ZEELAND, MI--(Marketwire - October 22, 2007) - Gentex Corporation (
NASDAQ:
GNTX), the Zeeland,
Michigan-based manufacturer of automatic-dimming rearview mirrors and
commercial fire protection products, today reported record financial
results for the third quarter and nine-month periods ended September 30,
2007.
The Company's net sales increased by 15 percent from $141.3 million in the
third quarter of 2006 to a third quarter record $162.5 million in the third
quarter of 2007. Net income for the third quarter of 2007 increased by 23
percent to $29.8 million compared with $24.3 million in the third quarter
last year. Earnings per diluted share increased to 21 cents in the third
quarter of 2007 compared with 17 cents in the third quarter of 2006.
For the first nine months of 2007, net sales increased by 14 percent to
$483.2 million compared with $422.7 million in the first nine months of
2006. Net income for the first nine months of 2007 increased by 16 percent
to $90.3 million compared with $77.9 million in the first nine months of
2006. Earnings per diluted share increased by 21 percent to 63 cents for
the first nine months of 2007 compared with 52 cents for the same period in
calendar 2006.
During the third quarter of 2007, the Company's quarterly financial results
were negatively impacted by approximately $1.6 million (pre-tax) in
expenses related to litigation between the Company and K.W. Muth and Muth
Mirror Systems LLC. The litigation, as previously announced, relates to
exterior mirrors with turn signal indicators.
"We are pleased that we reported another good quarter of growth and other
positive operating improvements," said Gentex Chairman and Chief Executive
Officer Fred Bauer. "Mirror unit shipments for the third quarter of 2007
increased by 15 percent, but automotive revenues increased by 16 percent
due to a richer mix of mirror products shipped during the quarter. For the
current quarter, unit shipments in North America increased by 18 percent,
primarily due to increased interior mirror unit shipments for certain
domestic and Asian transplant automakers. Increased penetration at certain
of our Asian and European automotive customers was the primary factor in
achieving a 13 percent increase in our offshore unit shipments."
Gentex Senior Vice President Enoch Jen provided certain guidance for the
fourth quarter.
"For the fourth quarter of 2007, we anticipate that our mirror unit
shipments and revenues will increase by approximately 10-15 percent over
the same prior-year period, based on the current forecast for product mix."
Jen also said that based on the current fourth quarter forecast, the gross
margin in the fourth quarter is expected to be similar to the gross margin
in the second quarter of 2007. On a year-over-year basis, the Company
significantly improved its gross margin from 33.9% in the third quarter of
2006 to 35.1% in the third quarter of 2007, primarily due to higher growth
rates that allowed the Company to better leverage its fixed overhead costs,
purchasing cost reductions and improved manufacturing yields.
Jen said that the Company's current fourth quarter 2007 forecast is based
on CSM's preliminary mid-October forecast for light vehicle production of
3.6 million units for North America, 5.5 million units for Europe and 3.9
million units for Japan and Korea. The Company's current calendar year
2007 forecast is based on CSM's 2007 calendar year projection of 15.0
million units for North America, 21.5 million units for Europe and 14.7
million units for Japan and Korea.
Total auto-dimming mirror unit shipments in the third quarter of 2007 were
approximately 3.7 million, a 15 percent increase over the same period last
year. Auto-dimming mirror unit shipments increased by 13 percent to 11.4
million for the first nine months of 2007, compared with the same
prior-year period.
Auto-dimming mirror unit shipments to customers in North America increased
by 18 percent to approximately 1.6 million in the third quarter of 2007
compared with the same quarter last year. North American light vehicle
production was up four percent in the third quarter of 2007 compared with
the same period in 2006. For the first nine months of 2007, auto-dimming
mirror unit shipments to customers in North America increased by nine
percent to approximately 5.0 million compared with the same period last
year. North American light vehicle production declined by two percent for
the first nine months of 2007 compared with the same period in 2006.
Unit shipments to offshore customers increased by 13 percent to
approximately 2.1 million in the third quarter of 2007 compared with the
same period in 2006. Light vehicle production in Europe increased by six
percent, and production increased by five percent in Japan and Korea, in
the third quarter of 2007, compared with the same prior year period.
