Gentex Reports Record Fourth Quarter and Year
25 January 1999
Gentex Reports Record Fourth Quarter and Year: Fourth Quarter Net Income Increased by 53%
ZEELAND, Mich., Jan. 25 -- 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, 1998.
The Company achieved record revenues of $64.3 million in the fourth
quarter, a 22 percent increase over the fourth quarter of 1997. Net income in
the 1998 fourth quarter increased by 53 percent to $17.1 million, compared
with net income of $11.2 million on revenues of $52.6 million for the same
period in 1997. Diluted earnings per share increased by 53 percent from 15
cents in the fourth quarter of 1997 to 23 cents in the fourth quarter of 1998.
For the year ended December 31, 1998, Gentex reported record net income of
$50.3 million, or 68 cents per share, on a 19 percent increase in revenues to
$222.3 million. The Company reported net income of $35.2 million, or 49 cents
per share, on revenues of $186.3 million in 1997. (All per share amounts
reported are diluted, and reflect the two-for-one stock split in June 1998.)
Gentex Executive Vice President Kenneth La Grand attributed the solid
fourth quarter to stronger unit shipments, resulting in higher sales. The
Company's gross margin also improved both sequentially and year-over-year,
primarily due to higher yields on certain mirror products as a result of new
coating equipment, the higher unit shipments and certain changes in estimates.
"We are very pleased with the results in the fourth quarter and for the
year," said La Grand. "While over two-thirds of the impact on the gross
margin in the fourth quarter is a result of non-recurring items, we are very
encouraged by the positive impact that the new coating equipment has had on
our yields for some of our mirror products, and hope to continue to integrate
additional coaters into other mirror lines over the next several years." La
Grand cited the non-recurring items as higher automotive mirror unit volume as
a result of shipments that were "make up" from the units lost due to the
General Motors strikes that occurred in the second and third quarters of 1998
and changes in expense estimates in the fourth quarter.
Total Night Vision Safety(TM) (NVS(R)) Mirror shipments to automotive
customers in 1998 increased to a record 1.4 million and 4.9 million units for
the fourth quarter and year, respectively, compared with 1.1 million and 3.9
million units for the same 1997 periods. Total exterior mirror units shipped
for the 1998 fourth quarter and year were 493,000 and 1.6 million,
respectively, compared with 348,000 and 1.1 million units for the same 1997
periods.
"Based on our current expectations for light vehicle production, we expect
our growth in automotive unit shipments to continue at a rate of approximately
20-25 percent in 1999, which would result in shipments of approximately six
million units," said La Grand. (**)
Unit shipments of NVS Mirrors to automakers outside North America
increased by 27 and 18 percent for the 1998 fourth quarter and year,
respectively. Shipments to offshore customers represented 30 percent of total
unit shipments in 1998. Unit shipments to automakers outside North America
were 405,000 and 1.5 million for the 1998 fourth quarter and year,
respectively, compared with 320,000 and 1.2 million for the same 1997 periods.
North American light vehicle production increased by about five percent in the
fourth quarter of 1998 compared with the fourth quarter of 1997, and was flat
when comparing calendar 1998 with calendar 1997.
Revenues in the Fire Protection Products Group decreased 2 percent in the
fourth quarter of 1998 compared with the same 1997 quarter. For the year
ended December 31, 1998, fire protection revenues were flat at $20.2 million
for 1998 and 1997. La Grand said the Fire Protection Products Group
experienced decreased sales of certain remote signaling devices during the
fourth quarter and for the year ended December 31, 1998, which was partially
offset by increases in sales of its AC/DC smoke detectors and a new, low-
current-draw horn/strobe product.
(**) 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, Daewoo,
DaimlerChrysler, Fiat, Ford, General Motors, Gulf States Toyota, Hyundai,
Infiniti, Kia Motors, Lexus, Mitsubishi, Nissan, Opel, Porsche, Rolls Royce,
Southeast Toyota Distributors and Toyota.
Founded in 1974, Gentex operates out of three facilities in Zeeland,
Michigan; an automotive sales office in Livonia, Michigan; automotive sales
and engineering subsidiaries in Germany and Japan; 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,
1998 1997 1998 1997
Net Sales $64,344,681 $52,583,995 $222,292,053 $186,327,877
Costs and Expenses
Cost of Goods
Sold 35,578,472 32,437,413 131,900,585 118,941,030
Research &
Development 2,831,258 2,189,106 10,983,514 9,079,472
Selling, General
& Administrative 2,929,167 2,768,284 12,065,141 10,825,389
Other Expense
(Income) (2,389,574) (1,366,761) (7,320,317) (4,707,238)
Total Costs and
Expenses 38,949,323 36,028,042 147,628,923 134,138,653
Income Before Income
Taxes 25,395,358 16,555,953 74,663,130 52,189,224
Provision for Income
Taxes 8,255,000 5,378,000 24,356,000 16,959,000
Net Income $17,140,358 $11,177,953 $50,307,130 $35,230,224
Earnings Per Share
Basic $0.24 $0.16 $0.70 $0.51
Diluted $0.23 $0.15 $0.68 $0.49
Weighted Average Shares:
Basic 72,032,273 70,237,962 71,611,401 69,629,824
Diluted 73,832,546 72,593,910 73,616,720 71,961,532
CONDENSED CONSOLIDATED BALANCE SHEETS
Dec. 31, Dec. 31,
1998 1997
ASSETS
Cash and Short-Term Investments $74,062,623 $41,131,383
Other Current Assets 41,294,796 34,788,053
Total Current Assets 115,357,419 75,919,436
Plant and Equipment - Net 59,359,885 42,238,885
Long-Term Investments
and Other Assets 80,172,254 71,624,526
Total Assets $254,889,558 $189,782,847
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities $14,846,890 $14,591,224
Long-Term Debt 0 0
Deferred Income Taxes 3,034,450 1,986,446
Shareholders' Investment 237,008,218 173,205,177
Total Liabilities & Shareholders'
Investment $254,889,558 $189,782,847
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 22, 1998.