Gentex Corporation (NASDAQ: GNTX), a leading supplier of
digital vision, connected car, dimmable glass and fire protection
technologies, today reported financial results for the three and
six months ended June 30, 2022.
2nd Quarter 2022 Summary
- Net sales of $463.4
million, an 8% increase compared to the second quarter of
2021
- Gross profit margin of
32.0%
- Net income of $72.4
million
- 2 New Nameplate Launches for FDM, bringing total
nameplates currently shipping to 72
For the second quarter of 2022, the Company reported net sales
of $463.4 million, compared to net sales of $428.0 million in the
second quarter of 2021, an 8% increase quarter over quarter. For
the second quarter of 2022, global light vehicle production in
North America, Europe, Japan/Korea, and China decreased
approximately 3% when compared to the second quarter of 2021. Light
vehicle production in the Company's primary markets of North
America, Europe and Japan/Korea, was down 1% on a quarter over
quarter basis, primarily driven by vehicle production increases in
North America that were more than offset by reductions in Europe
and Japan/Korea. "We were pleased with our sales performance
compared to the light vehicle production market, which represented
an 9% outperformance to our primary markets and 11% outperformance
to the global market. With that said, sales for the quarter fell
short of our beginning of quarter forecasts by approximately $70 -
$80 million for the quarter. The sales shortfall was primarily
driven by the fact that light vehicle production in our primary
markets was 4% lower than forecasted at the beginning of the
quarter and then was further compounded by supply shortages of
certain electronic components that negatively impacted mix for some
of our advanced feature products. While there appears to be some
improved stability in the light vehicle production environment as
compared to a year ago, the Company is still experiencing
significant customer order fluctuations on a week-to-week basis.
The industry dynamics continue to create a difficult forecasting
environment. Nevertheless, the continuing strong demand for light
vehicles, combined with the historically low level of light vehicle
inventories, should create the opportunity for an improving sales
environment as we move throughout the rest of this year and into
2023," said President and CEO, Steve Downing.
For the second quarter of 2022, the gross margin was 32.0%,
compared to a gross margin of 35.4% for the second quarter of 2021.
Gross margin was impacted on a quarter over quarter basis by raw
material cost increases, labor cost increases, lower than expected
sales levels, product mix shifts and ongoing customer order
volatility. "Inflationary pressures on our raw materials, logistics
costs, and labor costs are currently impacting our margin profile.
In the second quarter of 2022, these challenges were made even more
difficult by the lower than forecasted sales levels, mix issues
created by supply chain challenges and constant fluctuations in
customer orders. While we currently expect that many of these
challenges will continue throughout 2022 and into 2023, we are
optimistic about our ability to stabilize and offset many of these
headwinds due to the progress we are making with our customers
regarding the inflationary aspects of our business by building
collaborative relationships that provide opportunities to minimize
the impact of these inflationary pressures on our respective
business models,” commented Downing.
Operating expenses during the second quarter of 2022 increased
by 21% to $62.6 million, compared to operating expenses of $51.7
million in the second quarter of 2021. Operating expenses increased
during the second quarter of 2022 due to staffing and professional
fees, outbound freight expenses and travel related expenses. “Our
operating expense growth rate for the second quarter of 2022 was
significantly higher than our sales growth rate for the same
quarter but was necessary to support previously sourced new program
launches, product re-designs in support of component issues and our
ongoing commitment to new technology areas. Additionally, the
higher levels of operating expenses are needed based on our current
forecasted growth rate throughout 2022 and into 2023,” said
Downing.
Income from operations for the second quarter of 2022 was $85.8
million, compared to income from operations of $99.9 million for
the second quarter of 2021.
During the second quarter of 2022, the Company had an effective
tax rate of 14.6%, which was primarily driven by the benefit of the
foreign derived intangible income deduction and discrete benefits
from stock-based compensation.
Net income was $72.4 million for the second quarter of 2022,
compared to net income of $86.5 million for the second quarter of
2021. The change in net income was primarily the result of the
quarter over quarter changes in sales, gross margins and operating
profits.
Earnings per diluted share for the second quarter of 2022 were
$0.31, compared to earnings per diluted share of $0.36 for the
second quarter of 2021.
Automotive net sales in the second quarter of 2022 were $452.9
million, compared with $420.6 million in the second quarter of
2021. Auto-dimming mirror unit shipments increased 3% during the
quarter compared to the second quarter of 2021.
Other net sales in the second quarter of 2022, which includes
dimmable aircraft windows and fire protection products, was $10.5
million, compared to other net sales of $7.4 million in the second
quarter of 2021. Fire protection sales increased by 53% for the
second quarter of 2022, compared to the second quarter of 2021.
