Gentex Corporation (NASDAQ: GNTX), a leading supplier of digital
vision, connected car, dimmable glass and fire protection
technologies, today reported financial results for the fourth
quarter and calendar year ended December 31, 2023.
Fourth Quarter and Calendar Year 2023
Highlights:
- Fourth Quarter 2023
- Net sales of $589.1
million, a new quarterly sales record, and
a 19% increase compared to the
fourth quarter of 2022
- Gross profit margin of 34.5%, a 330 basis point
improvement compared to the fourth quarter of 2022
- Income from operations of $132.8 million, a 41%
increase compared to the fourth quarter of 2022
- Net income of $116.9 million, a 36% increase compared
to the fourth quarter of 2022
- Earnings per diluted share of $0.50, a 35% increase
compared to the fourth quarter of 2022
- Calendar Year 2023
- Net sales of $2.30
billion, a new annual sales record, and a
20% increase compared to calendar year
2022
- Gross profit margin of 33.2%, a 140 basis point
improvement as compared to calendar year 2022
- Income from operations of $495.7 million, a 34%
increase compared to calendar year 2022
- Net income of $428.4 million, a 34% increase compared
to calendar year 2022
- Earnings per diluted share of
$1.84, a 35% increase compared to calendar
year 2022
- Full Display Mirror®
("FDM") shipments of 2.44 million units, a 45% increase
compared to calendar year 2022
- Cash returned to shareholders of $256.9 million, a 13%
increase compared to calendar year 2022
- $144.7 million in share
repurchases (4.9 million shares)
- $112.2 million in
dividends
Fourth Quarter 2023
For the fourth quarter of 2023, the Company
reported net sales of $589.1 million, an increase of 19% compared
to net sales of $493.6 million for the fourth quarter of 2022. The
fourth quarter of 2023 revenue included one-time cost recoveries of
approximately $5 million. Light vehicle production increased by 6%
quarter over quarter in the Company's primary markets of North
America, Europe, and Japan/Korea, which equates to a 13% revenue
outperformance versus the Company's underlying markets.
The gross margin in the fourth quarter of 2023
was 34.5%, compared with a gross margin of 31.2% in the fourth
quarter of 2022. The increase in gross margin in the fourth quarter
of 2023 was positively impacted by recurring price increases to
customers and one-time cost recoveries, which together positively
impacted the gross margin by approximately 100 basis points on a
quarter over quarter basis. Additional improvements in gross margin
compared to the fourth quarter of 2022 came from the higher sales
levels, improved leverage on overhead expenses, purchasing cost
reductions, lower inbound freight expenses, and some improvements
in overtime-related costs. “The fourth quarter of 2023 produced
significant year over year gross margin improvements, as well as a
sequential improvement in gross margin compared to the third
quarter of 2023. Our team has done an excellent job of working with
our customers to execute both temporary and permanent price
increases to help offset the inflationary cost environment that has
negatively impacted Gentex over the last two years," said Gentex
President and CEO, Steve Downing. "I am very pleased with the
progress we have made in our gross margin recovery plan during
2023. As we head into 2024, the next phase of our gross margin
recovery plan will focus on bill of material reductions, throughput
improvements, and overtime and scrap cost reductions. The
improvements made in 2023 combined with our targeted improvements
for 2024 provide the roadmap of how to achieve our target of a 35%
- 36% gross margin by the end of the year," concluded Downing.
Operating expenses during the fourth quarter of
2023 were up 18% to $70.6 million, compared to operating expenses
of $59.7 million in the fourth quarter of 2022. Operating expenses
increased quarter over quarter primarily due to staffing and
engineering related professional fees. “As we ramp up our
development and launch capabilities, our planned R&D expenses
are trending higher, but remain in line with our expectations and
continue to increase in line with our overall sales growth rates.
We are focused on adding technical bandwidth across many different
disciplines to help execute the significantly higher number of
launches needed to accomplish our recent and forecasted growth.
While launch activity has been driving an increase in R&D, we
also continue to invest heavily in research activity focused on new
products and technical capabilities, while also ensuring the
technical team is in place to help drive product redesigns that
will optimize the cost structure of existing bills of material. We
expect our R&D levels to be elevated throughout 2024, as the
pace of innovation and launch of new products remain at the fastest
rate in Company history,” said Downing.
