Gentex Corp., a supplier of digital vision, connected car, dimmable glass and fire protection products, has reported financial results for the fourth quarter and calendar year ended Dec. 31, 2022.
For the fourth quarter of 2022, the company reported net sales of $493.6 million, an increase of 18% when compared to net sales of $419.8 million for the fourth quarter of 2021. The fourth quarter of 2022 revenue included cost recoveries from customers of approximately $15 million. Light vehicle production increased by 7% quarter-over-quarter in the company’s primary markets of North America, Europe, and Japan and Korea, which equates to an 11% revenue outperformance versus the company’s underlying markets.
The gross margin in the fourth quarter of 2022 was 31.2%, compared with a gross margin of 34.3% in the fourth quarter of 2021. The gross margin in the fourth quarter of 2022 was primarily impacted by raw material cost increases, unfavorable product mix, and increased manufacturing costs stemming from labor cost increases and inefficiencies created by customer order volatility. The cost increases were partially offset by cost recoveries during the quarter.
“The fourth quarter of 2022 produced sequential improvements in gross margin of 140 basis points versus the third quarter of 2022 as a result of customer cost recoveries during the quarter, as well as some improvements in leveraging fixed costs. However, margins in the quarter were negatively impacted by sales that came in below our original forecast for the quarter, unfavorable product mix, and increases in manufacturing costs,” said Gentex President and CEO, Steve Downing. “Heading into 2023, we continue to see strong demand for our products which should result in record revenue performance for the year and will assist our ongoing efforts focused on margin recovery throughout 2023 and 2024. For the calendar year 2023, we expect margins to begin the year in the range of the fourth quarter of 2022 margin profile and then improve as the year progresses, ultimately ending at a weighted average margin of 32 to 33% for 2023.”
Operating expenses during the fourth quarter of 2022 were up 7% to $59.7 million, when compared to operating expenses of $56.0 million in the fourth quarter of 2021.
Income from operations for the fourth quarter of 2022 was $94.1 million, as compared to income from operations of $88 million for the fourth quarter of 2021.
In the fourth quarter of 2022 net income was $86.2 million, as compared to net income of $84.2 million in the fourth quarter of 2021.
Earnings per diluted share in the fourth quarter of 2022 were $0.37, as compared with earnings per diluted share of $0.35 in the fourth quarter of 2021.
Calendar Year 2022
For calendar year 2022, the company’s net sales were $1.92 billion, which was an increase of 11% compared to net sales of $1.73 billion in calendar year 2021 and represented the highest annual sales in company history. Light vehicle production in 2022 increased by 3% when compared to 2021 in the company’s primary markets, but total revenue for the year outperformed the underlying market by 8% despite the many supply chain challenges and customer order volatility encountered during the year.
For calendar year 2022, the gross margin was 31.8%, compared to a gross margin of 35.8% for calendar year 2021. The largest impacts to gross margin on a year-over-year basis were increased raw material costs, increased manufacturing costs, higher freight and logistics costs, and certain previously agreed to annual customer price reductions.
Net income for calendar year 2022 was $318.8 million, down 12% compared to net income of $360.8 million in calendar year 2021.
Earnings per diluted share for calendar year 2022 were $1.36, compared to earnings per diluted share of $1.50 in calendar year 2021.
Automotive net sales during the fourth quarter of 2022 were $482.9 million, as compared to $409.6 million in the fourth quarter of 2021. For calendar year 2022, Automotive net sales were $1.87 billion, which was a 10% increase over 2021.