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 months
ended March 31, 2021.
1st Quarter 2021 Summary
- Net sales of $483.7
million, a 7% increase compared to the first quarter of
2020
- Gross profit margin of
37.9%, a 340 basis point improvement over the first quarter of
2020
- Net income of $113.5
million, a 27% increase compared to the first quarter of
2020
- Earnings per diluted share
of $0.46, a 28% increase compared to the first quarter of
2020
- 2.8 million shares
repurchased
For the first quarter of 2021, the Company
reported net sales of $483.7 million, which was an increase of 7%
compared to net sales of $453.8 million in the first quarter of
2020. During the first quarter of 2021, vehicle production levels
were negatively impacted by electronics and other part shortage
issues. These shortages were the primary reason for the 12%
reduction in North American light vehicle production compared to
the beginning of the quarter forecasts. The part shortages also
impacted light vehicle production levels in Europe and the Japan
and Korea markets which were each down 3% versus the beginning of
the quarter forecasts. The part shortages and corresponding change
to light vehicle production are estimated to have reduced Company
revenue in the first quarter of 2021 by approximately $45 million.
Despite these issues, the first quarter of 2021 was the second
highest sales quarter in Company history, behind only the fourth
quarter of 2020. "Our guidance for the year included a first
quarter that was forecasted to be similar to the fourth quarter of
2020 from a revenue perspective, but first quarter revenues were
clearly impacted by the difficulties created by parts shortages,"
said President and CEO Steve Downing. “During the first quarter of
2021, our primary revenue generating markets of North America,
Europe and Japan and Korea were down 2% on a combined basis, when
compared to the first quarter of 2020, which means our revenue
growth of 7% yielded a total out-growth versus the underlying
market of 9%. It is also important to remember that the first
quarter of 2020 was negatively impacted by COVID-19 shutdowns,
which means that vehicle production levels from the first quarter
of 2021 declined 15% in comparison to the first quarter of 2019.
However, the Company has experienced a net revenue growth rate of
3% when comparing those quarters, which calculates to a 18%
outperformance versus the underlying market in that two year
period.” concluded Downing.
For the first quarter of 2021, the gross margin
was 37.9%, compared to a gross margin of 34.5% for the first
quarter of 2020. The gross margin improved significantly on a
quarter over quarter basis, which was driven by the structural cost
savings put in place in the second quarter of 2020, as well as
product mix tailwinds related to exterior-auto dimming mirror unit
shipment growth and Full Display Mirror® unit shipment growth.
Gross margins were negatively impacted during the quarter by part
shortages that resulted in raw material price increases and
increased freight costs. "The Company has once again performed very
well in an incredibly difficult operating environment. The chaos
created this quarter by component shortages, freight issues, as
well as customer plant shutdowns and order changes made scheduling
very difficult, but the team at Gentex was able to not only keep up
with our customers’ orders but also improve gross margins by 340
basis points versus the first quarter of last year,” said Downing.
“While the gross margin in the first quarter of 2021 was below our
annual guidance range, the majority of that shortfall was driven by
the $45 million in lost sales in the quarter. We expect to see
further improvement in gross margins based on the higher sales
levels that are forecasted for the remainder of the year."
Operating expenses during the first quarter of 2021 decreased by 4%
to $49.6 million, compared to operating expenses of $51.6 million
in the first quarter of 2020. The decrease was primarily driven by
the continuation of the structural cost reductions made during the
second quarter of 2020, but the lack of international travel and
the cancellation of all industry-based trade shows because of the
COVID-19 pandemic also contributed to lower operating expenses.
Income from operations for the first quarter of 2021 was $133.7
million, which was an increase of 27% when compared to income from
operations of $105.0 million for the first quarter of 2020.During
the first quarter of 2021, the Company's effective tax rate was
16.1%, down from 16.6% during the first quarter of 2020. The
decrease in the tax rate was driven by increased foreign derived
intangible income deductions, as well as increased discrete
benefits from stock-based compensation. Net income increased 27% to
$113.5 million for the first quarter of 2021 compared to net income
of $89.5 million in the first quarter of 2020. The increase in net
income was driven by the quarter over quarter increase in sales,
improved product mix, higher gross margins and the continued
operating leverage as a result of the structural cost savings that
were put in place during the second quarter of 2020.
Earnings per diluted share for the first quarter
of 2021 were $0.46, an increase of 28% compared to earnings per
diluted share of $0.36 for the first quarter of 2020. The increase
in earnings per share is the result of the higher net income and a
lower diluted share count when compared to the first quarter of
2020.
Automotive net sales in the first quarter of
2021 were $475.6 million, compared with $439.9 million in the first
quarter of 2020, which was an 8% increase quarter over quarter.
Auto-dimming mirror unit shipment growth outpaced revenue growth
during the first quarter of 2021 primarily as a result of a 15%
growth in international shipments. The increase in international
unit shipments were largely comprised of base interior and exterior
auto-dimming mirror units and included significant growth in the
China market.
