Exhibit 99.1
CONTACT: Connie Hamblin RELEASE: July 20, 2006
(616) 772-1800
GENTEX REPORTS SECOND QUARTER RESULTS
ZEELAND, Michigan, July 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 second
quarter ended June 30, 2006. The Company also announced that it repurchased
approximately 7.2 million shares during the second quarter of 2006 under a
previously authorized share repurchase plan.
The Company's net sales increased by eight percent from $132.4 million
in the second quarter of 2005 to a record $142.4 million in the second quarter
of 2006. Second quarter net income increased by five percent to $27.2 million
compared with $26.0 million in the second quarter last year. Earnings per
diluted share were 18 cents in the second quarter of 2006 compared with 17 cents
in the second quarter of 2005.
For the first six months of 2006, net sales increased by eight percent
to $281.4 million compared with $260.0 million in the first six months of 2005.
Net income for the first six months of 2006 increased by three percent to $53.6
million compared with $52.0 million in the first six months of 2005.
Excluding the impact of stock option expensing, the Company's net
income would have increased by ten percent to $28.6 million in the second
quarter of 2006, and earnings per diluted share would have been 19 cents. Net
income, excluding the impact of stock option expensing, would have increased by
seven percent for the first six months of 2006 to $55.9 million, and earnings
per diluted share would have been 36 cents. Stock option expensing did not
impact the Company's income statement for the second quarter and first six
months of 2005, but was disclosed in a footnote to the financial statements.
"We are pleased to report improved performance in the second quarter,"
said Gentex Chairman and Chief Executive Officer Fred Bauer. "However, the
automotive industry continues to be very challenging, and it is a difficult area
to predict future sales and unit shipment volumes, particularly given the
current macroeconomic environment."
Bauer also said that the Company recently moved into its newly
completed Technology Center and Manufacturing Facility that is attached to its
world headquarters facility in Zeeland, Michigan.
"We believe that this new facility will meet our needs for auto-dimming
mirror building production capacity and engineering and R&D space due to the
continued growth of our business for the next five to eight years," said Bauer.
The Company also reported that it repurchased approximately 7,201,000
shares during the second quarter of 2006 at a cost of approximately $104.6
million. The Company has a share repurchase plan in place with authorization to
repurchase up to 16 million shares of the Company's stock (including the May
2006 Board of Directors' authorization to repurchase an additional eight million
shares). To date, including the prior share repurchases in 2003, 2005 and 2006,
the Company has repurchased approximately 12,331,000 shares, leaving
approximately 3,669,000 shares authorized to be repurchased under the plan.
"We were pleased to see an improvement in our manufacturing yields,
and hope that we'll be able to make further improvements in the second half of
this year, " said Enoch Jen, the Company's Senior Vice President and Chief
Financial Officer. "We currently expect unit shipment growth in the third
quarter to be approximately flat to up five percent compared with the third
quarter of 2005, and expect approximately five to ten percent unit shipment
growth for all of calendar year 2006."
Jen said that oil prices and higher interest rates continue to impact
the sales of vehicles, making it considerably more difficult to forecast,
especially in the mid- and full-sized truck/SUV segments, which are vehicle
segments for which the Company has historically shipped highly contented
interior mirrors in relatively high volumes. He said that the third quarter is
always the most difficult for forecasting unit shipments, due to the uncertainty
associated with customer changeover plant shutdowns and new vehicle and/or
product launches. The balance of calendar year 2006 will be impacted by annual
customer price reductions, the new facility, and automotive manufacturer plans
for lower vehicle production in the mid- and full-sized truck/SUV segments.
The unit shipment estimates provided by the Company for the 2006 third
quarter and calendar year are based on a slight decline in light vehicle
production forecasts of CSM Worldwide for North America, and slight increases in
those forecasts for Europe, Japan and Korea.
Automotive revenues increased by eight percent to $136.0 million in the
second quarter of 2006 compared with the same period last year, and increased by
nine percent to $269.3 million for the first six months of 2006. Fire Protection
revenues increased by one percent to $6.3 million for the second quarter of 2006
compared with the second quarter of 2005, and by two percent to $12.1 million
for the first six months of 2006, compared with the same period in 2005.
