1) The top 15-20 percent of the vehicle market will primarily offer the
display for a rear camera in the navigation system, with the option
of purchasing an RCD Mirror; and
2) The rest of the market is the most likely segment to offer the
camera display in the mirror or in other multi-purpose displays in
the vehicle in a number of different locations, including the radio,
instrument panel, console, etc. This is the segment of the market
that the Company believes offers the greatest volume potential, but
also has significant and increasing competition.
Jen also said that, as the Company has previously indicated, RCD Mirrors
will likely be implemented in three overlapping phases by automakers:
1. Market-Driven Phase: time period prior to any legislation through NHTSA's preliminary interpretation of the legislation on December 3, 2010; 2. "Wait and See" Phase: period of time from when the legislation was signed into law on February 28, 2008, until the final interpretation, which currently is expected by February 28, 2011; and 3. Implementation Phase: from the December 3, 2010, preliminary interpretation date until September of 2014, when 100 percent of all vehicles in the U.S. less than 10,000 lbs. will be required to be equipped with rear cameras and displays.Jen indicated that another factor affecting these three phases is that there are certain automakers that have made it clear that they want to be leaders in this safety area, and so those automakers have either already come forward and announced their strategies for how they will offer displays in their vehicles or are expected by the Company to do so in the near future. He said that it is important to understand the level of complexity involved in the customer decision-making process for determining how each different vehicle model will comply with these new, relatively technical regulations. At most automakers, the individuals who are responsible for displays, center consoles, mirrors and the rear back-up cameras each come from different departments at the automaker. While it's relatively straightforward to implement a Gentex auto-dimming RCD Mirror in a vehicle, pulling together the rest of the camera-based system at the automaker may be more complicated for the reasons discussed above. Jen said that based on NHTSA's December 3, 2010, preliminary interpretation, "We understand that our customers are all busily working to determine how they will meet NHTSA's phase-in schedule, and there are many decisions yet to be made. "We believe that this 'wait and see' phase may cause a brief slowdown in the ramp-up of RCD Mirror unit shipments until customers determine how they're going to meet the requirements of this new regulation across all of their vehicle lines -- and then implement those plans," said Jen. "Because we are in both the 'wait and see' phase and the early stages of the implementation phase, and many automakers are revisiting any decisions that may have been made prior to the December 3 NHTSA announcement, we believe that there are too many uncertainties to provide annual guidance for RCD Mirror unit shipments at this time and, as a result, we currently plan to only provide guidance for the first six months of the year," said Jen. The Rear Camera Display Mirrors display high-resolution, color images of the area directly behind the vehicle via an automaker-specified camera. SmartBeam is the Company's proprietary high beam headlamp assist system. Driver-assist features include several levels of the SmartBeam variable forward lighting product, as well as items like lane-departure warning and traffic sign recognition. Gentex currently is working to fill a significant number of technical positions, primarily in the electrical and software development and engineering areas. Additional information is available at http://www.gentex.com/corp_jobs.html. Unit Shipments and Net Sales Total auto-dimming mirror unit shipments increased by 26 percent in the fourth quarter of 2010 compared with the fourth quarter last year. Automotive net sales increased by 26 percent from $173.3 million in the fourth quarter of 2009 to $217.7 million in the fourth quarter of 2010. Total auto-dimming mirror unit shipments increased by 46 percent in calendar year 2010 compared with calendar year 2009. Automotive net sales increased by 52 percent from $525.6 million in calendar year 2009 to $797.1 million in calendar year 2010. Automatic-dimming mirror unit shipments increased by 27 percent in North America in the fourth quarter of 2010 compared with the fourth quarter of 2009, primarily as a result of increased mirror unit shipments to the domestic automakers as well as the Asian transplant automakers. North American light vehicle production increased by 8 percent in the fourth quarter of 2010 compared with the same prior-year period. Automatic-dimming mirror unit