Gentex Reports Second Quarter 2022 Financial Results
Gentex Corporation (NASDAQ: GNTX) reported Q2 2022 net sales of $463.4 million, an 8% increase from Q2 2021. Gross profit margin was 32.0%, down from 35.4% last year, primarily due to inflationary pressures and lower-than-expected sales. Net income decreased to $72.4 million, or $0.31 per share. The company experienced a sales shortfall of $70-$80 million due to production reductions and component supply shortages. Future guidance indicates potential growth with light vehicle production expected to rise 21% in Q3 2022.
- Net sales increased by 8% year-over-year
- Light vehicle production expected to increase 21% in Q3 2022
- Ongoing strong demand for light vehicles
- Fire protection sales increased by 53% year-over-year
- Continued focus on new technology investments
- Gross margin decreased to 32.0% from 35.4% YoY
- Net income fell to $72.4 million from $86.5 million YoY
- Sales shortfall of $70-$80 million due to production issues
- Operating expenses increased by 21% to $62.6 million
ZEELAND, Mich., July 22, 2022 (GLOBE NEWSWIRE) -- Gentex Corporation (NASDAQ: GNTX), a leading supplier of digital vision, connected car, dimmable glass and fire protection technologies, today reported financial results for the three and six months ended June 30, 2022.
2nd Quarter 2022 Summary
- Net sales of
$463.4 million , an8% increase compared to the second quarter of 2021 - Gross profit margin of
32.0% - Net income of
$72.4 million - 2 New Nameplate Launches for FDM, bringing total nameplates currently shipping to 72
For the second quarter of 2022, the Company reported net sales of
For the second quarter of 2022, the gross margin was
Operating expenses during the second quarter of 2022 increased by
Income from operations for the second quarter of 2022 was
During the second quarter of 2022, the Company had an effective tax rate of
Net income was
Earnings per diluted share for the second quarter of 2022 were
Automotive net sales in the second quarter of 2022 were
Other net sales in the second quarter of 2022, which includes dimmable aircraft windows and fire protection products, was
Share Repurchases
During the second quarter of 2022, the Company did not repurchase any shares of its common stock. As of June 30, 2022, the Company has approximately 22.4 million shares remaining available for repurchase pursuant to its previously announced share repurchase plan. The Company intends to continue to repurchase additional shares of its common stock in the future in support of the previously disclosed capital allocation strategy, but share repurchases may vary from time to time and will take into account macroeconomic issues (including the impact of the COVID-19 pandemic and supply constraints), market trends, and other factors that the Company deems appropriate.
Future Estimates
The Company’s current forecasts for light vehicle production for the third quarter of 2022, and full years 2022 and 2023, are based on the mid-July 2022 IHS Markit forecast for light vehicle production in North America, Europe, Japan/Korea and China. Light vehicle production in these markets is expected to increase
Light Vehicle Production (per IHS Markit mid-July light vehicle production forecast) | |||||||||||||
(in Millions) | |||||||||||||
Region | Q3 2022 | Q3 2021 | % Change | Calendar Year 2023 | Calendar Year 2022 | Calendar Year 2021 | 2023 vs 2022 % Change | 2022 vs 2021 % Change | |||||
North America | 3.71 | 2.95 | 26 | % | 16.41 | 14.70 | 13.05 | 12 | % | 13 | % | ||
Europe | 3.90 | 2.98 | 31 | % | 17.98 | 16.33 | 15.89 | 10 | % | 3 | % | ||
Japan and Korea | 2.95 | 2.30 | 28 | % | 11.85 | 11.20 | 10.87 | 6 | % | 3 | % | ||
China | 6.10 | 5.50 | 11 | % | 26.58 | 24.92 | 24.84 | 7 | % | — | % | ||
Total Light Vehicle Production | 16.66 | 13.73 | 21 | % | 72.82 | 67.15 | 64.65 | 8 | % | 4 | % |
Based on this light vehicle production forecast as well as year-to-date financials, the Company is updating certain guidance estimates for calendar year 2022 as shown in the table below.
