Exhibit 99.1
[LOGO OF GENTEX CORPORATION]
CONTACT: Connie Hamblin RELEASE: April 20, 2006
(616) 772-1800
GENTEX REPORTS FIRST QUARTER RESULTS
ZEELAND, Michigan, April 20, 2006 -- Gentex Corporation, the Zeeland,
Michigan-based manufacturer of automatic-dimming rearview mirrors and commercial
fire protection products, today reported financial results for the first quarter
ended March 31, 2006. The Company also announced that it repurchased
approximately 2.8 million shares during the first quarter of 2006 under a
previously authorized share repurchase plan.
The Company's net sales increased by nine percent from $127.6 million
in the first quarter of 2005 to a record $139.0 million in the first quarter of
2006. First quarter net income increased by two percent to $26.4 million
compared with $25.9 million in the first quarter last year. Earnings per diluted
share were 17 cents in the first quarter of 2006 compared with 17 cents in the
first quarter of 2005.
"We are pleased to report solid financial results in what continues to
be a very challenging automotive industry environment," said Gentex Chairman of
the Board and Chief Executive Officer Fred Bauer.
For the first quarter of 2006, the Company's Statements of Income
reflected stock option expense for the first time. Excluding the impact of stock
option expensing, the Company's net income would have increased by five percent
to $27.3 million, and earnings per diluted share would have been 18 cents, for
the first quarter of 2006. Stock option expense had previously not impacted the
Company's income statement but had been disclosed in a footnote to the financial
statements.
"Stock option expensing negatively impacted our earnings per share by
about one cent during the first quarter of 2006, and our expectation is that it
will have a similar effect in each quarter for the rest of this calendar year,"
said Gentex Senior Vice President and Chief Financial Officer Enoch Jen.
Jen said that the Company chose to include non-GAAP (generally accepted
accounting principles) earnings in an effort to provide clearer information to
investors who will compare certain 2006 first quarter line items including stock
option expenses to those same line items in 2005, when stock option expense was
not reflected in the Company's financial statements. He said that providing the
non-GAAP information should present a clearer picture of the Company's operating
performance on a comparative year-over-year basis.
The Company also reported that it repurchased approximately 2,804,000
shares during the first quarter of 2006 at a cost of approximately $47.1
million. The Company has a share repurchase plan in place with authorization to
repurchase up to 8 million shares of the Company's stock. To date, including the
prior share repurchases in 2003 and 2005, the Company has repurchased
approximately 5,130,000 shares, leaving approximately 2,870,000 shares
authorized to be repurchased under the plan.
"While our unit shipment growth was higher than we had forecasted for
the quarter, the average selling price of our auto-dimming mirrors was lower
than expected due to product mix," said Jen. "We shipped more base feature
mirrors to certain European and Asian customers during the quarter than we had
forecasted. In addition, a high-volume, advanced-feature mirror program for a
number of models at a European customer has been delayed until the third
quarter, and we will continue to ship base mirror sub-assemblies for those
models until the new contented mirror programs begin to ramp up."
During the first quarter ended March 31, 2006, the Company's gross
margin declined on both a year-over-year and sequential basis, primarily due to
customer price reductions and higher fixed overhead expense.
"In summary, with the lower sales dollars associated with mirror unit
shipments, we were not able to spread our fixed overhead costs over a higher
revenue base," said Jen. "We continue to hope that we'll be able to leverage our
fixed manufacturing overhead costs beginning in the second half of this year. We
currently expect unit shipment growth in the second quarter of approximately ten
percent compared to the second quarter of 2005, and a similar rate of growth for
all of calendar year 2006."
Jen said that there continues to be a great deal of uncertainty in the
automotive industry, making it more difficult for companies to accurately make
unit sales forecasts. In addition, higher interest rates and oil prices are
impacting the sales of vehicles, especially in the large truck/SUV segment,
which is a vehicle segment for which the Company has historically shipped highly
contented interior mirrors in relatively high volumes.
The unit shipment estimates provided by the Company for the 2006 second
quarter and calendar year are based on the flat to slightly increased light
vehicle production forecasts of CSM Worldwide for North America, Europe, Japan
and Korea.
Automotive revenues increased by nine percent to $133.2 million in the
first quarter of 2006 compared with the same period last year. Fire Protection
revenues increased two percent to $5.8 million for the first quarter of 2006
compared with the first quarter of 2005.