Other net sales in the first quarter of 2021,
which includes dimmable aircraft windows and fire protection
products, were $8.1 million, a decrease of 42% compared to other
net sales of $13.9 million in the first quarter of 2020. Dimmable
aircraft window sales decreased by 70% for the first quarter of
2021 when compared to the first quarter of 2020. The Company
continues to expect that dimmable aircraft window sales will be
impacted until there is a more meaningful recovery of the aerospace
industry and the Boeing 787 aircraft production levels improve.
Share RepurchasesDuring the
first quarter of 2021, the Company repurchased 2.8 million shares
of its common stock at an average price of $35.46 per share. As of
March 31, 2021, the Company has approximately 6.7 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), market trends, and other factors that the Company deems
appropriate. Future EstimatesThe Company’s current
forecasts for light vehicle production for the second quarter 2021,
and full years 2021 and 2022 are based on the mid-April 2021 IHS
Markit forecast for light vehicle production in North America,
Europe, Japan/Korea and China. Light vehicle production in the
Company's primary markets is expected to increase 46% for the
second quarter of 2021 versus the same period last year as a result
of rebounds in North America, Europe and Japan/Korea production as
compared to the COVID-19 impacted second quarter of 2020. For
calendar year 2021, light vehicle production in our primary markets
is forecasted to increase 10% when compared to calendar year 2020.
Second quarter 2021, and calendar years 2021 and 2022 forecasted
vehicle production volumes are shown below:
Light Vehicle Production (per IHS Markit mid-April light
vehicle production forecast) |
(in Millions) |
Region |
Q2 2021 |
Q2 2020 |
% Change |
|
Calendar Year 2022 |
Calendar Year 2021 |
Calendar Year 2020 |
|
2022 vs 2021% Change |
2021 vs 2020% Change |
North America |
3.78 |
|
1.38 |
|
174 |
|
% |
|
16.86 |
15.68 |
13.02 |
|
8 |
% |
20 |
% |
Europe |
4.70 |
|
2.25 |
|
109 |
|
% |
|
20.06 |
18.63 |
16.57 |
|
8 |
% |
12 |
% |
Japan and
Korea |
2.70 |
|
2.01 |
|
34 |
|
% |
|
12.35 |
11.74 |
11.21 |
|
5 |
% |
5 |
% |
China |
5.94 |
|
6.08 |
|
(2 |
) |
% |
|
26.29 |
24.87 |
23.59 |
|
6 |
% |
5 |
% |
Total Light Vehicle Production |
17.12 |
|
11.72 |
|
46 |
|
% |
|
75.56 |
70.92 |
64.39 |
|
7 |
% |
10 |
% |
Based on this light vehicle production forecast,
the structural cost savings that were implemented in 2020, and the
first quarter 2021 results, the Company is making no changes to its
previously provided guidance for calendar year 2021 as shown in the
table below. Over the last several quarters, the Company has been
closely monitoring the tariff discussions between the US and the
EU. Currently, EU Regulation 2018/0886 is scheduled to go into
effect on June 1, 2021. The Company remains hopeful that a trade
agreement can be reached before this date so that the increased
tariffs do not take effect. If these tariffs do go into effect on
June 1, 2021, the Company estimates an impact in 2021 of
approximately $7 - $10 million in incremental expense that is not
contemplated in the guidance below.
2021 Guidance |
Item |
2021 |
Revenue |
$1.94 - $2.02 billion |
Gross
Margin |
39% - 40% |
Operating
Expenses |
$210 - $220 million |
Tax
Rate |
16% - 18% |
Capital
Expenditures |
$85 - $95 million |
Depreciation & Amortization |
$105 - $110 million |
Based on the mid-April 2021 light vehicle
production estimates for 2022, the Company is updating revenue
guidance for 2022. Despite the fact that there continues to be
significant uncertainty regarding macroeconomic conditions,
underlying overall consumer demand for light vehicles worldwide,
and the continued impact from the COVID-19 pandemic; the Company is
increasing its estimate for calendar year 2022 revenue to be
approximately 8% - 13% higher than the estimated revenue for
calendar year 2021. "Our forecast for calendar year 2021 remains
strong despite the supply chain issues that are continuing to
impact the current vehicle production environment. While these
issues create instability in the short term, the industry dynamics
currently point to improved light vehicle production for the second
half of 2021 and also forecast the continued recovery of light
vehicle production into calendar year 2022. More specific to
Gentex, the combination of our launch cadence, product mix and
overall program awards continue to provide us confidence about the
future growth rate and health of our business in an otherwise hard
to predict market. Over the last 12 months, our employees have been
able to adapt to each situation. First, it was never seen before
shutdowns, followed by the busiest six months in Company history.
We are now battling to make sure we are able provide products to
our customers at the volume and timing they require without
compromising our commitment to the quality standards that underlies
our reputation in the industry. Accomplishing these objectives has
become quite difficult, but we are not satisfied with those
accomplishments alone. During this difficult time, we have
continued our active pursuit of new technologies, maintained our
focus on cost discipline that yielded margin improvement on our
core business, and continued to invest capital in the Company, all
while maintaining our rigorous approach to capital allocation and
share repurchases,” concluded Downing.
