Gentex Reports Second Quarter 2018 Financial Results
2nd Quarter 2018 Summary
- Net sales growth of 3% quarter over quarter
- Gross Margin increased from the first quarter of 2018 by 90 basis points
- Net Income increased 23% quarter over quarter
- Earnings per Diluted Share increased 29% quarter over quarter to
$0.40 per share - 6.3 million shares repurchased during the quarter at an average price of
$23.33 per share $26.9 million of debt repaid during the quarter
For the second quarter of 2018, the Company reported net sales of
"The second quarter of 2018 revenue growth rate fell just outside of our guidance range for the year which, although disappointing, is explainable when viewed in the context of production levels by region and segment. The overall production levels in the North American market were down 3% quarter over quarter and the luxury segments, defined as D and E segment vehicles, were down over 3% quarter over quarter in our primary markets of
For the second quarter of 2018, the gross margin improved to 38.0% when compared to a gross margin of 37.7% in the second quarter of 2017, and from 37.1% in the first quarter of 2018, primarily as a result of improved product mix and purchasing cost reductions. "The gross margin improvement sequentially from the first quarter of 2018 was impressive given the lower than expected growth rate for the quarter and was primarily driven by product mix improvements and the team's hard work to manage costs,” said President and CEO
Operating expenses during the second quarter of 2018 were up 12% to
Income from operations for the second quarter of 2018 increased 1% to
Other income increased to
During the second quarter of 2018, the Company's effective tax rate was 15.5%, down from 30.8% during the second quarter of 2017, primarily driven by the impacts of the Tax Cuts and Jobs Act of 2017 and the tax planning initiatives undertaken by the Company.
Net income for the second quarter of 2018 increased 23% to
Earnings per diluted share in the second quarter of 2018 increased 29% to
Automotive net sales in the second quarter of 2018 were
Other net sales in the second quarter of 2018, which includes dimmable aircraft windows and fire protection products, were
Share Repurchases
During the second quarter of 2018, the Company repurchased 6.3 million shares of its common stock at an average price of
Debt Repayment
During the second quarter of 2018, the Company paid down
Future Estimates
The Company’s forecasts for light vehicle production for the third quarter and full year of 2018 are based on IHS's
Light Vehicle Production (per IHS mid-July light vehicle production forecast) | |||||||||||||
(in Millions) | |||||||||||||
Region | 3Q 2018 | 3Q 2017 | % Change |
Calendar Year 2018 |
Calendar Year 2017 |
% Change |
|||||||
North America | 4.24 | 3.97 | 7 | % | 17.18 | 17.06 | 1 | % | |||||
Europe | 4.95 | 4.92 | 1 | % | 22.58 | 22.21 | 2 | % | |||||
Japan and Korea | 3.23 | 3.24 | — | % | 13.20 | 13.26 | — | % | |||||
Total Light Vehicle Production | 12.42 | 12.13 | 2 | % | 52.96 | 52.53 | 1 | % |
Based on the above IHS light vehicle production forecasts, the Company currently expects revenues in the second half of calendar year 2018 to increase between 7% and 10% when compared with the second half of calendar year 2017. As a result of the recently enacted tariffs by the
2018 Calendar Year Guidance | ||
Annual Guidance | ||
Item | As of 4/20/18 | Updated as of 7/20/18 |
Net Sales | $1.89 - $1.97 billion | $1.88 - $1.91 billion |
Gross Margin (includes additional tariff costs) | 38.0% - 39.0% | 37.5% - 38.5% |
Operating Expenses (E,R&D and S,G&A) | $180 - $190 million | $180 - $185 million |
Tax Rate (excluding discrete items) | 15% - 18% | No change |
Capital Expenditures | $115 - $130 million | $110 - $120 million |
Depreciation & Amortization | $105 - $115 million | No change |
Finally, based on 2019 light vehicle production forecasts and current forecasted product mix, the Company is making no changes to its previously announced revenue estimates for calendar year 2019, which continues to be estimated to be over and above the foregoing 2018 revenue estimates in the range of 5 - 10%.
