"As is widely known from recent news headlines, the European markets are increasingly uncertain and are becoming more volatile. As a result, we have more downside risk for any products that we're shipping to customers in Europe," said Gentex Chairman and CEO Fred Bauer.
ZEELAND, MI – Gentex Corp. today reported flat sales and reduced profits as a result of “challenging and deteriorating market conditions” during its recently completed third quarter.
Gentex, which makes automatic dimming rearview mirrors and camera-based lighting and driver safety systems for the automotive industry, also announced it plans to buy back 4 million shares of stock after buying back 2 million shares in the third quarter.
Sales in the third quarter were down slightly to $268.2 million compared to $269.5 million in the third quarter of 2011. Sales were up 10 percent for the first nine months of 2012 compared to the first nine months of 2011.
Profits were down 4 percent to $41.9 million compared to $43.4 million in the third quarter of 2011. Profits were up 4 percent for the first nine months of 2012.
Earnings per share were 29 cents in the third quarter compared to 30 cents per share in the third quarter of 2011.
Company officials forecast flat sales growth in the fourth quarter due to uncertainty in the European automotive market.
"As is widely known from recent news headlines, the European markets are increasingly uncertain and are becoming more volatile. As a result, we have more downside risk for any products that we're shipping to customers in Europe," said Gentex Chairman and CEO Fred Bauer.
"In the 2011 calendar year, approximately 45 percent of our total mirror unit shipments were to Europe, with a high percentage of high-value, advanced-feature products. European economic factors could have a negative impact on that product mix."
Bauer said the company has made progress in cost cutting programs, improving its gross profit margin.
"We are also pleased to illustrate the positive efficiencies we are experiencing within our operating expenses. Our engineering, research and development expenses declined primarily due to a concerted effort to reduce costs related to outside contract engineering development services as a result of better utilization of our own employees' talent.”
The stock buyback program is a response to the company’s low share price and a vote of confidence in the company’s future, Bauer said.
"We believe that the long-term fundamentals of Gentex continue to be strong, and that the Company's current share price does not necessarily reflect the Company's prospects for the future," said Bauer.
"The Company continues to have strong cash flow, and believes that share repurchases and dividends are an effective and efficient way to return cash to our shareholders, depending upon macroeconomic issues and trends."
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