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Gentex Reports Third Quarter 2024 Financial Results
Источник: Nasdaq GlobeNewswire / 25 окт 2024 07:00:00 America/Chicago
ZEELAND, Mich., Oct. 25, 2024 (GLOBE NEWSWIRE) -- Gentex Corporation (NASDAQ: GNTX), a leading supplier of digital vision, connected car, dimmable glass and fire protection technologies, today reported financial results for the three and nine months ended September 30, 2024.
3rd Quarter 2024 Summary
- Net sales of $608.5 million, a new quarterly sales record, and a 6% increase compared to the third quarter of 2023, versus light vehicle production that was down 6% quarter over quarter in the Company's primary markets
- Gross profit margin of 33.5%, an increase of 60 basis points from the second quarter of 2024
- Income from operations of $125.7 million
- Net income of $122.5 million, an increase of 17% from the third quarter of 2023
- Earnings per diluted share of $0.53, an increase of 18% from the third quarter of 2023
- 3.2 million shares repurchased during the quarter
For the third quarter of 2024, the Company reported net sales of $608.5 million, compared to net sales of $575.8 million in the third quarter of 2023. For the third quarter of 2024, global light vehicle production declined by 5%, compared to the third quarter of 2023. "During the third quarter of 2024, light vehicle production weakened across all major regions, but especially in our primary markets. When compared to the third quarter of 2023, light vehicle production declined by 6% this quarter in North America, Europe and Japan/Korea, which was significantly worse than the 3% quarter over quarter decline forecasted at the beginning of the quarter,” said Gentex President and CEO, Steve Downing. “The production declines resulted in a sales shortfall of approximately $25 - $30 million for the quarter, but despite that weakness in our end markets, we were able to outperform our primary markets by 12%,” commented Downing.
For the third quarter of 2024, the gross margin was 33.5%, compared to a gross margin of 33.2% for the third quarter of 2023. Compared to the third quarter of 2023, the gross margin improved as a result of the higher revenue levels and purchasing cost reductions, which were partially offset by unfavorable product mix. Sequentially, the gross margin improved by 60 basis points, as a result of the higher sales levels versus the second quarter of 2024 and lower pricing reserves in the third quarter, versus the first half of 2024. "Overall, we are pleased with the sequential improvement in gross margin, but the third quarter was still behind our margin forecast due to lower than expected sales driven by light vehicle production shortfalls, product mix issues and overhead inefficiencies. We remain committed to our gross margin recovery plan that we laid out over the last 18 months, but given the shifts in the market and light vehicle production mix, we expect that the Company’s margin recovery target won’t be fully achieved until 2025,” said Downing.
Operating expenses during the third quarter of 2024 increased by 13% to $78.3 million, compared to operating expenses of $69.0 million in the third quarter of 2023. Operating expenses increased quarter over quarter primarily due to staffing and engineering related professional fees. “Our operating expenses remain in line with our expectations for the full year, with increases primarily focused on R&D and launches of new programs and products. Operating expenses, especially R&D expenses, are expected to continue at the current pace for the rest of this year, despite the lower than forecasted light vehicle production and sales levels we have experienced over the last two quarters. Our R&D spend is being driven by several new launches that are currently in development and expected to launch in the next two years, as well as research projects in support of new technologies that we have showcased at CES the last few years,” said Downing.
Income from operations for the third quarter of 2024 was $125.7 million, compared to income from operations of $122.4 million for the third quarter of 2023.
Other income was $19.7 million during the third quarter of 2024, compared to other income of $2.1 million in the third quarter of 2023. The change was primarily driven by non-cash gains of $14.5 million resulting from mark-to-market adjustments and other market adjustments of certain holdings within the Company's tech investment portfolio, as well as interest income from the Company's investment portfolio.
During the third quarter of 2024, the Company had an effective tax rate of 15.7%, which was primarily driven by the benefit of the foreign derived intangible income deduction.
