Gentex Q2 Earnings Miss Expectations, Guidance Trimmed

Gentex Corporation's GNTX second-quarter 2024 earnings per share of 37 cents missed the Zacks Consensus Estimate of 52 cents and decreased 21.3% year over year.

This Zeeland-based automotive products supplier reported net sales of $573 million, which missed the Zacks Consensus Estimate of $623 million and fell 1.7% from the year-ago period. The company recorded a gross margin of 32.9%, reflecting a decline of 20 basis points from the second quarter of 2023, due to lower sales and unfavorable product mix.

Segmental Performance

The Automotive segment's net sales — contributing the most to Gentex's revenues — totaled $559.3 million in the second quarter, which was 2.6% lower than the $574.1 million reported in the year-ago quarter and missed our estimate of $619.6 million. In the reported quarter, auto-dimming mirror shipments in the North American market decreased 4% to 4,051,000 units. Shipments fell 7% year over year in the international markets to 8,133,000 units. Total shipments declined 6% to 12,184,000 units.

Other net sales, which include dimmable aircraft windows and fire protection products, increased from the year-ago quarter's $9.4 million to $13.6 million and outpaced our estimate of $9.6 million. Fire protection sales increased $1.3 million from the year-ago quarter's figure. Dimmable aircraft window sales increased $2.9 million from the year-ago quarter's level.

Financial Tidbits

Total operating expenses rose 12% year over year to $73.7 million in second-quarter 2024. Engineering and R&D expenses increased to $44 million from $38 million. SG&A expenses rose to $29.7 million from $27.8 million recorded in the corresponding quarter of 2023.

GNTX paid a dividend of 12 cents per share in the quarter. It repurchased 1.4 million shares of its common stock at an average price of $34.43 per share. As of Jun 30, 2024, the company had nearly 13.2 million shares remaining for buyback, per its previously announced share repurchase plan. Gentex had cash and cash equivalents of about $260.2 million as of Jun 30, 2024.

Revised 2024 Guidance

Gentex now expects 2024 net sales in the range of $2.40-$2.50 billion, down from the previous estimate of $2.45-$2.55 billion. The gross margin is projected in the band of 34-34.5%, down from the previous guidance of 34-35%. Capital expenditure is anticipated between $175 million and $200 million, down from the previous outlook of $225-$250 million. Operating expenses are estimated in the band of $295-$305 million.

Zacks Rank & Key Picks

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

Some better-ranked stocks in the auto space are Suzuki Motor Corporation SZKMY, BYD Company Limited BYDDY and Honda Motor Co., Ltd. HMC, each sporting a Zacks Rank #1 (Strong Buy) at present.

The consensus estimate for SZKMY's 2025 earnings suggests a year-over-year growth of 2.09%. EPS estimates for 2025 and 2026 have improved 38 cents and 15 cents, respectively, in the past 60 days.

The Zacks Consensus Estimate for BYDDY's 2024 sales and earnings suggests year-over-year growth of 21.11% and 9.93%, respectively. EPS estimates for 2024 and 2025 have improved 19 cents and 29 cents, respectively, in the past 30 days.

The Zacks Consensus Estimate for HMC's 2025 sales and earnings suggests year-over-year growth of 0.73%. EPS estimates for 2025 have improved a penny in the past seven days. EPS estimates for 2026 have improved 4 cents in the past 30 days.

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