Gentex's Full Display Mirror is collecting accolades from vehicle producers. Image source: Gentex.
Gentex results: The raw numbers
| Metric |
Q1 2016 Actuals |
Q1 2015 Actuals |
Growth (YOY) |
|---|---|---|---|
|
Revenue |
$405.6 million |
$368.9 million |
9.9% |
|
Net income |
$80.3 million |
$77.2 million |
4% |
|
Earnings per share |
$0.28 |
$0.26 |
7.7% |
Data source: Gentex.
What happened this quarter?
- Revenue growth was driven by a 11% increase in auto-dimming mirror shipments.
- Automotive segment revenue rose rose 9% year over year, to $394 million.
- "Other" revenue rose 39% year over year, to $11.6 million, including 42% growth in dimmable aircraft window sales, and 36% growth from fire protection products.
- Had 11 new nameplate launches of interior and exterior electrical mirrors and advanced electronic features, consistent with the pace it saw in the second half of 2015.
- Roughly half of revenue growth came from added electronic content, as well as style and design improvements.
- Gross margin increased 30 basis points year over year, to 39.1%, as purchasing cost reductions and Gentex's ability to leverage fixed overhead costs were only partially offset by annual customer price reductions.
- Excluding the benefit of tax adjustments last year, net income would have increased 10% year over year.
- Repurchased 3.1 million shares of common stock in Q1 at an average price of $14.27 per share, leaving 6.4 million shares available under Gentex's current repurchase authorization.
- Generated cash flow from operations of $146.4 million, up from $108 million last year's first quarter.
- Ended the quarter with cash and equivalents of $626.5 million, up from $551.6 million at the end of 2016
- Gentex also repaid $15 million on its revolver loan in addition to its normally scheduled principal payment on its term loan, ending the quarter with long-term debt of $208.8 million.
- Received an inaugural GM Innovation award for its new Full Display Mirror at General Motors' 24th annual Supplier of the Year ceremony held in Detroit in March.
- Also received its 17th consecutive designation as a GM Supplier of the Year for 2015.
What management had to say
During the subsequent conference call, Gentex CFO Steve Downing specifically highlighted the promise of Gentex's Full Display Mirror, noting the product has seen a significant "increase in recognition... in the industry."
"The Full Display Mirror is a continuation of the company's long-standing ability to create innovative products that improve safety for drivers and add value to the automotive OEMs' product portfolio," Downing elaborated. "This technology has the ability to be a game changer in the industry and for the company."
Looking forward
Based on the IHS Automotive mid-April 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 is making no changes to its previous guidance. As a reminder, that guidance calls for 2016 revenue of $1.64 billion to $1.72 billion, or growth of 6.2% to 11.4% over 2015, and gross margin remaining steady in the range of 38.5% to 39.5%.
But that production forecast also doesn't include any impact from the recent earthquake in Japan. According to Downing during the call, IHS anticipates "modest" lost production in the second quarter for OEM's producing in Japan, but also anticipates any lost volume to be made up by the end of Q3. Gentex therefore expects little disruption or impact to its supply chain or ability to secure raw materials.
As it stands, that means there were once again no big surprises in Gentex's latest quarter, as the company's revenue growth continues to outpace that of overall vehicle production. As Gentex further penetrates its core markets and simultaneously continues returning capital to shareholders, I think investors should be more than pleased with today's results.
