Gentex Corporation Q1 FY2026 earnings call

• Launches: Complex and innovative technologies like Gen 4 FDM, new CMOS imaging sensors, in-cabin monitoring platforms, dimmable visors, large area devices, and multiple new VOX automotive and premium audio launches. - Activity: Busy with launches and customers increasing cybersecurity requirements. - Automotive: Revenue growth despite light vehicle production decline due to favorable product mix, new tech launches, and content gains. Other product lines saw significant growth. - Vox: Integration well underway, focus on scaling product launches, expanding sales channels, and strengthening market position while improving margins and lowering operating expenses. - Product updates: Over 65% of launches were advanced interior and exterior auto-dimming mirrors and electronic features. Participated in trade shows and customer events. Deep expertise in high-end electronics manufacturing and assembly for near-shoring opportunities. Teams at Klipsch, Onkyo, and Integra launching showcased products. Driver monitoring solutions shipping to Rivian, Volvo, Polestar, with more OEM customers to start shipping in second to early third quarter of 2026. Dimmable Visor in development with production lines to support first program launch in back half of 2027.

Consolidated net sales in first quarter of 2026 were $675.4 million, a 17% increase from $576.8 million in first quarter of last year. Vox contributed $88.6 million, Core Gentex revenue was $586.8 million, up 2%. Core Gentex gross margin was 34%, an 80 basis point increase. Gentex automotive net sales were $566.2 million in first quarter of 2026, up from $563.9 million in first quarter of 2025. Net sales from other product lines were $20.6 million in first quarter, up from $12.9 million in first quarter of 2025. Vox net sales were $88.6 million in first quarter, and Vox business has achieved profitability.

• Light vehicle production forecast: Second quarter 2026 global light vehicle production expected to decline 2% vs last year, primary markets down over 3%. Full year 2026 primary markets production expected to decline 2% vs last year. - Revenue: 2026 consolidated revenue expected between $2.65 and $2.75 billion. 2027 calendar year revenue range updated to between $2.8 and $2.9 billion. - Gross margin: 2026 consolidated gross margin anticipated between 34 and 35%. - Operating expenses: Excluding severance and impairments, 2026 forecasted at $410 to $420 million. - Tax rate: Expected between 16 and 18%. - Capital expenditures: Projected at $125 to $140 million. - Depreciation and amortization: Expected to total $100 to $110 million. - Tariffs: Not recognized potential refund in first quarter results, assessing impact, estimated $15 million of tariff costs capitalized in inventory, cumulative $42 million paid excluding indirect through suppliers, $5 million recovered from customers. New tariffs reflected in outlook. Facing cost pressures from key commodities, pursuing customer reimbursement and internal VAVE projects.

• Tariff uncertainties: Difficulty in predicting tariff refunds, potential contest by US Customs and Border Protection Agency. - Commodity cost pressures: Headwinds from precious metals, petroleum-based products, memory components pricing. - Market and production challenges: Light vehicle production declines, decontenting on lowest-end vehicles, trends in vehicle mix affecting volume and content. - Geopolitical risks: Challenges in China and Europe, impact on market presence and business.

Q: Joseph Speck with UBS asked about customer interest in becoming strategic high-volume electronic supplier, including RFQ phase, incremental investment, products/end markets, return on initiative.

A: Right now with couple OEMs in RFQ phase, light capital lift, over next couple years, capital in line with guidance, see opportunities outside automotive in aerospace and consumer electronics.

Q: Luke Young with Baird asked about guidance revision, vehicle mix, Algeria device progress, electronics manufacturing margin.

A: Revenue strength on technology and advanced features offsetting light vehicle production headwinds, Algeria device equipment up and running, starting to run material, electronics manufacturing margin profile similar to others.

Q: Mark Delaney with Goldman Sachs asked about auto production trends by region, impact of Iran war, financial impact on buybacks, EV program cuts.

A: European market had weakening trend, electronics opportunity RFQs likely early 28 SOPs, buybacks funded by cash flow from operations, EV program cuts caused headwinds but not major change to forecast.

Q: David Whiston with Morningstar asked about buybacks and EV program cuts.

A: Continue buybacks as stock undervalued, funded by cash flow from operations, EV program cuts caused headwinds but not huge change to forecast.

Q: James Piccariello with BNP Paribas asked about Vox integration EBIT trajectory, decontenting topic.

A: Vox EBIT trajectory with first quarter $6 million, annualizing to mid to high 20s this year, ramp to 40 to 50 next year, decontenting in Europe with focus on content and new technology like in-cabin monitoring system and visors for customers.