Gentex Management Discusses Q1 2012 Results - Earnings Call Transcript

Gentex Corporation (GNTX)

Q1 2012 Earnings Call

April 19, 2012 10:30 a.m. ET

Executives

Steve Dykman – VP, Finance and CFO

Mark Newton - SVP

Analysts

David Leiker - Robert W. Baird

Steve Dyer - Craig-Hallum Capital Group

John Murphy - Bank of America, Merrill Lynch

Adam Brooks - Sidoti & Company, LLC

Brett Hoselton - KeyBanc Capital Markets

David Ling - Wells Fargo Securities

Greg Halter - LJR Great Lakes Review

H. Peter Nesvold - Jefferies & Company, Inc.

Presentation

Operator

Good morning, ladies and gentlemen. Welcome to the Gentex first quarter 2012 financial results conference call. Just a reminder, today's conference is being recorded. I would now like to turn the meeting over to Mr. Steve Dykman, Vice President of Finance and Chief Financial Officer. Please go ahead, Mr. Dykman.

Steve Dykman

Good morning and welcome to our first quarter 2012 conference call. I will be coordinating the call this morning as Connie Hamblin is out sick with bronchitis. Joining me on the call this morning is, in Connie’s absence, is Mark Newton, our Senior Vice President.

I will first cover a few housekeeping items and then I will make some remarks with respect to our first quarter financial results.

This call is being broadcast live on the Internet via an icon on the homepage of Gentex Corporation's website at www.gentex.com. The auto playback of the conference call is available on the website as well. All contents of Gentex Corporation's conference calls are the property of Gentex Corporation and may not be copied, published, reproduced, rebroadcast, retransmitted or otherwise redistributed without the express written consent of Gentex Corporation. Gentex Corporation alone holds such rights.

While we understand that there may be companies that transcribe and redistribute our conference calls, Gentex Corporation provides no authorization to do so and expressly disclaims any responsibility for any unauthorized use of the content. We advise that you should not rely on the content of any unauthorized transcript, as Gentex Corporation will not be held liable for the content of any such transcripts.

Gentex Corporation will hold responsible and liable any party for any damages incurred by Gentex Corporation with respect to any such unauthorized use. Your participation implies consent to our taping and to the foregoing terms. Please drop off the line if you do not agree with these terms.

Before I begin, I'd like to remind you of our forward-looking statements. Gentex Corporation will make forward-looking statements in this presentation related to its financial results for the first quarter and calendar year 2012 and beyond that are based on preliminary data and are subject to risks and uncertainties.

These forward-looking statements are based on management's beliefs, assumptions, current expectations, estimates and projections about the global automotive industry, the economy, the ability to control and leverage fixed manufacturing overhead costs, unit shipments and net sales growth, product mix, the ability to control ER&D and SG&A expenses, gross margins, and the company itself.

All statements other than statements of historical fact are declarations that are or could be considered to be forward-looking statements and include such terms as anticipate, outlook, expectations, estimates, projects or forecast and variations of such words and similar expressions.

These statements do not guarantee future performance and involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, expense, likelihood and degree of occurrence, and actual results may differ materially from those forward-looking statements.

The company undertakes no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events or otherwise. We urge you to review the full Safe Harbor statement that is contained in the news release that is posted on our website.

At this time, I will review the quarterly results and I am pleased to report an all-time record quarter in terms of net sales, operating income and net income despite a volatile automotive environment. The company reported record first quarter 2012 net sales of $290.7 million, a 16% increase compared with net sales of $250.9 million in the first quarter of 2011.

We also reported first quarter 2012 operating income of $65.5 million, a 9% increase compared with operating income of $60.1 million in the first quarter of 2011. We reported record first quarter 2012 net income of $46.3 million, a 9% increase compared with net income of $42.3 million in the first quarter of 2011. We reported record first quarter 2012 earnings per diluted share of $0.32 compared with $0.29 per share in the first quarter of 2011.

Next, we’ll look at automotive net sales and auto-dimming mirror unit shipments. For the first quarter ended March 31, total auto-dimming mirror unit shipments increased by 16% in the first quarter of 2011 compared with the first quarter last year. Automotive net sales increased by 16% from $246.3 million in the first quarter of 2011 to $285.7 million in the first quarter of 2012.

Auto-dimming mirror unit shipments increased by 18% in North America in the first quarter of 2012, primarily as a result of increased mirror unit shipments to the Detroit Three as well as Japanese and European transplant automakers. North American light vehicle production increased by 16% in the first quarter of 2012 compared with the same prior-year period.

Auto-dimming mirror unit shipments to offshore customers increased by 14% in the first quarter of 2012 compared with the same quarter last year. And the increase in unit shipments was primarily due to increased mirror unit shipments to certain European automakers. Light vehicle production in Europe decreased by approximately 4% in the first quarter of 2012, and increased by 33% in Japan and Korea in the first quarter of 2012, compared with the same quarter last year.

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