Gentex Declines on North American Weakness
Gentex Corporation (NASDAQ: GNTX) announced mixed third-quarter 2017 results on Friday, highlighting the effects of an unexpected decline in North American light-vehicle production on its core business. But thanks to higher unit shipments in international markets, the auto-dimming mirror specialist still managed to deliver modest top-line growth to kick off the second half of the year.
Let's take a closer look at what Gentex achieved over the past few months, as well as what investors can expect for the rest of 2017.
IMAGE SOURCE: GENTEX
Gentex results: The raw numbers
| Metric | Q3 2017 | Q3 2016 | Year-Over-Year Growth |
|---|---|---|---|
| Revenue | $438.6 million | $429.6 million | 2.1% |
| Net income | $90.2 million | $92.1 million | (2.0%) |
| Earnings per share (diluted) | $0.31 | $0.32 | (3.1%) |
Data source: Gentex Corporation.
What happened with Gentex this quarter?
-
Gentex doesn't provide specific quarterly guidance. But by comparison, investors were looking for roughly the same earnings per share on higher revenue of $452 million.
-
Revenue growth was driven primarily by international auto-dimming mirror-unit shipments, which more than offset a 7% decline in North American auto-dimming mirror-unit shipments. The latter was caused by an 8% decline in North American light-vehicle production during the quarter. Stateside light-vehicle production schedules decreased by roughly 3% as compared with Gentex's estimates last quarter.
-
Automotive segment revenue climbed 2%, to $428.2 million, thanks to a 5% increase in total auto-dimming mirror-unit shipments.
-
"Other" segment revenue climbed 6% year over year, to $10.5 million, driven by growth in dimmable aircraft windows and fire-protection products.
-
Gentex saw 20 net nameplate launches of interior and exterior electrochromic mirrors and electronic features compared to 24 last quarter and 11 in Q1. Roughly 60% of this quarter's net auto-dimming mirror launches contained advanced features.
-
Gross margin declined 150 basis points year over year, to 39.0%, as annual customer price reductions were only partially offset by purchasing cost reductions. But it also improved 130 basis points sequentially from last quarter, driven by manufacturing efficiencies and favorable product mix.
-
Gentex repurchased 3.2 million shares at an average price of $17.41 per share, leaving 14.9 million shares remaining under its repurchase authorization.
-
The company paid down $8.1 million of debt on its term loan, in addition to a $1.9 million scheduled principal repayment.
-
Gentex generated cash flow from operations of $89 million, and ended the quarter with cash and equivalents of $562 million.