Gentex says Q4 net income rose 2.3% while revenue improved 18%

Automotive mirror supplier Gentex Corp. said its fourth-quarter net income rose 2.3 percent to $86.2 million as customers improved production from previous quarters.

The company, which primarily produces automatic-dimming rearview mirrors and camera-based driver-assistance systems, on Friday said net sales rose 18 percent to $493.6 million.

Gentex is typically one of the first major auto suppliers to report its quarterly results. Its earnings are seen as a predictor for other suppliers' performances.

Shares in Gentex slid 2.8 percent to close Friday at $28.38.

Other fourth-quarter net sales, including dimmable aircraft windows and fire protection products, climbed 5 percent to $10.7 million.

The Zeeland, Mich., company said gross margin fell 3.1 percentage points to 31.2 percent. Gentex said the decrease was primarily caused by raw material costs, customer order volatility, an unfavorable product mix and increased labor costs.

"Heading into 2023, we continue to see strong demand for our products, which should result in record revenue performance for the year and will assist our ongoing efforts focused on margin recovery throughout 2023 and 2024," Gentex CEO Steve Downing said on a call with analysts and journalists.

Operating expenses rose 7 percent to $59.7 million. Higher labor costs have been driven by overtime costs, which the company is combatting by working to increase staffing, Downing said.

Forecasting remains a challenge due to customer volatility, said Neil Boehm, Gentex's vice president of engineering.

"The company continues to take a measured approach to inventory management as supply chain constraints [are] starting to lessen," Boehm said. "The company is looking at certain areas to reduce inventory levels."

For the year, Gentex said net income slipped 12 percent to $360.8 million. The company posted record annual sales of $1.92 billion, up 11 percent from a year ago. Light-vehicle production increased by 3 percent in the company's primary markets of North America, Europe, Japan and Korea.

Gentex ranks No. 88 on the Automotive News list of the top 100 global suppliers, with worldwide parts sales to automakers of $1.69 billion in 2021.