Net sales of $428.0 million, an 86% increase compared to the second quarter of 2020
2nd Quarter 2021 Summary
Net income of $86.5 million, an $88.9 million increase compared to the second quarter of 2020
Gross profit margin of 35.4%, a 1,631 basis point (16.3 percentage point) improvement over the second quarter of 2020
3.4 million shares repurchased during the quarter
Earnings per diluted share of $0.36, compared to a loss per diluted share of $.01 for the second quarter of 2020
For the second quarter of 2021, the Company reported net sales of $428.0 million, which was an increase of 86% compared to net sales of $229.9 million in the second quarter of 2020. On a quarter-over-quarter basis, global light vehicle production in the Company’s primary regions of Europe, North America, Japan/Korea and China increased 36% when compared to the COVID-19 impacted second quarter of 2020. However, when compared to the mid-April 2021 IHS Markit light vehicle production forecast in the Company’s primary regions, actual light vehicle production in the second quarter of 2021 declined approximately 1.1 million units, or 7% as a result of industry-wide part shortages and global supply chain constraints. The largest deviation from the forecasted production within the quarter came in North America, which saw an actual light vehicle production decline in excess of 15% compared to the mid-April 2021 forecast. The reduction in light vehicle production compared to forecast was led by certain OEM customers that deploy high levels of the Company’s product content, including both interior and exterior auto-dimming mirrors and other electronic features such as Full Display Mirror® and HomeLink®. In total, the impact from the shortfall in vehicle production compared to forecast, led to an estimated mirror unit shipment reduction of approximately 2 million units versus the Company’s beginning of the quarter expectations. “While we are very pleased with the net sales increase of 86% over the COVID-19 impacted second quarter of last year, we are still experiencing tremendous volatility and order cancellations as our customers continue to deal with the impact of the ongoing part shortages that are affecting our industry. Our initial forecast for the second quarter was for sales to be one of the largest quarters in the Company’s history, but the continual changes in releases and orders resulted in the push out of approximately 2 million units. The unit shipment changes were most severe in North America where our dollar content per vehicle is above the corporate average. As we move through the second half of the year and into 2022, we are encouraged that the overall demand for vehicles and our products should still provide opportunities for the Company to continue to outperform the underlying market,” said President and CEO, Steve Downing.
For the second quarter of 2021, the gross margin was 35.4%, compared to a gross margin of 19.1% for the second quarter of 2020. Compared to the COVID-19 impacted second quarter of 2020, gross margins improved due to the higher sales levels, significantly better overhead leverage, the structural cost savings put in place by the Company last year, and positive product mix on a quarter over quarter basis. “The gross margin for the second quarter of 2021 improved significantly versus last year, but was well below our initial estimates for the quarter. The lower than forecasted gross margin was primarily driven by the significant reductions in expected sales during the quarter, our inability to offset fixed and variable overhead costs due to the lower than expected sales levels, lower than expected price reductions on raw materials, and higher than expected incoming freight costs. However, the good news is that despite many of the challenges in the quarter, our estimates show that if sales had hit our initial forecast then gross margins would have been more in line with our previous annual guidance range,” continued Downing. Operating expenses during the second quarter of 2021 increased by 2% to $51.7 million, compared to operating expenses of $50.7 million in the second quarter of 2020.
Income from operations for the second quarter of 2021 was $99.9 million, compared to a loss from operations of $6.7 million for the second quarter of 2020. During the second quarter of 2021, the Company had an effective tax rate of 15% or $15.3 million, which is below our annual guidance range, and was primarily driven by the benefit of the foreign derived intangible income deduction and discrete benefits from stock based compensation.
Net income was $86.5 million for the second quarter of 2021, compared to a net loss of $2.4 million in the second quarter of 2020. The increase in net income was driven by the quarter over quarter increase in sales, gross margins and operating profits. Earnings per diluted share for the second quarter of 2021 were $0.36, compared to a loss per diluted share of $0.01 for the second quarter of 2020. The increase in earnings per share is the result of the higher net income when compared to the second quarter of 2020.
Share RepurchasesDuring the second quarter of 2021, the Company repurchased 3.4 million shares of its common stock for a total of $115.9 million. The Company intends to continue to repurchase additional shares of its common stock in the future in support of the previously disclosed capital allocation strategy, but share repurchases may vary from time to time and will take into account macroeconomic issues (including the impact of the COVID-19 pandemic), market trends, and other factors that the Company deems appropriate. Future EstimatesThe Company’s current forecasts for light vehicle production for the second half of 2021, and full years 2021 and 2022 are based on the mid-July 2021 IHS Markit forecast for light vehicle production in North America, Europe, Japan/Korea and China.
Other net sales in the second quarter of 2021, which includes dimmable aircraft windows and fire protection products, were $7.4 million, a decrease of 6% compared to other net sales of $7.9 million in the second quarter of 2020. Dimmable aircraft window sales decreased by 65% for the second quarter of 2021 when compared to the second quarter of 2020. The Company continues to expect that dimmable aircraft window sales will be impacted until there is a more meaningful recovery of the aerospace industry and the Boeing 787 aircraft production levels improve. Automotive net sales in the second quarter of 2021 were $420.6 million, compared with $222.1 million in the second quarter of 2020, which was an 89% increase quarter over quarter. Auto-dimming mirror unit shipments increased 98% during the quarter, highlighted by 140% growth in exterior-mirror unit shipments, compared to the second quarter of 2020. The increase in international unit shipments were largely comprised of base interior and exterior auto-dimming mirror units and included significant growth in the China market.