Gentex Corp (NASDAQ: GNTX) reported Q4 EPS of $0.39, $0.02 better than the analyst estimate of $0.37. Revenue for the quarter came in at $443.8 million versus the consensus estimate of $442.83 million.

Fourth Quarter and Calendar Year 2019 Highlights

• Full Display Mirror® unit shipments increased 89% for calendar year 2019 to 739,000 units
• Revenue for the fourth quarter of 2019 declined 2% versus the fourth quarter of 2018, primarily impacted by the strike at General Motors which created a 5% revenue headwind in the quarter, and global light vehicle production that declined approximately 5% versus the same quarter last year
• Gross profit margin of 36.5% for the fourth quarter of 2019, which was significantly higher than the strike-impacted Company forecast of 35 - 36% for the quarter
• Gross profit margin of 37% for calendar year 2019, which includes 70 basis points of incremental tariff headwinds when compared to 2018, and total tariff costs of approximately 100 basis points for the full year
• Earnings per diluted share for 2019 increased 2% to $1.66 in 2019 from $1.62 in 2018
• 2.4 million shares repurchased during the fourth quarter at an average price of $28.55 per share and 13.8 million shares repurchased during calendar year 2019 at an average price of $24.06 per share

"Considering the very challenging global light vehicle production markets, the strike, and the fact that we were still dealing with some of our own product related headwinds in 2019, our team has done an excellent job maintaining the gross margin profile of the Company. All of our teams were focused on offsetting annual customer price reductions, addressing incremental tariff costs, and finding ways to minimize the impact of fixed overhead, through better than expected purchasing cost reductions, improved manufacturing efficiencies, design changes that led to cost improvements, and the success of our Full Display Mirror. In fact, if not for the incremental tariffs encountered in 2019, our gross margin would have been slightly better than 2018," said Downing.

GUIDANCE:

Gentex Corp sees FY2020 revenue of $1.91-2 billion, versus the consensus of $1.95 billion.

Additionally, based on the Company’s forecasts for light vehicle production for calendar year 2021, the Company currently expects calendar year 2021 sales growth of approximately 3% - 8% above the 2020 sales estimates.

"While the current forecast for global light vehicle production appears to be stabilizing, it certainly does not provide any tailwind to our growth rate in 2020 or 2021. Additionally, although there have been some improvements in global trade relations, tariffs still remain on incoming materials and on our exports into the China market which create headwinds to growth in the domestic China market and to the profitability of many of our products. So, while the underlying market conditions continue to be difficult, we are optimistic about our ability to continue the trend of outgrowth versus the market for 2020 and 2021 based on our targeted growth rate of 3% - 8% per year. This growth rate will be driven by increased penetration rates of our core mirror products, continued growth of our Full Display Mirror product, and launches of the new Integrated Toll Module product. The Company remains committed to investing heavily in new technology in the areas of vision systems, connected car and dimmable glass. As an example, at CES in January, we showed advancements and several new product concepts in our mirror technology, digital vision systems, connected car technologies and large area dimmable devices. We also debuted a new vertical for the Company, when we introduced our intelligent medical lighting application that was developed in partnership with Mayo Clinic. We believe our technology roadmap will provide the opportunities we need to continue our revenue growth story for many years to come," concluded Downing.

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