Gentex shares fall 6% as Q2 results disappoint

ZEELAND, Mich. – Gentex (NASDAQ:) Corporation (NASDAQ:GNTX), a leading supplier of digital vision and connected car technologies, reported a second-quarter earnings per share (EPS) of $0.37, falling short of the analyst consensus of $0.52.

Revenue also missed expectations, coming in at $572.9 million against the anticipated $622.98 million. The company’s stock price reflected investor disappointment, dropping 6% in response to the earnings miss.

In comparison to the same period last year, Gentex experienced a decline in net sales from $583.5 million in the second quarter of 2023, representing a 1.8% decrease. The company attributed the shortfall to a significant change in June, which led to revenues falling approximately $50 million below the forecast, primarily due to reduced shipments to some of its largest customers. “During the second quarter of 2024, light vehicle production weakened in most of our primary markets,” stated Steve Downing, President and CEO of Gentex.

Despite the challenges, Downing remains optimistic about the company’s future, highlighting the progress on the gross margin recovery plan and expressing confidence in achieving the goal of a 35-36% margin. “We fully expect to achieve our ultimate goal of a 35 – 36% margin for the Company, even if there is a slight delay in achieving those results,” he said.

Looking ahead, Gentex provided guidance for fiscal year 2024, projecting revenue to be between $2.4 billion and $2.5 billion, which is slightly below the analyst consensus of $2.486 billion. For fiscal year 2025, the company forecasts revenue of $2.6 billion to $2.7 billion, compared to the consensus estimate of $2.682 billion.

The company’s gross profit margin for the second quarter stood at 32.9%, a slight decrease from 33.1% in the previous year. Operating expenses rose by 12% to $73.7 million, driven by staffing and engineering-related professional fees. Net income also saw a decline, dropping to $86.0 million from $109.2 million year-over-year (YoY).

In light of the recent performance and market conditions, Gentex remains committed to its capital allocation strategy, which includes continuing its share repurchase program. The company repurchased 1.4 million shares of its common stock at an average price of $34.43 per share during the second quarter.

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