Gentex Corporation (GNTX - Free Report) reported second-quarter 2020 earnings per share of 2 cents, missing the Zacks Consensus Estimate of 12 cents. The bottom line also declined from the year-ago earnings of 42 cents per share. Coronavirus-induced shutdowns in various parts of Asia, Europe and North America dented revenues and earnings of the automatic-dimming rearview-mirror specialist in second-quarter 2020.
During the quarter under review, total revenues came in at $229.93 million, which missed the Zacks Consensus Estimate of $262 million. Moreover, the top line fell from the year-ago figure of $468.7 million.
Key Takeaways
The company recorded adjusted gross margin of 20.8% in the quarter under review, down from the year-ago quarter’s 37.7% due to lost revenues amid the coronavirus pandemic, manufacturing inefficiencies and annual customer price reductions.
In the quarter, auto-dimming mirror shipments in the North America market plunged 65% from the prior-year quarter to 1.24 million units. In the International market, the same fell 45% from the prior-year quarter to 4.02 million units. Total shipments declined 51% year over year to 5.26 million units, as global light vehicle production dwindled 45% in the second quarter of 2020.
Operating expenses increased 4.2% year over year to $50.7 million in second-quarter 2020. SG&A expenses rose to $21.7 million from $20.2 million in the year-ago quarter. Engineering and R&D expenses increased to $28.9 million in second-quarter 2020 from $28.3 million recorded in the year-ago period.
During the quarter under review, the company tapped brakes on the share repurchase program in a bid to preserve cash. As of Jun 30, 2020, Gentex had around 13 million shares remaining under the buyback program. Nonetheless, it continues to pay dividends of 12 cents a share. Notably, the company had cash and cash equivalents of $343.8 million as of Jun 30, 2020.
Forecasts
Things are not looking up for the auto sector amid the COVID-19 pandemic, as is evident from depressed demand for vehicles amid weak consumer confidence. IHS Markit expects total light vehicle production to decline 20% year over year in 2020 and 7% for the second half of the year.
Gentex has provided guidance for the second half of 2020. The company envisions net sales in the band of $865-$915 million. Gross margin is anticipated in the range of 36-37%. Capex and operating expenses are estimated within $30-$40 million and $88-$93 million, respectively. Amid coronavirus-led uncertainty, Gentex is withdrawing revenue forecast for 2021.
Zacks Rank & Key Picks
Gentex currently carries a Zacks Rank #3 (Hold). Some better-ranked players from the same space include BRP Inc. (DOOO - Free Report) , Garrett Motion Inc. (GTX - Free Report) and Strattec Security Corporation (STRT - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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Gentex Corporation (GNTX - Free Report) reported second-quarter 2020 earnings per share of 2 cents, missing the Zacks Consensus Estimate of 12 cents. The bottom line also declined from the year-ago earnings of 42 cents per share. Coronavirus-induced shutdowns in various parts of Asia, Europe and North America dented revenues and earnings of the automatic-dimming rearview-mirror specialist in second-quarter 2020.
During the quarter under review, total revenues came in at $229.93 million, which missed the Zacks Consensus Estimate of $262 million. Moreover, the top line fell from the year-ago figure of $468.7 million.
Key Takeaways
The company recorded adjusted gross margin of 20.8% in the quarter under review, down from the year-ago quarter’s 37.7% due to lost revenues amid the coronavirus pandemic, manufacturing inefficiencies and annual customer price reductions.
In the quarter, auto-dimming mirror shipments in the North America market plunged 65% from the prior-year quarter to 1.24 million units. In the International market, the same fell 45% from the prior-year quarter to 4.02 million units. Total shipments declined 51% year over year to 5.26 million units, as global light vehicle production dwindled 45% in the second quarter of 2020.
Operating expenses increased 4.2% year over year to $50.7 million in second-quarter 2020. SG&A expenses rose to $21.7 million from $20.2 million in the year-ago quarter. Engineering and R&D expenses increased to $28.9 million in second-quarter 2020 from $28.3 million recorded in the year-ago period.
During the quarter under review, the company tapped brakes on the share repurchase program in a bid to preserve cash. As of Jun 30, 2020, Gentex had around 13 million shares remaining under the buyback program. Nonetheless, it continues to pay dividends of 12 cents a share. Notably, the company had cash and cash equivalents of $343.8 million as of Jun 30, 2020.
Forecasts
Things are not looking up for the auto sector amid the COVID-19 pandemic, as is evident from depressed demand for vehicles amid weak consumer confidence. IHS Markit expects total light vehicle production to decline 20% year over year in 2020 and 7% for the second half of the year.
Gentex has provided guidance for the second half of 2020. The company envisions net sales in the band of $865-$915 million. Gross margin is anticipated in the range of 36-37%. Capex and operating expenses are estimated within $30-$40 million and $88-$93 million, respectively. Amid coronavirus-led uncertainty, Gentex is withdrawing revenue forecast for 2021.
Zacks Rank & Key Picks
Gentex currently carries a Zacks Rank #3 (Hold). Some better-ranked players from the same space include BRP Inc. (DOOO - Free Report) , Garrett Motion Inc. (GTX - Free Report) and Strattec Security Corporation (STRT - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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