Income from operations for the fourth quarter of
2023 was $132.8 million, compared to income from operations of
$94.1 million for the fourth quarter of 2022.
During the fourth quarter of 2023, the Company
had an effective tax rate of 13.9%, which was driven by benefits
from the foreign derived intangible income deduction, discrete
benefits from stock-based compensation as well as by
provision-to-return adjustments.
In the fourth quarter of 2023, net income was
$116.9 million, compared to net income of $86.2 million in the
fourth quarter of 2022.
Earnings per diluted share in the fourth quarter
of 2023 were $0.50, compared with earnings per diluted share of
$0.37 in the fourth quarter of 2022.
Calendar Year 2023
For calendar year 2023, the Company’s net sales
were $2.30 billion, an increase of 20% compared to net sales of
$1.92 billion in calendar year 2022, representing the highest
annual sales in Company history. Light vehicle production in 2023
increased by 12%, compared to 2022 in the Company's primary
markets. The Company's revenue outperformance in 2023 versus the
underlying market was driven by growth in FDM and exterior
auto-dimming mirror unit shipments, as well as continued
penetration of base interior auto-dimming mirrors.For calendar year
2023, the gross margin was 33.2%, compared to a gross margin of
31.8% for calendar year 2022. Gross margin improved for the year by
140 basis points primarily due to price increases and cost
recoveries, lower freight costs, product mix, and improved overhead
leverage created by the growth in revenue.
For calendar year 2023, operating expenses
increased 11% to $266.9 million, compared to operating expenses of
$239.8 million for calendar year 2022.
For calendar year 2023, the Company's effective
tax rate was 15.2%, compared to an effective tax rate of 13.8% for
calendar year 2022. The increase in the tax rate in 2023 was
primarily driven by a reduced benefit from the foreign derived
intangible income deduction compared to 2022.
Net income for calendar year 2023 was $428.4
million, up 34% compared to net income of $318.8 million in
calendar year 2022.
Earnings per diluted share for calendar year
2023 were $1.84, compared to earnings per diluted share of $1.36 in
calendar year 2022.
Segment
Sales
Automotive net sales during the fourth quarter
of 2023 were $578.7 million, compared to $482.9 million in the
fourth quarter of 2022. For calendar year 2023, automotive net
sales were $2.25 billion, which represents a 20% increase over
2022. The increase in automotive net sales was driven primarily by
a 45% increase in FDM unit shipments to 2.44 million units, as well
as a 21% year over year increase in exterior auto-dimming mirror
unit shipments to 18.8 million.
Other net sales in the fourth quarter of 2023,
which includes dimmable aircraft windows and fire protection
products, were $10.5 million, a decrease of 2% compared to Other
net sales of $10.7 million in the fourth quarter of 2022. Fire
protection sales decreased by 44% and dimmable aircraft windows
increased by 362% for the fourth quarter of 2023, when compared to
the fourth quarter of 2022. Other net sales for calendar year 2023
were $44.6 million, compared to Other net sales of $44.2 million in
calendar year 2022. Fire protection sales in 2023 were down 32%
year over year, while dimmable aircraft windows increased by 211%
in 2023 compared to calendar year 2022.
Share Repurchases
The Company repurchased 2.2 million shares of
its common stock during the fourth quarter of 2023, at an average
price of $30.76 per share. For the year ended December 31,
2023, the Company repurchased 4.93 million shares of its common
stock at an average price of $29.61 per share for a total of $144.7
million. As of December 31, 2023, the Company has 15.9 million
shares remaining available for repurchase pursuant to its
previously announced share repurchase plan. The Company intends to
continue to repurchase additional shares of its common stock in the
future in support of the previously disclosed capital allocation
strategy, but share repurchases may vary from time to time and will
take into account macroeconomic issues, market trends, and other
factors that the Company deems appropriate.
Future Estimates
The Company’s current forecasts for light
vehicle production for calendar year 2024 and 2025 are based on the
S&P Global Mobility mid-January 2024 forecast for light vehicle
production in North America, Europe, Japan/Korea, and China and are
detailed in the table below.
