ZEELAND, Mich., July 20 /PRNewswire-FirstCall/ -- Gentex Corporation
(Nasdaq: GNTX), the Zeeland, Michigan-based manufacturer of
automatic-dimming rearview mirrors and commercial fire protection products,
today reported financial results for the second quarter ended June 30,
2006. The Company also announced that it repurchased approximately 7.2
million shares during the second quarter of 2006 under a previously
authorized share repurchase plan.
The Company's net sales increased by eight percent from $132.4 million
in the second quarter of 2005 to a record $142.4 million in the second
quarter of 2006. Second quarter net income increased by five percent to
$27.2 million compared with $26.0 million in the second quarter last year.
Earnings per diluted share were 18 cents in the second quarter of 2006
compared with 17 cents in the second quarter of 2005.
For the first six months of 2006, net sales increased by eight percent
to $281.4 million compared with $260.0 million in the first six months of
2005. Net income for the first six months of 2006 increased by three
percent to $53.6 million compared with $52.0 million in the first six
months of 2005.
Excluding the impact of stock option expensing, the Company's net
income would have increased by ten percent to $28.6 million in the second
quarter of 2006, and earnings per diluted share would have been 19 cents.
Net income, excluding the impact of stock option expensing, would have
increased by seven percent for the first six months of 2006 to $55.9
million, and earnings per diluted share would have been 36 cents. Stock
option expensing did not impact the Company's income statement for the
second quarter and first six months of 2005, but was disclosed in a
footnote to the financial statements.
"We are pleased to report improved performance in the second quarter,"
said Gentex Chairman and Chief Executive Officer Fred Bauer. "However, the
automotive industry continues to be very challenging, and it is a difficult
area to predict future sales and unit shipment volumes, particularly given
the current macroeconomic environment."
Bauer also said that the Company recently moved into its newly
completed Technology Center and Manufacturing Facility that is attached to
its world headquarters facility in Zeeland, Michigan.
"We believe that this new facility will meet our needs for auto-dimming
mirror building production capacity and engineering and R&D space due to
the continued growth of our business for the next five to eight years,"
said Bauer.
The Company also reported that it repurchased approximately 7,201,000
shares during the second quarter of 2006 at a cost of approximately $104.6
million. The Company has a share repurchase plan in place with
authorization to repurchase up to 16 million shares of the Company's stock
(including the May 2006 Board of Directors' authorization to repurchase an
additional eight million shares). To date, including the prior share
repurchases in 2003, 2005 and 2006, the Company has repurchased
approximately 12,331,000 shares, leaving approximately 3,669,000 shares
authorized to be repurchased under the plan.
"We were pleased to see an improvement in our manufacturing yields, and
hope that we'll be able to make further improvements in the second half of
this year," said Enoch Jen, the Company's Senior Vice President and Chief
Financial Officer. "We currently expect unit shipment growth in the third
quarter to be approximately flat to up five percent compared with the third
quarter of 2005, and expect approximately five to ten percent unit shipment
growth for all of calendar year 2006."
Jen said that oil prices and higher interest rates continue to impact
the sales of vehicles, making it considerably more difficult to forecast,
especially in the mid- and full-sized truck/SUV segments, which are vehicle
segments for which the Company has historically shipped highly contented
interior mirrors in relatively high volumes. He said that the third quarter
is always the most difficult for forecasting unit shipments, due to the
uncertainty associated with customer changeover plant shutdowns and new
vehicle and/or product launches. The balance of calendar year 2006 will be
impacted by annual customer price reductions, the new facility, and
automotive manufacturer plans for lower vehicle production in the mid- and
full-sized truck/SUV segments.
The unit shipment estimates provided by the Company for the 2006 third
quarter and calendar year are based on a slight decline in light vehicle
production forecasts of CSM Worldwide for North America, and slight
increases in those forecasts for Europe, Japan and Korea.
Automotive revenues increased by eight percent to $136.0 million in the
second quarter of 2006 compared with the same period last year, and
increased by nine percent to $269.3 million for the first six months of
2006. Fire Protection revenues increased by one percent to $6.3 million for
the second quarter of 2006 compared with the second quarter of 2005, and by
two percent to $12.1 million for the first six months of 2006, compared
with the same period in 2005.
Total auto-dimming mirror unit shipments in the second quarter were
approximately 3.4 million, a ten percent increase over the same period last
year. Auto-dimming mirror unit shipments increased by 11 percent to 6.8
million for the first six months of 2006.
Auto-dimming mirror unit shipments to customers in North America
increased by ten percent to approximately 1.6 million in the second quarter
of 2006 compared with the same quarter last year. North American light
vehicle production was flat in the second quarter of 2006 compared with the
same period in 2005. For the first six months of 2006, auto-dimming mirror
unit shipments to customers in North America increased by nine percent to
approximately 3.2 million compared with the same period last year. North
American light vehicle production increased by two percent for the first
six months of 2006 compared with the same period in 2005.
