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Thu, January 29, 2009
Gentex Corporation: Gentex Reports Fourth Quarter Results
ZEELAND, MI--(Marketwire - January 29, 2009) - Gentex Corporation (
For the fourth quarter of 2008, the Company's net sales declined by 28 percent to $122.3 million compared with $170.7 million in the fourth quarter of 2007. The gross profit margin declined on a year-over-year basis from 34.2 percent in the fourth quarter of 2007 to 28.4 percent in the fourth quarter of 2008. Two-thirds of that decline was the result of the Company's inability to leverage its fixed overhead costs due to production inefficiencies as a result of last-minute customer order reductions. The balance of the decline was due to annual customer price reductions and foreign exchange rates, which were partially offset by purchasing cost reductions.
Income from operations declined by 71 percent in the fourth quarter of 2008 to $9.8 million, compared with $33.7 million in the fourth quarter of 2007, primarily due to the decline in the gross margin as well as a $3.8 million increase in the allowance for doubtful accounts related to certain financially distressed Tier 1 automotive customers.
The net loss of $10.4 million in the fourth quarter of 2008 compared with net income of $31.8 million in the fourth quarter last year was primarily due to the decrease in other income (expense) and reduced operating margin. Other income (expense) decreased in the fourth quarter of 2008 compared with the same prior-year period due to a non-cash charge for other-than-temporary impairment losses of $17.9 million recognized on equity investments, realized losses on the sale of equity investments, and lower year-end mutual fund distributions. The net loss per diluted share was 8 cents in the fourth quarter of 2008 compared with earnings per share of 22 cents in the fourth quarter of 2007.
For calendar year 2008, net sales declined by five percent to $623.8 million compared with $653.9 million in calendar year 2007. Income from operations declined by 22 percent for calendar year 2008 compared with calendar year 2007, primarily due to the decline in the gross profit margin. Net income decreased by 49 percent in calendar year 2008 compared with calendar year 2007, primarily due to the decrease in other income (expense) and reduced operating margin. Other income (expense) decreased in calendar year 2008 compared with calendar year 2007 due to a non-cash charge for other-than-temporary impairment losses of $17.9 million recognized on equity investments, realized losses on the sale of equity investments, and lower year-end mutual fund distributions. Net income for calendar year 2008 was $62.1 million compared with $122.1 million for calendar year 2007. Earnings per diluted share were 44 cents for calendar year 2008 compared with 85 cents for calendar year 2007.
"The fourth quarter of 2008 is by far the toughest quarter that Gentex has experienced in 25 years," said Gentex Chairman and Chief Executive Officer Fred Bauer. "The Company has not reported a loss in operating or net income since 1984, which was three years prior to the introduction of the auto-dimming electrochromic mirror. The significant reductions in automotive production in the fourth quarter caused our customers to reduce their parts requirements, and we had to permanently lay off approximately 360 Gentex associates during the fourth quarter to bring our employment levels in line with our customers' production schedules.
"Like everyone else, we're searching for information that will help provide some guidance as to where 'the bottom' is in the global financial and automotive markets, and at what point we should start seeing the market recover. Given the stimulus actions that have been taken by the United States and other governments, we're hoping that the overall economy will gradually improve throughout 2009, and that the automotive industry will follow soon thereafter."
"We remain optimistic about the future of Gentex due to the continued development of new technologies and products. The Company has remained financially strong and debt free, and we believe we will come though this global economic crisis better than many companies," concluded Bauer.
Share Repurchase Plan
During the fourth quarter, the Company repurchased 2.1 million shares at a cost of approximately $17.9 million. The Company has a share repurchase plan in place with authorization to repurchase up to 28 million shares of the Company's stock. To date, including the prior share repurchases, the Company has repurchased approximately 26 million shares, leaving approximately two million shares authorized to be repurchased under the plan.
Unit Shipments and Revenues
Total auto-dimming mirror unit shipments decreased by 30 percent in the fourth quarter of 2008 compared with the fourth quarter last year. Automotive revenues decreased by 29 percent from $165.3 million in the fourth quarter of 2007 to $117.3 million in the fourth quarter of 2008.
Auto-dimming mirror unit shipments in North America decreased by 36% in the fourth quarter of 2008 compared with the same period in 2007, primarily as a result of significantly lower light vehicle production. North American light vehicle production declined by 26% in the fourth quarter of 2008 compared with the same prior-year period. The declines in light vehicle production were highly concentrated in the light truck/SUV vehicle segment of the market. During the fourth quarter of 2008, vehicle production was down 40 percent on a major truck/SUV platform that offers both interior and exterior Gentex auto-dimming mirrors, and total light truck/SUV production in North America declined by 38 percent during the quarter, as automotive manufacturers significantly reduced or ceased production and extended holiday shutdowns at numerous plants in response to poor sales of those vehicles.