Based on the following light vehicle production
forecasts for 2024 and 2025, the Company is providing certain
annual guidance for 2024 and revenue guidance for 2025:
Light Vehicle Production (per S&P Global Mobility
mid-January light vehicle production forecast) |
(in Millions) |
Region |
Calendar Year2025 |
Calendar Year2024 |
Calendar Year2023 |
2025 vs. 2024% Change |
2024 vs. 2023% Change |
North America |
16.2 |
15.8 |
15.6 |
3 |
% |
1 |
% |
Europe |
17.5 |
17.4 |
17.8 |
1 |
% |
(2)% |
Japan and Korea |
11.8 |
12.2 |
12.7 |
(3)% |
(4)% |
China |
30.1 |
28.9 |
28.9 |
4 |
% |
— |
% |
Total Light Vehicle Production |
75.6 |
74.3 |
75.0 |
2 |
% |
(1)% |
2024 Guidance |
Revenue |
$2.45 - $2.55 Billion |
Gross Margin |
34% - 35% |
Operating Expenses (E,R&D and S,G&A) |
$295 - $305 million |
Estimated Annual Tax Rate |
16% - 18% |
Capital Expenditures |
$225 - $250 million |
Depreciation & Amortization |
$95 - $105 million |
|
|
Additionally, based on the mid-January 2024
S&P Global Mobility light vehicle production forecast well as
the Company's estimates for aerospace, medical and fire protection
products for calendar year 2025, the Company currently expects
calendar year 2025 revenue to be between $2.65 and $2.75
billion.
"Calendar year 2023 turned out to be a
remarkable year for the Company, and was the first time that Gentex
has exceeded $2 billion in annual revenue. It is important to note
that the growth the Company has achieved over the last few years
has been driven by our new technologies and innovative product
roadmaps. From 2018 through 2023, the Company's revenue has grown
by over 26% while light vehicle production in our primary markets
of Europe, North America and Japan and Korea has shrunk by over 11%
during this same period. We believe this revenue out performance
versus the underlying market is evidence that our product strategy
is effective and is creating our targeted results. Our revenue
guidance for 2024 and 2025 shows that we remain confident in our
ability to continue to outperform the underlying market in revenue
growth, while we continue to focus on gross margin improvement.
Gentex is poised to execute on our forecasted revenue growth while
maintaining focus on cost control and gross margin improvement,
which are necessary to accomplish the goal of achieving a gross
margin profile of 35 to 36 percent by the end of 2024. These
factors, we believe, will result in record revenue and
profitability that should create the foundation for increased
shareholder returns over the next several years,” concluded
Downing.
Safe Harbor for Forward-Looking
Statements
This news release contains forward-looking
statements within the meaning of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The statements
contained in this communication that are not purely historical are
forward-looking statements. Forward-looking statements give the
Company’s current expectations or forecasts of future events. These
forward-looking statements generally can be identified by the use
of words such as “anticipate,” “believe,” “could,” “estimate,”
“expect,” “forecast,” “future,” “goal,” “guidance,” “hope,”
“intend,” "likely", “may,” “opinion,” “optimistic,” “plan,”
“poised,” “predict,” “project,” “should,” “strategy,” “target,”
“will,” "work to," and variations of such words and similar
expressions. Such statements are subject to risks and uncertainties
that are often difficult to predict and beyond the Company’s
control, and could cause the Company’s results to differ materially
from those described. These risks and uncertainties include,
without limitation: changes in general industry or regional market
conditions, including the impact of inflation; changes in consumer
and customer preferences for our products (such as cameras
replacing mirrors and/or autonomous driving); our ability to be
awarded new business; continued uncertainty in pricing negotiations
with customers and suppliers; loss of business from increased
competition; changes in strategic relationships; customer
bankruptcies or divestiture of customer brands; fluctuation in
vehicle production schedules (including the impact of customer
employee strikes); changes in product mix; raw material and other
supply shortages; labor shortages, supply chain constraints and
disruptions; our dependence on information systems; higher raw
material, fuel, energy and other costs; unfavorable fluctuations in
currencies or interest rates in the regions in which we operate;
costs or difficulties related to the integration and/or ability to
maximize the value of any new or acquired technologies and
businesses; changes in regulatory conditions; warranty and recall
claims and other litigation and customer reactions thereto;
possible adverse results of pending or future litigation or
infringement claims; changes in tax laws; import and export duty
and tariff rates in or with the countries with which we conduct
business; negative impact of any governmental investigations and
associated litigation including securities litigation relating to
the conduct of our business; and force majeure events. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date they are made. The
Company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise, except as required by law or the rules
of the NASDAQ Global Select Market. Accordingly, any
forward-looking statement should be read in conjunction with the
additional information about risks and uncertainties identified
under the heading “Risk Factors” in the Company’s latest Form 10-K
and Form 10-Q filed with the SEC, which risks and uncertainties
include supply chain constraints that have affected, are affecting,
and will continue to affect, general economic and industry
conditions, customers, suppliers, and the regulatory environment in
which the Company operates. Includes content supplied by S&P
Global Mobility Light Vehicle Production Forecast of January 16,
2024 (http://www.gentex.com/forecast-disclaimer).
