Gentex Corp.'s fourth-quarter net income surged 47 percent to $130.5 million, powered by higher automotive mirror shipments and U.S. tax cuts.
The company said its effective tax rate fell to 5.6 percent from 31 percent during the fourth quarter of 2017, reflecting the passage of U.S. tax reform late in the year.
The Zeeland, Mich., supplier of mirrors said revenue rose 9 percent to $459.6 million over the fourth quarter of 2016, driven by a 13 percent rise in interior and exterior mirror shipments to 10 million units.
During the period, mirror shipments outside North America totaled 6.9 million, and mirror deliveries in North America totaled 3 million, Gentex said.
Gentex said its gross profit margin fell 1.1 percentage points to 39.2 percent.
The decline in gross profit margin reflected annual customer price reductions that were not fully offset with cuts in purchasing outlays. The quarter-over-quarter comparisons also were negatively impacted by an unusually strong advanced feature mix in the fourth quarter of 2016 "related to certain, previously disclosed, supply constraints experienced at the end of 2016 that negatively impacted base mirror shipments," the company said.
Gentex CEO Steve Downing said the company's gross margin continued to improve during the second half of the year, "despite the fact that we have been battling against difficult comparisons in product mix and our typical annual price reductions."
In 2016, "The mix was disproportionately strong primarily because of a supply shortage, we couldn't ship all of our base inside auto-dimming mirrors that we had wanted to ship at the end of '16," Downing said during a conference call Friday with reporters. "Obviously, that drove [the] mix to improve, but that was an artificial improvement at the end of '16. It was higher than expected and higher than sustainable."
For full-year 2017, Gentex reported net income jumped 17 percent to $406.8 million. Total net sales increased 7 percent to $1.79 billion.
Gentex shipped 39 million mirror units last year compared with 36 million in 2016.
For 2017, the company's gross profit margin fell to 38.7 percent compared with 39.8 percent in 2016, reflecting price reductions, higher fixed overhead costs and negative product mix, which was not completely offset by purchasing outlays.