Gentex Reports Second Quarter Revenues and Net Income
ZEELAND, Mich., July 20 -- Gentex Corporation , the Zeeland, Michigan-based manufacturer of automatic-dimming rearview mirrors and commercial fire protection products, today reported second quarter revenues and net income for the quarter ended June 30, 2005. The Company also announced that the Executive Committee of the Board of Directors has authorized an increase in the price at which the Company may repurchase shares under the existing share repurchase plan. In a separate announcement, the Company reported that BMW will offer the Company's new SmartBeam technology on three vehicle models beginning this fall.
The Company reported quarterly revenues of $132.4 million, a two percent increase over revenues of $129.6 million reported in the second quarter last year. Second quarter net income of $26.0 million decreased by ten percent compared with net income of $29.0 million in the comparable 2004 quarter. Earnings per diluted share were 17 cents in the second quarter of 2005 compared with 18 cents in the second quarter of 2004. All per share data reflect the two-for-one stock split effected in the form of a 100 percent common stock dividend that became effective on May 9, 2005.
For the first six months of 2005, the Company posted net income of $52.0 million on revenues of $260.0 million, compared with net income of $58.8 million on revenues of $259.0 million for the same period in 2004. Earnings per diluted share were 33 cents for the first six months of 2005 compared with 37 cents for the same period in 2004.
Mirror unit shipments in North America in the second quarter increased by one percent while light vehicle production in that market declined by two percent, as lower unit shipments to the "Detroit 3" automakers were more than offset by shipments to the Asian and European transplants in North America. Due to high inventories of certain domestic full-sized sport-utility vehicles throughout most of the second quarter, production of those vehicles was lower than forecasted. In addition, the Company experienced a few short-term new program delays during the second quarter, and sales to certain tier one mirror customers were lower than expected as those customers made adjustments by reducing inventories at the end of the quarter.
"While the new vehicle sales incentive programs currently being offered by the 'Detroit 3' automakers are moving vehicles off the lots and reducing auto dealer inventories, Gentex benefits only when production increases on the vehicles offering our mirror products. This did not, for the most part, happen with those customers during the second quarter," said Garth Deur, Gentex executive vice president. "And, while it is difficult for us to anticipate, it is not unusual for tier one exterior mirror customers to reduce their own inventories near the end of a model year, which ultimately impacts our shipments during the quarter."
The Company reported a somewhat weaker than expected gross margin in the second quarter, which was primarily attributable to lower unit shipment growth resulting in reduced capacity utilization.
Total auto-dimming mirror unit shipments for the second quarter of 2005 increased by three percent to 3,095,000 units, compared with 3,001,000 units for the same quarter in 2004. Total automotive revenues in the second quarter of 2005 increased by two percent to $126.1 million, compared with the same quarter last year.
Total auto-dimming mirror unit shipments for the first six months of 2005 increased by two percent to 6,125,000 units, compared with 5,983,000 units for the same period in 2004. Total automotive revenues were approximately flat for the first six months of 2005 at $248.1 million, compared with $247.6 million in the same period in 2004.
Auto-dimming mirror unit shipments to offshore customers increased by five percent in the second quarter of 2005 compared with the second quarter of 2004. Light vehicle production declined by one percent in Europe and the Japan and Korean markets in the second quarter of 2005 compared with the same quarter last year.
For the first six months of 2005, auto-dimming mirror unit shipments to offshore customers increased by six percent compared with the same prior year period. When comparing those same periods, auto-dimming mirror unit shipments in North America declined by two percent. During the first six months of 2005, light vehicle production was flat in Europe and increased by two percent in the Japan and Korean markets, compared with the first six months of 2004. Light vehicle production in North America decreased by three percent for the first six months of 2005 compared with the same period last year.
For the third quarter of 2005, the Company estimates that the growth in mirror unit shipments will be in the range of five to ten percent compared with the third quarter of 2004. For the fourth quarter of 2005, unit shipments are estimated to increase by approximately ten to 15 percent compared with the same prior-year period.
Revenues in the Company's Fire Protection Products Group increased by eight percent in the second quarter of 2005 to $6.3 million, compared with the second quarter last year. For the first six months of 2005, fire protection revenues increased by five percent to $11.9 million.
