Gentex Reports Record Revenues
ZEELAND, Mich., Oct. 19, 2005 -- Gentex Corporation , the Zeeland, Michigan-based manufacturer of automatic-dimming rearview mirrors and commercial fire protection products, today reported third quarter revenues and net income for the quarter ended September 30, 2005. In addition, the Company announced that it has recently negotiated an extension to its long-term agreement with DaimlerChrysler. The Company also repurchased approximately 1,496,000 shares during the third quarter.
The Company reported record revenues for the third quarter of 2005 of $138.1 million, a 15 percent increase over revenues of $120.5 million reported in the third quarter last year. Third quarter net income of $27.9 million increased by 11 percent compared with net income of $25.2 million in the comparable 2004 quarter. Earnings per diluted share were 18 cents in the third quarter of 2005 compared with 16 cents in the third quarter of 2004. All per share data reflects 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 nine months of 2005, the Company posted net income of $79.9 million on revenues of $398.1 million, compared with net income of $84.0 million on revenues of $379.4 million for the same period in 2004. Earnings per diluted share were 51 cents for the first nine months of 2005 compared with 54 cents for the same period in 2004.
According to Garth Deur, Gentex executive vice president, the Company also recently negotiated a three-year extension to its current long-term agreement with DaimlerChrysler for virtually all interior and exterior auto-dimming mirrors, extending the existing agreement through the end of the 2009 calendar year.
The Company also reported that it repurchased approximately 1,496,000 shares during the third quarter of 2005 at a cost of approximately $25.2 million. The Company has a share repurchase plan in place with authorization to repurchase up to 8 million shares of the Company's stock. To date, including the prior share repurchases in 2003, the Company has repurchased approximately 2,326,000 shares, leaving approximately 5,674,000 shares authorized to be repurchased under the plan.
Mirror unit shipments in North America in the third quarter increased by 14 percent while light vehicle production in that market increased by two percent. The increase in unit shipments in North America was due to higher shipments to Asian transplant automakers and accelerated growth in the Company's exterior mirror business. Unit shipments to offshore automakers increased by 18 percent during the quarter. Light vehicle production declined by one percent in Europe and increased by six percent in the Japan and Korean markets in the third quarter of 2005 compared with the same quarter last year.
"We are pleased to see the higher rates of growth in our exterior mirror business as new and existing customers opt to offer complete glare-control systems on their vehicles," said Deur. "In addition, we have been seeing higher-than-expected European and Korean unit shipments due to the strong start-up of several new mirror programs with customers in those regions."
The Company reported a slightly lower than expected gross margin in the third quarter, which was primarily attributable to yield issues on certain new manufacturing processes. The start-up challenges are taking longer to work through than the Company previously anticipated, and these issues are making it more difficult for the Company to offset ongoing customer price reductions.
"To say that we are working diligently to resolve these yield issues would be an understatement," said Deur, "but we do expect it to take us a while longer as the challenges happen to be on products where customer demand is increasing, and we cannot take risks on quality or customer delivery schedules. The challenges that we have been facing are not insurmountable and, as we continue to make improvements, we expect that our manufacturing costs will also gradually improve.
"Overall, we are very pleased with our results in the third quarter. After a year of slower growth, we are looking forward to a strong 2006 model year," Deur said.
Total auto-dimming mirror unit shipments for the third quarter of 2005 increased by 16 percent to 3,198,000 units, compared with 2,756,000 units for the same quarter in 2004. Total automotive revenues in the third quarter of 2005 increased by 15 percent to $131.7 million, compared with the same quarter last year.
Total auto-dimming mirror unit shipments for the first nine months of 2005 increased by seven percent to 9,323,000 units, compared with 8,739,000 units for the same period in 2004. Total automotive revenues increased by five percent for the first nine months of 2005 to $379.8 million, compared the same period in 2004.