Total auto-dimming mirror unit shipments in the first quarter were
approximately 3.4 million, a 12 percent increase over the same period last year.
Auto-dimming mirror unit shipments to customers in North America
increased by seven percent to approximately 1.6 million in the first quarter of
2006 compared with the same quarter last year. North American light vehicle
production increased by five percent in the first quarter of 2006 compared with
the same period in 2005.
Unit shipments to offshore customers increased by 16 percent to
approximately 1.8 million in the first quarter of 2006 compared with the same
period in 2005. The growth in offshore unit shipments is primarily attributable
to increased vehicle penetration in Europe. Light vehicle production in Europe
increased by three percent in the first quarter of 2006 and by four percent for
Japan and Korea in that same period, compared with the same prior year periods.
Non-GAAP Financial Measure
- --------------------------
The financial information provided, including earnings, is in
accordance with GAAP. Still, the Company believes it is useful to provide
non-GAAP earnings to exclude the effect of FAS 123(R). This non-GAAP financial
measure allows investors to evaluate current performance in relation to historic
performance without considering this non-cash charge.
The Company's management uses this non-GAAP information internally to
help assess performance in the current period versus prior periods. Disclosure
of non-GAAP earnings to exclude the effect of FAS 123(R) has economic substance
because the excluded expenses do not represent current or future cash
expenditures.
A reconciliation of non-GAAP earnings, to exclude the effect of FAS
123(R), to GAAP earnings can be found in the attached financial table. The use
of non-GAAP earnings is intended to supplement, not to replace, presentation of
GAAP earnings. Like all non-GAAP financial measures, non-GAAP earnings are
subject to inherent limitations because all of the expenses required by GAAP are
not included. The limitations are compensated by the fact that non-GAAP earnings
are not relied on exclusively, but are used to simply supplement GAAP earnings.
Safe Harbor Statement
- ---------------------
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act, as amended, that are based on management's
belief, assumptions, current expectations, estimates and projections about the
global automotive industry, the economy, the impact of stock option expenses on
earnings, the ability to leverage fixed manufacturing overhead costs, unit
shipment growth rates and the Company itself. Words like "anticipates,"
"believes," "confident," "estimates," "expects," "forecast," "likely," "plans,"
"projects," and "should," and variations of such words and similar expressions
identify forward-looking statements. These statements do not guarantee future
performance and involve certain risks, uncertainties, and assumptions that are
difficult to predict with regard to timing, expense, likelihood and degree of
occurrence. These risks include, without limitation, employment and general
economic conditions, the pace of economic recovery in the U.S. and in
international markets, the pace of automotive production worldwide, the types of
products purchased by customers, competitive pricing pressures, currency
fluctuations, the financial strength of the Company's customers, the mix of
products purchased by customers, the ability to continue to make product
innovations, the success of newly introduced products (e.g. SmartBeam), and
other risks identified in the Company's filings with the Securities and Exchange
Commission. Therefore actual results and outcomes may materially differ from
what is expressed or forecasted. Furthermore, the Company undertakes no
obligation to update, amend, or clarify forward-looking statements, whether as a
result of new information, future events, or otherwise.
First Quarter Conference Call
- -----------------------------
A conference call related to this news release will be simulcast live
on the Internet beginning at 11 a.m. Eastern Daylight Saving Time today. To
access that call, go to www.gentex.com and select the "Audio Webcast" icon in
the lower right-hand corner of the page. Other conference calls hosted by the
Company will also be available at that site in the future.
About the Company
- -----------------
Founded in 1974, Gentex Corporation (Nasdaq: GNTX) is an international
company that provides high-quality products to the worldwide automotive industry
and North American fire protection market. Based in Zeeland, Michigan, the
Company develops, manufactures and markets interior and exterior
automatic-dimming automotive rearview mirrors that utilize proprietary
electrochromic technology to dim in proportion to the amount of headlight glare
from trailing vehicle headlamps. Many of the mirrors are sold with advanced
electronic features, and approximately 96 percent of the Company's revenues are
derived from the sales of auto-dimming mirrors to nearly every major automaker
in the world.
GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended
March 31,
-------------------------------
2006 2005 % Change
-------------- -------------- --------
Net Sales $ 139,020,593 $ 127,641,720 8.9%
Costs and Expenses
Cost of Goods Sold 90,787,885 79,588,903 14.1%
Engineering, Research & Development 10,159,168 7,977,385 27.3%
Selling, General & Administrative 7,791,068 6,839,831 13.9%
Other Expense (Income) (7,988,411) (4,623,369) 72.8%
-------------- --------------
Total Costs and Expenses 100,749,710 89,782,750 12.2%
-------------- --------------
Income Before Provision
for Income Taxes 38,270,883 37,858,970 1.1%
Provision for Income Taxes 11,899,826 11,926,000 -0.2%
-------------- --------------
Net Income $ 26,371,057 $ 25,932,970 1.7%
============== ==============
Earnings Per Share
Basic $ 0.17 $ 0.17
Diluted $ 0.17 $ 0.17
Weighted Average Shares:
Basic 154,223,254 155,215,506
Diluted 155,751,925 156,713,620
Cash Dividends Declared per Share $ 0.09 $ 0.085
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
March 31, Dec 31,
2006 2005
------------- -------------
ASSETS
Cash and Short-Term Investments $ 479,354,703 $ 507,013,621
Other Current Assets 120,816,161 111,973,906
------------- -------------
Total Current Assets 600,170,864 618,987,527
Plant and Equipment - Net 170,335,847 164,030,341
Long-Term Investments and Other Assets 144,502,381 139,627,934
------------- -------------
Total Assets $ 915,009,092 $ 922,645,802
============= =============
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities $ 72,988,314 $ 58,088,259
Long-Term Debt 0 0
Deferred Income Taxes 23,855,817 22,962,168
Shareholders' Investment 818,164,961 841,595,375
------------- -------------
Total Liabilities & Shareholders' Investment $ 915,009,092 $ 922,645,802
============= =============
GENTEX CORPORATION
STATEMENTS OF INCOME RECONCILIATION
NON-GAAP MEASUREMENT TO GAAP
(unaudited)
Three Months Ended March 31, 2006
---------------------------------------------
(Non-GAAP GAAP Non-GAAP
Excluding 2006 2006
Stock (unaudited) vs. vs.
Stock Option Option Quarter Ended 2005 2005
GAAP Expense Expense) 3/31/2005 % Change % Change
------------- ------------- ------------- ------------- -------- --------
Net sales $ 139,020,593 $ 0 $ 139,020,593 $ 127,641,720 8.9% 8.9%
Costs and Expenses
Costs of Goods Sold 90,787,885 (542,254) 90,245,631 79,588,903 14.1% 13.4%
Engineering, Research & Development 10,159,168 (657,710) 9,501,458 7,977,385 27.3% 19.1%
Selling, General & Administrative 7,791,068 (520,131) 7,270,937 6,839,831 13.9% 6.3%
Other Expense (Income) (7,988,411) 0 (7,988,411) (4,623,369) 72.8% 72.8%
------------- ------------- ------------- -------------
Total Costs and Expenses 100,749,710 (1,720,095) 99,029,615 89,782,750 12.2% 10.3%
------------- ------------- ------------- -------------
Income Before Provision for Income Taxes 38,270,883 1,720,095 39,990,978 37,858,970 1.1% 5.6%
Provision for Income Taxes 11,899,826 797,174 12,697,000 11,926,000 -0.2% 6.5%
------------- ------------- ------------- -------------
Net Income $ 26,371,057 $ 922,921 $ 27,293,978 $ 25,932,970 1.7% 5.2%
============= ============= ============= =============
Earnings Per Share:
Basic $ 0.17 $ 0.01 $ 0.18 $ 0.17
Diluted $ 0.17 $ 0.01 $ 0.18 $ 0.17
Weighted Average Shares:
Basic 154,223,254 154,223,254 154,223,254 155,215,506
Diluted 155,751,925 155,751,925 155,751,925 156,713,620
[LOGO OF GENTEX CORPORATION]
AUTO-DIMMING MIRROR UNIT SHIPMENTS
(Thousands)
FIRST QUARTER
ENDED MARCH 31,
-----------------------
2006 2005 % CHANGE
---------- ---------- ----------
Domestic Interior 1,106 1,041 6%
Domestic Exterior 478 434 10%
Total Domestic Units 1,583 1,474 7%
Foreign Interior 1,266 1,140 11%
Foreign Exterior 543 416 30%
Total Foreign Units 1,809 1,556 16%
Total Interior Mirrors 2,372 2,180 9%
Total Exterior Mirrors 1,020 850 20%
Total Mirror Units 3,392 3,030 12%
Note: Certain prior year amounts have been reclassified to conform with the
current year presentation. Amounts may not total due to rounding.
END OF FILING