Unit shipments to offshore customers increased by ten percent to
approximately 1.8 million in the second quarter of 2006 compared with the
same period in 2005. Light vehicle production in Europe decreased by two
percent in the second quarter of 2006 and increased by five percent for
Japan and Korea in that same period, compared with the same prior year
periods. For the first six months of 2006, unit shipments to offshore
customers increased by 13 percent to approximately 3.6 million, compared
with the same period in 2005. Light vehicle production in Europe increased
by two percent in the first six months of 2006 and increased by five
percent for Japan and Korea in that same period, compared with the same
prior year periods.
Non-GAAP Financial Measure
The financial information provided, including earnings, is in
accordance with GAAP. Still, the Company believes it is useful to provide
non-GAAP earnings to exclude the effect of FAS 123(R). This non-GAAP
financial measure allows investors to evaluate current performance in
relation to historic performance without considering this non-cash charge.
The Company's management uses this non-GAAP information internally to
help assess performance in the current period versus prior periods.
Disclosure of non-GAAP earnings to exclude the effect of FAS 123(R) has
economic substance because the excluded expenses do not represent current
or future cash expenditures.
A reconciliation of non-GAAP earnings, to exclude the effect of FAS
123(R), to GAAP earnings can be found in the attached financial table. The
use of non-GAAP earnings is intended to supplement, not to replace,
presentation of GAAP earnings. Like all non-GAAP financial measures,
non-GAAP earnings are subject to inherent limitations because all of the
expenses required by GAAP are not included. The limitations are compensated
by the fact that non-GAAP earnings are not relied on exclusively, but are
used to simply supplement GAAP earnings.
Safe Harbor Statement
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act, as amended, that are based on
management's belief, assumptions, current expectations, estimates and
projections about the global automotive industry, the economy, the impact
of stock option expenses on earnings, the ability to leverage fixed
manufacturing overhead costs, unit shipment growth rates and the Company
itself. Words like "anticipates," "believes," "confident," "estimates,"
"expects," "forecast," "likely," "plans," "projects," and "should," and
variations of such words and similar expressions identify forward-looking
statements. These statements do not guarantee future performance and
involve certain risks, uncertainties, and assumptions that are difficult to
predict with regard to timing, expense, likelihood and degree of
occurrence. These risks include, without limitation, employment and general
economic conditions, the pace of economic recovery in the U.S. and in
international markets, the pace of automotive production worldwide, the
types of products purchased by customers, competitive pricing pressures,
currency fluctuations, the financial strength of the Company's customers,
the mix of products purchased by customers, the ability to continue to make
product innovations, the success of newly introduced products (e.g.
SmartBeam), and other risks identified in the Company's filings with the
Securities and Exchange Commission. Therefore actual results and outcomes
may materially differ from what is expressed or forecasted. Furthermore,
the Company undertakes no obligation to update, amend, or clarify
forward-looking statements, whether as a result of new information, future
events, or otherwise.
Second Quarter Conference Call
A conference call related to this news release will be simulcast live
on the Internet beginning at 10 a.m. Eastern Daylight Saving Time today. To
access that call, go to http://www.gentex.com and select the "Audio
Webcast" icon in the lower right-hand corner of the page. Other conference
calls hosted by the Company will also be available at that site in the
future.
About the Company
Founded in 1974, Gentex Corporation (Nasdaq: GNTX) is an international
company that provides high-quality products to the worldwide automotive
industry and North American fire protection market. Based in Zeeland,
Michigan, the Company develops, manufactures and markets interior and
exterior automatic-dimming automotive rearview mirrors that utilize
proprietary electrochromic technology to dim in proportion to the amount of
headlight glare from trailing vehicle headlamps. Many of the mirrors are
sold with advanced electronic features, and approximately 96 percent of the
Company's revenues are derived from the sales of auto-dimming mirrors to
nearly every major automaker in the world.
GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Net Sales $142,391,231 $132,384,445 $281,411,824 $260,026,165
Costs and
Expenses
Cost of Goods
Sold 91,494,753 82,818,876 182,282,638 162,407,779
Engineering,
Research
& Development 9,962,629 8,798,430 20,121,797 16,775,815
Selling, General
& Administrative 7,512,959 7,011,298 15,304,027 13,851,129
Other Expense
(Income) (6,678,259) (4,260,209) (14,666,670) (8,883,578)
Total Costs and
Expenses 102,292,082 94,368,395 203,041,792 184,151,145
Income Before
Provision for
Income Taxes 40,099,149 38,016,050 78,370,032 75,875,020
Provision for
Income Taxes 12,863,099 11,975,000 24,762,925 23,901,000
Net Income $27,236,050 $26,041,050 $53,607,107 $51,974,020
Earnings Per Share
Basic $0.18 $0.17 $0.35 $0.33
Diluted $0.18 $0.17 $0.35 $0.33
Weighted Average
Shares:
Basic 150,592,680 155,568,960 152,402,407 155,396,365
Diluted 151,044,639 157,209,802 153,176,602 156,962,435
Cash Dividends
Declared per
Share $0.090 $0.085 $0.18 $0.17
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
June 30, Dec 31,
2006 2005
ASSETS
Cash and Short-Term Investments $382,529,607 $507,013,621
Other Current Assets 123,368,187 111,973,906
Total Current Assets 505,897,794 618,987,527
Plant and Equipment - Net 180,695,166 164,030,341
Long-Term Investments and Other Assets 137,900,694 139,627,934
Total Assets $824,493,654 $922,645,802
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities $72,813,036 $58,088,259
Long-Term Debt 0 0
Deferred Income Taxes 21,898,366 22,962,168
Shareholders' Investment 729,782,252 841,595,375
Total Liabilities & Shareholders'
Investment $824,493,654 $922,645,802
GENTEX CORPORATION AND SUBSIDIARIES
STATEMENTS OF INCOME RECONCILIATION
NON-GAAP MEASUREMENT TO GAAP
(unaudited) (unaudited)
Three Months Ended June 30, 2006
Non-
(Non-GAAP GAAP GAAP
Excluding 2006 2006
Stock Stock Quarter vs. vs.
Option Option Ended 2005 % 2005 %
GAAP Expense Expense) 6/30/05 Change Change
Net
Sales $142,391,231 $0 $142,391,231 $132,384,445 7.6% 7.6%
Costs and
Expenses
Cost of
Goods
Sold 91,494,753 (575,107) 90,919,646 82,818,876 10.5% 9.8%
Engineering,
Research &
Deve-
lopment 9,962,629 (619,071) 9,343,558 8,798,430 13.2% 6.2%
Selling,
General &
Admini-
strative 7,512,959 (555,617) 6,957,342 7,011,298 7.2% (0.8%)
Other
Expense
(Income) (6,678,259) 0 (6,678,259) (4,260,209) 56.8% 56.8%
Total Costs
and
Expenses 102,292,082 (1,749,795) 100,542,287 94,368,395 8.4% 6.5%
Income
Before
Provision
for Income
Taxes 40,099,149 1,749,795 41,848,944 38,016,050 5.5% 10.1%
Provision for
Income
Taxes 12,863,099 424,901 13,288,000 11,975,000 7.4% 11.0%
Net Income 27,236,050 1,324,894 28,560,944 26,041,050 4.6% 9.7%
Six Months Ended June 30, 2006
Non-
(Non-GAAP GAAP GAAP
Excluding 2006 2006
Stock Stock vs. vs.
Option Option YTD 2005 % 2005 %
GAAP Expense Expense) 6/30/05 Change Change
Net
Sales $281,411,824 $0 $281,411,824 $260,026,165 8.2% 8.2%
Costs and
Expenses
Cost of
Goods
Sold 182,282,638 (1,117,361) 181,165,277 162,407,779 12.2% 11.5%
Engineering,
Research &
Devel-
opment 20,121,797 (1,276,781) 18,845,016 16,775,815 19.9% 12.3%
Selling,
General &
Admini-
strative 15,304,027 (1,075,748) 14,228,279 13,851,129 10.5% 2.7%
Other
Expense
(Income) (14,666,670) 0 (14,666,670) (8,883,578) 65.1% 65.1%
Total
Costs and
Expenses 203,041,792 (3,469,890) 199,571,902 184,151,145 10.3% 8.4%
Income
Before
Provision
for Income
Taxes 78,370,032 3,469,890 81,839,922 75,875,020 3.3% 7.9%
Provision
for Income
Taxes 24,762,925 1,222,075 25,985,000 23,901,000 3.6% 8.7%
Net
Income 53,607,107 2,247,815 55,854,922 51,974,020 3.1% 7.5%
AUTO-DIMMING MIRROR UNIT SHIPMENTS
(Thousands)
Second Quarter Six Months Ended
Ended June 30, June 30,
2006 2005 %Change 2006 2005 %Change
Domestic Interior 1,124 1,038 8% 2,229 2,078 7%
Domestic Exterior 488 426 15% 966 860 12%
Total Domestic Units 1,611 1,463 10% 3,195 2,938 9%
Foreign Interior 1,293 1,190 9% 2,560 2,330 10%
Foreign Exterior 503 441 14% 1,046 857 22%
Total Foreign Units 1,796 1,631 10% 3,605 3,187 13%
Total Interior
Mirrors 2,417 2,228 9% 4,789 4,408 9%
Total Exterior
Mirrors 991 867 14% 2,011 1,717 17%
Total Mirror Units 3,408 3,095 10% 6,800 6,125 11%
Note: Certain prior year amounts have been reclassified to conform with
the current year presentation. Amounts may not total due to
rounding.
SOURCE Gentex Corporation
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Related links:
http://www.gentex.com
CONTACT:
Connie Hamblin for Gentex Corporation,
+1-616-772-1800
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