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 and six months ended June 30, 2018.
For the second quarter of 2018, the company reported net sales of $455 million, which was an increase of 3 percent compared to net sales of $443.1 million in the second quarter of 2017. When compared with IHS’s mid-April forecast for the second quarter of 2018, actual light vehicle production in North America declined approximately 3 percent, which resulted in lower than expected unit shipments and revenue during the quarter. In addition, OEM shutdowns related to a supplier fire, caused a revenue headwind of approximately 1 percent during the quarter.
“The second quarter of 2018 revenue growth rate fell just outside of our guidance range for the year which, although disappointing, is explainable when viewed in the context of production levels by region and segment. The overall production levels in the North American market were down 3 percent quarter-over-quarter and the luxury segments, defined as D and E segment vehicles, were down over 3 percent quarter-over-quarter in our primary markets of North America, Europe and Japan/Korea,” said President and CEO Steve Downing. “While we aren’t happy with this level of growth, we remain optimistic about the second half of 2018, based in part on our product launch cadence of full display mirror nameplates over the balance of 2018. While we continue to monitor the production levels in our primary markets, we still have reason to believe that the second half of the year will be closer to the top end of the range of our annual revenue growth rate guidance.”
Net income for the second quarter of 2018 increased 23 percent to $109 million compared with net income of $88.5 million in the second quarter of 2017.
Earnings per diluted share in the second quarter of 2018 increased 29 percent to 40 cents, compared with earnings per diluted share of 31 cents in the second quarter of 2017, as a result of the lower effective tax rate and a reduction in diluted shares outstanding on a quarter over quarter basis.
Automotive net sales in the second quarter of 2018 were $444.2 million, an increase of 2 percent compared with automotive net sales of $433.9 million in the second quarter of 2017, which was aided by an 8 percent increase in auto-dimming mirror unit shipments on a quarter-over-quarter basis, but partially offset by certain advanced feature headwinds within the product mix.
Share Repurchases
During the second quarter of 2018, the company repurchased 6.3 million shares of its common stock at an average price of $23.33 per share. As of June 30, 2018, the company has approximately 19.7 million shares remaining available for repurchase pursuant to the previously announced share repurchase plan, which remains a part of the company’s broader publicly disclosed capital allocation strategy.
Debt Repayment
During the second quarter of 2018, the company paid down $25 million of principal on the company’s term loan, which in combination with its normally scheduled principal repayment of $1.9 million resulted in a total principal repayment of $26.9 million during the quarter. The company expects to pay all remaining principal on its credit facility during the third quarter of 2018, in anticipation of such debt maturing on Sept. 27, 2018.
Based on 2019 light vehicle production forecasts and current forecasted product mix, Gentex said it is making no changes to its previously announced revenue estimates for calendar year 2019, which continues to be estimated to be over and above the foregoing 2018 revenue estimates in the range of 5 to 10 percent.
