ZEELAND, MI — Gentex Corp. has reported record sales and net income for the fourth quarter ended Dec. 31. The company also announced that it repurchased approximately 1.2 million shares during the fourth quarter of 2006 under a previously authorized and announced share repurchase plan. In addition, the company announced that it has developed and is selling its own proprietary compass technology.
The company’s net sales increased by eight percent from $138.3 million in the fourth quarter of 2005 to a record $149.6 million in the fourth quarter of 2006. Fourth quarter net income increased by four percent to $30.8 million compared with $29.6 million in the fourth quarter last year. Earnings per diluted share were 22 cents in the fourth quarter of 2006 compared with 19 cents in the fourth quarter of 2005.
For calendar year 2006, net sales increased by seven percent to a record $572.3 million compared with $536.5 million in calendar year 2005. Net income for calendar year 2006 decreased by one percent to $108.8 million compared with $109.5 million in calendar year 2005. Earnings per diluted share were 73 cents in calendar year 2006 compared with 70 cents for the same prior-year period.
Excluding the impact of stock option expensing, the company’s net income would have increased by eight percent to $31.9 million in the fourth quarter of 2006 compared to the fourth quarter of 2005, and earnings per diluted share for those same periods would have been 22 cents for the fourth quarter of 2006 compared with 19 cents for the fourth quarter of 2005. Net income, excluding the impact of stock option expensing, would have increased by three percent to $113.3 million for calendar year 2006 compared to the same period last year, and earnings per diluted share would have been 76 cents in calendar year 2006 compared with 70 cents in calendar year 2005. Stock option expensing did not impact the company’s income statement for the fourth quarter and calendar year 2005, but was disclosed in a footnote to the financial statements.
"We are pleased that we were able to post record revenues and net income for the quarter, despite the significant light vehicle production cuts that took place, primarily at the domestic automakers in North America," said Gentex Chairman and Chief Executive Officer Fred Bauer. "Mirror unit shipments for the fourth quarter of 2006 increased by five percent, but automotive revenues increased by eight percent due to a richer mix of mirror products shipped during the quarter. Unit shipments in North America were down by four percent, but our European business volume improved with some featured mirrors, helping our offshore unit shipments to increase by 14 percent."
The company also reported that it repurchased approximately 1,233,000 shares during the fourth quarter of 2006 at a cost of approximately $19.5 million. The company has a share repurchase plan in place with authorization to repurchase up to 24 million shares of the company’s stock. As of the end of the fourth quarter of 2006, the company has cumulatively repurchased approximately 17.5 million shares, leaving approximately 6.5 million shares authorized to be repurchased under the plan.
Gentex Senior Vice President Enoch Jen said that the company continues to make good progress in its manufacturing yields, and provided certain guidance for the first quarter and calendar year 2007.
"For the first quarter of 2007, we expect that our mirror unit shipments will increase by approximately 5-10 percent over the same prior-year period, and believe that, based on the current forecast for product mix, that the company’s revenues for the first quarter of 2007 will increase toward the top of that same range versus the same period in the prior year. At this time, we expect to post similar numbers for unit shipments and revenues for all of Calendar Year 2007."
Jen said that the company’s current first quarter 2007 forecast is based on CSM’s preliminary mid-January forecast for light vehicle production of 3.9 million units for North America, 5.3 million units for Europe and 3.9 million units for Japan and Korea. The Calendar Year 2007 forecast is based upon CSM’s 2007 calendar year projection of 15.3 million units for North America, 20.8 million units for Europe and 14.5 million units for Japan and Korea.
Automotive revenues increased by eight percent to $144.0 million in the fourth quarter of 2006 compared with the same period last year, and increased by seven percent to $548.4 million for calendar year 2006 compared with calendar year 2005. Fire Protection revenues increased by four percent to $5.6 million for the fourth quarter of 2006 compared with the fourth quarter of 2005, and were up by one percent to $23.9 million for calendar year 2006, compared with the same period in 2005.
Total auto-dimming mirror unit shipments in the fourth quarter were approximately 3.4 million, an increase of about five percent over the same period last year. Auto-dimming mirror unit shipments increased by seven percent to 13.4 million for calendar year 2006 compared to calendar year 2005.
Auto-dimming mirror unit shipments to customers in North America decreased by four percent to approximately 1.5 million in the fourth quarter of 2006 compared with the same quarter last year. North American light vehicle production declined by eight percent in the fourth quarter of 2006 compared with the same period in 2005. For calendar year 2006, auto-dimming mirror unit shipments to customers in North America increased by one percent to approximately 6.1 million compared with the same period last year. North American light vehicle production decreased by three percent for calendar year 2006 compared with the same period in 2005.
Unit shipments to offshore customers increased by 14 percent to approximately 1.9 million in the fourth quarter of 2006 compared with the same period in 2005. Light vehicle production in Europe increased by two percent in both the fourth quarter and for calendar year 2006, and also increased by five percent for Japan and Korea in both the fourth quarter and calendar year 2006, compared with the same prior year periods. For calendar 2006, unit shipments to offshore customers increased by 12 percent to approximately 7.4 million, compared with the same period in 2005.
Electronics is the fastest growing segment in the automotive industry, and also one of the most competitive, and Gentex continues to invest significant research and development dollars in this area. The company has developed its own unique compass technology, which can be sold as a system with the compass heading displayed in the interior auto-dimming mirror.
"We call our compass technology Z-Nav, as it features a proprietary, digital, tri-axis sensor (transducer) and software," said Bauer. "All other compass technologies currently used in the automotive industry utilize analog or digital dual-axis sensors, which are more susceptible to variation and tolerance errors, and must be mounted in a fixed location that is on a plane parallel to the earth’s surface. The Gentex tri-axis design is similar to compasses used in highly scientific apparatus such as aerospace applications, and can be mounted on any fixed or pivotal location in the vehicle, including inside the mirror housing. Calibration is easier and faster using Z-Nav. We are pleased that we can now offer our customers another option when they are evaluating compass technologies, and that we can fully participate in that market segment," Bauer concluded.
For more information about Gentex, go to: http://www.gentex.com.
