Gentex Earnings: Higher Volume Finally Returns and Boosts Earnings

Gentex’s management has long said it needed more volume as the chip shortage ravaged production, and second-quarter results show why. Mirror unit shipments rose 20.8% year over year to a quarterly record of 12.9 million, with double-digit growth for both interior and exterior mirrors. This led to revenue growing 25.9% to a record $583.5 million, which beat Refinitiv consensus, as did diluted EPS, which rose 51.6% to $0.47 versus $0.41 consensus. We are raising our fair value estimate to $38 per share from $35 to reflect higher than previously modeled global light-vehicle production and higher content per vehicle, given that 2023 is progressing above our prior expectation, as well as management raising its guidance. Gentex now expects 2023 revenue of $2.2 billion-$2.3 billion, up from about $2.2 billion, while its gross margin outlook is now 32.5%-33%, up from 32%-33%. 2024 revenue guidance is now $2.45 billion-$2.55 billion, about an 11% increase at the midpoint versus 2023. Previous 2024 guidance was for about a 10% increase from $2.2 billion.