The Company also announced today that the Executive Committee of the Board of Directors has authorized an increase in the price at which the Company may repurchase shares under the existing share repurchase plan. The current share repurchase plan was announced by the Company in October 2002, and authorizes the repurchase of up to eight million (split adjusted) shares based on a number of factors, including market conditions, the market price of the Company's common stock, anti-dilutive effect on earnings, available cash and other factors as the Company deems appropriate. Under this plan, the Company repurchased 830,000 shares in the first quarter of 2003. The Company does not intend to provide the price at which it will repurchase shares, except as disclosed in its quarterly Form 10-Q.
In a separate announcement, the Company today reported that BMW will offer the Company's new SmartBeam high-beam headlamp technology on the 5 Series, 6 Series and 7 Series beginning this fall in Europe and other selected regions. SmartBeam will be offered in conjunction with Xenon headlamps on those vehicle models. SmartBeam is the intelligent high-beam headlamp control product developed by the Company that was introduced in the North American market on several models for the 2005 and 2006 model years.
Founded in 1974, Gentex Corporation 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 95 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 Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Net Sales $132,384,445 $129,646,277 $260,026,165 $258,973,825
Costs and Expenses
Cost of Goods
Sold 82,818,876 75,190,805 162,407,779 149,634,081
Engineering,
Research &
Development 8,798,430 7,546,085 16,775,815 14,989,373
Selling, General
& Administrative 7,011,298 6,880,091 13,851,129 13,625,212
Other Expense
(Income) (4,260,209) (2,910,496) (8,883,578) (6,385,108)
Total Costs and
Expenses 94,368,395 86,706,485 184,151,145 171,863,558
Income Before
Provision
for Income Taxes 38,016,050 42,939,792 75,875,020 87,110,267
Provision for
Income Taxes 11,975,000 13,955,000 23,901,000 28,310,000
Net Income $26,041,050 $28,984,792 $51,974,020 $58,800,267
Earnings Per Share
Basic $0.17 $0.19 $0.33 $0.38
Diluted $0.17 $0.18 $0.33 $0.37
Weighted Average
Shares:
Basic 155,568,960 154,123,884 155,396,365 153,921,294
Diluted 157,209,802 156,831,858 156,962,435 156,864,096
Cash Dividends
Declared per
Share $0.085 $0.075 $0.17 $0.15
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
June 30, Dec 31,
2005 2004
ASSETS
Cash and Short-Term Investments $511,812,075 $494,880,260
Other Current Assets 107,223,033 97,728,834
Total Current Assets 619,035,108 592,609,094
Plant and Equipment - Net 152,505,201 135,649,119
Long-Term Investments and Other Assets 134,740,877 128,601,215
Total Assets $906,281,186 $856,859,428
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities $68,102,574 $50,856,258
Long-Term Debt 0 0
Deferred Income Taxes 21,020,714 22,723,198
Shareholders' Investment 817,157,898 783,279,972
Total Liabilities & Shareholders' Investment $906,281,186 $856,859,428
Note: All earnings per share amounts and weighted daily average shares outstanding reflect the 2-for-1 stock split effected in the form of a 100% common stock dividend effective on May 9, 2005.
AUTO-DIMMING MIRROR UNIT SHIPMENTS
(Thousands)
Second Quarter Six Months Ended
Ended June 30, June 30,
2005 2004 % Change 2005 2004 % Change
Domestic Interior 1,038 1,007 3% 2,078 2,077 Flat
Domestic Exterior 426 445 -4% 860 908 -5%
Total Domestic Units 1,463 1,452 1% 2,938 2,985 -2%
Foreign Interior 1,190 1,138 5% 2,330 2,204 6%
Foreign Exterior 441 411 7% 857 794 8%
Total Foreign Units 1,631 1,549 5% 3,187 2,999 6%
Total Interior
Mirrors 2,228 2,145 4% 4,408 4,281 3%
Total Exterior
Mirrors 867 856 1% 1,717 1,702 1%
Total Mirror Units 3,095 3,001 3% 6,125 5,983 2%
Note: Certain prior year amounts have been reclassified to conform with the current year presentation. Amounts may not total due to rounding.