Gentex Reports Third Quarter 2024 Financial Results
ZEELAND, Mich., Oct. 25, 2024 (GLOBE NEWSWIRE) -- Gentex Corporation (NASDAQ: GNTX), a leading supplier of digital vision, connected car, dimmable glass and fire protection technologies, today reported financial results for the three and nine months ended September 30, 2024.
3rd Quarter 2024 Summary
Net sales of $608.5 million, a new quarterly sales record, and a 6% increase compared to the third quarter of 2023, versus light vehicle production that was down 6% quarter over quarter in the Company's primary markets
Gross profit margin of 33.5%, an increase of 60 basis points from the second quarter of 2024
Income from operations of $125.7 million
Net income of $122.5 million, an increase of 17% from the third quarter of 2023
Earnings per diluted share of $0.53, an increase of 18% from the third quarter of 2023
3.2 million shares repurchased during the quarter
For the third quarter of 2024, the Company reported net sales of $608.5 million, compared to net sales of $575.8 million in the third quarter of 2023. For the third quarter of 2024, global light vehicle production declined by 5%, compared to the third quarter of 2023. "During the third quarter of 2024, light vehicle production weakened across all major regions, but especially in our primary markets. When compared to the third quarter of 2023, light vehicle production declined by 6% this quarter in North America, Europe and Japan/Korea, which was significantly worse than the 3% quarter over quarter decline forecasted at the beginning of the quarter," said Gentex President and CEO, Steve Downing. "The production declines resulted in a sales shortfall of approximately $25 - $30 million for the quarter, but despite that weakness in our end markets, we were able to outperform our primary markets by 12%," commented Downing.
For the third quarter of 2024, the gross margin was 33.5%, compared to a gross margin of 33.2% for the third quarter of 2023. Compared to the third quarter of 2023, the gross margin improved as a result of the higher revenue levels and purchasing cost reductions, which were partially offset by unfavorable product mix. Sequentially, the gross margin improved by 60 basis points, as a result of the higher sales levels versus the second quarter of 2024 and lower pricing reserves in the third quarter, versus the first half of 2024. "Overall, we are pleased with the sequential improvement in gross margin, but the third quarter was still behind our margin forecast due to lower than expected sales driven by light vehicle production shortfalls, product mix issues and overhead inefficiencies. We remain committed to our gross margin recovery plan that we laid out over the last 18 months, but given the shifts in the market and light vehicle production mix, we expect that the Company's margin recovery target won't be fully achieved until 2025," said Downing.
Operating expenses during the third quarter of 2024 increased by 13% to $78.3 million, compared to operating expenses of $69.0 million in the third quarter of 2023. Operating expenses increased quarter over quarter primarily due to staffing and engineering related professional fees. "Our operating expenses remain in line with our expectations for the full year, with increases primarily focused on R&D and launches of new programs and products. Operating expenses, especially R&D expenses, are expected to continue at the current pace for the rest of this year, despite the lower than forecasted light vehicle production and sales levels we have experienced over the last two quarters. Our R&D spend is being driven by several new launches that are currently in development and expected to launch in the next two years, as well as research projects in support of new technologies that we have showcased at CES the last few years," said Downing.
Income from operations for the third quarter of 2024 was $125.7 million, compared to income from operations of $122.4 million for the third quarter of 2023.
Other income was $19.7 million during the third quarter of 2024, compared to other income of $2.1 million in the third quarter of 2023. The change was primarily driven by non-cash gains of $14.5 million resulting from mark-to-market adjustments and other market adjustments of certain holdings within the Company's tech investment portfolio, as well as interest income from the Company's investment portfolio.
During the third quarter of 2024, the Company had an effective tax rate of 15.7%, which was primarily driven by the benefit of the foreign derived intangible income deduction.
Net income for the third quarter of 2024 was $122.5 million, a 17% increase compared to net income of $104.7 million for the third quarter of 2023. The increase in net income for the third quarter was driven by the increased net sales, income from operations, and other income, compared to the third quarter of 2023.
