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Gentex Reports Q1 2020 Results

Net sales declined of 3% quarter-over-quarter versus a 24% quarter-over-quarter reduction in global light vehicle production volumes.

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Gentex Corp., a leading supplier of digital vision, connected car, dimmable glass and fire protection technologies, has reported financial results for the three months ended March 31, 2020.

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1st Quarter 2020 Summary:

  • Net sales declined of 3% quarter-over-quarter versus a 24% quarter-over-quarter reduction in global light vehicle production volumes;
  • Novel coronavirus pandemic (COVID-19) negatively impacted first quarter net sales by approximately 9%;
  • Gross margin of 34.5% for the first quarter; and
  • 7 million shares repurchased during the quarter.

For the first quarter of 2020, the company reported net sales of $453.8 million, which was a decrease of 3% compared to net sales of $468.6 million in the first quarter of 2019. The impact of the COVID-19 pandemic created shutdowns in the automotive industry in various parts of Asia, Europe, and North America, which resulted in an estimated negative impact on net sales of approximately $40 million dollars for the first quarter of 2020. Global light vehicle production ended the first quarter of 2020 down 24% when compared to the first quarter of 2019. 

“For the first two months of the first quarter, top-line revenue growth was progressing in line with our forecasts, with modest negative impacts coming from reductions in China as a result of the pandemic,” said President and CEO, Steve Downing. “By mid-March, the pandemic was negatively affecting European OEMs more significantly and then the North American production environment was brought to a grinding halt. The vast majority of the $40 million shortfall in sales occurred during the last two weeks of March.” 

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Operating expenses during the first quarter of 2020 were up 7% to $51.6 million when compared to operating expenses of $48 million in the first quarter of 2019. “The quarter-over-quarter increase in operating expenses continues to be driven by headcount and other resources focused on new product launches, as well as research and development of new products. CES 2020 created significant interest in our existing and new technologies, and we continue to believe in the long-term value that our new product offerings and technologies will create for our customers and the resultant trajectory that this can create for our business. It is important to note that the operating expense growth rate in the quarter was in-line with our original guidance for operating expenses for the year, which were planned to increase at approximately the same rate as sales for the year,” concluded Downing.

Income from operations for the first quarter of 2020 decreased 14% to $105 million when compared to income from operations of $121.6 million for the first quarter of 2019. The reduction in operating income was primarily the result of the lost sales due to the pandemic and the impact this had on gross margins in the quarter.

Net income for the first quarter of 2020 decreased by 14% to $89.5 million when compared to net income of $104.3 million in the first quarter of 2019. The reduction in net income was driven by the lost sales due to the pandemic and the impact this had on gross margins.

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Earnings per diluted share for the first quarter of 2020 decreased 10% to $0.36, when compared to $0.40 for the first quarter of 2019, primarily as a result of the impacts of the COVID-19 pandemic on net income.

Automotive net sales in the first quarter of 2020 were $439.9 million, compared with automotive net sales of $455.8 million in the first quarter of 2019. The 3% quarter over quarter decrease in automotive sales was driven primarily by a 6% quarter over quarter decrease in interior auto-dimming mirror unit shipments due to a 24% reduction in global light vehicle production. 

Other net sales in the first quarter of 2020, which includes dimmable aircraft windows and fire protection products, were $13.9 million, an increase of 9% compared to other net sales of $12.8 million in the first quarter of 2019.

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