Gentex Reports Second Quarter 2016 Financial Results

ZEELAND, MI--(Marketwired - Jul 22, 2016) - Gentex Corporation ( NASDAQ : GNTX ) the Zeeland, Michigan-based manufacturer of automotive automatic-dimming rearview mirrors, automotive electronics, dimmable aircraft windows, and fire protection products, today reported financial results for the three months ended June 30, 2016.

2nd Quarter 2016 Quarter over Quarter Highlights

• Revenue growth of 12%
• Gross Margin improved to 39.4% from 38.4%
• Income from Operations increased by 19%
• Net Income increased by 16%
• Earnings per Diluted Share increased by 20% to $0.30 per diluted share
• 3.1 million shares repurchased during the quarter

For the second quarter of 2016, the Company is pleased to report net sales of $423.8 million, which was an increase of 12% compared to net sales of $379.3 million in the second quarter of 2015. The 12% sales growth was driven by a 13% quarter over quarter increase in auto-dimming mirror unit shipments, while overall automotive light vehicle production in the second quarter of 2016 increased 3% when compared with the same quarter in 2015.

The gross profit margin in the second quarter of 2016 was 39.4%, compared with a gross profit margin of 38.4% in the second quarter of 2015. The quarter over quarter increase in the gross profit margin was driven by purchasing cost reductions and favorable product mix, which more than offset annual customer price reductions.

Income from operations for the second quarter of 2016 increased 19% to $128.7 million when compared to income from operations of $108.1 million for the second quarter of 2015.

Other income decreased to a loss of $1.1 million in the second quarter of 2016 compared with other income of $2.3 million in the second quarter of 2015, primarily due to a reduction in realized gains on the sale of equity investments during the most recently completed quarter as compared to the same quarter in the prior year.

Net income for the second quarter of 2016 increased 16% to $86.5 million compared with net income of $74.6 million in the second quarter of 2015. Management believes the second quarter of 2016 is representative of the Company's stated strategy of delivering sales growth through the income statement to the bottom line, by maintaining financial discipline, while continuing to invest in the future of the Company.

Earnings per diluted share in the second quarter of 2016 increased 20% to $0.30, compared with earnings per diluted share of $0.25 in the second quarter of 2015. The increase was primarily driven by increases in net income, but were assisted by the Company continuing to execute a consistent capital allocation strategy, which resulted in a lower diluted share count on a quarter over quarter basis.

Automotive net sales in the second quarter of 2016 were $414.4 million, an increase of 12% compared with automotive net sales of $370.5 million in the second quarter of 2015. As noted previously, this increase was driven by a 13% increase in auto-dimming mirror unit shipments quarter over quarter.

Other net sales in the second quarter of 2016, which includes dimmable aircraft windows and fire protection products, were $9.4 million, an increase of 7% compared with $8.8 million in the second quarter of 2015, primarily due to increases in dimmable aircraft window shipments.

Share Repurchases During the second quarter of 2016, the Company repurchased 3.1 million shares of its common stock. As of June 30, 2016, the Company has approximately 3.3 million shares remaining available for repurchase in the previously announced share repurchase plan. The Company intends to continue to repurchase additional shares of its common stock in the future depending on macroeconomic issues, market trends and other factors that the Company deems appropriate.

Future Estimates The Company's forecasts for light vehicle production for the second half of calendar year 2016 are based on the IHS Automotive July 2016 forecast for light vehicle production in North America, Europe, Japan and Korea.

Light Vehicle Production (per IHS Automotive July light vehicle production forecast)
(in Millions)
Region	2H 2016		2H 2015		% Change			Calendar Year 2016		Calendar Year 2015		% Change
North America	8.95		8.75		2	%		18.04		17.54		3	%
Europe	10.11		9.56		6	%		21.53		20.54		5	%
Japan and Korea	6.59		6.58		-	%		13.03		13.19		(1	)%
Total Light Vehicle Production	25.65		24.89		3	%		52.60		51.27		3	%

Based on the July 2016 IHS production forecast, current forecasted product mix and expense growth estimates, the Company has updated certain of its 2016 guidance. The Company is making no changes to its previous estimates for calendar year 2017.

2016 Calendar Year Guidance
		Annual Guidance
Item		As of 4/22/16		Updated as of 7/22/16
Net Sales		$1.64 - $1.72 billion		$1.68 - $1.72 billion
Gross Margin		38.5% - 39.5%		39.0% - 39.5%
Operating Expenses (E,R&D and S,G&A)		$152 - $160 million		$150 - $158 million
Tax Rate		31.5% - 32.5%		No change
Capital Expenditures		$115 - $130 million		No change
Depreciation & Amortization		$90 - $100 million		No change

