GENTEX CORP

Gentex Corporation designs, develops, manufactures, markets, and supplies digital vision, connected car, premium audio, dimmable glass, fire protection technologies, medical devices, and consumer electronics. The Company's largest business segment involves designing, developing, manufacturing and marketing interior and exterior automatic-dimming automotive rearview mirrors that utilize proprietary electrochromic technology. The Company ships its products to all of the major automotive producing regions worldwide, which it supports with numerous sales, engineering and distribution locations worldwide. The Company is the leading manufacturer of electrochromic automatic-dimming rearview mirrors in the world, and is the largest supplier of the same to the automotive industry with an approximate 79% ¹ market share worldwide in 2025. As a result of tariff and counter tariff actions in the global economy, and with the Company primarily manufacturing in the United States, the Company's export sales into the China market were impacted in 2025, resulting in an overall reduction in global market share.

The Company's primary competitors for automotive rearview mirrors and other automotive electronic products include Magna International, Ficosa, Fudi Technology, Findream Technology, Ganxiang, Hefei Haoxiang, Kingband, Acson, Nigbo Huichang, Panasonic, Aolian, Ultronix, SMR Automotive, Intertech, Adayo, Sincode, Licon, Mirrortech, Mike Shanghai, Guangdong Yangfeng Electronic Technology Co. Ltd., Guangdong E-Think Technology Company, Hubei SL, Shanxi Coal, Chongqing Yimei, Denso, LG, Continental, Lear, Bosch, and Forvia. The Company also supplies electrochromic automatic-dimming rearview mirrors to certain of its rearview mirror competitors. The Company believes its electrochromic automatic-dimming mirrors and mirrors with advanced electronic features offer significant performance advantages over competing products and the Company makes significant research and development investments to continue to increase and improve the performance advantages of its products. The Company is the leading producer of automatic-dimming rearview mirrors in the world and currently is the largest supplier to the automotive industry with an approximate 79% ² market share worldwide in 2025.

The Company generates revenue through the design, development, manufacture, marketing, and supply of digital vision, connected car, premium audio, dimmable glass, fire protection technologies, medical devices, and consumer electronics. Automotive rearview mirrors and electronics accounted for 89% ³ of the Company's consolidated net sales in 2025. The Company generally supplies automatic-dimming mirrors, mirrors with advanced electronic features, and other automotive electronics products to its customers worldwide under annual blanket purchase orders with customers, as well as under long-term agreements with certain customers. The Company's largest business segment involves designing, developing, manufacturing and marketing interior and exterior automatic-dimming automotive rearview mirrors that utilize proprietary electrochromic technology. Within this business segment, the Company also designs, develops and manufactures various electronics that are value added features to the interior and exterior automotive rearview mirrors, as well as electronics for interior visors, overhead consoles, and other locations in the vehicle.

Automotive Products, the Company's largest business segment, consists primarily of interior and exterior electrochromic automatic-dimming rearview mirrors and automotive electronics. The Company manufactures interior electrochromic automatic-dimming rearview mirrors that darken to reduce glare and improve visibility for the driver, which can also include additional electronic features such as compass, HomeLink, interior driver and cabin monitoring systems, lighting assist and driver assist forward safety camera systems, various lighting systems, various telematics systems, ITM systems, and a wide variety of displays, including the Full Display Mirror product. The Company also ships interior non-automatic-dimming rearview mirrors with and without features. The Company's interior electrochromic automatic-dimming rearview mirrors also power the application of the Company's exterior electrochromic automatic-dimming rearview mirrors that darken to reduce glare and improve visibility for the driver. Automotive rearview mirrors and electronics accounted for 89% ⁴ of the Company's consolidated net sales in 2025. As a result of its completion of the acquisition of VOXX on April 1, 2025, the Company now manufactures other automotive electronic products, including automotive security, vehicle access, and remote start modules and systems; mobile multi-media infotainment products and rear-seat entertainment products; 360 camera applications; interior lighting systems and solutions; turn signal switches; puddle lamps; box lights; and harnesses.

