Gentex (GNTX) Q2 Earnings Beat Estimates, Increase 52% Y/Y
Gentex Corporation GNTX delivered second-quarter 2023 earnings of 47 cents per share, surpassing the Zacks Consensus Estimate of 40 cents and increasing 52% from the year-ago quarter. The outperformance was driven by penetration rates of core electrochromic technology, continued growth in the Full Display Mirror product line and the adoption of other value-add features.
This Zeeland-based automotive products supplier reported net sales of $583.5 million, beating the Zacks Consensus Estimate of $539 million. Sales also increased 26% from the year-ago period. The company recorded a gross margin of 33.1%, an increase of 140 basis points from the first quarter of 2023, due to higher sales, manufacturing improvements, cost recoveries and improvements in freight-related costs and product mix.
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 — contributing the most to Gentex’s revenues — totaled $574.1 million in the second quarter, 27% higher than $452.9 million reported in the year-ago quarter and higher than our estimate of $521.7 million. Year-over-year increase in auto-dimming mirror shipments in both markets resulted in the outperformance. In the reported quarter, auto-dimming mirror shipments in the North American market increased 21% to 4,199,000 units, ahead of our estimate of 3,885,000 units. Shipments rose 23% year over year in the international markets to 8,722,000 units, topping our estimate of 7,870,000 units. Total shipments increased 21% to 12,921,000 units, outpacing our estimate of 11,755,000 units.
Other net sales, which include dimmable aircraft windows and fire protection products, decreased 11.7% from the year-ago quarter’s $10.5 million to $9.4 million and also lagged our estimate of $12.6 million. Fire protection sales decreased by $3.6 million from the year-ago quarter. Dimmable aircraft window sales increased by $2.5 million year over year.
Financial Tidbits
Total operating expenses rose 5.1% year over year to $65.8 million in second-quarter 2023. Engineering and R&D expenses increased to $38 million from $32.9 million. SG&A expenses fell to $27.8 million from nearly $29.7 million recorded in the corresponding quarter of 2022.
Gentex paid a dividend of 12 cents per share in the quarter. During the quarter, it repurchased 0.9 million shares of its common stock at an average price of $27.28 per share. As of Jun 30, 2023, the company had nearly 18.8 million shares remaining for buyback per its previously announced share repurchase plan. Gentex had cash and cash equivalents of nearly $237.7 million as of Jun 30, 2023.
Updated Guidance 2023
Gentex’s 2023 net sales are now estimated in the range of $2.2-$2.3 billion, up from the prior estimate of $2.2 billion. The gross margin is now projected in the band of 32.5%-33%, up from the previously estimated range of 32%-33%. Capital expenditure is anticipated within $200-$225 million, the same as the prior estimate. Operating expenses are estimated in the band of $260-$270 million, the same as the prior estimated range.
Zacks Rank & Key Picks
Gentex currently carries a Zacks Rank #2 (Buy).
Some other top-ranked players in the auto space include Ford Motor Company F, Toyota Motor Corporation TM and Workhorse Group Inc. WKHS, each sporting a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for F’s 2023 sales and earnings implies year-over-year growth of 0.49% and 13.33%, respectively. The 2023 EPS estimate has been revised upward by 8 cents in the past seven days. The EPS estimate for 2024 has moved north by 8 cents in the past seven days.
The Zacks Consensus Estimate for TM’s 2023 sales implies year-over-year growth of 6.77%. The EPS estimate for 2023 has moved north by 95 cents in the past 30 days. The 2024 EPS estimate has moved up by 54 cents in the past seven days.
The Zacks Consensus Estimate for WKHS’s 2023 sales implies year-over-year growth of 106,900%. The EPS estimate for 2023 has moved up by 2 cents in the past 30 days. The 2024 EPS estimate has moved north by a cent in the past 30 days.
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