Gentex (GNTX, Financial) is engaged in providing electronic products and features for the automotive, aerospace and fire protection industries. It is known for its innovation spree and caters high-end automotive mirrors.It is the manufacturer of automotive automatic-dimming rearview mirrors, automotive electronics, dimmable aircraft windows, and fire protection products. It is known for rewarding its shareholders.
In 2013, the company acquired HomeLink to adopt electronic features that enable users to control home security systems, control garage doors with the help of push buttons.
First quarter results
Sales
Net sales during the quarter were $368.9 million (which was an increase of 10% from prior year period’s $335.7 million. This strong improvement resulted despite the foreign currency fluctuations that accounted for approximately 1% of revenue headwind during the most recently completed quarter.
GP Margin
There was a reduction in the GP Margin this quarter, which was 38.8%, compared to last year’s 39.1% in the first quarter. This reduction was attributed to annual customer price reductions, continued higher-than-expected manufacturing costs related to new technology launches, and currency rate fluctuations.
Net Income
Net income during the quarter increased by13% to $77.2 million (in the first quarter of 2014 it was $68.6 million).
Earnings per Diluted Share
Earnings per diluted share in the first quarter of 2015 were $0.26, compared with earnings per diluted share of $0.23 in the first quarter of 2014.
Automotive Sales
Automotive net sales in the first quarter of 2015 were $360.6 million, up 10% compared with automotive net sales of $326.3 million in the first quarter of 2014. An 11% increase in auto dimming mirror unit shipment contributed to this.
Sales of dimmable aircraft windows and fire protection products
Sales of dimmable aircraft windows and fire protection products were $8.3 million in the first quarter of 2015, compared with $9.4 million in the first quarter of 2014.
Share Repurchases
During the first quarter of 2015, the company repurchased 1.4 million shares of its common stock for approximately $25 million.
2015 Guidance
- GNTX expects its net sales to be in the range of $1.47 - $1.54 billion.
- GP Margin to be in the range of 38.5% - 39.5%.
- Operating expenses to be in the range of $148-$154 million.
- Tax rate to be in the range of 31.25%-32.25%.
- Capex to be around $95 million-$105 million.
- Depreciation and amortization to be around $85 million to $ 90 million.
Miscellaneous
There were incremental research and development tax credits of $7.3 million in the calendar year of 2014 (excluding audit reserves). GNTX realized incremental research and development tax credits of approximately $3.9 million. Effective tax rate during the quarter decreased to 28.8% (it was 32.6% in the first quarter of 2014).
Conclusion
The company impressed us with its first-quarter results. It boasts of its automotive segment, which contributed to its significant earnings this quarter. After its dismal 2014 end, the first-quarter results were a relief. It is making continual efforts to strive in the industry. Results show that over many years it has increased its earnings a many times and returned significant returns to its shareholders.
This Zeeland, Michigan-based company again bounced back with its first quarter results and is expected to continue this trend in the immediate future. There is more room to grow, and it is tapping the international market. The company looks promising at this moment.
