Gentex Corp. has reported financial results for the three and nine months ended Sept. 30, 2021.
For the third quarter of 2021, the company reported net sales of $399.6 million, compared to net sales of $474.6 million in the third quarter of 2020. On a quarter-over-quarter basis, global light vehicle production in the company’s primary regions of Europe, North America, Japan/Korea and China decreased 23% when compared to the third quarter of 2020.
In addition, when compared to the mid-July 2021 IHS Markit light vehicle production forecast in the company’s primary regions, actual light vehicle production during the third quarter of 2021 declined in excess of 3.1 million units, or 19%, as a result of the ongoing industry-wide part shortages and global supply chain constraints. The largest shortfall in light vehicle production for the third quarter of 2021 came from the European and North American markets, which together, experienced actual light vehicle production levels that declined by approximately 27% compared to the third quarter of 2020. The reduction in light vehicle production compared to forecast was led by several OEM customers that deploy high levels of the company’s product content, including both interior and exterior auto-dimming mirrors and other electronic features such as Full Display Mirror and HomeLink. The total impact to the company from the shortfall in vehicle production was a reduction in actual mirror unit shipments of approximately 2.5 to 3 million mirrors versus the company’s beginning of the quarter forecast.
“While we have been dealing with the impacts of supply chain constraints throughout the first half of 2021, the effects of the electronic component shortages worsened during the third quarter of this year. The majority of the forecasted mirror unit shipments that were lost during the quarter came from our primary markets, but the hardest hit regions were North America and Europe where we typically have content that is above the corporate average in terms of average sell price. Despite these challenges, our team has done a remarkable job of securing components as well as providing unique solutions for our customers that included complete re-designs of circuits in order to avoid constrained components which helped minimize the impact to OEM production schedules,” said President and CEO, Steve Downing.
Net income was $76.7 million for the third quarter of 2021, compared to a net income of $117.1 million in the third quarter of 2020. The change in net income was primarily the result of the quarter over quarter changes in sales, gross margins and operating profits.
Earnings per diluted share for the third quarter of 2021 were $0.32, compared to earnings per diluted share of $0.48 for the third quarter of 2020.
Automotive net sales in the third quarter of 2021 were $391.3 million, compared with $464.7 million in the third quarter of 2020. Auto-dimming mirror unit shipments decreased 7% during the quarter compared to the third quarter of 2020.
Future Estimates
Based on this light vehicle production forecast and the actual results of the third quarter of 2021, the company is providing updated guidance estimates for the second half of 2021. The company’s current estimate is that net sales for the second half of 2021 will be between $770 million and $840 million. This revenue forecast is based on the combination of the third quarter of 2021 actual revenue, as well as the company’s expectation that component shortages and supply constraints will continue to drive light vehicle production below the IHS-Markit light vehicle production forecast shown above during the fourth quarter of 2021. The guidance provided includes manual adjustments to account for the company’s estimates of the impact that global supply constraints will have on overall light vehicle production.
Based on the mid-October 2021 light vehicle production estimates for 2022, the company estimates that revenue for calendar year 2022 will be approximately 15% to 20% higher than the updated 2021 revenue estimates of $1.68 billion to $1.75 billion.
“On a positive note, overall vehicle inventory levels are at historic lows, demand from our customers continues to remain strong, and interest from our customers in our core products and new technology areas for future projects is very high. So, despite the incredibly turbulent last 18 months and the next few quarters, which we expect to continue to be challenging due to supply chain constraints, our long-term growth prospects remain very strong and we continue to believe that the next several years will produce above market growth rates that should provide us the opportunity to achieve excellent shareholder returns,” concluded Downing.