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”, “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; 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
Second Quarter 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
GENTEX CORPORATION AUTO-DIMMING MIRROR SHIPMENTS (Thousands) |
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Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2018 | 2017 | % Change |
2018 | 2017 | % Change |
||||||||||||
North American Interior Mirrors | 2,202 | 2,231 | (1 | )% | 4,528 | 4,591 | (1 | )% | |||||||||
North American Exterior Mirrors | 950 | 914 | 4 | % | 1,768 | 1,831 | (3 | )% | |||||||||
Total North American Mirror Units | 3,152 | 3,146 | — | % | 6,296 | 6,422 | (2 | )% | |||||||||
International Interior Mirrors | 5,299 | 4,826 | 10 | % | 10,647 | 9,644 | 10 | % | |||||||||
International Exterior Mirrors | 2,115 | 1,816 | 16 | % | 4,227 | 3,642 | 16 | % | |||||||||
Total International Mirror Units | 7,415 | 6,642 | 12 | % | 14,874 | 13,286 | 12 | % | |||||||||
Total Interior Mirrors | 7,501 | 7,058 | 6 | % | 15,175 | 14,235 | 7 | % | |||||||||
Total Exterior Mirrors | 3,066 | 2,730 | 12 | % | 5,995 | 5,472 | 10 | % | |||||||||
Total Auto-Dimming Mirror Units | 10,567 | 9,788 | 8 | % | 21,170 | 19,707 | 7 | % |
Note: Percent change and amounts may not total due to rounding.
GENTEX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net Sales | $ | 454,981,440 | $ | 443,139,073 | $ | 920,401,545 | $ | 896,674,323 | |||||||
Cost of Goods Sold | 282,176,968 | 275,931,278 | 574,968,672 | 553,665,743 | |||||||||||
Gross Profit | 172,804,472 | 167,207,795 | 345,432,873 | 343,008,580 | |||||||||||
Engineering, Research & Development | 27,200,465 | 25,243,410 | 53,249,723 | 50,395,667 | |||||||||||
Selling, General & Administrative | 18,921,003 | 16,099,871 | 36,984,813 | 32,321,279 | |||||||||||
Operating Expenses | 46,121,468 | 41,343,281 | 90,234,536 | 82,716,946 | |||||||||||
Income from Operations | 126,683,004 | 125,864,514 | 255,198,337 | 260,291,634 | |||||||||||
Other Income (Expense) | 2,289,774 | 2,079,249 | 5,534,372 | 2,517,033 | |||||||||||
Income before Income Taxes | 128,972,778 | 127,943,763 | 260,732,709 | 262,808,667 | |||||||||||
Provision for Income Taxes | 19,948,796 | 39,407,816 | 40,459,984 | 76,715,979 | |||||||||||
Net Income | $ | 109,023,982 | $ | 88,535,947 | $ | 220,272,725 | $ | 186,092,688 | |||||||
Earnings Per Share | |||||||||||||||
Basic | $ | 0.40 | $ | 0.31 | $ | 0.81 | $ | 0.65 | |||||||
Diluted | $ | 0.40 | $ | 0.31 | $ | 0.80 | $ | 0.64 | |||||||
Weighted Average Shares | |||||||||||||||
Basic | 271,747,049 | 286,722,482 | 273,085,191 | 286,956,367 | |||||||||||
Diluted | 274,122,498 | 289,842,902 | 275,660,418 | 290,538,242 | |||||||||||
Cash Dividends Declared per Share | $ | 0.11 | $ | 0.10 | $ | 0.22 | $ | 0.19 | |||||||
GENTEX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(Unaudited) | |||||||
June 30, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Cash and Cash Equivalents | $ | 296,699,141 | $ | 569,734,496 | |||
Short-Term Investments | 171,020,806 | 152,538,054 | |||||
Accounts Receivable, net | 239,406,379 | 231,121,788 | |||||
Inventories | 212,375,655 | 216,765,583 | |||||
Other Current Assets | 23,575,408 | 14,403,902 | |||||
Total Current Assets | 943,077,389 | 1,184,563,823 | |||||
Plant and Equipment - Net | 499,673,418 | 492,479,330 | |||||
Goodwill | 307,365,845 | 307,365,845 | |||||
Long-Term Investments | 141,305,695 | 57,782,418 | |||||
Intangible Assets | 279,325,000 | 288,975,000 | |||||
Patents and Other Assets | 21,361,937 | 20,887,496 | |||||
Total Other Assets | 749,358,477 | 675,010,759 | |||||
Total Assets | $ | 2,192,109,284 | $ | 2,352,053,912 | |||
LIABILITIES AND SHAREHOLDERS' INVESTMENT | |||||||
Current Liabilities | $ | 214,434,674 | $ | 243,647,007 | |||
Deferred Income Taxes | 56,175,298 | 58,888,644 | |||||
Shareholders' Investment | 1,921,499,312 | 2,049,518,261 | |||||
Total Liabilities & Shareholders' Investment | $ | 2,192,109,284 | $ | 2,352,053,912 |
Source: Gentex Corporation