Dimmable aircraft window sales decreased by 22% for the second
quarter of 2022, compared to the second quarter of 2021. The
Company continues to expect that dimmable aircraft window sales
will be negatively impacted until there is a more meaningful
recovery of the aerospace industry and the Boeing 787 aircraft
production levels improve.
Share RepurchasesDuring the second quarter of
2022, the Company did not repurchase any shares of its common
stock. As of June 30, 2022, the Company has approximately 22.4
million shares remaining available for repurchase pursuant to its
previously announced share repurchase plan. The Company intends to
continue to repurchase additional shares of its common stock in the
future in support of the previously disclosed capital allocation
strategy, but share repurchases may vary from time to time and will
take into account macroeconomic issues (including the impact of the
COVID-19 pandemic and supply constraints), market trends, and other
factors that the Company deems appropriate.
Future EstimatesThe Company’s current forecasts
for light vehicle production for the third quarter of 2022, and
full years 2022 and 2023, are based on the mid-July 2022 IHS Markit
forecast for light vehicle production in North America, Europe,
Japan/Korea and China. Light vehicle production in these markets is
expected to increase 21% for the third quarter of 2022 as compared
to light vehicle production for the third quarter of 2021. For
calendar year 2022, light vehicle production in these markets is
forecasted to increase 4% when compared to calendar year 2021. The
Company continues to expect that revenue will remain difficult to
forecast for the remainder of the year as a result of high levels
of volatility in customer orders and vehicle production volumes,
electronics supply chain constraints, the Ukraine-Russia conflict,
labor shortages, and overall economic uncertainty. Third quarter
2022 and calendar years 2022 and 2023 forecasted vehicle production
volumes from IHS are shown below:
Light Vehicle Production (per IHS Markit mid-July light
vehicle production forecast) |
(in Millions) |
Region |
Q3 2022 |
Q3 2021 |
% Change |
|
CalendarYear 2023 |
CalendarYear 2022 |
CalendarYear 2021 |
|
2023 vs 2022% Change |
2022 vs 2021% Change |
North America |
3.71 |
2.95 |
26 |
% |
|
16.41 |
14.70 |
13.05 |
|
12 |
% |
13 |
% |
Europe |
3.90 |
2.98 |
31 |
% |
|
17.98 |
16.33 |
15.89 |
|
10 |
% |
3 |
% |
Japan and
Korea |
2.95 |
2.30 |
28 |
% |
|
11.85 |
11.20 |
10.87 |
|
6 |
% |
3 |
% |
China |
6.10 |
5.50 |
11 |
% |
|
26.58 |
24.92 |
24.84 |
|
7 |
% |
— |
% |
Total Light Vehicle Production |
16.66 |
13.73 |
21 |
% |
|
72.82 |
67.15 |
64.65 |
|
8 |
% |
4 |
% |
Based on this light vehicle production forecast as well as
year-to-date financials, the Company is updating certain guidance
estimates for calendar year 2022 as shown in the table below.
2022 Guidance |
Item |
Original Guidance |
Updated Guidance |
Revenue |
$1.87 - $2.02 billion |
$1.87 - $1.97 billion |
Gross
Margin |
35% - 36% |
33% - 34% |
Operating
Expenses |
$230 - $240 million |
$230 - $240 million |
Tax
Rate |
15% - 17% |
15% - 16% |
Capital
Expenditures |
$150 - $175 million |
$125 - $150 million |
Depreciation & Amortization |
$100 - $110 million |
$100 - $105 million |
Additionally, based on the Company’s forecasts for light vehicle
production for calendar year 2023, the Company still expects
calendar year 2023 revenue growth of approximately 15% - 20% above
the new 2022 revenue guidance of $1.87 - $1.97 billion.
"As we look back at the quarter, we did see some stabilization
in our sales levels due to the significant amount of re-design work
that we have completed over the last several quarters and some
modest improvement in the overall supply base. Unfortunately, many
of these improvements were offset by new component shortages and
customer order changes and volatility that we expect to continue
throughout the rest of 2022 and into 2023. Despite these
challenges, we still believe that the overall backdrop in the
industry should lead to a demand increase in the automotive market
over the next 12-18 months, and will be supported by growth in Full
Display Mirrors, exterior auto-dimming mirrors, and other new
technologies that we have been investing in over the last few
years. So while we acknowledge that the inflationary aspects of our
business will remain a challenge that needs to be addressed, we are
optimistic about our growth opportunities driven by our commitment
to new technology and our team's ability to handle the cost
challenges that are inundating our industry,” concluded
Downing.
