ZEELAND, MI — Gentex Corp. has reported financial results for the third quarter ended Sept. 30. The company also announced that it repurchased approximately 4 million shares during the third quarter of 2006 under a previously authorized and announced share repurchase plan.
The company’s net sales increased by 2 percent from $138.1 million in the third quarter of 2005 to a record $141.3 million in the third quarter of 2006. Third quarter net income decreased by 13 percent to $24.3 million compared with $27.9 million in the third quarter last year. Earnings per diluted share were 17 cents in the third quarter of 2006 compared with 18 cents in the third quarter of 2005.
For the first nine months of 2006, net sales increased by six percent to a record $422.7 million compared with $398.1 million in the first nine months of 2005. Net income for the first nine months of 2006 decreased by two percent to $77.9 million compared with $79.9 million in the first nine months of 2005. Earnings per diluted share were 52 cents for the first nine months of 2006 compared with 51 cents for the same prior-year period.
Excluding the impact of stock option expensing, the company’s net income would have decreased by eight percent to $25.6 million in the third quarter of 2006 compared to the third quarter of 2005, and earnings per diluted share for those same periods would have been flat at 18 cents. Net income, excluding the impact of stock option expensing, would have increased by two percent for the first nine months of 2006 compared to the same period last year to $81.5 million, and earnings per diluted share would have been 54 cents. Stock option expensing did not impact the company’s income statement for the third quarter and first nine months of 2005, but was disclosed in a footnote to the financial statements.
"While we did well in a difficult operating environment, we do wish that we could have posted better numbers in the third quarter, and still believe that we have significant new opportunities in the future," said Gentex Chairman and Chief Executive Officer Fred Bauer. "Mirror unit shipments for the third quarter of 2006 increased just slightly compared to the same period in 2005, mostly because of stronger unit shipments to automakers headquartered outside North America that offset domestic production cuts. The stronger unit shipments to automakers headquartered offshore have been camouflaged by those domestic production cuts recently, but as we look to the future and further diversify our customer base in the automotive industry, that will hopefully become less of an issue."
Bauer added that he does expect the economy and North American auto industry to improve. "We believe that it’s not a question of ‘if’ … it’s a question of ‘when.’"
The company also reported that it repurchased approximately 3,968,000 shares during the third quarter of 2006 at a cost of approximately $55.6 million. The company has a share repurchase plan in place with authorization to repurchase up to 24 million shares of the company’s stock (including the May and August 2006 Board of Directors’ authorizations to repurchase a total of an additional 16 million shares). As of the end of the third quarter of 2006, including the prior share repurchases in 2003, 2005 and 2006, the company has repurchased approximately 16.3 million shares, leaving approximately 7.7 million shares authorized to be repurchased under the plan.
"We continue to see improvements in our manufacturing yields and expect that process to continue as we make our way up the learning curve and our volumes increase on our lines," said Enoch Jen, the company’s senior vice president and chief financial officer. "We currently expect unit shipment growth in the fourth quarter to increase by approximately five percent compared with the fourth quarter of 2005. The expectation of five percent unit shipment growth in the fourth quarter is at the lower end of the range of our previous guidance, but it now reflects the significant North American light vehicle production cuts that have previously been announced for the fourth quarter."
The unit shipment estimates provided by the company for the 2006 fourth quarter are based on an eight percent decline in light vehicle production forecasts of CSM Worldwide for North America, and slight increases in those forecasts for Europe, Japan and Korea.
For more information about Gentex, go to: http://www.gentex.com.