Automotive revenues increased by 16 percent to $156.5 million in the third
quarter of 2007 compared with the same period last year, and increased by
15 percent to $464.8 million for the first nine months of 2007, compared
with the first nine months of 2006. Fire Protection revenues decreased by
three percent to $6.0 million for the third quarter of 2007 compared with
the third quarter of 2006, and were approximately flat at $18.4 million for
the first nine months of 2007, compared with the same period in 2006.
Non-GAAP Financial Measure
The financial information provided, including earnings, is in accordance
with GAAP. Still, the Company believes it is useful to provide non-GAAP
earnings to exclude the effect of Statement of Financial Accounting
Standards No. 123(R), "Share-Based Payment" [FAS 123(R)]. This non-GAAP
financial measure allows investors to evaluate current performance in
relation to historic performance without considering this non-cash charge.
The Company's management uses this non-GAAP information internally to help
assess performance in the current period versus historical performance
(especially prior periods where this non-cash charge was not included).
Disclosure of non-GAAP earnings to exclude the effect of FAS 123(R) has
economic substance because the excluded expenses do not represent current
or future cash expenditures.
A reconciliation of non-GAAP earnings, to exclude the effect of FAS 123(R),
to GAAP earnings can be found in the attached financial table. The use of
non-GAAP earnings is intended to supplement, not to replace, presentation
of GAAP earnings. Like all non-GAAP financial measures, non-GAAP earnings
are subject to inherent limitations because all of the expenses required by
GAAP are not included. The limitations are compensated by the fact that
non-GAAP earnings are not relied on exclusively, but are used to simply
supplement GAAP earnings.
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
expenses on earnings, the ability to leverage fixed manufacturing overhead
costs, unit shipment and revenue growth rates and the Company itself.
Words like "anticipates," "believes," "confident," "estimates," "expects,"
"forecast," "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, the pace of automotive production worldwide, the maintenance of
the Company's relative market share, competitive pricing pressures,
currency fluctuations, the financial strength of the Company's customers,
supply chain disruptions, potential sale of OEM business segments or
suppliers, the mix of products purchased by customers, the ability to
continue to make product innovations, the success of certain newer products
(e.g. SmartBeam®, Z-Nav® and Rear Camera Display Mirror), and other
risks identified in the Company's 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.
Third Quarter Conference Call
A conference call related to this news release will be simulcast live on
the Internet beginning at 10:30 a.m. Eastern Daylight Saving Time 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.
About the Company
Founded in 1974, Gentex Corporation (
NASDAQ:
GNTX) is an international
company that provides high-quality products to the worldwide automotive
industry and North American fire protection market. Based in Zeeland,
Michigan, the Company develops, manufactures and markets interior and
exterior automatic-dimming automotive rearview mirrors that utilize
proprietary electrochromic technology to dim in proportion to the amount of
headlight glare from trailing vehicle headlamps. Many of the mirrors are
sold with advanced electronic features, and approximately 96 percent of the
Company's revenues are derived from the sales of auto-dimming mirrors to
nearly every major automaker in the world.
GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
------------- ------------- ------------- -------------
Net Sales $ 162,524,803 $ 141,265,647 $ 483,210,597 $ 422,677,471
Costs and
Expenses
Cost of Goods
Sold 105,522,931 93,387,125 313,933,117 275,669,763
Engineering,
Research &
Development 13,251,945 10,536,334 37,974,076 30,658,131
Selling,
General &
Administrat-
ive 9,112,808 7,737,384 26,212,009 23,041,411
Other Expense
(Income) (9,215,954) (6,103,269) (27,197,260) (20,769,939)
------------- ------------- ------------- -------------
Total Costs and
Expenses 118,671,730 105,557,574 350,921,942 308,599,366
------------- ------------- ------------- -------------
Income Before
Provision
for Income
Taxes 43,853,073 35,708,073 132,288,655 114,078,105
Provision for
Income Taxes 14,026,590 11,370,152 42,008,356 36,133,077
------------- ------------- ------------- -------------
Net Income $ 29,826,483 $ 24,337,921 $ 90,280,299 $ 77,945,028
============= ============= ============= =============
Earnings Per
Share
Basic $ 0.21 $ 0.17 $ 0.63 $ 0.52
Diluted $ 0.21 $ 0.17 $ 0.63 $ 0.52
Weighted
Average
Shares:
Basic 143,496,082 144,879,673 142,740,287 149,871,596
Diluted 144,842,628 145,092,084 143,699,262 150,441,525
Cash Dividends
Declared per
Share $ 0.105 $ 0.095 $ 0.295 $ 0.275
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
Sept 30, Dec 31,
2007 2006
------------- -------------
ASSETS
Cash and
Short-Term
Investments $ 380,944,140 $ 328,227,710
Other Current
Assets 138,806,947 118,650,384
------------- -------------
Total Current
Assets 519,751,087 446,878,094
Plant and
Equipment -
Net 198,135,164 184,134,373
Long-Term
Investments
and Other
Assets 170,304,031 154,015,933
------------- -------------
Total Assets $ 888,190,282 $ 785,028,400
============= =============
LIABILITIES AND
SHAREHOLDERS'
INVESTMENT
Current
Liabilities $ 70,314,815 $ 57,362,978
Long-Term Debt 0 0
Deferred Income
Taxes 26,629,722 24,971,133
Shareholders'
Investment 791,245,745 702,694,289
------------- -------------
Total
Liabilities &
Shareholders'
Investment $ 888,190,282 $ 785,028,400
============= =============
AUTO-DIMMING MIRROR UNIT SHIPMENTS
(Thousands)
Third Quarter Nine Months Ended
Ended September 30, September 30,
--------------------- ---------------------
% %
2007 2006 Change 2007 2006 Change
------ ------ ------- ------ ------ -------
Domestic Interior
1,235 978 26% 3,661 3,207 14%
------ ------ ------- ------ ------ -------
Domestic Exterior 412 414 -0.5% 1,322 1,370 -4%
------ ------ ------- ------ ------ -------
Total Domestic Units 1,647 1,392 18% 4,983 4,578 9%
------ ------ ------- ------ ------ -------
------ ------ ------- ------ ------ -------
Foreign Interior 1,443 1,248 16% 4,503 3,808 18%
------ ------ ------- ------ ------ -------
Foreign Exterior 615 569 8% 1,872 1,625 15%
------ ------ ------- ------ ------ -------
Total Foreign Units 2,059 1,818 13% 6,375 5,433 17%
------ ------ ------- ------ ------ -------
------ ------ ------- ------ ------ -------
Total Interior
Mirrors 2,678 2,226 20% 8,164 7,015 16%
------ ------ ------- ------ ------ -------
Total Exterior
Mirrors 1,028 984 4% 3,193 2,995 7%
------ ------ ------- ------ ------ -------
Total Mirror Units 3,706 3,210 15% 11,358 10,010 13%
------ ------ ------- ------ ------ -------
Note: Certain prior year amounts have been reclassified to conform
with the current year presentation. Amounts may not total due to
rounding
GENTEX CORPORATION AND SUBSIDIARIES
STATEMENTS OF INCOME RECONCILIATION
NON-GAAP MEASUREMENT TO GAAP
Three Months Ended September 30, 2007
----------------------------------------
(Non-GAAP
Stock Excluding
Option Stock Option
GAAP Expense Expense)
------------- ---------- -------------