Total auto-dimming mirror unit shipments in the second quarter were
approximately 3.4 million, a ten percent increase over the same period last
year. Auto-dimming mirror unit shipments increased by 11 percent to 6.8 million
for the first six months of 2006.
Auto-dimming mirror unit shipments to customers in North America
increased by ten percent to approximately 1.6 million in the second quarter of
2006 compared with the same quarter last year. North American light vehicle
production was flat in the second quarter of 2006 compared with the same period
in 2005. For the first six months of 2006, auto-dimming mirror unit shipments to
customers in North America increased by nine percent to approximately 3.2
million compared with the same period last year. North American light vehicle
production increased by two percent for the first six months of 2006 compared
with the same period in 2005.
Unit shipments to offshore customers increased by ten percent to
approximately 1.8 million in the second quarter of 2006 compared with the same
period in 2005. Light vehicle production in Europe decreased by two percent in
the second quarter of 2006 and increased by five percent for Japan and Korea in
that same period, compared with the same prior year periods. For the first six
months of 2006, unit shipments to offshore customers increased by 13 percent to
approximately 3.6 million, compared with the same period in 2005. Light vehicle
production in Europe increased by two percent in the first six months of 2006
and increased by five 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.
Second Quarter Conference Call
- ------------------------------
A conference call related to this news release will be simulcast live
on the Internet beginning at 10 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 Global Market: 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
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------------- ----------------------------------
2006 2005 2006 2005
--------------- --------------- --------------- ---------------
(unaudited)
Net Sales $ 142,391,231 $ 132,384,445 $ 281,411,824 $ 260,026,165
Costs and Expenses
Cost of Goods Sold 91,494,753 82,818,876 182,282,638 162,407,779
Engineering, Research & Development 9,962,629 8,798,430 20,121,797 16,775,815
Selling, General & Administrative 7,512,959 7,011,298 15,304,027 13,851,129
Other Expense (Income) (6,678,259) (4,260,209) (14,666,670) (8,883,578)
--------------- --------------- --------------- ---------------
Total Costs and Expenses 102,292,082 94,368,395 203,041,792 184,151,145
--------------- --------------- --------------- ---------------
Income Before Provision
for Income Taxes 40,099,149 38,016,050 78,370,032 75,875,020
Provision for Income Taxes 12,863,099 11,975,000 24,762,925 23,901,000
--------------- --------------- --------------- ---------------
Net Income $ 27,236,050 $ 26,041,050 $ 53,607,107 $ 51,974,020
=============== =============== =============== ===============
Earnings Per Share
Basic $ 0.18 $ 0.17 $ 0.35 $ 0.33
Diluted $ 0.18 $ 0.17 $ 0.35 $ 0.33
Weighted Average Shares:
Basic 150,592,680 155,568,960 152,402,407 155,396,365
Diluted 151,044,639 157,209,802 153,176,602 156,962,435
Cash Dividends Declared per Share $ 0.090 $ 0.085 $ 0.18 $ 0.17
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, Dec 31,
2006 2005
--------------- ---------------
(unaudited)
ASSETS
Cash and Short-Term Investments $ 382,529,607 $ 507,013,621
Other Current Assets 123,368,187 111,973,906
--------------- ---------------
Total Current Assets 505,897,794 618,987,527
Plant and Equipment - Net 180,695,166 164,030,341
Long-Term Investments and Other Assets 137,900,694 139,627,934
--------------- ---------------
Total Assets $ 824,493,654 $ 922,645,802
=============== ===============
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities $ 72,813,036 $ 58,088,259
Long-Term Debt 0 0
Deferred Income Taxes 21,898,366 22,962,168
Shareholders' Investment 729,782,252 841,595,375
--------------- ---------------
Total Liabilities & Shareholders' Investment $ 824,493,654 $ 922,645,802
=============== ===============
GENTEX CORPORATION AND SUBSIDIARIES
STATEMENTS OF INCOME RECONCILIATION
NON-GAAP MEASURMENT TO GAAP
Three Months Ended June 30, 2006 (unaudited)
---------------------------------------------
(Non-GAAP
Excluding GAAP Non-GAAP
Stock Stock Quarter 2006 vs. 2006 vs.
