Gentex Expectings 2nd Half Growth

February 4, 2005
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ZEELAND — Gentex Corp. expects solid growth to return in the second half of the year, as new business contracts from automakers take effect and offset flat production levels in North America.

Executive Vice President Garth Deur said he expects the continued weakness in North American automotive production through the first half of 2005 to cut into Gentex's sale of auto-dimming mirrors to domestic automakers, particularly to the company's largest customer, General Motors.

Business will then "pick up pretty significantly" in the latter half of the year as GM and other automakers introduce new vehicles. Gentex expects to benefit from GM's introduction of a new SUV platform for the 2006 model year and a full-sized pick-up truck for 2007, Deur said.

"We've just got to make it through the trough in North American production," Deur told brokerage analysts during a conference call to discuss Gentex's fourth quarter results that included lower earnings on slightly higher sales.

Gentex on Jan. 27 reported quarterly sales of $126.2 million, a 2 percent increase over the $123.9 million during the same period a year ago.

Net income for the fourth quarter totaled $28.6 million, or 37 cents per share, down 2 percent from the $29.1 million, or 37 cents per share, in the final three months of 2003.

A 3 percent decline in North American light vehicle production contributed to Gentex's continued sales weakness during the quarter, Deur said, and led to a 2 percent decline in mirror shipments to domestic automakers. The biggest impact was on sales to GM, which last year accounted for 31 percent of all sales.

Gentex, which in 2004 began selling more mirrors to automakers in Europe and Asia than to domestic customers, continues to work to diversify its customer base, Deur said.

"We're making progress on all fronts and dealing with the realities of GM and their issues," he said.

For all of 2004, Gentex reported record sales of $505.7 million, an 8 percent increase over the $469 million in 2003.

Annual net income was $112.6 million, or $1.44 per diluted share, a 6 percent increase over the  $106.7 million, or $1.37 per diluted share, in 2003.

Gentex recorded a 13 percent increase in mirror shipments during 2004, to 11.64 million units, with much of the growth coming from sales to foreign automakers.

Shipments to foreign customers in 2004 grew 26 percent over 2003 volumes, to 5.89 million units. Domestic mirror shipments grew just 3 percent, to 5.75 million units.

Deur said he expects mirror shipments in the first quarter of between flat to 5 percent higher and 2005 growth in shipments of 10 percent.    

Gentex Financials

Here are the highlights of Gentex Corp.'s fourth quarter financial report:

Sales

4Q 2005: $126.2 million

4Q 2004: $123.9 million

2005: $505.6 million

2004: $469.0 million

Net income

4Q 2005: $28.6 million, 37 cents EPS

4Q 2004: $29.0 million, 37 cents EPS

2005: $112.6 million, $1.44 EPS

2004: $106.7 million, $1.37 EPS

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