Gentex Corp (GNTX) Tops Q4 EPS by 8c, Revenues Beat

January 29, 2021 8:02 AM EST

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Gentex Corp (NASDAQ: GNTX) reported Q4 EPS of $0.58, $0.08 better than the analyst estimate of $0.50. Revenue for the quarter came in at $529.86 million versus the consensus estimate of $483.16 million.

For the fourth quarter of 2020, the Company reported net sales of $529.9 million, an increase of 19% compared to net sales of $443.8 million for the fourth quarter of 2019. The increase in revenue on a quarter over quarter basis was due, in large part, to the 14% quarter over quarter increase in auto-dimming mirror unit shipments and strong advanced feature product mix. The growth in units was particularly strong for Full Display Mirror® which grew at 96% quarter over quarter, and exterior auto-dimming mirrors, which increased 16% quarter over quarter. The 19% increase in sales on a quarter over quarter basis was in contrast to relatively modest growth in global light vehicle production of approximately 3% compared to the fourth quarter of 2019. The sales growth rate for the quarter equates to a 16% out-performance versus the underlying market and represents one of the highest growth rates for the Company in many years.

"The entire fourth quarter was a continuation of the furious pace that we were operating at towards the end of the third quarter of 2020. In fact, during most of the fourth quarter, our shipment volumes were at a level that had never been achieved by the company previously and were also well above our forecast heading into the quarter,” said President and CEO Steve Downing. “Our employees stepped up to this challenge and worked tirelessly to keep up with demand from our customers. Achieving sales of this magnitude required unbelievable effort from the entire Gentex team and was accomplished by our operations team’s willingness to work seven days a week, along with the assistance of salaried team members who volunteered to work in operations,” noted Downing.

The gross margin in the fourth quarter of 2020 was 40.9% compared with a gross margin of 36.5% in the fourth quarter of 2019. The quarter over quarter increase in gross margin was positively impacted by the large increase in sales levels and the structural cost savings implemented during the second quarter of 2020. A number of other factors positively impacted the gross margin during the fourth quarter of 2020, including positive product mix from growth in both Full Display Mirror® unit and exterior auto-dimming mirror unit shipments, purchasing cost reductions, and operational efficiencies.

“We mentioned in the third quarter release and earnings conference call that we were anticipating success in the second half of 2020 based on all of the work we performed during the pandemic, and these fourth quarter results have more than delivered on those expectations. In fact, the Company’s gross margin of 40.9% is the highest quarterly gross margin for the Company since the second quarter of 2004,” said Downing. Operating expenses during the fourth quarter of 2020 were up 7% to $54.3 million when compared to operating expenses of $50.9 million in the fourth quarter of 2019.Income from operations for the fourth quarter of 2020 was $162.4 million, a 46% increase when compared to $110.9 million for the fourth quarter of 2019. "We are very pleased to see this kind of operating leverage during the fourth quarter of 2020. As a Company, we pride ourselves on being financially disciplined, while maintaining our focus on new technology. We believe that these quarterly results, when combined with the new product announcements and innovations shown during our virtual CES events, prove that these seemingly opposed objectives can absolutely be accomplished at the same time,” said Downing.In the fourth quarter of 2020 net income was $143.3 million which set a Company record and represented a 44% increase when compared to net income of $99.5 million in the fourth quarter of 2019.Earnings per diluted share in the fourth quarter of 2020 were $0.58, which was a 49% increase when compared with earnings per diluted share of $0.39 in the fourth quarter of 2019. "The financial results of the Company in the fourth quarter are truly extraordinary given the year that we have been through. Our continued focus and discipline has produced tangible results through the entire income statement,” said Downing. “When you combine this level of financial performance, with our common sense approach to capital allocation, we believe we are forging a pathway to a significant increase in overall shareholder returns. Our share repurchases during 2020 resulted in a 4% reduction in shares outstanding, which will also help provide a meaningful increase to the return profile of the Company," commented Downing.

For earnings history and earnings-related data on Gentex Corp (GNTX) click here.

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