Gentex Reports Record Fourth Quarter and Year: Fourth Quarter Net Income Increased by 58%
26 January 1998
Gentex Reports Record Fourth Quarter and Year: Fourth Quarter Net Income Increased by 58%
ZEELAND, Mich., Jan. 26 -- Gentex Corporation ,
the Zeeland, Michigan-based manufacturer of automatic-dimming rearview mirrors
and commercial fire protection products, today reported record revenues and
net income for the fourth quarter and year ended December 31, 1997.
The Company achieved record fourth quarter revenues of $52.6 million, a 41
percent increase over the fourth quarter of 1996. Net income in the 1997
fourth quarter increased by 58 percent to $11.2 million, compared with net
income of $7.1 million on revenues of $37.3 million for the same period in
1996. Diluted earnings per share increased by 55 percent from 20 cents in the
fourth quarter of 1996 to 31 cents in the fourth quarter of 1997.
For the year ended December 31, 1997, Gentex reported record net income of
$35.2 million, or 98 cents per share, on a 25 percent increase in revenues to
$186.3 million. The Company reported net income of $24.0 million, or 67 cents
per share, on revenues of $148.7 million in 1996. Without the pre-tax $6
million patent settlement in April 1996 ($4.0 million, net of accrued
reserves), the Company would have reported net income of $26.6 million, or 75
cents per share. (All per share amounts reported are diluted.)
Gentex Executive Vice President Kenneth La Grand attributed the higher
sales both during the 1997 fourth quarter and year primarily to the high
volume shipments of its three newest auto-dimming exterior mirror products:
flat thin glass, curved "convex" thin glass and wide-angle "aspheric" mirror
sub-assemblies.
"Our total exterior mirror shipments increased by 88 and 64 percent for
the 1997 fourth quarter and year, respectively. The new thin-glass and
aspheric mirrors together accounted for 40 and 35 percent of all of our
exterior mirror sub-assembly shipments in those respective periods," said La
Grand.
La Grand also said that those three new exterior mirror products had the
greatest impact on the improvement in the Company's gross margin throughout
the year. "Both aspheric and thin-glass exterior mirror sub-assemblies are
very difficult products to manufacture. Early in the year, we had very low
yields on those products, which negatively impacted the Company's gross
margin. As the year progressed, yields improved and are now at a more
acceptable level. There still is room for improvement and we have set new
target yields that we would eventually like to achieve."
Total Night Vision Safety(TM) (NVS(R)) Mirror shipments to automotive
customers in 1997 increased to a record 1.1 million and 3.9 million units for
the fourth quarter and year, respectively.
"We currently expect our automotive unit growth to continue at a rate of
approximately 25 to 30 percent in 1998, which would result in shipments of
approximately five million units," said La Grand. (**)
The Company's gross profit margin improved to 38.3 percent in the fourth
quarter of 1997 compared with 35.6 percent in the third quarter of 1997 and
37.7% in the fourth quarter of 1996. The improved gross margin in the fourth
quarter was attributable to better yields on its new exterior mirror products,
and increased capacity utilization at its newer automotive production
facility. For the fiscal year, the gross margin percentage declined from 37.1
percent in calendar 1996 to 36.2 percent in calendar 1997. This decline is
mostly attributable to the initial lower yields on the Company's new exterior
mirror products, price reductions associated with automotive long-term
contracts, and to unused capacity at the Company's newer automotive products
manufacturing facility.
Revenues in the Fire Protection Products Group increased 11 percent in the
fourth quarter of 1997 compared with the same 1996 quarter, primarily due to
increased sales of its signals and AC/DC smoke detectors. For the year ended
December 31, 1997, fire protection revenues increased 6 percent from $19.1
million in 1996 to $20.2 million in 1997. La Grand attributed the sales
growth in 1997 to higher demand for the Company's AC/DC smoke detectors and
certain remote signaling devices.
Total automotive mirror unit shipments for the 1997 fourth quarter and
year were 1.1 million and 3.9 million, respectively, compared with 808,000 and
3.1 million units for the same 1996 periods. Total exterior mirror units
shipped for the 1997 fourth quarter and year were 348,000 and 1.1 million,
respectively, compared with 185,000 and 656,000 for the same 1996 periods.