In the fourth quarter of 2008, auto-dimming mirror unit shipments to offshore customers decreased by 24 percent compared with the same period last year. The decrease in unit shipments was primarily due to lower light vehicle production in Europe and Asia. Light vehicle production in Europe decreased by 27 percent in the fourth quarter, and decreased by 16 percent in Japan and Korea in the fourth quarter of 2008, compared with the same period last year.
For calendar year 2008, total auto-dimming mirror unit shipments decreased by five percent and automotive revenues decreased by five percent to $601.5 million, compared with calendar year 2007, primarily due to the significant light vehicle production declines.
Auto-dimming mirror unit shipments in North America decreased by 19 percent in calendar year 2008 compared with calendar year 2007, primarily as a result of significantly lower light vehicle production at the Detroit Three. North American light vehicle production declined by 16 percent in calendar year 2008 compared with calendar year 2007. Production was down 41% in calendar year 2008 on the previously referenced truck/SUV platform for which the Company supplies both interior and exterior auto-dimming mirrors, compared with the same period in 2007. Total light truck/SUV production was down by 25 percent in calendar 2008 compared with calendar year 2007.
Auto-dimming mirror unit shipments to offshore customers increased by five percent in calendar year 2008 compared with calendar year 2007, primarily due to increased unit shipments to certain European and Asian customers. Light vehicle production in Europe decreased by five percent in calendar year 2008 compared with calendar year 2007. Light vehicle production in Japan and Korea decreased by two percent in calendar year 2008 compared with calendar year 2007.
Fire Protection revenues decreased by nine percent to $5.0 million for the fourth quarter of 2008 compared with the same period last year. Fire Protection revenues decreased by seven percent to $22.1 million for calendar year 2008 compared with calendar year 2007. The decreased revenues during both periods were primarily due to the weak commercial construction market.
Future Estimates
Gentex Senior Vice President Enoch Jen provided certain guidance for the first quarter of 2009. "Based on CSM Worldwide's mid-January light vehicle production forecast, we currently expect our revenues in the first quarter of 2009 to decline by approximately 40 percent compared with the first quarter of 2008," said Jen. "Light vehicle production in the first quarter of 2009 currently is expected to decline by 42 percent in North America (including a 46 percent decline in total light truck/SUV production), by 34 percent in Europe and by 29 percent in Japan and Korea.
"It's very difficult to grow your business when your customers are experiencing production declines like these," said Jen. "The production schedules have been very unstable and continue to change on a weekly basis. For that reason, we do not plan to provide full year 2009 guidance at this time. However, CSM is currently forecasting that vehicle production levels will stabilize and then gradually improve during the balance of 2009."
The Company's current first quarter 2009 forecast is based on CSM's mid-January forecast for light vehicle production of 2.0 million units for North America, 3.8 million units for Europe and 2.8 million units for Japan and Korea. CSM's current calendar year 2009 forecast for production is a 21 percent decline to 10.0 million light vehicle units for North America; a 16 percent decline to 17.4 million units for Europe, and a 17 percent decline to 12.0 million units for Japan and Korea.
Safe Harbor Statement
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended, that are based on management's belief, assumptions, current expectations, estimates and projections about the global automotive industry, the economy, the impact of stock option expense, the ability to control and leverage fixed manufacturing overhead costs, unit shipment and revenue growth rates, the ability to control E,R&D and S,G&A expenses, gross margins, and the Company itself. Words like "anticipates," "believes," "confident," "estimates," "expects," "forecast," "hopes," "likely," "plans," "projects," and "should," and variations of such words and similar expressions identify forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict with regard to timing, expense, likelihood and degree of occurrence. These risks include, without limitation, employment and general economic conditions, worldwide automotive production, the maintenance of the Company's market share, the ability to achieve purchasing cost reductions, competitive pricing pressures, currency fluctuations, interest rates, equity prices, the financial strength/stability of the Company's customers (including their Tier 1 suppliers), supply chain disruptions, potential sale of OEM business segments or suppliers, potential customer (including their Tier 1 suppliers) bankruptcies, the mix of products purchased by customers, the ability to continue to make product innovations, the success of certain newer products (e.g. SmartBeam® and Rear Camera Display Mirror), and other risks identified in the Company's other filings with the Securities and Exchange Commission. Therefore, actual results and outcomes may materially differ from what is expressed or forecasted. Furthermore, the Company undertakes no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.
