Gentex

Image source: Gentex Corporation.

Gentex Corporation (NASDAQ:GNTX) announced fourth-quarter 2015 results Thursday morning, and though the market's muted reaction may not show it, the auto-dimming mirror company is rightly pleased. Let's take a closer look at Gentex's headline numbers:

Gentex results: The raw numbers

Metric

Q4 2015 Actuals

Q4 2014 Actuals

Growth (YOY)

Revenue

$405.6 million

$350.4 million

16%

Net Income

$88.4 million

$71 million

25%

Earnings Per Share

$0.30

$0.24

25%

Data source: Gentex Corporation.

What happened this quarter?

  • Full-year revenue came to $1.54 billion, near the high end of Gentex's most recent guidance provided last quarter.
  • Revenue growth was primarily driven by a 17% increase in auto-dimming interor and exterior rearview mirror shipments.
  • Automotive segment revenue rose 16% year over year to $395.9 million.
  • "Other" revenue -- primarily comprised of dimmable aircraft windows and fire protection products -- rose 22% year over year to $9.7 million.
  • Gross margin increased to 40.2% from 38.4% in the same year-ago period, driven by purchasing-cost reductions and Gentex's ability to leverage fixed overhead costs, partially offset by annual customer price reductions.
  • The company repurchased 1.8 million shares of common stock in Q4, bringing full-year 2015 repurchases to 6.7 million shares. That leaves 4.6 million shares remaining under Gentex's current repurchase authorization.
  • Gentex generated cash flow from operations of $68.4 million, down from $99.8 million in last year's fourth quarter due to higher net income and a $9.3 million increase in depreciation expense.
  • The company ended the quarter with cash and equivalents of $551.6 million, up from $497.4 million at the end of 2014, and long-term debt of $225.6 million.
  • In addition to three models so far from GM, it announced three other OEM customers will debut Gentex's full display mirror in their vehicles over the next 18 months.
  • The company eached an agreement with TransCore to develop a vehicle-integrated, nationwide tolling solution that enables motorists to drive on all U.S. toll roads without a traditional toll tag. Note currently 75% of all new car registrations are in states with toll roads accessed by more than 50 million drivers each year.

What management had to say 
During the subsequent conference call, Gentex CFO Steve Downing stated, "The company continues to see strong orders and book business despite modest vehicle production increases in our primary markets."

Meanwhile, VP of Engineering Neil Boehm added, "On the launch side, the company has continued to demonstrate solid growth at one of the fastest rates in company history. This growth is being driven by continued penetration of our core electrochromic technology on many vehicles that are new applications for our products."

To be sure, Gentex saw 63 new vehicle launches of inside and outside electrochromic mirrors in 2015, up from 43 in 2014 and 37 in 2013. In addition, Boehm pointed out roughly half of Gentex's growth came from "advanced features," including frameless mirrors and electronic content from SmartBeam, HomeLink, compass displays, Lightning technology, and full display mirrors.

Looking forward 
Based on the IHS Automotive January 2016 forecast for light vehicle production in North America, Europe, Japan, and Korea, which calls for total light vehicle production to increase 2% in 2016 over 2015, Gentex anticipates 2016 revenue of $1.64 billion to $1.72 billion, good for solid growth of roughly 6.2% to 11.4% over 2015. Gentex also provided initial guidance for gross margin to remain roughly steady over 2015 in the range of 38.5% to 39.5%.

In addition, based on IHS' forecast for further 1% light vehicle production growth in 2017, Gentex currently expects 2017 revenue growth of 6% to 10% over 2016.

In the end, there were no real surprises in Gentex's latest quarter, but that's certainly not a bad thing. That Gentex's revenue growth continues to outpace that of overall vehicle production indicates the company 's products have enjoyed -- and will continue to enjoy -- increased penetration into Gentex's core markets. What's more, Gentex's continued focus on innovation is bearing fruit as advanced features further help grow its slice of the automotive market pie. Taken together with Gentex's opportunistic approach at returning capital to investors through share repurchases given today's depressed prices, I think shareholders should be more than pleased with Gentex's performance.

Steve Symington has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Gentex. The Motley Fool has the following options: short March 2016 $15 puts on Gentex. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.