Premium Audio Products, established following the acquisition of VOXX, designs, manufactures, distributes, and markets high quality audio equipment including premium loudspeakers, architectural speakers, commercial and cinema speakers, outdoor speakers, wireless and Bluetooth speakers, A/V receivers, high performance 2 channel loudspeakers and electronics, high performance party speakers, home theater systems, business and streaming music systems, soundbars, and Bluetooth headphones and earbuds. Premium Audio products accounted for approximately 6% ⁵ of the Company's consolidated net sales for the year ended December 31, 2025. The Other reportable segment includes Fire Protection, Dimmable Aircraft Windows, Nanofiber, Medical, Aftermarket Electronics, Consumer Electronics, and Biometrics, which accounted for approximately 5% ⁶ of the Company's consolidated net sales for the year ended December 31, 2025. The Company manufactures photoelectric smoke detectors and alarms, visual signaling alarms, photoelectric smoke alarms and electrochemical carbon monoxide alarms, audible and visual signaling appliances, and bells and speakers for use in fire detection systems. The Company also manufactures and sells variable dimmable windows for the passenger compartment on the Boeing 787 Dreamliner series of aircraft and has made first production shipments of variably dimmable windows to Boeing for the 777X program. In 2024, the Company announced the introduction of a suite of smart home safety products with room-specific functionality called PLACE, with shipments beginning during the second quarter of 2025. The Company also has medical products including an intelligent lighting system co-developed with Mayo Clinic and low-vision smart glasses technology acquired from eSight Corporation, referred to as eSightGo, with deliveries beginning in calendar year 2024.

On April 1, 2025, the Company acquired all of the issued and outstanding shares of VOXX common stock not already owned by the Company for a purchase price of $7.50 ⁷ per share, resulting in VOXX becoming a wholly owned subsidiary of the Company for cash consideration totaling $148.3 million ⁸. The acquisition of VOXX is a strategic addition to the Company's portfolio of products, providing full access to the EyeLock iris biometric technology and including Premium Audio Company LLC with world renowned brands such as Klipsch, Onkyo and Integra. On July 1, 2025, the Company completed its acquisition of BioConnect Inc., a leader in biometric authentication solutions. The Company also acquired GalvanEyes, LLC in November 2024, which is the managing partner and 50% owner of the BioCenturion LLC joint venture with EyeLock. In 2025, the Company introduced its next-generation Full Display Mirror, which incorporates the Company's Dynamic View Assist. The Company repurchased 13,587,090 ⁹ shares of common stock during 2025 at an average price paid per share ranging from $21.93 ¹⁰ to $28.61 ¹¹. On July 16, 2025, the Company announced a new share repurchase authorization of 40 million ¹² shares in addition to the Company's prior repurchase authorization. The Company also completed construction of the Gentex Discovery Preschool in the fourth quarter of 2025, an on-site daycare and preschool, at a total cost of approximately $20 million ¹³.

In 2025, the Company's consolidated net sales increased by $221.0 million ¹⁴, or 10% ¹⁵ compared to the prior year. Core Gentex sales were $2.27 billion ¹⁶ for calendar year 2025, a 2% ¹⁷ decline versus calendar year 2024, primarily driven by tariff and counter-tariff actions and resulting reduction in demand for exports of the Company's products into the China market. Net income decreased by $19.6 million ¹⁸ in 2025, or 5% ¹⁹ compared to 2024, in large part due to the year over year changes in Other (loss) income. Net income attributable to Gentex Corporation was $384,841,367 ²⁰ for 2025, compared to $404,487,743 ²¹ for 2024. Diluted earnings per share attributable to Gentex Corporation was $1.74 ²² for 2025, compared to $1.76 ²³ for 2024. Cash flow from operating activities was $587.1 million ²⁴ for 2025, compared to $498.2 million ²⁵ for 2024.

The Company estimates that top line revenue for calendar year 2026 will be between $2.60 and $2.70 billion ²⁶. The Company estimates that the gross margin will be between 34.0% and 35.0% ²⁷ for calendar year 2026. The Company also estimates that its operating expenses, which include Engineering, Research and Development and Selling, General and Administrative, are expected to be between $410 and $420 million ²⁸ for calendar year 2026. The Company is estimating that revenue for calendar year 2027 will be between $2.75 and $2.85 billion ²⁹. The Company is further estimating that its tax rate will be between 16% and 18% ³⁰ for calendar year 2026.