shipments increased by 56 percent in North America in calendar year 2010 compared with calendar year 2009, primarily as a result of increased mirror unit shipments to the domestic automakers as well as the Asian transplant automakers. North American light vehicle production increased by 39 percent in calendar year 2010 compared with calendar year 2009. Automatic-dimming mirror unit shipments to offshore customers increased by 26 percent in the fourth quarter of 2010 compared with the same period last year. The increase in unit shipments was primarily due to increased mirror unit shipments to certain European automakers. Light vehicle production in Europe was flat in the fourth quarter of 2010, and decreased by 5 percent in Japan and Korea in the fourth quarter of 2010, compared with the same period last year. Automatic-dimming mirror unit shipments to offshore customers increased by 41 percent in calendar year 2010 compared with calendar year 2009. The increase in unit shipments was primarily due to increased mirror unit shipments to certain European and Asian automakers. Light vehicle production in Europe increased by 13 percent in calendar year 2010, and increased by 20 percent in Japan and Korea in calendar year 2010, compared with calendar year 2009. Other net sales increased by 5 percent to $4.4 million for the fourth quarter of 2010 compared with the same quarter last year, as increased dimmable aircraft window net sales more than offset the 5 percent decrease in fire protection net sales. Other net sales increased by 2 percent to $19.2 million for calendar year 2010 compared with calendar year 2009, as increased dimmable aircraft window net sales more than offset the 16 percent decrease in fire protection net sales. The decrease in fire protection net sales for both the fourth quarter and calendar year was primarily due to the continued weak commercial construction market. Future Estimates Gentex Senior Vice President Enoch Jen provided certain guidance for 2011. "Based on IHS Automotive's (formerly CSM Worldwide) end-of-December forecast for light vehicle production levels for the first quarter of 2011, we currently expect our net sales in the first quarter of 2011 to increase by approximately 30-35 percent compared with the first quarter of 2010," said Jen. "Additionally, we currently estimate that shipments of our SmartBeam high beam headlamp assist product will increase by approximately 50-60 percent in calendar year 2011 compared with shipments of approximately 630,000 SmartBeam units in calendar year 2010," said Jen. The SmartBeam unit shipment estimate is based on IHS Automotive's light vehicle production forecast for calendar year 2011 compared with calendar year 2010. As previously noted, the Company currently believes that there are too many uncertainties to provide annual guidance for RCD Mirror unit shipments at this time due to the December 3, 2010, NHTSA announcement and the uncertainties that has created. "As a result, based on the current IHS Automotive forecast for light vehicle production levels for the first six months of 2011, we currently estimate that RCD Mirror unit shipments will increase approximately 50 percent for the first six months of 2011 compared with the same period in 2010," said Jen. "Gentex shipped approximately 1.25 million RCD Mirror units in calendar year 2010 compared with shipments of approximately 573,000 units in calendar year 2009." The RCD Mirror unit shipment estimate is based on IHS Automotive's light vehicle production forecast for the first six months of 2011 compared with the first six months of 2010. The Company's current forecasts for light vehicle production for each of the following periods in 2011 compared with the same periods in 2010 are based on IHS Automotive's end-of-December forecast for light vehicle production in North America, Europe and Japan and Korea.
IHS Automotive Light Vehicle Production Forecast
(formerly CSM Worldwide - based on end-of-December information)
First First
Six Six
First First Months Months Calendar Calendar
Quarter Quarter % of of % Year Year %
2011* 2010* Change 2011* 2010* Change 2011* 2010* Change
------ ------ ----- ------ ------ ----- ------ ------ -----
*light vehicle units - millions
------ ------ ----- ------ ------ ----- ------ ------ -----
North America 3.3 2.9 15% 6.7 6.0 12% 12.9 11.9 9%
------ ------ ----- ------ ------ ----- ------ ------ -----
Europe 4.8 4.7 2% 9.7 9.7 Flat 18.6 18.5 1%
------ ------ ----- ------ ------ ----- ------ ------ -----
Japan and
Korea 3.3 3.3 Flat 6.5 6.6 -2% 12.8 13.0 -2%
------ ------ ----- ------ ------ ----- ------ ------ -----
Based on the Company's expected net sales for the first quarter of 2011,
Jen said that the Company currently expects its gross profit margin for the
first quarter of 2011 to be approximately in the same range as the fourth
quarter of 2010.
