Second-quarter profits rose for mirror supplier Gentex Corp. as a result of improved light-vehicle production and fewer supply chain disruptions.
The Zeeland, Mich., company said in a call with investors Friday that net income climbed 51 percent to $109.2 million. The surge is partially magnified by the decrease in profits Gentex experienced in the second quarter of 2022 as a result of component shortages.
“Last year, when we started launching with customers like Hyundai, there was a direction and a want of having a much higher take rate than what we could support due to component availability,” Chief Technology Officer Neil Boehm said on the call. “As component availability improved, we’ve been able to actually produce the parts that [customers] wanted and are actually able to catch up to it.”
Gentex’s earnings are generally considered a quarterly predictor for other suppliers’ results. The supplier produces automatic-dimming rearview mirrors and camera-based driver-assistance systems.
Net sales grew 26 percent to $583.5 million, with automotive net sales just ahead at a 27 percent increase. Sales outperformed light-vehicle production in the company’s primary markets of North America, Europe, Japan and South Korea by 9 percent.
Gentex shares were up 3.2 percent to $32.76 in midday trading Friday. The company said it repurchased 900,000 shares of its common stock at an average price of $27.28 per share in the second quarter.
The supplier’s operating costs grew 5 percent to $65.8 million, largely as a result of staffing and engineering related professional fees. The company expects operating costs to continue to climb throughout as resources are directed to new product R&D and other initiatives.
“Over the last two years, we’ve incurred significant cost increases due to the reactionary mode we needed to be in,” Boehm said. “But we’re now turning our focus on the designs, the components and the suppliers of the components in an effort to drive down our bill of material costs.”
Gentex’s gross margin rose 1.1 percentage point to 33.1 percent. The increase was a result of manufacturing improvements, cost recoveries from automakers, and improvements in freight-related costs, but gains were offset by increased raw material and labor costs. The company said it had many new hires over the past six months, which drove up labor expenses.
Gentex ranks No. 98 on Automotive News’ list of the top 100 global suppliers, with worldwide parts sales to automakers of $1.88 billion in 2022.