What happened

Shares of Gentex (NASDAQ:GNTX) rose over 11% last month, according to data provided by S&P Global Market Intelligence. The world's leading supplier of dimmable auto glass reported first-quarter 2019 operating results that revealed quarter-over-quarter revenue increased 1% even though global light-vehicle production volumes fell 7% in that span. 

While the business has struggled against headwinds -- including slumping vehicle production, slowing growth in China, and rising tariffs -- it's done well to control the factors within its reach. Gentex Corporation has also responded to recent volatility by increasing research and development (R&D) in new products like integrated toll modules and connected-car products.

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Image source: Getty Images.

So what

Gentex is scratching and clawing its way through tough market fundamentals, but recent diversification efforts are starting to pay off. The business achieved a 36.2% gross margin in the first quarter of 2019, versus 37.1% in the year-ago period. Margins would have been identical if not for the impact of tariffs this year.

The caveat is that operating expenses are rising as investments in R&D increase. That led to a 5.5% year-over-year decline in operating income during Q1 2019. Then again, given the stock's struggles since the start of 2017, investors are likely willing to live with slightly lower profits in the near term in order to spark long-term growth opportunities.

Now what

Gentex kept its conservative forecast for full-year 2019 global light-vehicle production. Wall Street didn't mind that so much, given the relative operational strength and the fact there are 29.1 million shares remaining available for purchase under the company's buyback plan -- over 10% of total shares outstanding. Therefore, although it might be a difficult year, the business is doing everything it can to deliver.

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