Gentex Corp.'s first-quarter net income fell 6 percent to $104.3 million, but its shares rose more than 4 percent in Wednesday morning trading.
The Zeeland, Mich., supplier of automotive mirrors said the setback in first-quarter net income is primarily a result of higher operating expenses and an increased tax rate on a quarter-over-quarter basis.
Revenue increased 1 percent to $468.6 million over the first quarter of 2019. Gentex said the growth was in contrast to global light-vehicle production that declined about 7 percent in the first quarter of 2019 when compared to the first quarter of the previous year.
The company typically is one of the first auto suppliers to report its quarterly results, and many analysts view it as a bellwether for the entire segment.
Gentex shipped 10.7 million auto-dimming mirrors in the first quarter, up 1 percent from 2018. Deliveries of interior mirrors decreased 2 percent to 7.5 million in 2019, while exterior mirrors increased 9 percent to 3.2 million.
North American shipments improved 10 percent to 3.5 million, while international shipments fell 3 percent to 7.2 million.
Gentex's effective tax rate was 16.5 percent, up from 15.6 percent during the first quarter in 2018, primarily driven by a decrease in tax benefits related to stock-based compensation.
The company's shares rose 4.3 percent to $23.05 in midday trading after analysts noted that earnings per share exceeded forecasts.
Gentex said its gross profit margin in the first quarter fell nearly one percentage point to 36.2 percent because of tariffs that became effective in the second half of 2018.
"Our ability to maintain our gross margin on a quarter over quarter basis, if not for the 90-basis point impact from tariffs, required a tremendous effort from the team to overcome the headwinds created from our annual customer price reductions and the overhead inefficiencies from the slower growth rate," CEO Steve Downing said.
"The resiliency in the gross margin was supported by the positive product mix shifts during the first quarter of 2019, including continued growth in full display mirror unit shipments and a 9 percent quarter-over-quarter growth rate in exterior auto-dimming mirrors in the first quarter of 2019."
Net sales for the supplier's core automotive business remained relatively stagnant for the first quarter, increasing less than 1 percent.
The company said its full display mirror and exterior auto-dimming mirror shipment growth was essentially offset by reductions in interior auto-dimming mirror shipments. The company also said the decrease in interior auto-dimming mirror shipments was primarily related to the decline in global light vehicle production, particularly in China.
Operating expenses in the first quarter rose 9 percent to $48 million.
Gentex repurchased 4.7 million shares of its common stock, leaving 29.1 million shares remaining available for repurchase under the current program, Gentex said.
The company's annual guidance for 2019 and 2020 remains the same.
The company ranks No. 91 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $1.76 billion in 2017.