Earnings per diluted share for the third quarter of 2024 were $0.53, an 18% increase compared to earnings per diluted share of $0.45 for the third quarter of 2023. Earnings per diluted share for the third quarter of 2024 were positively impacted by the increased net sales and operating income as well as the increases in other income for the quarter.
Automotive net sales in the third quarter of 2024 were $596.5 million compared to $564.5 million in the third quarter of 2023. Auto-dimming mirror unit shipments decreased by 3% during the third quarter of 2024, compared to the third quarter of 2023.
Other net sales in the third quarter of 2024, which includes dimmable aircraft windows and fire protection products, were $12.0 million, compared to other net sales of $11.3 million in the third quarter of 2023. Fire protection sales increased by $1.8 million for the third quarter of 2024, compared to the third quarter of 2023. Dimmable aircraft window sales decreased by $1.9 million for the third quarter of 2024, compared to the third quarter of 2023. Additionally, in the third quarter of 2024, the Company recorded its first official sales of medical devices of $0.8 million from shipments of the previously acquired eSight Go product line and business.
Share Repurchases
During the third quarter of 2024, the Company repurchased 3.2 million shares of its common stock at an average price of $30.16 per share. As of September 30, 2024, the Company has approximately 10.1 million shares remaining available for repurchase pursuant to its previously announced share repurchase plan. The Company intends to continue to repurchase additional shares of its common stock in the future in support of the previously disclosed capital allocation strategy, but share repurchases will vary from time to time and will take into account macroeconomic issues, market trends, and other factors that the Company deems appropriate.
Future Estimates
The Company's current forecasts for light vehicle production for the fourth quarter of 2024 and full years 2024 and 2025, are based on the mid-October 2024 S&P Global Mobility forecast for light vehicle production in North America, Europe, Japan/Korea, and China. Light vehicle production in these markets is expected to decrease by approximately 4% for the fourth quarter of 2024, versus the same quarter in 2023, while light vehicle production in our primary markets of North America, Europe and Japan/Korea is expected to be down 6% in the fourth quarter of 2024, compared to the fourth quarter of 2023. For calendar year 2024, light vehicle production in North America, Europe, Japan/Korea and China is now forecasted to decline approximately 2%, compared to light vehicle production in calendar year 2023. Light vehicle production for calendar year 2025 is forecasted to increase by 1%, compared to the calendar year 2024 forecast in these markets. Fourth quarter 2024 and calendar years 2024 and 2025 forecasted vehicle production volumes from S&P Global Mobility are shown below:
Light Vehicle Production (per S&P Global Mobility mid-October light vehicle production forecast)
(in Millions)
Region
Q42024
Q42023
%Change
CalendarYear2025
CalendarYear2024
CalendarYear2023
2025 vs2024%Change
2024 vs2023%Change
North America
3.64
3.76
(3
)%
15.29
15.47
15.68
(1
)%
(1
)%
Europe
4.24
4.66
(9
)%
17.00
17.07
17.97
—
%
(5
)%
Japan and Korea
3.20
3.38
(5
)%
12.02
12.00
12.80
—
%
(6
)%
China
8.69
8.81
(1
)%
30.02
29.34
29.04
2
%
1
%
Total Light Vehicle Production
19.77
20.61
(4
)%
74.33
73.88
75.49
1
%
(2
)%
Based on this light vehicle production forecast and actual results for the first nine months of 2024, the Company is making certain changes to its previously provided guidance for calendar year 2024 as shown in the table below.
2024 Annual Guidance
Guidance as of July 26, 2024
As of October 25, 2024
Revenue
$2.40 - $2.50 billion
$2.35 - $2.40 billion
Gross Margin
34% - 34.5%
33.5% - 34.0%
Operating Expenses
$295 -$305 million
$295 -$305 million
Tax Rate
15% - 16%
15% - 15.5%
Capital Expenditures
$175 - $200 million
$150 - $175 million