2022 Guidance | ||
Item | Original Guidance | Updated Guidance |
Revenue | ||
Gross Margin | ||
Operating Expenses | ||
Tax Rate | ||
Capital Expenditures | ||
Depreciation & Amortization |
Additionally, based on the Company’s forecasts for light vehicle production for calendar year 2023, the Company still expects calendar year 2023 revenue growth of approximately
"As we look back at the quarter, we did see some stabilization in our sales levels due to the significant amount of re-design work that we have completed over the last several quarters and some modest improvement in the overall supply base. Unfortunately, many of these improvements were offset by new component shortages and customer order changes and volatility that we expect to continue throughout the rest of 2022 and into 2023. Despite these challenges, we still believe that the overall backdrop in the industry should lead to a demand increase in the automotive market over the next 12-18 months, and will be supported by growth in Full Display Mirrors, exterior auto-dimming mirrors, and other new technologies that we have been investing in over the last few years. So while we acknowledge that the inflationary aspects of our business will remain a challenge that needs to be addressed, we are optimistic about our growth opportunities driven by our commitment to new technology and our team's ability to handle the cost challenges that are inundating our industry,” concluded Downing.
Safe Harbor for Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements contained in this communication that are not purely historical are forward-looking statements. Forward-looking statements give the Company’s current expectations or forecasts of future events. These forward-looking statements generally can be identified by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,” “hope,” “intend,” “may,” “opinion,” “optimistic,” “plan,” “poised,” “predict,” “project,” “should,” “strategy,” “target,” “will,” and variations of such words and similar expressions. Such statements are subject to risks and uncertainties that are often difficult to predict and beyond the Company’s control, and could cause the Company’s results to differ materially from those described. These risks and uncertainties include, without limitation: changes in general industry or regional market conditions; changes in consumer and customer preferences for our products (such as cameras replacing mirrors and/or autonomous driving); our ability to be awarded new business; continued uncertainty in pricing negotiations with customers and suppliers; loss of business from increased competition; changes in strategic relationships; customer bankruptcies or divestiture of customer brands; fluctuation in vehicle production schedules (including the impact of customer employee strikes); changes in product mix; raw material and other supply shortages; labor shortages, supply chain constraints and disruptions; our dependence on information systems; higher raw material, fuel, energy and other costs; unfavorable fluctuations in currencies or interest rates in the regions in which we operate; costs or difficulties related to the integration and/or ability to maximize the value of any new or acquired technologies and businesses; changes in regulatory conditions; warranty and recall claims and other litigation and customer reactions thereto; possible adverse results of pending or future litigation or infringement claims; changes in tax laws; import and export duty and tariff rates in or with the countries with which we conduct business; negative impact of any governmental investigations and associated litigation including securities litigation relating to the conduct of our business; the length and severity of the COVID-19 (coronavirus) pandemic, including its impact across our business on demand, operations, and the global supply chain. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made.
The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law or the rules of the NASDAQ Global Select Market. Accordingly, any forward-looking statement should be read in conjunction with the additional information about risks and uncertainties identified under the heading “Risk Factors” in the Company’s latest Form 10-K and Form 10-Q filed with the SEC, which risks and uncertainties now include the impacts of COVID-19 (coronavirus) pandemic and supply chain constraints that have affected, and will continue to affect, general economic and industry conditions, customers, suppliers, and the regulatory environment in which the Company operates. Includes content supplied by IHS Markit Light Vehicle Production Forecast of July 18, 2022 (http://www.gentex.com/forecast-disclaimer).
Second Quarter Conference Call
The Company will host a conference call related to this news release and it will simulcast beginning at 9:30 a.m. ET, July 22, 2022. Participants who wish to ask questions may register for the call at https://register.vevent.com/register/BI474da0c712c94c2490d794747bbbb7ec to receive the dial-in numbers and unique PIN to access the call seamlessly. It is recommended that participants join 10 minutes prior to the event start, although they may register ahead of the call and dial in at any time during the call. Participants may listen to the call via audio streaming https://edge.media-server.com/mmc/p/pxb4q3v6. A webcast replay will be available approximately 24 hours after the conclusion of the call at http://ir.gentex.com/events-and-presentations/upcoming-past-events.
About the Company
Founded in 1974, Gentex Corporation (The NASDAQ Global Select Market: GNTX) is a leading supplier of digital vision, connected car, dimmable glass and fire protection technologies. Visit the Company’s web site at www.gentex.com.