Net income for the third quarter of 2024 was $122.5 million, a 17% increase compared to net income of $104.7 million for the third quarter of 2023. The increase in net income for the third quarter was driven by the increased net sales, income from operations, and other income, compared to the third quarter of 2023.
Earnings per diluted share for the third quarter of 2024 were $0.53, an 18% increase compared to earnings per diluted share of $0.45 for the third quarter of 2023. Earnings per diluted share for the third quarter of 2024 were positively impacted by the increased net sales and operating income as well as the increases in other income for the quarter.
Automotive net sales in the third quarter of 2024 were $596.5 million compared to $564.5 million in the third quarter of 2023. Auto-dimming mirror unit shipments decreased by 3% during the third quarter of 2024, compared to the third quarter of 2023.
Other net sales in the third quarter of 2024, which includes dimmable aircraft windows and fire protection products, were $12.0 million, compared to other net sales of $11.3 million in the third quarter of 2023. Fire protection sales increased by $1.8 million for the third quarter of 2024, compared to the third quarter of 2023. Dimmable aircraft window sales decreased by $1.9 million for the third quarter of 2024, compared to the third quarter of 2023. Additionally, in the third quarter of 2024, the Company recorded its first official sales of medical devices of $0.8 million from shipments of the previously acquired eSight Go product line and business.
Share Repurchases
During the third quarter of 2024, the Company repurchased 3.2 million shares of its common stock at an average price of $30.16 per share. As of September 30, 2024, the Company has approximately 10.1 million shares remaining available for repurchase pursuant to its previously announced share repurchase plan. The Company intends to continue to repurchase additional shares of its common stock in the future in support of the previously disclosed capital allocation strategy, but share repurchases will vary from time to time and will take into account macroeconomic issues, market trends, and other factors that the Company deems appropriate.
Future Estimates
The Company’s current forecasts for light vehicle production for the fourth quarter of 2024 and full years 2024 and 2025, are based on the mid-October 2024 S&P Global Mobility forecast for light vehicle production in North America, Europe, Japan/Korea, and China. Light vehicle production in these markets is expected to decrease by approximately 4% for the fourth quarter of 2024, versus the same quarter in 2023, while light vehicle production in our primary markets of North America, Europe and Japan/Korea is expected to be down 6% in the fourth quarter of 2024, compared to the fourth quarter of 2023. For calendar year 2024, light vehicle production in North America, Europe, Japan/Korea and China is now forecasted to decline approximately 2%, compared to light vehicle production in calendar year 2023. Light vehicle production for calendar year 2025 is forecasted to increase by 1%, compared to the calendar year 2024 forecast in these markets. Fourth quarter 2024 and calendar years 2024 and 2025 forecasted vehicle production volumes from S&P Global Mobility are shown below:
Light Vehicle Production (per S&P Global Mobility mid-October light vehicle production forecast) (in Millions) Region Q42024 Q4
2023%
ChangeCalendar
Year
2025Calendar
Year
2024Calendar
Year
20232025 vs
2024
%
Change2024 vs
2023
%
ChangeNorth America 3.64 3.76 (3 )% 15.29 15.47 15.68 (1 )% (1 )% Europe 4.24 4.66 (9 )% 17.00 17.07 17.97 — % (5 )% Japan and Korea 3.20 3.38 (5 )% 12.02 12.00 12.80 — % (6 )% China 8.69 8.81 (1 )% 30.02 29.34 29.04 2 % 1 % Total Light Vehicle Production 19.77 20.61 (4 )% 74.33 73.88 75.49 1 % (2 )%
Based on this light vehicle production forecast and actual results for the first nine months of 2024, the Company is making certain changes to its previously provided guidance for calendar year 2024 as shown in the table below.2024 Annual Guidance Guidance as of July 26, 2024 As of October 25, 2024 Revenue $2.40 - $2.50 billion $2.35 - $2.40 billion Gross Margin 34% - 34.5% 33.5% - 34.0% Operating Expenses $295 -$305 million $295 -$305 million Tax Rate 15% - 16% 15% - 15.5% Capital Expenditures $175 - $200 million $150 - $175 million Depreciation & Amortization $95 - $100 million $90 - $95 million
Additionally, based on the Company’s updated forecast for light vehicle production for calendar year 2025 as well as year to date actual results for the first nine months of 2024, the Company is updating calendar year 2025 revenue estimates to approximately $2.45 - $2.55 billion."The Company continues to be on pace for record revenue in 2024 and 2025, despite significant changes in the light vehicle production environment, vehicle mix and regional mix that have impacted the production landscape. Obviously, the actual and forecasted light vehicle production deterioration has impacted our total revenue estimates for 2024 and 2025, but our 12% outperformance versus the underlying vehicle production numbers in our primary markets during the third quarter gives us renewed confidence in our ability to continue to outperform the market. While the teams have done a phenomenal job creating and executing our margin recovery plan, industry conditions have created a slower growth environment that we intend to address with increased cost focus, expense control and lower capital expenditures that more closely align with our updated revenue expectations. As we have indicated, the timeline to achieve our targeted gross margin of 35 - 36% will likely push into the 2025 calendar year, but we remain confident in our ability to accomplish our stated goal despite the industry headwinds,” concluded Downing.
