Gentex (GNTX, Financial) is engaged in providing electronic products and features for the automotive, aerospace and fire protection industries.
It is known for its innovations and 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 and control garage doors with the help of push buttons.
The company recently posted strong fourth quarter results and is poised to grow. The gross margin, net sales and net income increased during the quarter, and the company is strategically well-positioned to capitalize on its opportunities.
Strong fourth quarter
For the fourth quarter the company reported net sales of $405.6 million (an increase of 16% from the prior-year quarter). The increase was primarily due to a 17% increase in auto-dimming interior and exterior rearview mirror shipments on a quarter-over-quarter basis.
For the full year of 2015, the company's net sales increased by 12% and were $1.54 billion ($1.38 billion during the prior-year period).
The gross profit margin in the fourth quarter of 2015 was 40.2% (38.4% during the prior-year quarter). The improvement in gross profit margin was primarily due to purchasing cost reductions and the company's ability to leverage fixed overhead costs, which were partially offset by annual customer price reductions.
The gross profit margin for full year 2015 was 39.1% (39.2% during the prior-year period).
Net income for the fourth quarter of 2015 was $88.4 million (an increase of 25% from the net income of $71.0 million in the prior-year quarter). Net income in calendar year 2015 was $318.5 million (an increase of 10% from the net income of $288.6 million in the prior-year period)
Earnings per diluted share in the fourth quarter of 2015 were 30 cents (24 cents in the prior-year quarter). Earnings per diluted share were $1.08 for calendar year 2015 (98 cents during the prior-year period).
Automotive auto-dimming unit shipments in the fourth quarter of 2015 increased 17% from the prior-year quarter and for calendar year 2015 increased by 14% from the prior-year period. Automotive net sales in the fourth quarter of 2015 were $395.9 million (an increase of 16% from $342.4 million in the during the prior-year quarter) and for calendar year 2015 were $1.51 billion (an increase of 12% compared from $1.34 billion in the prior-year period).
Other net sales, which include dimmable aircraft windows and fire protection products, were $9.7 million in the fourth quarter of 2015 (an increase of 22% from $8.0 million in the prior-year quarter) and for calendar year 2015 were $36.7 million (an increase of 4% from $35.4 million in the prior-year period).
Share repurchases
The company repurchased approximately 1.8 million shares of its common stock during the fourth quarter of 2015 and for the year ended Dec, 31, 2015, the company repurchased approximately 6.7 million shares of its common stock pursuant to its previously announced share repurchase plan. As of Dec. 31, 2015, the company had approximately 4.6 million shares remaining available for repurchase in the plan. The company intends to continue to repurchase additional shares of its common stock in the future depending on macroeconomic issues, market trends and other factors deemed appropriate.
(Source: Company’s website)
Expectations for 2016
The company expects the following:
- Revenue to be in the range of $1.64 billion to $1.72 billion.
- Gross margin to be in the range of 38.5% to 39.5%.
- Operating expenses to be around $152 million to $160 million.
- Tax rate to be around 31.5% to 32.5%.
- Capex to be around $115 million to $130 million.
- Depreciation and Amortization to be around $90 million to $100 million.
Strong company attributes
- Market leadership.
- Innovation.
- Strong product pipeline.
- New partnerships.
Being in the news
GNTX was named one of IndustryWeek magazine’s top manufacturers. The IndustryWeek 50 Best U.S. Manufacturers is IndustryWeek's exclusive annual ranking of America's top-performing public manufacturers.
IndustryWeek compiles the list by ranking America’s largest public manufacturers based on their financial performance in six key areas over a three-year period. This includes inventory turns, profit margin, asset turns, return on assets and return on equity and revenue growth.
On a concluding note
The company believes its existing and planned facilities are currently suitable, adequate and have the capacity required for current and near-term planned business. Nevertheless, the company continues to evaluate longer-term facility needs.
As a result, in 2014, the company began construction of a 250,000 square-foot manufacturing and distribution facility located at a 140-acre site where the company previously performed master planning and completed land infrastructure improvements, located in the Dutch province of Zeeland.
The cost of the building project is expected to be between $30 million and $35 million. It will be completed this year and will be funded with cash and cash equivalents on hand. Once operational, the company expects it will add capacity to produce an additional 5 million to 7 million mirrors annually, depending on product mix.
The company impressed us with its fourth-quarter results. It boasts of its automotive segment, which contributed to its significant earnings this quarter. 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.
Disclosure: I do not hold any position in the company.