Safe Harbor Statement
This news release contains forward-looking 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 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," "optimistic" 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 and engineering cost reductions, customer inventory management,
supplier part shortages, 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 market for Rear Camera
Display Mirrors and the success of those products, the success of certain
other products (e.g. SmartBeam®), 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 on the right side 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 (
GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Year Ended
December 31, December 31,
2010 2009 2010 2009
------------ -------------- ------------ ------------
Net Sales $222,100,572 $ 177,607,892 $816,263,414 $544,522,993
Cost of Goods
Sold 142,632,209 112,513,832 520,573,101 366,968,216
------------ -------------- ------------ ------------
Gross Profit 79,468,363 65,094,060 295,690,313 177,554,777
Engineering,
Research &
Development 18,075,511 12,570,247 64,100,411 47,128,086
Selling, General
& Administrative 10,787,736 9,285,547 40,617,833 35,807,622
------------ -------------- ------------ ------------
Income from
Operations 50,605,116 43,238,266 190,972,069 94,619,069
Other Income (4,637,271) (1,615,618) (12,467,945) (1,733,234)
------------ -------------- ------------ ------------
Income Before
Income Taxes 55,242,387 44,853,884 203,440,014 96,352,303
Provision for
Income Taxes 18,319,122 14,806,029 65,706,045 31,715,218
------------ -------------- ------------ ------------
Net Income $ 36,923,265 $ 30,047,855 $137,733,969 $ 64,637,085
============ ============== ============ ============
Earnings Per Share
Basic $ 0.26 $ 0.22 $ 0.99 $ 0.47
Diluted $ 0.26 $ 0.22 $ 0.98 $ 0.47
Weighted Average
Shares:
Basic 140,483,242 137,418,113 139,356,831 137,227,677
Diluted 142,227,174 138,372,258 140,735,767 137,645,350
Cash Dividends
Declared per
Share $ 0.11 $ 0.11 $ 0.44 $ 0.44
CONDENSED CONSOLIDATED BALANCE SHEETS
Dec 31, 2010 Dec 31, 2009
-------------- ------------
ASSETS
Cash and Short-Term
Investments $ 434,797,369 $353,232,093
Other Current
Assets 220,471,905 152,181,402
-------------- ------------
Total Current Assets 655,269,274 505,413,495
Plant and
Equipment - Net 205,107,756 197,530,249
Long-Term
Investments and
Other Assets 142,313,609 119,659,745
-------------- ------------
Total Assets $1,002,690,639 $822,603,489
============== ============
LIABILITIES AND
SHAREHOLDERS'
INVESTMENT
Current Liabilities $ 72,088,629 $ 58,637,778
Long-Term Debt 0 0
Deferred Income
Taxes 37,071,184 28,036,968
Shareholders'
Investment 893,530,826 735,928,743
-------------- ------------
Total Liabilities
& Shareholders'
Investment $1,002,690,639 $822,603,489
============== ============
AUTO-DIMMING MIRROR UNIT SHIPMENTS
(Thousands)
Fourth
Quarter Ended Year Ended
December 31, December 31,
------------- -------------
2010 2009 % Change 2010 2009 % Change
------ ------ ------- ------ ------ -------
Domestic Interior 1,331 1,046 27% 4,956 3,086 61%
------ ------ ------- ------ ------ -------
Domestic Exterior 329 262 26% 1,206 862 40%
------ ------ ------- ------ ------ -------
Total Domestic Units 1,660 1,307 27% 6,162 3,949 56%
------ ------ ------- ------ ------ -------
------ ------ ------- ------ ------ -------
Foreign Interior 2,148 1,676 28% 7,872 5,537 42%
------ ------ ------- ------ ------ -------
Foreign Exterior 840 695 21% 3,058 2,193 39%
------ ------ ------- ------ ------ -------
Total Foreign Units 2,988 2,371 26% 10,930 7,730 41%
------ ------ ------- ------ ------ -------
------ ------ ------- ------ ------ -------
Total Interior Mirrors 3,479 2,721 28% 12,828 8,623 49%
------ ------ ------- ------ ------ -------
Total Exterior Mirrors 1,170 957 22% 4,264 3,055 40%
------ ------ ------- ------ ------ -------
Total Mirror Units 4,648 3,678 26% 17,092 11,678 46%
------ ------ ------- ------ ------ -------
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.
Contact Information: CONTACT: Connie Hamblin (616) 772-1800