Safe Harbor for Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements contained in this communication that are not purely historical are forward-looking statements. Forward-looking statements give the Company’s current expectations or forecasts of future events. These forward-looking statements generally can be identified by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,” “hope,” “intend,” "likely", “may,” “opinion,” “optimistic,” “plan,” “poised,” “predict,” “project,” “should,” “strategy,” “target,” “will,” "work to," and variations of such words and similar expressions. Such statements are subject to risks and uncertainties that are often difficult to predict and beyond the Company’s control, and could cause the Company’s results to differ materially from those described. These risks and uncertainties include, without limitation: changes in general industry or regional market conditions, including the impact of inflation; changes in consumer and customer preferences for our products (such as cameras replacing mirrors and/or autonomous driving); our ability to be awarded new business; continued uncertainty in pricing negotiations with customers and suppliers; loss of business from increased competition; changes in strategic relationships; customer bankruptcies or divestiture of customer brands; fluctuation in vehicle production schedules (including the impact of customer employee strikes); changes in product mix; raw material and other supply shortages; labor shortages, supply chain constraints and disruptions; our dependence on information systems; higher raw material, fuel, energy and other costs; unfavorable fluctuations in currencies or interest rates in the regions in which we operate; costs or difficulties related to the integration and/or ability to maximize the value of any new or acquired technologies and businesses; changes in regulatory conditions; warranty and recall claims and other litigation and customer reactions thereto; possible adverse results of pending or future litigation or infringement claims; changes in tax laws; import and export duty and tariff rates in or with the countries with which we conduct business; negative impact of any governmental investigations and associated litigation, including securities litigation relating to the conduct of our business; and force majeure events. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made.
The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law or the rules of the NASDAQ Global Select Market. Accordingly, any forward-looking statement should be read in conjunction with the additional information about risks and uncertainties identified under the heading “Risk Factors” in the Company’s latest Form 10-K and Form 10-Q filed with the SEC, which risks and uncertainties include supply chain constraints that have affected, are affecting, and will continue to affect, general economic and industry conditions, customers, suppliers, and the regulatory environment in which the Company operates. Includes content supplied by S&P Global Mobility Light Vehicle Production Forecast of October 15, 2024 (http://www.gentex.com/forecast-disclaimer).
Third Quarter Conference Call
A conference call related to this news release will be simulcast live on the Internet beginning at 9:30 a.m. ET today, October 25, 2024. Participants who wish to ask questions may register for the call at https://register.vevent.com/register/BI5c6e81632d434791b1b558bea845af36 to receive the dial-in numbers and unique PIN to access the call. It is recommended that participants join 10 minutes prior to the event start, although they may register ahead of the call and dial in at any time during the call. Participants may listen to the call via audio streaming https://edge.media-server.com/mmc/p/bpf4ihh4/. A webcast replay will be available approximately 24 hours after the conclusion of the call at http://ir.gentex.com/events-and-presentations/upcoming-past-events.
