Cost-cutting helps Gentex profits
The Zeeland company will repurchase 4 million shares of its stock.
Gentex’s third quarter results show net sales down slightly, but gross profits were up and have allowed the Zeeland automotive supplier to buy back 4 million shares of its stock.
“We are pleased to report that our gross profit margin improved sequentially in the third quarter of 2012, despite a sequential decrease in net sales,” said Gentex chairman/CEO Fred Bauer. “We are also pleased to illustrate the positive efficiencies we are experiencing within our operating expenses. Our engineering, research and development expenses declined primarily due to a concerted effort to reduce costs related to outside contract engineering development services, as a result of better utilization of our own employees’ talent.
“While we continue to be concerned about flattening net sales, particularly as we operate in challenging and deteriorating market conditions, our primary long-term goal is to improve our top line growth,” said Bauer.
Gentex’s net sales declined to $268.2 million in the third quarter, compared with $269.5 million in the same quarter last year. For the first nine months of 2012, net sales increased by 10 percent to $839.2 million, compared with $763.4 million for the same period in 2011.
Gross profit increased to 33.6 percent in the third quarter, compared with 33.1 percent in the second quarter of 2012, primarily due to purchasing cost reductions. It decreased on a quarter-over-quarter basis from 35.4 percent in the third quarter of 2011 to 33.6 percent in the third quarter of 2012, primarily due to the impact of annual customer price reductions and product mix, partially offset by purchasing cost reductions.
Net income for the third quarter decreased 4 percent to $41.9 million, compared with net income of $43.4 million in the third quarter of 2011. Net income in the first nine months of 2012 increased by 4 percent to $129 million, compared with $124.2 million in the first nine months of 2011.
Earnings per diluted share were 29 cents in the third quarter of 2012 compared with 30 cents per share in the third quarter of 2011. Earnings per diluted share were 89 cents for the first nine months of 2012 compared with 86 cents in the first nine months of 2011.