Option Option Ended 2005 % 2005 %
GAAP Expense Expense) 6/30/05 Change Change
------------- ----------- ------------- ------------- ---------- ----------
(unaudited)
Net Sales $ 142,391,231 $ 0 $ 142,391,231 $ 132,384,445 7.6% 7.6%
Costs and Expenses
Cost of Goods Sold 91,494,753 (575,107) 90,919,646 82,818,876 10.5% 9.8%
Engineering, Research & Development 9,962,629 (619,071) 9,343,558 8,798,430 13.2% 6.2%
Selling, General & Administrative 7,512,959 (555,617) 6,957,342 7,011,298 7.2% (0.8)%
Other Expense (Income) (6,678,259) 0 (6,678,259) (4,260,209) 56.8% 56.8%
------------- ----------- ------------- -------------
Total Costs and Expenses 102,292,082 (1,749,795) 100,542,287 94,368,395 8.4% 6.5%
------------- ----------- ------------- -------------
Income Before Provision
for Income Taxes 40,099,149 1,749,795 41,848,944 38,016,050 5.5% 10.1%
Provision for Income Taxes 12,863,099 424,901 13,288,000 11,975,000 7.4% 11.0%
------------- ----------- ------------- -------------
Net Income 27,236,050 1,324,894 28,560,944 26,041,050 4.6% 9.7%
============= =========== ============= =============
Six Months Ended June 30, 2006
---------------------------------------------
(Non-GAAP
Excluding GAAP Non-GAAP
Stock Stock 2006 vs. 2006 vs.
Option Option 2005 % 2005 %
GAAP Expense Expense) YTD 6/30/05 Change Change
------------- ----------- ------------- ------------- ---------- ----------
Net Sales $ 281,411,824 $ 0 $ 281,411,824 $ 260,026,165 8.2% 8.2%
Costs and Expenses
Cost of Goods Sold 182,282,638 (1,117,361) 181,165,277 162,407,779 12.2% 11.5%
Engineering, Research & Development 20,121,797 (1,276,781) 18,845,016 16,775,815 19.9% 12.3%
Selling, General & Administrative 15,304,027 (1,075,748) 14,228,279 13,851,129 10.5% 2.7%
Other Expense (Income) (14,666,670) 0 (14,666,670) (8,883,578) 65.1% 65.1%
------------- ----------- ------------- -------------
Total Costs and Expenses 203,041,792 (3,469,890) 199,571,902 184,151,145 10.3% 8.4%
------------- ----------- ------------- -------------
Income Before Provision
for Income Taxes 78,370,032 3,469,890 81,839,922 75,875,020 3.3% 7.9%
Provision for Income Taxes 24,762,925 1,222,075 25,985,000 23,901,000 3.6% 8.7%
------------- ----------- ------------- -------------
Net Income 53,607,107 2,247,815 55,854,922 51,974,020 3.1% 7.5%
============= =========== ============= =============
AUTO-DIMMING MIRROR UNIT SHIPMENTS
(Thousands)
SECOND QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
2006 2005 % CHANGE 2006 2005 % CHANGE
---------- ---------- ---------- ---------- ---------- ----------
Domestic Interior 1,124 1,038 8% 2,229 2,078 7%
Domestic Exterior 488 426 15% 966 860 12%
Total Domestic Units 1,611 1,463 10% 3,195 2,938 9%
Foreign Interior 1,293 1,190 9% 2,560 2,330 10%
Foreign Exterior 503 441 14% 1,046 857 22%
Total Foreign Units 1,796 1,631 10% 3,605 3,187 13%
Total Interior Mirrors 2,417 2,228 9% 4,789 4,408 9%
Total Exterior Mirrors 991 867 14% 2,011 1,717 17%
Total Mirror Units 3,408 3,095 10% 6,800 6,125 11%
Note: Certain prior year amounts have been reclassified to conform with the
current year presentation. Amounts may not total due to rounding.