Safe Harbor for Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The statements contained in this
communication that are not purely historical are forward-looking
statements. Forward-looking statements give the Company’s current
expectations or forecasts of future events. These forward-looking
statements generally can be identified by the use of words such as
“anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,”
“future,” “goal,” “guidance,” “hope,” “intend,” “may,” “opinion,”
“optimistic,” “plan,” “poised,” “predict,” “project,” “should,”
“strategy,” “target,” “will,” and variations of such words and
similar expressions. Such statements are subject to risks and
uncertainties that are often difficult to predict and beyond the
Company’s control, and could cause the Company’s results to differ
materially from those described. These risks and uncertainties
include, without limitation: changes in general industry or
regional market conditions; changes in consumer and customer
preferences for our products (such as cameras replacing mirrors
and/or autonomous driving); our ability to be awarded new business;
continued uncertainty in pricing negotiations with customers and
suppliers; loss of business from increased competition; changes in
strategic relationships; customer bankruptcies or divestiture of
customer brands; fluctuation in vehicle production schedules
(including the impact of customer employee strikes); changes in
product mix; raw material and other supply shortages; labor
shortages, supply chain constraints and disruptions; our dependence
on information systems; higher raw material, fuel, energy and other
costs; unfavorable fluctuations in currencies or interest rates in
the regions in which we operate; costs or difficulties related to
the integration and/or ability to maximize the value of any new or
acquired technologies and businesses; changes in regulatory
conditions; warranty and recall claims and other litigation and
customer reactions thereto; possible adverse results of pending or
future litigation or infringement claims; changes in tax laws;
import and export duty and tariff rates in or with the countries
with which we conduct business; negative impact of any governmental
investigations and associated litigation including securities
litigation relating to the conduct of our business; the length and
severity of the COVID-19 (coronavirus) pandemic, including its
impact across our business on demand, operations, and the global
supply chain. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
they are made.
The Company undertakes no obligation to publicly update or
revise any forward-looking statement, whether as a result of new
information, future events or otherwise, except as required by law
or the rules of the NASDAQ Global Select Market. Accordingly, any
forward-looking statement should be read in conjunction with the
additional information about risks and uncertainties identified
under the heading “Risk Factors” in the Company’s latest Form 10-K
and Form 10-Q filed with the SEC, which risks and uncertainties now
include the impacts of COVID-19 (coronavirus) pandemic and supply
chain constraints that have affected, and will continue to affect,
general economic and industry conditions, customers, suppliers, and
the regulatory environment in which the Company operates. Includes
content supplied by IHS Markit Light Vehicle Production Forecast of
July 18, 2022 (http://www.gentex.com/forecast-disclaimer).
Second Quarter Conference CallThe Company will
host a conference call related to this news release and it will
simulcast beginning at 9:30 a.m. ET, July 22, 2022. Participants
who wish to ask questions may register for the call at
https://register.vevent.com/register/BI474da0c712c94c2490d794747bbbb7ec to
receive the dial-in numbers and unique PIN to access the call
seamlessly. It is recommended that participants join 10 minutes
prior to the event start, although they may register ahead of the
call and dial in at any time during the call. Participants may
listen to the call via audio streaming
https://edge.media-server.com/mmc/p/pxb4q3v6. A webcast replay will
be available approximately 24 hours after the conclusion of the
call
at http://ir.gentex.com/events-and-presentations/upcoming-past-events.
About the CompanyFounded in 1974, Gentex
Corporation (The NASDAQ Global Select Market: GNTX) is a leading
supplier of digital vision, connected car, dimmable glass and fire
protection technologies. Visit the Company’s web site at
www.gentex.com.
Contact Information:
Gentex Investor & Media ContactJosh
O'Berski(616)772-1590 x5814
GENTEX
CORPORATIONAUTO-DIMMING MIRROR
SHIPMENTS(Thousands)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
|
% Change |
|
2022 |
|
2021 |
|
% Change |
North American Interior
Mirrors |
2,127 |
|
1,873 |
|
14 % |
|
4,288 |
|
3,946 |
|
9 % |
North American Exterior
Mirrors |
1,468 |
|
1,497 |
|
(2)% |
|
2,929 |
|
2,990 |
|
(2)% |
Total North American Mirror Units |
3,595 |
|
3,370 |
|
7 % |
|
7,217 |
|
6,936 |
|
4 % |
International Interior
Mirrors |
4,909 |
|
4,811 |
|
2 % |
|
9,996 |
|
10,590 |
|
(6)% |
International Exterior
Mirrors |
2,188 |
|
2,240 |
|
(2)% |
|
4,482 |
|
4,676 |
|
(4)% |
Total International Mirror Units |
7,097 |
|
7,052 |
|
1 % |
|
14,477 |
|
15,266 |
|
(5)% |
Total Interior Mirrors |
7,036 |
|
6,684 |
|
5 % |
|
14,284 |
|
14,535 |
|
(2)% |
Total Exterior Mirrors |
3,656 |
|
3,738 |
|
(2)% |
|
7,411 |
|
7,666 |
|
(3)% |
Total Auto-Dimming Mirror Units |
10,692 |
|
10,422 |
|
3 % |
|
21,695 |
|
22,202 |
|
(2)% |
Note: Percent change and amounts may not
total due to rounding.
