Gentex (GNTX) Earnings & Sales Beat Estimates, Down Y/Y

Gentex Corporation GNTX reported first-quarter 2022 earnings of 37 cents per share, topping the Zacks Consensus Estimate of 32 cents. Higher-than-expected auto-dimming mirror shipments in the North American market resulted in the outperformance. The reported figure,however, compares unfavorably with the prior-year quarter’s earnings of 46 cents.

This Zeeland-based automotive products supplier reported net sales of $468.3 million, beating the Zacks Consensus Estimate of $434.2 million. However, the top line fell 3.2% year over year. The company recorded gross margin of 34.3%, lower than the year-ago quarter’s 37.9%, led by increases in raw material costs, freight-related cost, labor cost due to higher wages and labor inefficiencies.

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 — which have the highest contribution to Gentex’s revenues — totaled $458 million in the first quarter, lower than $475.6 million reported in the year-ago quarter. The figure marginally topped the Zacks Consensus Estimate of $457 million. In the reported quarter, auto-dimming mirror shipments in the North American market increased 2% to 3,623,000 units and topped the consensus mark of 3,350,000 units. Shipments declined almost 10% year over year in the international markets to 7,380,000 units and lagged the Zacks Consensus Estimate of 7,979,000 units. Total shipments slid 7% to 11,003,000 units.

Other net sales, which include dimmable aircraft windows and fire protection products, increased 27.2% from the year-ago quarter to $10.3 million. Fire protection sales increased 46%. Dimmable aircraft window sales fell 20% from the first quarter of 2021. Gentex expects the dimmable aircraft window sales to continue being impacted until a meaningful recovery of the aerospace industry begins and the Boeing 787 aircraft production levels get a boost.

Financial Tidbits

Total operating expenses rose 15.2% year over year to $57 million in first-quarter 2022. Engineering and R&D expenses increased to $32 million from $27.6 million. SG&A expenses moved up to $25.1 million from $22 million recorded in the corresponding quarter of 2021.

Gentex paid dividends of 12 cents per share in the quarter. During the quarter, it repurchased 2.44 million shares of its common stock at an average price of $29 per share for a total of $71.3 million. Gentex had cash and cash equivalents of $279.7 million as of Mar 31, 2022.

Guidance

The company’s projection for light vehicle production (LVP) for the second quarter of 2022 is based on the IHS Markit mid-April 2022 forecast for light vehicle production in North America, Europe, Japan/Korea and China.  Light vehicle production in these markets is expected to be flat year over year for second-quarter 2022. For calendar year, the LVP is expected to increase 9% from the year-ago period. Gentex’s estimated 2022 net sales remain in band of $1.87-$2.02 billion. Estimated capital expenditure remains in the earlier range of $150-$175 million. Operating expenses are unchanged in the band of $230-$240 million. For 2023, GNTX expects year over year sales growth of 15-20%.

Zacks Rank & Key Picks

GNTX currently carries a Zacks Rank #4 (Sell).

Better-ranked players in the auto space include BRP Group, Inc. DOOO, sporting a Zacks Rank #1 (Strong Buy) and CNH Industrial CNHI and Standard Motor Products SMP, each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

BRP Group has an expected earnings growth rate of 9.1% for fiscal 2023. The Zacks Consensus Estimate for current-year earnings has been revised around 7.9% upward in the past 60 days.

BRP Group’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. DOOO pulled off a trailing four-quarter earnings surprise of 68%, on average. The stock has declined 16.1% over the past year.

CNH Industrial has an expected earnings growth rate of 1.5% for the current year. The Zacks Consensus Estimate for current-year earnings has remained stable in the past 60 days.

CNH Industrial’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. CNHI pulled off a trailing four-quarter earnings surprise of 63%, on average. The stock has lost 3.8% over the past year.

The Zacks Consensus Estimate for Standard Motor’s current-year earnings has been revised around 0.2% upward in the past 60 days.

Standard Motor’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. SMP pulled off a trailing four-quarter earnings surprise of 60.4%, on average. The stock has declined 0.3% over the past year.

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