Gentex Corp. (NASDAQ:GNTX) Q4 2014 Earnings Conference Call - Final Transcript

Jan 28, 2015 • 10:30 am ET

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Gentex Corp. (NASDAQ:GNTX) Q4 2014 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good morning, ladies and gentlemen. Welcome to the Gentex Fourth Quarter Earnings Conference Call. Today's conference is being recorded. I would now like to turn the meeting over to Mr. Mark Newton, Senior Vice President. Please go ahead, Mr. Newton.

Executive
Mark Newton

Thank you very much. Good morning and welcome to the Gentex 2014 Fourth Quarter and 2014 Calendar Year Earnings Release Conference Call. Also here is Steve Downing, Chief Financial Officer and Kevin Nash, Chief Accounting Officer. This call is live on the Internet by way of an icon on the Gentex website at www.gentex.com.

All contents of this conference call are the property of Gentex Corporation and may not be copied, published, reproduced, rebroadcast, retransmitted, transcribed or otherwise redistributed. Gentex Corporation will hold responsible and liable any party for any damages incurred by Gentex Corporation with respect to any unauthorized use of the contents of this conference call.

(Forward-Looking Cautionary Statements)

Now to Steve Downing for the financial summary.

Executive
Steven Downing

Thank you, Mark. For the fourth quarter of 2014, the company reported net sales of $350.4 million, which were up 7% compared to net sales of $326.8 million for the fourth quarter of 2013. The sales level on the fourth quarter was behind our beginning of the quarter forecast primarily due to end-of-year inventory adjustments at certain Tier 1 customers that is not expected to continue.

For calendar year 2014, the company's net sales increased 17% to $1.38 billion, compared to $1.17 billion for calendar year 2013. Gross profit margin in the fourth quarter of 2014 was 38.4%, compared with the gross profit margin of 39.4% in the fourth quarter of 2013, primarily due to higher than expected manufacturing costs related to new technology launches.

The company's inability to leverage fix overhead costs because of the lower than anticipated sales levels and annual customer price reductions, which were not fully offset by favorable purchasing cost reductions and improvements in product mix.

The gross profit margin for calendar year 2014 was 39.2%, compared with a gross profit margin of 36.8% for calendar year 2013, primarily due to favorable shifts in product mix, the impact of the HomeLink acquisition and purchasing cost reductions, which were partially offset by annual customer price reductions.

Net income for the fourth quarter of 2014 was $71 million, up 2%, compared with net income $69.9 million in the fourth quarter of 2013. Net income in calendar year 2014 was $288.6 million, up 29% compared with net income of $222.9 million in calendar year 2013. After adjusting for the stock split, earnings per diluted share in the fourth quarter of 2014 were $0.24, which is unchanged from the fourth quarter of 2013.

Earnings per diluted share were $0.98 for calendar year 2014, compared with $0.77 for calendar year 2013. Automotive electrochromic mirrors unit shipments in the fourth quarter of 2014 increased 9% compared with the fourth quarter of 2013, primarily due to increased unit shipments of both the company's interior and exterior auto-dimming rear-view mirrors in all of the company