Gentex Reports Fourth Quarter Results - aftermarketNews

Gentex Reports Fourth Quarter Results

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.

ZEELAND, Mich. — Gentex Corp. has reported its results for the fourth quarter and year ended Dec. 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.

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