Gentex Reports Record Fourth Quarter and Year
26 January 2000
Gentex Reports Record Fourth Quarter and Year
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, 1999.
The Company achieved record revenues of $65.5 million in the fourth
quarter, a two percent increase over the fourth quarter of 1998. Net income
in the 1999 fourth quarter increased slightly to $17.2 million, compared with
net income of $17.1 million on revenues of $64.3 million for the same period
in 1998. Diluted earnings per share were constant at 23 cents in the fourth
quarter of 1999 compared with the same period in 1998. The lower-than-
historic increases in revenues and net income for the fourth quarter of 1999
are primarily due to two non-recurring events: the fourth quarter of 1998 was
an extraordinarily good quarter for Gentex due to the make up of unit
shipments to General Motors following its parts plant strikes during the
second and third quarters of 1998. And, in the fourth quarter of 1999,
General Motors changed over its full-size sport utility vehicles to new
models. As a result of that plant-by-plant ramp up, Gentex shipped about half
of the mirror units it normally would have for those models.
For the year ended December 31, 1999, Gentex reported record net income of
$64.9 million, or 86 cents per share, on an 18 percent increase in revenues to
$262.2 million. The Company reported net income of $50.3 million, or 68 cents
per share, on revenues of $222.3 million in 1998. (All per share amounts
reported are diluted.)
"We are pleased with the results in the fourth quarter and for the year,
despite the tough comparison we had in the fourth quarter of 1999 due to last
year's tremendous fourth quarter," said Gentex Executive Vice President
Kenneth La Grand. "We should get back to more normalized production for the
General Motors full-size sport/utility vehicles now that those models are
ramping to full production."
La Grand said the Company also is pleased with the strong gross margin for
calendar 1999. The improved gross margin is primarily due to higher yields on
exterior mirror products as a result of coating equipment installed last year,
higher mirror unit shipments and changes in estimates.
"While the strong gross margin we reported for calendar 1999 is not
sustainable, we do believe that we will be able to maintain the gross margin,
on average, in the neighborhood of 40 percent for the next several quarters,"
said La Grand. "The way that we will do that, despite the very competitive
automotive environment, is to continually re-invent our product lines which
allows us to reduce costs and complexity. We also continue to add new
electronic features to our interior mirrors, which helps to increase the
dollar content per vehicle." (**)
La Grand also said that the Company will soon take delivery of the first
prototype coater for interior mirror products.
"We're currently developing the processes for that coater, and hope to
begin gradually integrating it and other coaters into production later in the
year. While we don't expect that the in-house coating of interior mirrors
will have nearly the positive effect on our gross margin that the coater did
for exterior mirrors, we are hopeful that it will reduce costs due to better
quality," said La Grand.
Total Night Vision Safety(TM) (NVS(R)) Mirror shipments to automotive
customers in 1999 increased to a record 1.5 million and 6.0 million units for
the fourth quarter and year, respectively, compared with 1.4 million and 4.9
million units for the same 1998 periods. Total exterior mirror units shipped
for the 1999 fourth quarter and year were 481,000 and 2.0 million,
respectively, compared with 493,000 and 1.6 million units for the same 1998
periods.
"Based on J.D. Power's current expectations for North American light
vehicle industry production in calendar year 2000 (down four to five percent
versus 1999), we expect our growth in automotive unit shipments to be in the
range of 15 to 20 percent this year. We believe, however, that our unit
shipments will continue to grow, on average, by 20-25 percent over the next
five years. (**)
Unit shipments of NVS Mirrors to automakers outside North America
increased by 23 and 20 percent for the 1999 fourth quarter and year,
respectively. Shipments to offshore customers represented 30 percent of total
unit shipments in 1999. Unit shipments to automakers outside North America
were 498,000 and 1.8 million for the 1999 fourth quarter and year,
respectively, compared with 404,000 and 1.5 million for the same 1998 periods.
North American light vehicle production increased by about four percent in the
fourth quarter of 1999 compared with the fourth quarter of 1998, and was up
approximately nine percent when comparing calendar 1999 with calendar 1998.
Revenues in the Fire Protection Products Group increased 13 percent in the
fourth quarter of 1999 compared with the same 1998 quarter. For the year
ended December 31, 1999, fire protection revenues were up four percent to
$21.1 million for 1999 compared with $20.2 million in 1998. La Grand said the
Fire Protection Products Group experienced increased sales of its AC/DC smoke
detectors and a new, low-current-draw horn/strobe product, which was partially
offset by decreased sales of certain other remote signaling devices.
(**) 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 (some of which are outlined
in the Company's Form 10-K filed with the Securities and Exchange Commission
and other interim reports) and future events may affect 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, Japan and the United Kingdom; and
four 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,
1999 1998 1999 1998
Net Sales $65,501,788 $64,344,681 $262,155,498 $222,292,053
Costs and Expenses
Cost of Goods
Sold 36,290,871 35,578,472 148,820,129 131,900,585
Research &
Development 3,476,483 2,831,258 13,755,318 10,983,514
Selling, General &
Administrative 3,402,923 2,929,167 14,057,560 12,065,141
Other Expense
(Income) (3,013,241) (2,389,574) (10,693,265) (7,320,317)
Total Costs
and Expenses 40,157,036 38,949,323 165,939,742 147,628,923
Income Before
Income Taxes 25,344,752 25,395,358 96,215,756 74,663,130
Provision for
Income Taxes 8,171,000 8,255,000 31,352,000 24,356,000
Net Income $17,173,752 $17,140,358 $64,863,756 $50,307,130
Earnings Per Share
Basic $0.23 $0.24 $0.89 $0.70
Diluted $0.23 $0.23 $0.86 $0.68
Weighted Average Shares:
Basic 73,312,353 72,032,273 72,999,601 71,611,401
Diluted 74,828,696 73,832,546 74,996,314 73,616,720
CONDENSED CONSOLIDATED BALANCE SHEETS
Dec. 31, Dec. 31,
1999 1998
ASSETS
Cash and Short-Term Investments $94,733,629 $74,062,623
Other Current Assets 43,481,955 41,294,796
Total Current Assets 138,215,584 115,357,419
Plant and Equipment -- Net 71,338,053 59,359,885
Long-Term Investments and Other Assets 128,119,133 80,172,254
Total Assets $337,672,770 $254,889,558
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities $16,470,211 $14,846,890
Long-Term Debt 0 0
Deferred Income Taxes 4,151,143 3,034,450
Shareholders' Investment 317,051,416 237,008,218
Total Liabilities &
Shareholders' Investment $337,672,770 $254,889,558