Gentex Corp., the Zeeland, Michigan-based manufacturer of automotive automatic-dimming rearview mirrors, automotive electronics, dimmable aircraft windows and fire protection products, has reported financial results for the three months ended March 31, 2017.
For the first quarter of 2017, the company reported net sales of $453.5 million, which was an increase of 12 percent compared to net sales of $405.6 million in the first quarter of 2016. The 12 percent net sales growth was driven by a 12 percent quarter-over-quarter increase in auto-dimming mirror unit shipments while overall automotive light vehicle production, in the company’s primary regions, increased by approximately 3 percent for the first quarter of 2017 when compared with the same quarter in 2016.
The gross profit margin in the first quarter of 2017 was 38.8 percent, compared with a gross profit margin of 39.1 percent in the first quarter of 2016. Gentex said the quarter-over-quarter net decrease in gross profit margin was the result of annual customer price reductions, which was partially offset by purchasing cost reductions and favorable product mix.
Income from operations for the first quarter of 2017 increased 11 percent to $134.4 million when compared to income from operations of $120.8 million for the first quarter of 2016.
Net income for the first quarter of 2017 increased 22 percent to $97.6 million compared with net income of $80.3 million in the first quarter of 2016, driven by the 12 percent revenue growth, as well as favorable discrete items that impacted the company’s tax provision in the amount of $5.6 million. The favorable discrete tax items included $3.8 million related to a change in tax method and $1.8 million related to newly adopted accounting guidance which impacted the treatment of share-based compensation.
Earnings per diluted share in the first quarter of 2017 increased 18 percent to 33 cents, compared with earnings per diluted share of 28 cents in the first quarter of 2016. The company said this increase was primarily driven by the increase in net income on a quarter over quarter basis.
Automotive net sales in the first quarter of 2017 were $445.6 million, an increase of 13 percent compared with automotive net sales of $394 million in the first quarter of 2016, driven by a 12 percent increase in auto-dimming mirror unit shipments on a quarter-over-quarter basis.
Other net sales in the first quarter of 2017, which includes dimmable aircraft windows and fire protection products, were $7.9 million, compared to other sales of $11.6 million in the first quarter of 2016.
Share Repurchases
During the first quarter of 2017, the company repurchased 1.5 million shares of its common stock. As of March 31, the company has approximately 5.3 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 depending on macroeconomic issues, market trends and other factors that the company deems appropriate.
Future Estimates
The company’s forecasts for light vehicle production for the 2nd and 3rd quarters of calendar year 2017 and full year 2017 are based on the IHS Automotive April 2017 forecast for light vehicle production in North America, Europe, Japan and Korea.
Based on the April 2017 IHS light vehicle production forecast, current forecasted product mix and expense growth estimates, the company is making no changes to its previous estimates for calendar year 2017 or 2018. However, based on weakening light vehicle production estimates in Europe for the second quarter and in North America in the third quarter, the company expects its revenue estimates for the second and third quarter of 2017 to be at or around the lower end of its annual guidance range but expects the fourth quarter to return to the higher end of its annual guidance range.