Safe Harbor for Forward-Looking Statements This news release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements contained in this communication that are not purely historical are forward-looking statements. Forward-looking statements give the Company's current expectations or forecasts of future events. These forward-looking statements generally can be identified by the use of words such as "anticipate", "believe", "could", "estimate", "expect", "forecast", "goal", "hope", "may", "plan", "project", "will", and variations of such words and similar expressions. Such statements are subject to risks and uncertainties that are often difficult to predict and beyond the Company's control, and could cause the Company's results to differ materially from those described. These risks and uncertainties include, without limitation: changes in general industry or regional market conditions; changes in consumer and customer preferences for our products; our ability to be awarded new business; continued uncertainty in pricing negotiations with customers; loss of business from increased competition; customer bankruptcies or divestiture of customer brands; fluctuation in vehicle production schedules; changes in product mix; raw material shortages; higher raw material, fuel, energy and other costs; unfavorable fluctuations in currencies or interest rates in the regions in which we operate; costs or difficulties related to the integration of any new or acquired technologies and businesses; changes in regulatory conditions; warranty and recall claims and other litigation and customer reactions thereto; possible adverse results of pending or future litigation or infringement claims; and negative impact of any governmental investigations and associated litigations including securities litigations relating to the conduct of our business. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law or the rules of the NASDAQ Global Select Market. Accordingly, any forward-looking statement should be read in conjunction with the additional information about risks and uncertainties identified under the heading "Risk Factors" in the Company's latest Form 10-K and Form 10-Q filed with the SEC.

Second Quarter Conference Call A conference call related to this news release will be simulcast live on the Internet beginning at 9:30 a.m. EDT today, July 22, 2016. The dial-in number to participate in the call is 888-339-3503 , passcode 3491269 . Participants may listen to the call via audio streaming at www.gentex.com or by visiting http://edge.media-server.com/m/p/ox2s3zqj . A webcast replay will be available approximately 24 hours after the conclusion of the call at http://ir.gentex.com/WebcastArchives .

About The Company Founded in 1974, Gentex Corporation ( NASDAQ : GNTX ) is a supplier of automatic-dimming rearview mirrors and electronics to the automotive industry, dimmable aircraft windows for aviation markets, and fire protection products to the fire protection market. Visit the Company's web site at www.gentex.com .

GENTEX CORPORATION
AUTO-DIMMING MIRROR SHIPMENTS
(Thousands)
		Three Months Ended June 30,							Six Months Ended June 30,
		2016		2015		%  Change			2016		2015		%  Change
North American Interior Mirrors		2,316		2,184		6	%		4,576		4,208		9	%
North American Exterior Mirrors		929		851		9	%		1,793		1,591		13	%
	Total North American Mirror Units	3,245		3,035		7	%		6,370		5,800		10	%
International Interior Mirrors		4,392		3,642		21	%		8,512		7,234		18	%
International Exterior Mirrors		1,629		1,497		9	%		3,212		3,073		5	%
	Total International Mirror Units	6,021		5,139		17	%		11,724		10,307		14	%
Total Interior Mirrors		6,708		5,826		15	%		13,089		11,442		14	%
Total Exterior Mirrors		2,559		2,348		9	%		5,005		4,664		7	%
	Total Auto-Dimming Mirror Units	9,267		8,174		13	%		18,094		16,107		12	%
Note: Percent change and amounts may not total due to rounding.

GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
			(Unaudited)							(Unaudited)
			Three Months Ended June 30,							Six Months Ended June 30,
			2016				2015			2016				2015
Net Sales			$	423,800,778			$	379,258,477		$	829,368,564			$	748,195,932
	Cost of Goods Sold			257,028,219				233,715,046			503,905,217				459,560,092
		Gross profit		166,772,559				145,543,431			325,463,347				288,635,840
	Engineering, Research & Development			23,071,788				22,315,244			46,162,997				43,902,795
	Selling, General & Administrative			14,955,050				15,095,357			29,705,639				28,891,709
		Operating Expenses		38,026,838				37,410,601			75,868,636				72,794,504
	Income from operations			128,745,721				108,132,830			249,594,711				215,841,336
	Other Income (Expense)			(1,137,011	)			2,317,343			(2,416,389	)			3,026,727
Income before Income Taxes				127,608,710				110,450,173			247,178,322				218,868,063
Provision for Income Taxes				41,123,468				35,891,736			80,413,086				67,126,185
Net Income			$	86,485,242			$	74,558,437		$	166,765,236			$	151,741,878
Earnings Per Share
	Basic		$	0.30			$	0.25		$	0.58			$	0.52
	Diluted		$	0.30			$	0.25		$	0.57			$	0.51
Weighted Average Shares
	Basic			288,803,045				293,958,258			288,943,030				294,461,499
	Diluted			291,463,883				297,462,102			291,372,725				297,990,032
Cash Dividends Declared per Share			$	0.090			$	0.085		$	0.175			$	0.17

GENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
		(Unaudited) June 30, 2016			December 31, 2015
ASSETS
Cash and Cash Equivalents		$	499,493,964		$	551,557,527
Short-Term Investments			145,335,532			4,547,355
Accounts Receivable, net			219,442,950			195,969,400
Inventories			176,226,597			174,695,411
Other Current Assets			15,104,858			57,239,099
Total Current Assets			1,055,603,901			984,008,792
Plant and Equipment - Net			431,695,399			412,720,270
Goodwill			307,365,845			307,365,845
Long-Term Investments			73,457,358			95,156,539
Intangible Assets			317,925,000			327,575,000
Patents and Other Assets			21,211,703			21,846,482
Total Other Assets			719,959,906			751,943,866
Total Assets		$	2,207,259,206		$	2,148,672,928
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities		$	169,083,833		$	131,006,546
Long-Term Debt			206,875,000			225,625,000
Deferred Income Taxes			46,377,195			69,524,621
Shareholders' Investment			1,784,923,178			1,722,516,761
Total Liabilities & Shareholders' Investment		$	2,207,259,206		$	2,148,672,928