Gentex Corp. (GNTX) filed Quarterly Report for the period ended 2009-09-30.
Gentex Corporation is an international company that provides high-quality products to the worldwide automotive industry and North American fire protection market. The Company develops manufactures and markets proprietary electro-optic products including interior and exterior electrochromic automatic-dimming Night Vision Safety automotive rearview mirrors that dim in proportion to the amount of headlight glare from trailing vehicle headlamps and an extensive line of fire protection products for commercial applications. Gentex Corp. has a market cap of $2.2 billion; its shares were traded at around $16 with a P/E ratio of 53.3 and P/S ratio of 3.5. The dividend yield of Gentex Corp. stocks is 2.8%. Gentex Corp. had an annual average earning growth of 10% over the past 10 years. GuruFocus rated Gentex Corp. the business predictability rank of 3-star.
Highlight of Business Operations:
Net Sales. Net sales for the third quarter of 2009 increased by approximately $2,685,000, or 2%, when compared with the third quarter last year. Net sales of the Company’s automotive mirrors increased by approximately $3,799,000, or 3%, in the third quarter of 2009, when compared with the third quarter last year, primarily due to increased penetration of advanced featured mirrors. Auto-dimming mirror unit shipments decreased 7% from approximately 3,528,000 in the third quarter 2008 to approximately 3,297,000 in the current quarter. Unit shipments to customers in North America for the current quarter decreased by 4% compared with the third quarter of the prior year, primarily due to lower light vehicle production levels. Mirror unit shipments for the current quarter to automotive customers outside North America decreased by 8% compared with the third quarter in 2008, primarily due to lower light vehicle production levels in Asia and Europe. Net sales of the Company’s fire protection products decreased 19% for the current quarter versus the same quarter of last year, primarily due to the weaker commercial construction market.
Operating Expenses. Engineering, research and development (E, R & D) expenses for the current quarter decreased 9% and approximately $1,146,000 when compared with the same quarter last year, primarily due to reduced employee compensation expense. Selling, general and administrative expenses decreased 10% and approximately $1,028,000, for the current quarter, when compared with the same quarter last year, primarily due to reduced overseas office expenses, reduced travel related expenses and foreign exchange rates. Each factor is estimated to have impacted selling, general and administrative expenses equally.
Net Sales. Net sales for the nine months ended September 30, 2009 decreased by approximately $134,603,000, or 27%, when compared with the same period last year. Net sales of the Company’s automotive mirrors decreased by approximately $131,912,000, or 27%, period over period, as auto-dimming mirror unit shipments decreased by 31% from approximately 11,593,000 in the first nine months of 2008 to approximately 8,000,000 in the first nine months of 2009. The decrease was primarily due to lower light vehicle production levels globally. Unit shipments to customers in North America decreased by 39% during the first nine months of 2009 versus the same period in 2008, primarily due to lower light vehicle production levels. Mirror unit shipments to automotive customers outside North America decreased by 26% period over period, primarily due to lower light vehicle production levels in Asia and Europe. Net sales of the Company’s fire protection products decreased 16% period over period, primarily due to the weak commercial construction market.
Operating Expenses. For the nine months ended September 30, 2009, engineering, research and development expenses decreased 12% and approximately $4,678,000, when compared with the same period last year, primarily due to reduced employee compensation expense. Selling, general and administrative expenses decreased 12% and approximately $3,618,000 for the nine months ended September 30, 2009, when compared with the same period last year, primarily due to reduced employee compensation expense and foreign exchange rates. Foreign exchange rates accounted for approximately one third of the decrease in selling, general and administrative expenses.
Cash flow from operating activities for the nine months ended September 30, 2009, decreased approximately $7,383,000 to approximately $83,624,000, compared with approximately $91,007,000, for the same period last year, primarily due to the decrease in net income, partially offset by a decrease in inventory and an increase in accrued liabilities. Capital expenditures for the nine months ended September 30, 2009, were $16,453,000, compared with $38,206,000 for the same period last year, primarily due to reduced production equipment purchases.
Management considers the Company’s working capital and long-term investments totaling approximately $514,436,000 as of September 30, 2009, together with internally generated cash flow and an unsecured $5,000,000 line of credit from a bank, to be sufficient to cover anticipated cash needs for the next year and for the foreseeable future.
GNTX is in the portfolios of PRIMECAP Management.
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