Net Sales $ 162,524,803 $ 0 $ 162,524,803
Costs and
Expenses
Cost of Goods
Sold 105,522,931 (602,146) 104,920,785
Engineering,
Research &
Development 13,251,945 (634,777) 12,617,168
Selling,
General &
Administrative 9,112,808 (693,911) 8,418,897
Other Expense
(Income) (9,215,954) 0 (9,215,954)
------------- ---------- -------------
Total Costs and
Expenses 118,671,730 (1,930,834) 116,740,896
------------- ---------- -------------
Income Before
Provision
for Income
Taxes 43,853,073 1,930,834 45,783,907
Provision for
Income Taxes 14,026,590 1,083,410 15,110,000
------------- ---------- -------------
Net Income 29,826,483 847,424 30,673,907
============= ========== =============
Nine Months Ended September 30, 2007
----------------------------------------
(Non-GAAP
Excluding
Stock Option Stock Option
GAAP Expense Expense)
------------- ---------- -------------
Net Sales $ 483,210,597 $ 0 $ 483,210,597
Costs and
Expenses
Cost of Goods
Sold 313,933,117 (1,776,564) 312,156,553
Engineering,
Research &
Development 37,974,076 (1,910,338) 36,063,738
Selling,
General &
Administrative 26,212,009 (1,795,698) 24,416,311
Other Expense
(Income) (27,197,260) 0 (27,197,260)
------------- ---------- -------------
Total Costs and
Expenses 350,921,942 (5,482,600) 345,439,342
------------- ---------- -------------
Income Before
Provision
for Income
Taxes 132,288,655 5,482,600 137,771,255
Provision for
Income Taxes 42,008,356 3,469,644 45,478,000
------------- ---------- -------------
Net Income 90,280,299 2,012,956 92,293,255
------------- ---------- -------------
Three Months Ended September 30, 2006
-----------------------------------------
Non-
GAAP GAAP
(Non-GAAP 2007 2007
Stock Excluding vs. vs.
Option Stock Option 2006 % 2006 %
GAAP Expense Expense) Change Change
------------- ----------- ------------- ------ ------
Net Sales $ 141,265,647 $ 0 $ 141,265,647 15.0% 15.0%
Costs and
Expenses
Cost of Goods
Sold 93,387,125 (565,696) 92,821,429 13.0% 13.0%
Engineering,
Research &
Development 10,536,334 (604,667) 9,931,667 25.8% 27.0%
Selling,
General &
Administrative 7,737,384 (636,647) 7,100,737 17.8% 18.6%
Other Expense
(Income) (6,103,269) 0 (6,103,269) 51.0% 51.0%
------------- ----------- -------------
Total Costs and
Expenses 105,557,574 (1,807,010) 103,750,564 12.4% 12.5%
------------- ----------- -------------
Income Before
Provision
for Income
Taxes 35,708,073 1,807,010 37,515,083 22.8% 22.0%
Provision for
Income Taxes 11,370,152 540,848 11,911,000 23.4% 26.9%
------------- ----------- -------------
Net Income $ 24,337,921 $ 1,266,162 $ 25,604,083 22.6% 19.8%
============= =========== =============
Nine Months Ended September 30, 2006
-----------------------------------------
Non-
GAAP GAAP
(Non-GAAP 2007 2007
Stock Excluding vs. vs.
Option Stock Option 2006 % 2006 %
GAAP Expense Expense) Change Change
------------- ----------- ------------- ------ ------
Net Sales $ 422,677,471 $ 0 $ 422,677,471 14.3% 14.3%
Costs and
Expenses
Cost of Goods
Sold 275,669,763 (1,683,057) 273,986,706 13.9% 13.9%
Engineering,
Research &
Development 30,658,131 (1,881,448) 28,776,683 23.9% 25.3%
Selling,
General &
Administrative 23,041,411 (1,712,395) 21,329,016 13.8% 14.5%
Other Expense
(Income) (20,769,939) 0 (20,769,939) 30.9% 30.9%
------------- ----------- -------------
Total Costs and
Expenses 308,599,366 (5,276,900) 303,322,466 13.7% 13.9%
------------- ----------- -------------
Income Before
Provision
for Income
Taxes 114,078,105 5,276,900 119,355,005 16.0% 15.4%
Provision for
Income Taxes 36,133,077 1,762,923 37,896,000 16.3% 20.0%
------------- ----------- -------------
Net Income $ 77,945,028 $ 3,513,977 $ 81,459,005 15.8% 13.3%
------------- ----------- -------------
Contact Information: CONTACT:
Connie Hamblin
(616) 772-1800