Gentex Corp.'s second-quarter net income was flat at $109 million and shares in the supplier rose 9.6 percent Friday to finish trading at $25.82.
Revenue increased 3 percent to $468.7 million over the second quarter of 2018, Gentex said, noting it improved its results despite an 8 percent drop in global auto production and "overly optimistic" auto industry forecasts. Margins were dinged by tariffs implemented in July 2018, Gentex said. The company said operating expenses rose 5 percent to $48.6 million.
"We continue to manage our operating costs carefully and with discipline, while maintaining our focus on future growth," the second-quarter report said.
The company typically is one of the first auto suppliers to report quarterly results, and many analysts view it as a bellwether for the segment.
Gentex shipped 10.8 million auto-dimming mirrors in the second quarter, up 2 percent from 2018. Deliveries of interior mirrors increased 1 percent to 7.5 million.
North American shipments improved 12 percent to 3.5 million, while international shipments fell 2 percent to 7.3 million.
Gentex's effective tax rate was 16.4 percent, up from 15.5 percent during the second quarter of 2018, primarily driven by a decrease in discrete tax benefits related to stock-based compensation.
The company's shares rose 8.9 percent to $25.67 in midday Friday trading. The earnings results topped Wall Street forecasts by 2 cents per share. A Baird analyst called the second-quarter performance "incrementally positive."
Gentex said its 37.7 percent gross profit margin in the second quarter increased significantly when compared with its 36.2 percent gross margin in the first quarter of 2019. The company said its second-quarter gross profit margin was negatively impacted by approximately 60 basis points because of incremental tariffs that became effective at various times starting in July 2018.
"Our sequential gross margin expansion in 2019 was due to positive product mix shifts, which include full display mirror and domestic exterior-mirror growth, better than expected purchasing cost reductions in the first half of calendar year 2019, cost discipline throughout the company, and success in mitigating some of the escalating costs related to tariffs that have been impacting the Company since July 2018," CEO Steve Downing said in a statement.
Net sales for the supplier's core automotive business unit remained relatively stagnant for the second quarter, increasing 3 percent to $456.6 million.
Gentex repurchased 3.1 million shares of its common stock, leaving 26 million shares available for repurchase pursuant to the previously announced share repurchase plan, Gentex said.
The supplier raised the bottom range and narrowed its full-year revenue guidance to be between $1.87 billion and $1.90 billion.
The company ranks No. 90 on the Automotive News list of the top 100 global suppliers with worldwide part sales to automakers of $1.79 billion in its 2018 fiscal year.