Contact Information:
Gentex Investor & Media Contact
Josh O'Berski
(616)772-1590 x5814
GENTEX CORPORATION
AUTO-DIMMING MIRROR SHIPMENTS
(Thousands)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | ||||||||
North American Interior Mirrors | 2,127 | 1,873 | 14 % | 4,288 | 3,946 | 9 % | |||||||
North American Exterior Mirrors | 1,468 | 1,497 | (2)% | 2,929 | 2,990 | (2)% | |||||||
Total North American Mirror Units | 3,595 | 3,370 | 7 % | 7,217 | 6,936 | 4 % | |||||||
International Interior Mirrors | 4,909 | 4,811 | 2 % | 9,996 | 10,590 | (6)% | |||||||
International Exterior Mirrors | 2,188 | 2,240 | (2)% | 4,482 | 4,676 | (4)% | |||||||
Total International Mirror Units | 7,097 | 7,052 | 1 % | 14,477 | 15,266 | (5)% | |||||||
Total Interior Mirrors | 7,036 | 6,684 | 5 % | 14,284 | 14,535 | (2)% | |||||||
Total Exterior Mirrors | 3,656 | 3,738 | (2)% | 7,411 | 7,666 | (3)% | |||||||
Total Auto-Dimming Mirror Units | 10,692 | 10,422 | 3 % | 21,695 | 22,202 | (2)% |
Note: Percent change and amounts may not total due to rounding.
GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) | (Unaudited) | ||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||
Net Sales | $ | 463,423,002 | $ | 428,005,026 | $ | 931,673,777 | $ | 911,729,865 | |||||
Cost of Goods Sold | 315,055,988 | 276,408,285 | 622,894,804 | 576,832,956 | |||||||||
Gross Profit | 148,367,014 | 151,596,741 | 308,778,973 | 334,896,909 | |||||||||
Engineering, Research & Development | 32,857,419 | 29,059,058 | 64,832,406 | 56,711,139 | |||||||||
Selling, General & Administrative | 29,718,626 | 22,613,062 | 54,849,694 | 44,527,448 | |||||||||
Operating Expenses | 62,576,045 | 51,672,120 | 119,682,100 | 101,238,587 | |||||||||
Income from Operations | 85,790,969 | 99,924,621 | 189,096,873 | 233,658,322 | |||||||||
Other Income | (982,985 | ) | 1,891,098 | (993,479 | ) | 3,424,133 | |||||||
Income before Income Taxes | 84,807,984 | 101,815,719 | 188,103,394 | 237,082,455 | |||||||||
Provision for Income Taxes | 12,403,581 | 15,309,301 | 28,170,366 | 37,125,167 | |||||||||
Net Income | $ | 72,404,403 | $ | 86,506,418 | $ | 159,933,028 | $ | 199,957,288 | |||||
Earnings Per Share(1) | |||||||||||||
Basic | $ | 0.31 | $ | 0.36 | $ | 0.68 | $ | 0.83 | |||||
Diluted | $ | 0.31 | $ | 0.36 | $ | 0.68 | $ | 0.82 | |||||
Cash Dividends Declared per Share | $ | 0.120 | $ | 0.120 | $ | 0.120 | $ | 0.240 | |||||
(1) Earnings Per Share has been adjusted to exclude the portion of net income allocated to participating securities as a result of share-based payment awards. |
GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) | |||||
June 30, 2022 | December 31, 2021 | ||||
ASSETS | |||||
Cash and Cash Equivalents | $ | 269,372,471 | $ | 262,311,670 | |
Short-Term Investments | 11,992,154 | 5,423,612 | |||
Accounts Receivable, net | 274,404,572 | 249,794,906 | |||
Inventories | 392,577,825 | 316,267,442 | |||
Other Current Assets | 43,539,709 | 39,178,119 | |||
Total Current Assets | 991,886,731 | 872,975,749 | |||
Plant and Equipment - Net | 488,913,960 | 464,121,676 | |||
Goodwill | 313,857,650 | 313,960,209 | |||
Long-Term Investments | 197,644,313 | 207,693,147 | |||
Intangible Assets | 229,010,910 | 239,189,627 | |||
Patents and Other Assets | 63,140,670 | 33,450,758 | |||
Total Other Assets | 803,653,543 | 794,293,741 | |||
Total Assets | $ | 2,284,454,234 | $ | 2,131,391,166 | |
LIABILITIES AND SHAREHOLDERS' INVESTMENT | |||||
Current Liabilities | $ | 286,171,887 | $ | 181,656,100 | |
Other Non-current Liabilities | 11,707,867 | 11,746,599 | |||
Shareholders' Investment | 1,986,574,480 | 1,937,988,467 | |||
Total Liabilities & Shareholders' Investment | $ | 2,284,454,234 | $ | 2,131,391,166 |
FAQ
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