ZEELAND, Mich. — Gentex Corp. has reported results for the second quarter and six months ended June 30.

For the second quarter of 2009, the company’s net sales declined by 31 percent to $117.3 million compared with $170.5 million in the second quarter of 2008. The gross profit margin declined on a year-over-year basis from 34.7 percent in the second quarter of 2008 to 30.5 percent in the second quarter of 2009, primarily due to the company’s inability to leverage its fixed overhead costs due to decreased revenues. The impact of annual customer price reductions was offset by purchasing cost reductions.

The company’s revenues increased by 25 percent on a sequential, quarter-to-quarter basis, from $93.8 million in the first quarter of 2009 to $117.3 million in the second quarter of 2009. The gross profit margin of 30.5 percent in the second quarter of 2009 increased sequentially from 23.8 percent in the first quarter of 2009. Approximately two-thirds of the sequential, quarter-to-quarter increase was due to the company’s ability to leverage fixed overhead costs due to increased revenues. The balance of the increase was due to direct labor productivity, foreign exchange rates and product mix.

Income from operations declined by 55 percent in the second quarter of 2009 to $16.1 million, compared with $35.8 million in the second quarter of 2008. Income from operations declined by 76 percent for the first six months of 2009 compared with the same prior-year period. The decline in operating income during both year-over-year periods was primarily due to the decline in the gross margin.

Net income declined by 55 percent to $12.2 million in the second quarter of 2009 compared with $26.9 million in the second quarter of 2008. For the first six months of 2009, net income declined by 81 percent to $10.7 million compared with the same six-month period in 2008. The decreased net income for the second quarter was primarily due to the decreased operating margin, and for the six-month period was primarily due to the decreased operating margin and a decrease in other expense (income). Other income decreased in the second quarter of 2009 compared with the second quarter last year, primarily due to decreased investment income as a result of lower interest rates. Other income of $9.7 million for the six months ended June 30, 2008, decreased to other expense of $2.4 million for the six months ended June 30, 2009, primarily due to realized losses on the sale of equity investments and lower investment income due to lower interest rates. Net income per diluted share was nine cents in the second quarter of 2009 compared with earnings per diluted share of 19 cents in the second quarter of 2008, and was eight cents per diluted share for the first six months of 2009 compared with 40 cents per diluted share during the first six months of 2008.

"We’re hopeful that the global automotive market is beginning to recover, based on our improved sequential quarterly results," said Gentex Chairman and Chief Executive Officer Fred Bauer. "Despite reporting lower year-over-year comparisons, we are pleased to report a profit in this still challenging automotive environment.

"We hope that the market continues to improve, as we have a number of new program launches, including many SmartBeam and Rear Camera Display programs, during the balance of the year. The interest in those products remains at a high level," said Bauer, "and an improving production environment can only help."

Future Estimates
Gentex Senior Vice President Enoch Jen provided certain guidance for the third quarter of 2009.

"Based on CSM Worldwide’s end-of-June light vehicle production forecast, we currently expect our revenues in the third quarter of 2009 to decline by approximately 10 percent compared with the third quarter of 2008," said Jen. "According to CSM, light vehicle production in the third quarter of 2009 is currently expected to decline by 27 percent in North America (including a 20 percent decline in total light truck/SUV production), by 13 percent in Europe and by 22 percent in Japan and Korea.

"It continues to be a very difficult operating environment," said Jen. "While CSM’s end-of-June forecast continues to show gradually improving production numbers for the balance of calendar 2009, we believe that the production environment is still too unstable for us to provide full-year 2009 guidance with any degree of certainty."

The company’s current third quarter 2009 forecast is based on CSM’s end-of-June forecast for light vehicle production of 2.2 million units for North America, 4.2 million units for Europe and 2.7 million units for Japan and Korea. CSM’s current calendar year 2009 forecast for production in North America is a 37 percent decline to 8 million light vehicle units; a 21 percent decline to 16.3 million units for Europe, and a 28 percent decline to 10.3 million units for Japan and Korea.

Based on the company’s expected revenues for the third quarter of 2009, Jen said that the company expects its gross profit margin to improve on a sequential basis.