Fourth Quarter Conference Call
A conference call related to this news release will be simulcast live on the Internet beginning at 10:30 a.m. EST today. To access that call, go to [ www.gentex.com ] and select the "Audio Webcast" icon in the lower right-hand corner of the page. Other conference calls hosted by the Company will also be available at that site in the future.
Annual Meeting of Shareholders
The Company's 2009 Annual Meeting of Shareholders will be held on Thursday, May 14, 2009, at 4:30 p.m. EDT at the Pinnacle Center in Hudsonville, Michigan.
About the Company
Founded in 1974, Gentex Corporation (
GENTEX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Year Ended December 31, December 31, 2008 2007 2008 2007 ------------ ------------ ------------- ------------ Net Sales $122,281,421 $170,722,639 $ 623,799,822 $653,933,236 Cost of Goods Sold 87,578,410 112,303,124 420,672,934 426,236,241 ------------ ------------ ------------- ------------ Gross Profit 34,703,011 58,419,515 203,126,888 227,696,995 Engineering, Research & Development 12,652,748 12,740,981 51,888,922 50,715,057 Selling, General & Administrative 12,285,244 9,068,837 42,425,050 35,280,846 Lawsuit Judgment 0 2,885,329 0 2,885,329 ------------ ------------ ------------- ------------ Income from Operations 9,765,019 33,724,368 108,812,916 138,815,763 Other Expense (Income) 25,757,662 (13,725,745) 16,618,055 (40,923,005) ------------ ------------ ------------- ------------ Income (Loss) Before Income Taxes (15,992,643) 47,450,113 92,194,861 179,738,768 Provision for Income Taxes (5,627,538) 15,600,391 30,106,914 57,608,747 ------------ ------------ ------------- ------------ Net Income (Loss) $(10,365,105) $ 31,849,722 $ 62,087,947 $122,130,021 ============ ============ ============= ============ Earnings (Loss) Per Share Basic $ (0.08) $ 0.22 $ 0.44 $ 0.85 Diluted $ (0.08) $ 0.22 $ 0.44 $ 0.85 Weighted Average Shares: Basic 137,890,462 143,995,387 140,902,304 143,056,704 Diluted 137,890,462 145,188,679 141,004,936 144,070,297 Cash Dividends Declared per Share $ 0.110 $ 0.105 $ 0.43 $ 0.40 CONDENSED CONSOLIDATED BALANCE SHEETS Dec 31, Dec 31, 2008 2007 ------------ ------------ ASSETS Cash and Short-Term Investments $323,483,785 $397,988,781 Other Current Assets 133,668,174 130,505,167 ------------ ------------ Total Current Assets 457,151,959 528,493,948 Plant and Equipment - Net 214,951,719 205,609,671 Long-Term Investments and Other Assets 90,999,702 163,919,061 ------------ ------------ Total Assets $763,103,380 $898,022,680 ============ ============ LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities $ 49,472,438 $ 68,362,705 Long-Term Debt 0 0 Deferred Income Taxes 15,034,620 22,847,779 Shareholders' Investment 698,596,322 806,812,196 ------------ ------------ Total Liabilities & Shareholders' Investment $763,103,380 $898,022,680 ============ ============ GENTEX CORPORATION AUTO-DIMMING MIRROR UNIT SHIPMENTS (Thousands) Fourth Quarters Years Ended Ended December 31, December 31, ----------------- ------- ----------------- ------- % % 2008 2007 Change 2008 2007 Change -------- -------- ------- -------- -------- ------- Domestic Interior 842 1,247 -32% 4,095 4,907 -17% -------- -------- ------- -------- -------- ------- Domestic Exterior 238 452 -47% 1,285 1,768 -27% -------- -------- ------- -------- -------- ------- Total Domestic Units 1,080 1,699 -36% 5,380 6,676 -19% -------- -------- ------- -------- -------- ------- -------- -------- ------- -------- -------- ------- Foreign Interior 1,141 1,589 -28% 6,410 6,093 5% -------- -------- ------- -------- -------- ------- Foreign Exterior 497 574 -13% 2,598 2,452 6% -------- -------- ------- -------- -------- ------- Total Foreign Units 1,638 2,163 -24% 9,009 8,545 5% -------- -------- ------- -------- -------- ------- -------- -------- ------- -------- -------- ------- Total Interior Mirrors 1,983 2,836 -30% 10,505 11,000 -5% -------- -------- ------- -------- -------- ------- Total Exterior Mirrors 735 1,026 -28% 3,884 4,220 -8% -------- -------- ------- -------- -------- ------- Total Mirror Units 2,718 3,863 -30% 14,389 15,221 -5% -------- -------- ------- -------- -------- ------- Note: Certain prior year amounts have been reclassified to conform with the current year presentation. Percent change and amounts may not total due to rounding.