ZEELAND — The United Auto Workers strike against General Motors has cost Tier 1 automotive supplier Gentex Corp. about $7 million to $8 million per week in lost sales.
The Zeeland-based supplier of auto-dimming mirrors, digital vision and connected car technologies narrowed its guidance for the 2019 fiscal year as a result of the effects of the strike to date and the company’s projections for future effects before the strike ends.
While the UAW and GM on Wednesday reached a tentative agreement on a four-year contract, the union leaders opted to continue the strike until members vote to ratify the agreement. The vote is expected to start this weekend and wrap up by Friday, Oct. 25, according to reports.
Gentex (Nasdaq: GNTX) said the strike reduced revenues by about 2 percent in the third quarter, which ended Sept. 30.
Despite the strike and a 3-percent easing in global automotive production, net sales for Gentex increased 3.8 percent for the quarter to nearly $477.8 million. The company estimates for the third quarter it outperformed the market by 7 percent to 9 percent.
Shipments of auto-dimming mirrors in the quarter rose 6 percent, and were up 3 percent year to date.
The company’s quarterly gross margin was 37.7 percent, up from 37.6 percent a year ago, despite various tariffs having a negative effect of about 0.5 percent.
“The overall gross margin improvement was driven by our solid, mid-single digit growth rate, positive product mix, better than expected purchasing cost reductions, and the team’s success in mitigating some of the costs related to the tariffs that have been impacting the Company since July 2018,” Gentex President and CEO Steve Downing said in a statement.
For the quarter, Gentex reported $111.9 million in net income, or 44 cents per diluted share, an increase of 0.5 percent from the same period in 2018.
The company cited “headcount and other resources required to fund development and launch of new products, travel and other resources associated with mitigation of tariffs, increased legal and professional fees associated with a minor acquisition of new technology, and ongoing focus on tax planning” as contributing factors to a 15-percent increase in quarterly operating expenses.
Based on the strike, lower global production volumes and other factors, Gentex narrowed its 2019 guidance for net sales of $1.84 billion to $1.87 billion, on the lower end of the guidance for $1.87 billion to $1.9 billion in net sales that it issued in July.
Despite a continued worsening of 2020 vehicle production forecasts, Gentex said it was sticking by its estimates of 3-8 percent revenue growth compared to the current year.
Gentex ended the quarter with $260.1 million in cash on its balance sheet.