject to risks and uncertainties that are often difficult to predict and beyond the Company’s control, and could cause the Company’s results to differ materially from those described. These risks and uncertainties include, without limitation: changes in general industry or regional market conditions; changes in consumer and customer preferences for our products (such as cameras replacing mirrors and/or autonomous driving); our ability to be awarded new business; continued uncertainty in pricing negotiations with customers; loss of business from increased competition; changes in strategic relationships; customer bankruptcies or divestiture of customer brands; fluctuation in vehicle production schedules (including the impact of customer employee strikes); changes in product mix; raw material shortages; higher raw material, fuel, energy and other costs; unfavorable fluctuations in currencies or interest rates in the regions in which we operate; costs or difficulties related to the integration and/or ability to maximize the value of any new or acquired technologies and businesses; changes in regulatory conditions; warranty and recall claims and other litigation and customer reactions thereto; possible adverse results of pending or future litigation or infringement claims; changes in tax laws; import and export duty and tariff rates in or with the countries with which we conduct business; and negative impact of any governmental investigations and associated litigations including securities litigations relating to the conduct of our business. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law or the rules of the NASDAQ Global Select Market. Accordingly, any forward-looking statement should be read in conjunction with the additional information about risks and uncertainties identified under the heading “Risk Factors” in the Company’s latest Form 10-K and Form 10-Q filed with the SEC. Includes content supplied by IHS Markit Light Vehicle Production Forecast (
Fourth Quarter and Year End Conference Call
A conference call related to this news release will be simulcast live on the Internet beginning at
About the Company
Founded in 1974,
Contact Information:
Gentex Investor & Media Contact
(616)772-1590 x5814
AUTO-DIMMING MIRROR SHIPMENTS
(Thousands)
Three Months Ended December 31, |
Twelve Months ended December 31, |
||||||||||||||||
2019 | 2018 | % Change |
2019 | 2018 | % Change |
||||||||||||
North American Interior Mirrors | 1,985 | 2,201 | (10 | )% | 8,556 | 8,838 | (3 | )% | |||||||||
North American Exterior Mirrors | 1,318 | 1,157 | 14 | % | 5,279 | 4,029 | 31 | % | |||||||||
Total North American Mirror Units | 3,304 | 3,359 | (2 | )% | 13,836 | 12,867 | 8 | % | |||||||||
International Interior Mirrors | 5,253 | 5,039 | 4 | % | 21,038 | 20,813 | 1 | % | |||||||||
International Exterior Mirrors | 1,981 | 1,827 | 8 | % | 8,007 | 7,925 | 1 | % | |||||||||
Total International Mirror Units | 7,234 | 6,866 | 5 | % | 29,044 | 28,738 | 1 | % | |||||||||
Total Interior Mirrors | 7,238 | 7,240 | — | % | 29,594 | 29,651 | — | % | |||||||||
Total Exterior Mirrors | 3,300 | 2,984 | 11 | % | 13,286 | 11,954 | 11 | % | |||||||||
Total Auto-Dimming Mirror Units | 10,538 | 10,225 | 3 | % | 42,880 | 41,605 | 3 | % | |||||||||
Note: Percent change and amounts may not total due to rounding. | |||||||||||||||||
GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended December 31, | Twelve Months ended December 31, |
||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net Sales | $ | 443,835,638 | $ | 453,408,719 | $ | 1,858,897,406 | $ | 1,834,063,697 | |||||||
Cost of Goods Sold | 282,031,064 | 281,365,186 | 1,170,589,437 | 1,143,597,005 | |||||||||||
Gross profit | 161,804,574 | 172,043,533 | 688,307,969 | 690,466,692 | |||||||||||
Engineering, Research & Development | 28,840,060 | 26,996,140 | 114,687,309 | 107,134,862 | |||||||||||
Selling, General & Administrative | 22,063,889 | 19,548,094 | 85,083,056 | 75,206,283 | |||||||||||
Income from operations | 110,900,625 | 125,499,299 | 488,537,604 | 508,125,547 | |||||||||||
Other Income | 2,744,108 | 5,280,324 | 11,877,730 | 13,921,400 | |||||||||||
Income before Income Taxes | 113,644,733 | 130,779,623 | 500,415,334 | 522,046,947 | |||||||||||
Provision for Income Taxes | 14,097,683 | 24,505,068 | 75,731,395 | 84,163,850 | |||||||||||
Net Income | $ | 99,547,050 | $ | 106,274,555 | $ | 424,683,939 | $ | 437,883,097 | |||||||
Earnings Per Share(1) | |||||||||||||||
Basic | $ | 0.39 | $ | 0.41 | $ | 1.67 | $ | 1.64 | |||||||
Diluted | $ | 0.39 | $ | 0.41 | $ | 1.66 | $ | 1.62 | |||||||
Weighted Average Shares | |||||||||||||||
Basic | 248,955,547 | 260,860,937 | 251,766,382 | 267,794,786 | |||||||||||
Diluted | 250,452,266 | 262,199,420 | 253,272,990 | 269,877,349 | |||||||||||
Cash Dividends Declared per Share | $ | 0.115 | $ | 0.110 | $ | 0.460 | $ | 0.440 | |||||||
(1) Earnings Per Share has been adjusted to exclude the portion of net income allocated to participating securities as a result of share-based payment awards | |||||||||||||||
GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, 2019 |
December 31, 2018 | ||||||
ASSETS | |||||||
Cash and Cash Equivalents | $ | 296,321,622 | $ | 217,025,278 | |||
Short-Term Investments | 140,384,053 | 169,412,999 | |||||
Accounts Receivable, net | 235,410,326 | 213,537,799 | |||||
Inventories | 248,941,855 | 225,281,599 | |||||
Other Current Assets | 29,319,036 | 25,672,579 | |||||
Total Current Assets | 950,376,892 | 850,930,254 | |||||
Plant and Equipment - Net | 498,316,100 | 498,473,766 | |||||
Goodwill | 307,365,845 | 307,365,845 | |||||
Long-Term Investments | 139,909,323 | 137,979,082 | |||||
Intangible Assets | 250,375,000 | 269,675,000 | |||||
Patents and Other Assets | 22,460,033 | 21,010,121 | |||||
Total Other Assets | 720,110,201 | 736,030,048 | |||||
Total Assets | $ | 2,168,803,193 | $ | 2,085,434,068 | |||
LIABILITIES AND SHAREHOLDERS' INVESTMENT | |||||||
Current Liabilities | $ | 171,846,800 | $ | 169,160,919 | |||
Other Non-current Liabilities | 7,414,424 | — | |||||
Deferred Income Taxes | 51,454,149 | 54,521,489 | |||||
Shareholders' Investment | 1,938,087,820 | 1,861,751,660 | |||||
Total Liabilities & Shareholders' Investment | $ | 2,168,803,193 | $ | 2,085,434,068 |
Source: Gentex Corporation