For the first nine months of 2005, auto-dimming mirror unit shipments in North America increased by three percent compared with the same prior year period, while light vehicle production declined by about one percent for the first nine months of 2005. Mirror unit shipments to offshore customers increased by ten percent compared with the same prior year period. During the first nine months of 2005, light vehicle production was flat in Europe and increased by six percent in the Japan and Korean markets, compared with the first nine months of 2004.
For the fourth quarter of 2005, the Company estimates that the growth in mirror unit shipments will be in the range of ten to 15 percent compared with the fourth quarter of 2004.
"While we currently believe that this may be a conservative estimate, we continue to be cautious due to uncertainties associated with the automotive industry at this time," said Deur.
Revenues in the Company's Fire Protection Products Group increased by nine percent in the third quarter of 2005 to $6.4 million, compared with the third quarter last year. For the first nine months of 2005, fire protection revenues increased by six percent to $18.4 million.
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
September 30,
2005 2004
Net Sales $138,114,897 $120,456,707
Costs and Expenses
Cost of Goods Sold 86,918,447 72,754,752
Engineering, Research &
Development 9,140,231 7,758,575
Selling, General & Administrative 6,762,837 6,550,287
Other Expense (Income) (5,489,437) (3,431,740)
Total Costs and Expenses 97,332,078 83,631,874
Income Before Provision
for Income Taxes 40,782,819 36,824,833
Provision for Income Taxes 12,847,000 11,600,000
Net Income $27,935,819 $25,224,833
Earnings Per Share
Basic $0.18 $0.16
Diluted $0.18 $0.16
Weighted Average Shares:
Basic 155,817,978 154,487,100
Diluted 157,458,416 156,435,922
Cash Dividends Declared per Share $0.090 $0.085
(unaudited)
Nine Months Ended
September 30,
2005 2004
Net Sales $398,141,062 $379,430,532
Costs and Expenses
Cost of Goods Sold 249,326,226 222,388,833
Engineering, Research &
Development 25,916,046 22,747,948
Selling, General & Administrative 20,613,966 20,175,499
Other Expense (Income) (14,373,015) (9,816,848)
Total Costs and Expenses 281,483,223 255,495,432
Income Before Provision
for Income Taxes 116,657,839 123,935,100
Provision for Income Taxes 36,748,000 39,910,000
Net Income $79,909,839 $84,025,100
Earnings Per Share
Basic $0.51 $0.55
Diluted $0.51 $0.54
Weighted Average Shares:
Basic 155,545,871 154,118,332
Diluted 157,137,065 156,747,022
Cash Dividends Declared per Share $0.260 $0.235
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
Sept 30, Dec 31,
2005 2004
ASSETS
Cash and Short-Term Investments $481,242,837 $494,880,260
Other Current Assets 125,235,959 97,728,834
Total Current Assets 606,478,796 592,609,094
Plant and Equipment - Net 158,926,604 135,649,119
Long-Term Investments and Other
Assets 139,602,583 128,601,215
Total Assets $905,007,983 $856,859,428
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
Current Liabilities $67,401,006 $50,856,258
Long-Term Debt 0 0
Deferred Income Taxes 22,298,802 22,723,198
Shareholders' Investment 815,308,175 783,279,972
Total Liabilities &
Shareholders' Investment $905,007,983 $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)
Third Quarter Nine Months Ended
Ended September 30, September 30,
2005 2004 % Change 2005 2004 % Change
Domestic Interior 1,032 933 11% 3,111 3,010 3%
Domestic Exterior 492 403 22% 1,351 1,311 3%
Total Domestic Units 1,524 1,336 14% 4,462 4,321 3%
Foreign Interior 1,197 1,057 13% 3,527 3,261 8%
Foreign Exterior 477 363 32% 1,334 1,157 15%
Total Foreign Units 1,674 1,420 18% 4,861 4,418 10%
Total Interior
Mirrors 2,230 1,990 12% 6,638 6,271 6%
Total Exterior
Mirrors 969 766 27% 2,686 2,468 9%
Total Mirror Units 3,198 2,756 16% 9,323 8,739 7%
Note: Certain prior year amounts have been reclassified to conform with the current year presentation. Amounts may not total due to rounding.