SOURCE: Gentex Corporation

October 22, 2007 08:02 ET

Gentex Reports Record Third Quarter Results

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