About the Company
Founded in 1974, Gentex Corporation (The NASDAQ Global Select Market: GNTX) is a leading supplier of digital vision, connected car, dimmable glass and fire protection technologies. Visit the Company’s web site at www.gentex.com.
Contact Information:
Gentex Investor & Media Contact
Josh O'Berski
616.931.3505GENTEX CORPORATION AUTO-DIMMING MIRROR SHIPMENTS (Thousands) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 % Change 2024 2023 % Change North American Interior Mirrors 2,291 2,366 (3)% 6,899 7,192 (4)% North American Exterior Mirrors 1,532 1,614 (5)% 4,858 5,033 (3)% Total North American Mirror Units 3,823 3,980 (4)% 11,757 12,224 (4)% International Interior Mirrors 5,569 5,708 (2)% 16,313 17,099 (5)% International Exterior Mirrors 2,830 2,915 (3)% 8,808 8,918 (1)% Total International Mirror Units 8,399 8,623 (3)% 25,120 26,017 (3)% Total Interior Mirrors 7,860 8,075 (3)% 23,211 24,291 (4)% Total Exterior Mirrors 4,362 4,529 (4)% 13,665 13,950 (2)% Total Auto-Dimming Mirror Units 12,221 12,604 (3)% 36,877 38,242 (4)% Note: Percent change and amounts may not total due to rounding.
GENTEX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net Sales $ 608,525,777 $ 575,848,490 $ 1,771,676,766 $ 1,710,082,647 Cost of Goods Sold 404,462,142 384,407,857 1,176,812,215 1,150,821,744 Gross Profit 204,063,635 191,440,633 594,864,551 559,260,903 Engineering, Research & Development 48,225,968 40,197,517 134,411,948 112,825,054 Selling, General & Administrative 30,109,515 28,826,587 90,494,117 83,479,285 Operating Expenses 78,335,483 69,024,104 224,906,065 196,304,339 Income from Operations 125,728,152 122,416,529 369,958,486 362,956,564 Other Income/(Loss) 19,727,198 2,063,632 4,475,771 6,122,483 Income before Income Taxes 145,455,350 124,480,161 374,434,257 369,079,047 Provision for Income Taxes 22,906,309 19,754,749 57,614,063 57,619,971 Net Income $ 122,549,041 $ 104,725,412 $ 316,820,194 $ 311,459,076 Earnings Per Share(1) Basic $ 0.54 $ 0.45 $ 1.38 $ 1.33 Diluted $ 0.53 $ 0.45 $ 1.38 $ 1.33 Cash Dividends Declared per Share $ 0.120 $ 0.120 $ 0.360 $ 0.360 (1) Earnings Per Share has been adjusted to exclude the portion of net income allocated to participating securities as a result of share-based payment awards. GENTEX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS September 30, 2024 December 31, 2023 (Unaudited) (Note) ASSETS Cash and Cash Equivalents $ 179,639,743 $ 226,435,019 Short-Term Investments 20,462,581 14,356,476 Accounts Receivable, net 356,338,008 321,809,868 Inventories 449,311,020 402,473,028 Other Current Assets 39,932,866 32,663,762 Total Current Assets 1,045,684,218 997,738,153 Plant and Equipment - Net 703,583,489 652,877,672 Goodwill 340,105,631 340,105,631 Long-Term Investments 325,561,578 299,080,876 Intangible Assets, net 201,604,035 214,005,910 Patents and Other Assets, net 118,757,892 107,629,310 Total Other Assets 986,029,136 960,821,727 Total Assets $ 2,735,296,843 $ 2,611,437,552 LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities $ 283,164,653 $ 271,608,976 Other Non-current Liabilities 34,504,848 27,311,507 Shareholders' Investment 2,417,627,342 2,312,517,069 Total Liabilities & Shareholders' Investment $ 2,735,296,843 $ 2,611,437,552 Note: The condensed consolidated balance sheet at December 31, 2023 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
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