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Gentex (GNTX) Lags Q3 Earnings & Sales Estimates, Revises 2H'21 View

·3 min read

Gentex Corporation GNTX reported third-quarter 2021 earnings of 32 cents per share, missing the Zacks Consensus Estimate of 36 cents. The reported figure compares unfavorably with prior-year quarter’s earnings of 48 cents per share. The earnings miss was due to the lower-than-projected auto-dimming mirror shipments in North America, which, in turn, resulted in weaker-than-expected revenues.

This Zeeland-based automotive products supplier reported net sales of $399.6 million, lagging the Zacks Consensus Estimate of $423 million. Moreover, the top-line figure fell 15.8% year over year. The company recorded gross margin of 35.3% for the reported quarter, lower than the year-ago quarter’s 39.7% on lower year-over-year sales.

Gentex Corporation Price, Consensus and EPS Surprise

Gentex Corporation Price, Consensus and EPS Surprise
Gentex Corporation Price, Consensus and EPS Surprise

Gentex Corporation price-consensus-eps-surprise-chart | Gentex Corporation Quote

Segmental Performance

The Automotive segment’s net sales — which have the highest contribution to Gentex’s revenues — totaled $391.3 million for the third quarter, lower than the $464.7 million reported in the third quarter of 2020 and missing the Zacks Consensus Estimate of $461 million. For the reported quarter, auto-dimming mirror shipments in the North America market dropped 11% from the prior-year level to 3,252,000 units and also fell short of the consensus mark of 3,599,000 units. Shipments dropped 5% year over year in the international markets to 6,557,000 units. Total shipments also slid 7% year over year to 9,809,000 units.

Other net sales, which include dimmable aircraft windows and fire protection products, dropped 17% from the year-ago quarter to $8.3 million. Dimmable aircraft window sales also plunged 34% year over year for the July-September period. Gentex expects the dimmable aircraft window sales to continue being impacted until a meaningful recovery of the aerospace industry begins and the Boeing 787 aircraft production levels get a boost.

Financial Tidbits

Total operating expenses flared up 7% year over year to $52.7 million for third-quarter 2021. Engineering and R&D expenses rose to $29.6 million from $27.8 million recorded in the year-ago period. The SG&A expenses moved up to $23 million from the $21.6 million recorded in the corresponding quarter of 2020.

Gentex paid dividends of 12 cents per share for the quarter. During the September-end quarter, it repurchased 2.83 million shares of its common stock for $90.6 million.

Gentex — which shares space in the same industry with firms including Adient ADNT, Magna International MGA and American Axle & Manufacturing AXL — had cash and cash equivalents of $270 million as of Sep 30.

Updated Guidance

Based on the mid-October IHS Markit forecast, light vehicle production in Gentex’s primary markets is expected to decrease 20% for the fourth quarter of 2021 from the year-ago period. Based on this light vehicle production forecast and the actual results of the third quarter of 2021, the company has updated its second-half 2021 guidance estimates.

It now envisions net sales in the band of $770-$840 million for second-half 2021, lower than the previous outlook of $970 million-$1.07 billion. The gross margin is anticipated in the range of 35-36% compared to the earlier forecast of 37.5-38.5%. The capital expenditure forecast remains intact at $50-$60 million, while operating expenses are estimated within $105-$108 million, compared with the previous range of $105-$110 million. For calendar-year 2022, the Zacks Rank #3 (Hold) firm expects sales growth of 15-20%, year over year, compared to the previous estimate of 10-15% year over year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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