Safe Harbor for Forward-Looking StatementsThis
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”, “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; 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; supply chain disruptions; our
dependence of 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 that has 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 April 16, 2021
(http://www.gentex.com/forecast-disclaimer).
First Quarter Conference CallA conference call
related to this news release will be simulcast live on the internet
beginning at 9:30 a.m. ET, April 23, 2021. The dial-in number to
participate in the call is 844-389-8658, passcode
8652117. Participants may listen to the call via
audio streaming at ir.gentex.com or by
visiting https://edge.media-server.com/mmc/p/fp6m9zc8. 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 March 31, |
|
2021 |
|
2020 |
|
% Change |
North American Interior Mirrors |
2,073 |
|
2,019 |
|
3 |
% |
North American Exterior
Mirrors |
1,493 |
|
1,234 |
|
21 |
% |
Total North American Mirror Units |
3,566 |
|
3,253 |
|
10 |
% |
International Interior
Mirrors |
5,779 |
|
5,032 |
|
15 |
% |
International Exterior
Mirrors |
2,436 |
|
2,108 |
|
16 |
% |
Total International Mirror Units |
8,215 |
|
7,141 |
|
15 |
% |
Total Interior Mirrors |
7,852 |
|
7,051 |
|
11 |
% |
Total Exterior Mirrors |
3,929 |
|
3,343 |
|
18 |
% |
Total Auto-Dimming Mirror Units |
11,780 |
|
10,394 |
|
13 |
% |
Note: Percent change and amounts may not total due to
rounding.
GENTEX CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
INCOME
|
(Unaudited) |
|
Three Months Ended March 31, |
|
2021 |
|
2020 |
Net Sales |
$ |
483,724,839 |
|
$ |
453,761,726 |
|
|
|
|
Cost of Goods Sold |
300,424,671 |
|
297,174,245 |
Gross Profit |
183,300,168 |
|
156,587,481 |
|
|
|
|
Engineering, Research & Development |
27,652,081 |
|
29,615,422 |
Selling, General & Administrative |
21,914,386 |
|
21,944,892 |
Operating Expenses |
49,566,467 |
|
51,560,314 |
|
|
|
|
Income from Operations |
133,733,701 |
|
105,027,167 |
|
|
|
|
Other Income |
1,533,035 |
|
2,247,482 |
Income before Income
Taxes |
135,266,736 |
|
107,274,649 |
|
|
|
|
Provision for Income
Taxes |
21,815,866 |
|
17,768,848 |
|
|
|
|
Net Income |
$ |
113,450,870 |
|
$ |
89,505,801 |
|
|
|
|
Earnings Per Share(1) |
|
|
|
Basic |
$ |
0.47 |
|
$ |
0.36 |
Diluted |
$ |
0.46 |
|
$ |
0.36 |
|
|
|
|
Cash Dividends Declared per
Share |
$ |
0.120 |
|
$ |
0.120 |
|
|
|
|
(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) |
|
|
|
March 31, 2021 |
|
December 31, 2020 |
ASSETS |
|
|
|
Cash and Cash Equivalents |
$ |
455,940,751 |
|
$ |
423,371,036 |
Short-Term Investments |
25,944,114 |
|
27,164,369 |
Accounts Receivable, net |
277,676,643 |
|
284,925,335 |
Inventories |
233,060,307 |
|
226,291,843 |
Other Current Assets |
17,893,732 |
|
17,577,981 |
Total Current Assets |
1,010,515,547 |
|
979,330,564 |
|
|
|
|
Plant and Equipment - Net |
460,593,013 |
|
468,135,135 |
|
|
|
|
Goodwill |
314,681,508 |
|
311,922,787 |
Long-Term Investments |
172,934,410 |
|
162,028,068 |
Intangible Assets |
256,911,809 |
|
249,748,127 |
Patents and Other Assets |
26,809,257 |
|
26,776,489 |
Total Other Assets |
771,336,984 |
|
750,475,471 |
|
|
|
|
Total Assets |
$ |
2,242,445,544 |
|
$ |
2,197,941,170 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
INVESTMENT |
|
|
|
Current Liabilities |
$ |
223,229,993 |
|
$ |
177,736,857 |
Other Non-current Liabilities |
18,059,874 |
|
17,300,442 |
Deferred Income Taxes |
40,174,963 |
|
38,960,743 |
Shareholders' Investment |
1,960,980,714 |
|
1,963,943,128 |
Total Liabilities &
Shareholders' Investment |
$ |
2,242,445,544 |
|
$ |
2,197,941,170 |
Gentex (NASDAQ:GNTX)
Historical Stock Chart
From Apr 2024 to May 2024
Gentex (NASDAQ:GNTX)
Historical Stock Chart
From May 2023 to May 2024