Automatic dimming rear view mirror maker Gentex Corporation boosted third quarter net income 11% to USD27.9 million as revenues climbed 15% to USD138.1 million.
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Earnings per share were 18 cents in the third quarter of 2005 compared with 16 cents in the third quarter of 2004.
For the first nine months of 2005, however, Gentex posted net income of USD79.9 million on revenues of USD398.1 million, compared with net income of USD84.0 million on revenues of USD379.4 million for the same period in 2004. Earnings per share were 51 cents for the first nine months of 2005 compared with 54 cents in 2004.
Gentex executive vice president Garth Deur noted that the company also recently negotiated a three-year extension to its current long-term agreement with DaimlerChrysler for virtually all interior and exterior auto-dimming mirrors, extending the existing agreement to the end of 2009.
Gentex said it had repurchased approximately 1,496,000 shares during the third quarter of 2005 at a cost of approximately USD25.2 million under a plant to repurchase up to 8 million shares of the stock. To date, including the prior share repurchases in 2003, the company has repurchased approximately 2,326,000 shares.
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By GlobalDataMirror unit shipments in North America in the third quarter increased 14% while light vehicle production in that market increased by 2%. The increase in unit shipments in North America was due to higher shipments to Asian transplant automakers and accelerated growth in exterior mirror business. Unit shipments to offshore automakers increased 18% during the quarter. Light vehicle production declined 1% in Europe and increased 6% in the Japan and Korean markets in the third quarter of 2005 compared with the same quarter last year.
“We are pleased to see the higher rates of growth in our exterior mirror business as new and existing customers opt to offer complete glare-control systems on their vehicles,” said Deur. “In addition, we have been seeing higher-than-expected European and Korean unit shipments due to the strong start-up of several new mirror programmes with customers in those regions.”
The company reported a slightly lower than expected gross margin in the third quarter, which was primarily attributable to yield issues on new manufacturing processes. The start-up challenges are taking longer to work through than previously anticipated, and these issues are making it more difficult to offset ongoing customer price reductions.
“To say that we are working diligently to resolve these yield issues would be an understatement,” said Deur, “but we do expect it to take us a while longer as the challenges happen to be on products where customer demand is increasing, and we cannot take risks on quality or customer delivery schedules. The challenges that we have been facing are not insurmountable and, as we continue to make improvements, we expect that our manufacturing costs will also gradually improve.
“Overall, we are very pleased with our results in the third quarter. After a year of slower growth, we are looking forward to a strong 2006 model year,” Deur said.
Total auto-dimming mirror unit shipments for the third quarter of 2005 increased 16% to 3,198,000 units, compared with 2,756,000 units for the same quarter in 2004. Total automotive revenues in the third quarter of 2005 increased by 15% to USD131.7 million, compared with the same quarter last year.
Total auto-dimming mirror unit shipments for the first nine months of 2005 increased 7% to 9,323,000 units, compared with 8,739,000 units for the same period in 2004. Total automotive revenues increased 5% for the first nine months of 2005 to USD379.8 million, compared the same period in 2004.
For the first nine months of 2005, auto-dimming mirror unit shipments in North America increased 3% compared with the same prior year period, while light vehicle production declined by about 1% for the first nine months of 2005. Mirror unit shipments to offshore customers increased 10% compared with the same prior year period. During the first nine months of 2005, light vehicle production was flat in Europe and increased by 6% in the Japan and Korean markets, compared with the first nine months of 2004.
For the fourth quarter of 2005, Gentex estimates that the growth in mirror unit shipments will be in the range of 10 to 15% compared with the fourth quarter of 2004.
“While we currently believe that this may be a conservative estimate, we continue to be cautious due to uncertainties associated with the automotive industry at this time,” said Deur.