Unit shipments of NVS Mirrors to automakers outside North America
increased by 39 and 50 percent for the 1997 fourth quarter and year,
respectively. Shipments to offshore customers represented 32 percent of total
unit shipments in 1997. Unit shipments to automakers outside North America
were 320,000 and 1.2 million for the 1997 fourth quarter and year,
respectively, compared with 230,000 and 831,000 for the same 1996 periods.
(**) Certain matters discussed in this news release are forward looking
statements which involve certain risks and uncertainties, and are subject to
change based on various market, industry and other important factors. The
Company cautions investors that numerous factors (as outlined in the Company's
Form 10-K filed with the Securities and Exchange Commission and other interim
reports) in some cases may affect in the future the Company's actual results,
and may cause those results to differ materially from those expressed in this
news release.
Gentex Corporation is an international company that provides high-quality
products to the worldwide automotive industry and North American fire
protection market. The Company develops, manufactures and markets proprietary
electro-optic products, including interior and exterior electrochromic,
automatic-dimming Night Vision Safety(TM) (NVS(R)) automotive rearview mirrors
that dim in proportion to the amount of headlight glare from trailing vehicle
headlamps, and an extensive line of fire protection products for commercial
applications.
Gentex was the first company in the world to successfully develop and
produce a commercial electrochromic mirror for the motor vehicle industry.
The Company is the leading supplier of these mirrors to the worldwide
automotive industry. Gentex customers include Audi, Bentley, BMW, Chrysler,
Daewoo, Fiat, Ford, General Motors, Gulf States Toyota, Honda, Hyundai,
Infiniti, Kia Motors, Lexus, Mercedes-Benz, Mitsubishi, Nissan, Opel, Porsche,
Rolls Royce and Southeast Toyota Distributors.
Founded in 1974, Gentex operates out of three facilities in Zeeland,
Michigan; an automotive sales and marketing office in Livonia, Michigan; an
automotive sales and engineering subsidiary in Germany; and five regional U.S.
sales offices for the Fire Protection Products Group. The Company is
recognized for its quality products, its application of world class
manufacturing principles, for its commitment to developing and maintaining a
highly skilled workforce, and for encouraging employee ownership of the
Company's stock.
GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Year Ended
December 31, December 31,
1997 1996 1997 1996
Net Sales $52,583,995 $37,329,668 $186,327,877 $148,708,218
Costs and Expenses
Cost of Goods Sold 32,437,413 23,274,778 118,941,030 93,582,756
Research &
Development 2,189,106 1,961,178 9,079,472 7,537,933
Selling, General &
Administrative 2,768,284 2,722,683 10,825,389 11,747,961
Patent Settlement 0 0 0 4,000,000
Other Expense
(Income) (1,366,761) (1,112,263) (4,707,238) (3,642,827)
Total Costs and
Expenses 36,028,042 26,846,376 134,138,653 113,225,823
Income Before
Income Taxes 16,555,953 10,483,292 52,189,224 35,482,395
Provision for
Income Taxes 5,378,000 3,423,000 16,959,000 11,519,000
Net Income $11,177,953 $7,060,292 $35,230,224 $23,963,395
Earnings Per Share
Basic $0.32 $0.21 $1.01 $0.70
Diluted $0.31 $0.20 $0.98 $0.67
Weighted Average Shares:
Basic 35,118,981 34,386,902 34,814,912 34,093,219
Diluted 36,296,955 35,828,680 35,980,766 35,512,286
CONDENSED CONSOLIDATED BALANCE SHEETS
Dec 31, Dec 31,
1997 1996
ASSETS
Cash and Short-Term Investments $41,131,383 $48,533,977
Other Current Assets 34,788,053 24,161,883
Total Current Assets 75,919,436 72,695,860
Plant and Equipment - Net 42,238,885 31,574,547
Long-Term Investments and Other Assets 71,624,526 36,108,013
Total Assets $189,782,847 $140,378,420
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities $14,591,224 $11,360,917
Long-Term Debt 0 0
Deferred Income Taxes 1,986,446 1,213,862
Shareholders' Investment 173,205,177 127,803,641
Total Liabilities & Shareholders'
Investment $189,782,847 $140,378,420
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 issued to shareholders on June 24, 1996.
SOURCE Gentex Corporation