Gentex Corp (NASDAQ: GNTX) reported Q1 EPS of $0.46, $0.03 worse than the analyst estimate of $0.49. Revenue for the quarter came in at $483.7 million versus the consensus estimate of $491.21 million.

1st Quarter 2021 Summary

• Net sales of $483.7 million, a 7% increase compared to the first quarter of 2020
• Gross profit margin of 37.9%, a 340 basis point improvement over the first quarter of 2020
• Net income of $113.5 million, a 27% increase compared to the first quarter of 2020
• Earnings per diluted share of $0.46, a 28% increase compared to the first quarter of 2020
• 2.8 million shares repurchased

"Our guidance for the year included a first quarter that was forecasted to be similar to the fourth quarter of 2020 from a revenue perspective, but first quarter revenues were clearly impacted by the difficulties created by parts shortages," said President and CEO Steve Downing. “During the first quarter of 2021, our primary revenue generating markets of North America, Europe and Japan and Korea were down 2% on a combined basis, when compared to the first quarter of 2020, which means our revenue growth of 7% yielded a total out-growth versus the underlying market of 9%. It is also important to remember that the first quarter of 2020 was negatively impacted by COVID-19 shutdowns, which means that vehicle production levels from the first quarter of 2021 declined 15% in comparison to the first quarter of 2019. However, the Company has experienced a net revenue growth rate of 3% when comparing those quarters, which calculates to a 18% outperformance versus the underlying market in that two year period.” concluded Downing.

For the first quarter of 2021, the gross margin was 37.9%, compared to a gross margin of 34.5% for the first quarter of 2020. The gross margin improved significantly on a quarter over quarter basis, which was driven by the structural cost savings put in place in the second quarter of 2020, as well as product mix tailwinds related to exterior-auto dimming mirror unit shipment growth and Full Display Mirror® unit shipment growth. Gross margins were negatively impacted during the quarter by part shortages that resulted in raw material price increases and increased freight costs. "The Company has once again performed very well in an incredibly difficult operating environment. The chaos created this quarter by component shortages, freight issues, as well as customer plant shutdowns and order changes made scheduling very difficult, but the team at Gentex was able to not only keep up with our customers’ orders but also improve gross margins by 340 basis points versus the first quarter of last year,” said Downing. “While the gross margin in the first quarter of 2021 was below our annual guidance range, the majority of that shortfall was driven by the $45 million in lost sales in the quarter. We expect to see further improvement in gross margins based on the higher sales levels that are forecasted for the remainder of the year."

GUIDANCE:

Gentex Corp sees FY2021 revenue of $1.94-2.02 billion, versus the consensus of $2 billion.

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