Gentex Management Discusses Q2 2012 Results - Earnings Call Transcript

Gentex Corporation (GNTX)

Q2 2012 Earnings Call

July 24, 2012 10:30 AM ET

Executives

Connie Hamblin – VP, IR

Steve Dykman – CFO

Mark Newton – SVP

Analysts

David Leiker – Robert W. Baird

Ryan Brinkman – JP Morgan

Steve Dyer – Craig-Hallum Capital Group

John Murphy – Bank of America

Rich Kwas – Wells Fargo

Jason Rogers – Great Lakes Review

Adam Brooks – Sidoti & Company

Brett Hoselton – KeyBanc Capital Markets

Elaine Kwei – Jefferies

Presentation

Operator

Good morning, ladies and gentlemen, welcome to the Gentex Second Quarter 2012 Financial Results Conference Call. Today’s call is being recorded. I would now like to turn the meeting over to Ms. Connie Hamblin, Vice President of Investor Relations. Please go ahead Ms. Hamblin.

Connie Hamblin

Thank you. Good morning everyone. Thank you for joining us for the second quarter conference call. On the call today with me are Steve Dykman, our Chief Financial Officer; and Mark Newton, our Senior Vice President. I will go through a few routine items and then turn the call over to Steve.

This call is being broadcast live on the internet via an icon on the homepage at www.gentex.com. Auto playback of this conference call is also available on the website. All contents of Gentex Corporation’s conference calls are the property of Gentex Corporation. It 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 notwithstanding this warning, 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 transcript. Gentex Corporation will hold responsible or liable any party for any damages incurred by Gentex with respect to any such unauthorized use. Your participation implies consent to our taping and to the foregoing terms. Please drop off the line now if you do not agree with these terms.

Before we 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 in the second quarter and first six months and beyond that are based on preliminary data and are subject to risk and uncertainties. These forward-looking statements are based on management’s belief, assumptions, current expectation, estimates and projections about the global automotive industry, the economy, the ability to control and leverage fixed manufacturing overhead costs, unit shipment 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 historic facts or declarations that are or could be considered to be forward-looking statements and include terms such as anticipate, outlook, expectations, estimates, project, 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 in these 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 within the news release that is posted on our website.

At this time, I will turn the call over to Steve Dykman.

Steve Dykman

Good morning and welcome to our second quarter 2012 conference call. We are pleased to report another good quarter with a 15% increase in net sales. As we will review below, you’ll note that the company’s operating expenses are more in line with historic growth rates, however our gross profit margin declined in the second quarter and we are working to stabilize the margin going forward.

I’ll start with net sales. The company reported recorded net sales in the second quarter of 2012 of $280.3 million, a 15% increase compared with net sales of $243 million in the second quarter of 2011. Record net sales of $571 million for the first six months of 2012, a 16% increase compared to with net sales of $493.9 million in the first six months of 2011. We reported operating income in the second quarter of $57.5 million, an 8% increase compared with operating income of $53.2 million in the second quarter of 2011.

Operating income of $123 million for the first six months of 2012, a 9% increase compared with net sales of $113.3 million in the first six months of 2011. We reported second quarter 2012 net income of $40.8 million, a 6% increase compared with net income of $38.5 million in the second quarter of 2011. Net income of $87.1 million for the first six months of 2012 an 8% increase compared with net income of $80.8 million in the first six months of 2011.

We also reported second quarter 2012 earnings per diluted share of $0.28 compared with $0.27 per share in the second quarter of 2011. Earnings per diluted share of $0.60 for the first six months of 2012 compared with earnings per diluted share of $0.56 for the first six months of 2011. Next we’ll look at automotive net sales and auto-dimming mirror unit shipments. For the second quarter ended June 30, 2012 the total auto-dimming mirror units increased by 19% in the second quarter of 2012 compared with the second quarter last year.

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