Fourth Quarter Conference Call
A conference call related to this news release
will be simulcast live on the Internet beginning at 9:30 a.m. ET
today, January 26, 2024. Participants who wish to ask questions may
register for the call at
https://register.vevent.com/register/BI2be277eaaa904858bc4ebde90c1fe1f9
to receive the dial-in numbers and unique PIN to access the call
seamlessly. It is recommended that participants join 10 minutes
prior to the event start, although they may register ahead of the
call and dial in at any time during the call. Participants may
listen to the call via audio streaming
at https://edge.media-server.com/mmc/p/fasubkb7. A webcast
replay will be available approximately 24 hours after the
conclusion of the call
at http://ir.gentex.com/events-and-presentations/upcoming-past-events.
About the Company
Founded in 1974, Gentex
Corporation (The NASDAQ Global Select Market: GNTX) is a
leading supplier of digital vision, connected car, dimmable glass
and fire protection technologies. Visit the Company’s web site
at www.gentex.com.
Contact Information:Gentex Investor & Media ContactJosh
O'Berski(616)772-1590 x5814
GENTEX CORPORATION |
AUTO-DIMMING MIRROR SHIPMENTS |
(Thousands) |
|
|
Three Months Ended December
31, |
|
Twelve Months ended December
31, |
|
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
North American Interior Mirrors |
2,068 |
|
1,939 |
|
7 |
% |
|
9,213 |
|
8,384 |
|
10 |
% |
North American Exterior
Mirrors |
1,769 |
|
1,454 |
|
22 |
% |
|
6,781 |
|
5,986 |
|
13 |
% |
Total North American Mirror Units |
3,837 |
|
3,393 |
|
13 |
% |
|
15,993 |
|
14,369 |
|
11 |
% |
International Interior
Mirrors |
5,410 |
|
5,020 |
|
8 |
% |
|
22,554 |
|
20,303 |
|
11 |
% |
International Exterior
Mirrors |
3,109 |
|
2,591 |
|
20 |
% |
|
12,048 |
|
9,516 |
|
27 |
% |
Total International Mirror Units |
8,519 |
|
7,611 |
|
12 |
% |
|
34,602 |
|
29,819 |
|
16 |
% |
Total Interior Mirrors |
7,478 |
|
6,959 |
|
7 |
% |
|
31,767 |
|
28,686 |
|
11 |
% |
Total Exterior Mirrors |
4,878 |
|
4,045 |
|
21 |
% |
|
18,828 |
|
15,502 |
|
21 |
% |
Total Auto-Dimming Mirror Units |
12,357 |
|
11,004 |
|
12 |
% |
|
50,596 |
|
44,188 |
|
15 |
% |
Note: Percent change
and amounts may not total due to rounding.