GENTEX CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
INCOME
|
(Unaudited) |
|
(Unaudited) |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
2022 |
|
|
|
2021 |
Net Sales |
$ |
463,423,002 |
|
|
$ |
428,005,026 |
|
$ |
931,673,777 |
|
|
$ |
911,729,865 |
|
|
|
|
|
|
|
|
Cost of Goods Sold |
|
315,055,988 |
|
|
|
276,408,285 |
|
|
622,894,804 |
|
|
|
576,832,956 |
Gross Profit |
|
148,367,014 |
|
|
|
151,596,741 |
|
|
308,778,973 |
|
|
|
334,896,909 |
|
|
|
|
|
|
|
|
Engineering, Research & Development |
|
32,857,419 |
|
|
|
29,059,058 |
|
|
64,832,406 |
|
|
|
56,711,139 |
Selling, General & Administrative |
|
29,718,626 |
|
|
|
22,613,062 |
|
|
54,849,694 |
|
|
|
44,527,448 |
Operating Expenses |
|
62,576,045 |
|
|
|
51,672,120 |
|
|
119,682,100 |
|
|
|
101,238,587 |
|
|
|
|
|
|
|
|
Income from Operations |
|
85,790,969 |
|
|
|
99,924,621 |
|
|
189,096,873 |
|
|
|
233,658,322 |
|
|
|
|
|
|
|
|
Other Income |
|
(982,985 |
) |
|
|
1,891,098 |
|
|
(993,479 |
) |
|
|
3,424,133 |
Income before Income
Taxes |
|
84,807,984 |
|
|
|
101,815,719 |
|
|
188,103,394 |
|
|
|
237,082,455 |
|
|
|
|
|
|
|
|
Provision for Income
Taxes |
|
12,403,581 |
|
|
|
15,309,301 |
|
|
28,170,366 |
|
|
|
37,125,167 |
|
|
|
|
|
|
|
|
Net Income |
$ |
72,404,403 |
|
|
$ |
86,506,418 |
|
$ |
159,933,028 |
|
|
$ |
199,957,288 |
|
|
|
|
|
|
|
|
Earnings Per Share(1) |
|
|
|
|
|
|
|
Basic |
$ |
0.31 |
|
|
$ |
0.36 |
|
$ |
0.68 |
|
|
$ |
0.83 |
Diluted |
$ |
0.31 |
|
|
$ |
0.36 |
|
$ |
0.68 |
|
|
$ |
0.82 |
|
|
|
|
|
|
|
|
Cash Dividends Declared per
Share |
$ |
0.120 |
|
|
$ |
0.120 |
|
$ |
0.120 |
|
|
$ |
0.240 |
|
|
|
|
|
|
|
|
(1) Earnings Per Share has been adjusted to exclude the
portion of net income allocated to participating securities as a
result of share-based payment awards. |
GENTEX CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS
|
(Unaudited) |
|
|
|
June 30, 2022 |
|
December 31, 2021 |
ASSETS |
|
|
|
Cash and Cash Equivalents |
$ |
269,372,471 |
|
$ |
262,311,670 |
Short-Term Investments |
|
11,992,154 |
|
|
5,423,612 |
Accounts Receivable, net |
|
274,404,572 |
|
|
249,794,906 |
Inventories |
|
392,577,825 |
|
|
316,267,442 |
Other Current Assets |
|
43,539,709 |
|
|
39,178,119 |
Total Current Assets |
|
991,886,731 |
|
|
872,975,749 |
|
|
|
|
Plant and Equipment - Net |
|
488,913,960 |
|
|
464,121,676 |
|
|
|
|
Goodwill |
|
313,857,650 |
|
|
313,960,209 |
Long-Term Investments |
|
197,644,313 |
|
|
207,693,147 |
Intangible Assets |
|
229,010,910 |
|
|
239,189,627 |
Patents and Other Assets |
|
63,140,670 |
|
|
33,450,758 |
Total Other Assets |
|
803,653,543 |
|
|
794,293,741 |
|
|
|
|
Total Assets |
$ |
2,284,454,234 |
|
$ |
2,131,391,166 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
INVESTMENT |
|
|
|
Current Liabilities |
$ |
286,171,887 |
|
$ |
181,656,100 |
Other Non-current Liabilities |
|
11,707,867 |
|
|
11,746,599 |
Shareholders' Investment |
|
1,986,574,480 |
|
|
1,937,988,467 |
Total Liabilities &
Shareholders' Investment |
$ |
2,284,454,234 |
|
$ |
2,131,391,166 |
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