ZEELAND, MI--(Marketwire - January 29, 2009) - Gentex Corporation (
NASDAQ:
GNTX), the Zeeland,
Michigan-based manufacturer of automatic-dimming rearview mirrors and
commercial fire protection products, today reported results for the fourth
quarter and year ended December 31, 2008. The Company also announced that
it repurchased approximately 2.1 million shares of its stock during the
fourth quarter of 2008.
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 (
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
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.
Contact Information: CONTACT:
Connie Hamblin
(616) 772-1800