GENTEX CORPORATION AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
(Unaudited) |
|
|
Three Months Ended December 31, |
|
Twelve Months ended December 31, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net Sales |
$ |
589,132,396 |
|
$ |
493,647,571 |
|
$ |
2,299,215,044 |
|
$ |
1,918,958,043 |
|
Cost of Goods Sold |
|
385,763,291 |
|
|
339,813,384 |
|
|
1,536,585,036 |
|
|
1,309,143,858 |
|
Gross profit |
|
203,369,105 |
|
|
153,834,187 |
|
|
762,630,008 |
|
|
609,814,185 |
|
|
|
|
|
|
|
|
|
Engineering, Research & Development |
|
41,534,646 |
|
|
34,935,068 |
|
|
154,359,700 |
|
|
133,308,804 |
|
Selling, General & Administrative |
|
29,059,971 |
|
|
24,781,407 |
|
|
112,539,255 |
|
|
106,499,255 |
|
Income from operations |
|
132,774,488 |
|
|
94,117,712 |
|
|
495,731,053 |
|
|
370,006,126 |
|
|
|
|
|
|
|
|
|
Other Income |
|
3,127,638 |
|
|
1,339,617 |
|
|
9,250,121 |
|
|
(283,050 |
) |
Income before Income
Taxes |
|
135,902,126 |
|
|
95,457,329 |
|
|
504,981,174 |
|
|
369,723,076 |
|
|
|
|
|
|
|
|
|
Provision for Income
Taxes |
|
18,957,931 |
|
|
9,289,000 |
|
|
76,577,902 |
|
|
50,965,724 |
|
Net Income |
$ |
116,944,195 |
|
$ |
86,168,329 |
|
$ |
428,403,272 |
|
$ |
318,757,352 |
|
|
|
|
|
|
|
|
|
Earnings Per Share(1) |
|
|
|
|
|
|
|
Basic |
$ |
0.50 |
|
$ |
0.37 |
|
$ |
1.84 |
|
$ |
1.36 |
|
Diluted |
$ |
0.50 |
|
$ |
0.37 |
|
$ |
1.84 |
|
$ |
1.36 |
|
|
|
|
|
|
|
|
|
Cash Dividends Declared per
Share |
$ |
0.12 |
|
$ |
0.12 |
|
$ |
0.480 |
|
$ |
0.480 |
|
|
|
|
|
|
|
|
|
(1) Earnings Per Share has been adjusted to exclude the portion of
net income allocated to participating securities as a result of
share-based payment awards |
|
GENTEX CORPORATION AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
|
|
December 31, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
Cash and Cash Equivalents |
$ |
226,435,019 |
|
$ |
214,754,638 |
|
Short-Term Investments |
|
14,356,476 |
|
|
23,007,385 |
|
Accounts Receivable, net |
|
321,809,868 |
|
|
276,493,752 |
|
Inventories |
|
402,473,028 |
|
|
404,360,270 |
|
Other Current Assets |
|
32,663,762 |
|
|
30,036,331 |
|
Total Current Assets |
|
997,738,153 |
|
|
948,652,376 |
|
|
|
|
|
Plant and Equipment - Net |
|
652,877,672 |
|
|
550,033,036 |
|
|
|
|
|
Goodwill |
|
340,105,631 |
|
|
313,807,494 |
|
Long-Term Investments |
|
299,080,876 |
|
|
202,331,983 |
|
Intangible Assets |
|
214,005,910 |
|
|
219,360,910 |
|
Deferred Tax Asset |
|
41,113,759 |
|
|
25,528,700 |
|
Patents and Other Assets |
|
66,515,551 |
|
|
67,515,425 |
|
Total Other Assets |
|
960,821,727 |
|
|
828,544,512 |
|
|
|
|
|
Total Assets |
$ |
2,611,437,552 |
|
$ |
2,327,229,924 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
INVESTMENT |
|
|
|
Current Liabilities |
$ |
271,608,976 |
|
$ |
250,552,752 |
|
Other Non-current
Liabilities |
|
27,311,507 |
|
|
10,884,351 |
|
Shareholders' Investment |
|
2,312,517,069 |
|
|
2,065,792,821 |
|
Total Liabilities &
Shareholders' Investment |
$ |
2,611,437,552 |
|
$ |
2,327,229,924 |
|
Gentex (NASDAQ:GNTX)
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