The Company's growth strategy includes expansion of its biometric technology and solutions into commercial markets. The Company intends to incorporate the EyeLock iris biometric technology, acquired through the VOXX acquisition, into future product developments across its automotive, aerospace, and medical market segments to enhance authentication, security, and human-machine interface solutions. The Company also believes its expertise in high volume manufacturing will help the Premium Audio Company team continue its expansion in the consumer technology and connected home space through newly launched Company products, such as PLACE and HomeLink. Additionally, the Company's sales and business development teams will further equip the Premium Audio Company team with additional automaker exposure to build on the early success of several OEM launches of Klipsch Reference Premiere audio systems. The Company believes the acquisition of VOXX will contribute to long-term revenue growth and profitability and create shareholder value through expansion in existing and new markets, potential growth stemming from acquired technologies, realization of operational efficiencies, net asset values and potentially capturable tax losses, as well as the combined brand value and reputation of the VOXX family of brands.

The Company intends to utilize the acquisition of BioConnect to expand its reach in the biometric industry, providing it with a stronger foothold in the security and access control industry, as well as the expertise to continue developing advanced biometric solutions for the industries currently served. The Company also believes synergies exist between BioConnect and the previously acquired EyeLock and is exploring ways to utilize EyeLock hardware in BioConnect platforms. The Company continues to make investments intended to maintain a competitive advantage in its existing markets, as well as to use its core competencies to develop products that are applicable in other markets. The Company continues to invest heavily in technology directed at funding the development of its current product portfolio and creating advancements of those products so as to be fresh and attractive to customers, as well as new products.

The Company estimates that the gross margin will be between 34.0% and 35.0% ³¹ for calendar year 2026. Historically, annual customer price reductions have placed pressure on gross margin on an annual basis. Given the current revenue forecast and projected product mix for 2026, as well as external headwinds in the form of tariff-related costs, the Company hopes to offset certain annual customer price reductions with raw material cost decreases, a continued focus on driving greater operational efficiencies, and leveraging the Company's fixed costs, while also attempting to negotiate reimbursements to offset incremental tariff-related costs. The Company also estimates that its operating expenses are expected to be between $410 and $420 million ³² for calendar year 2026, due in part to continued investments that support growth initiatives, launch of new business, and develop new products, which are primarily staffing related, as well as a full year of VOXX operating expenses.

The Company estimates that it currently has building capacity to manufacture approximately 42 to 45 ³³ million interior automatic-dimming mirror units annually, based on current product mix. In 2025, the Company shipped 28.6 ³⁴ million interior automatic-dimming mirrors. The Company's automotive exterior mirror manufacturing facility has an estimated building capacity to manufacture approximately 19 to 22 ³⁵ million units annually, based on the current product mix. In 2025, the Company shipped approximately 16.2 ³⁶ million exterior automatic-dimming mirrors. The Company continues to evaluate longer term facilities needs. The Company anticipates that 2026 capital expenditures will be between $125 and $140 million ³⁷, a majority of which will be related to production equipment purchases. The Company is also estimating that depreciation and amortization expense for calendar year 2026 will be between $100 and $110 million ³⁸.

The Company anticipates that 2026 capital expenditures will be between $125 and $140 million ³⁹, a majority of which will be related to production equipment purchases. Capital expenditures for calendar year 2026 are currently anticipated to be financed from current cash and cash equivalents on hand and cash flows from operating activities. The Company is also estimating that depreciation and amortization expense for calendar year 2026 will be between $100 and $110 million ⁴⁰. In accordance with its previously announced share repurchase plan and capital allocation strategy, the Company intends to continue to repurchase additional shares of its common stock in 2026 and into the future depending on a number of factors, including market, economic, and industry conditions; the market price of the Company's common stock; anti-dilutive effect on earnings; available cash; and other factors that the Company deems appropriate. The Company's cash and cash equivalents were $145.6 million ⁴¹ as of December 31, 2025.

The Company faces headwinds from tariff and counter tariff actions in the global economy, which have impacted the Company's export sales into the China market in 2025, resulting in an overall reduction in global market share, and it is expected that such tariff and counter tariff action will continue to negatively impact the Company's export sales into China and further affect the Company's ability to compete in that market. The geopolitical environment between the United States and other jurisdictions, most significantly China, continues to cause uncertainty, especially in light of recently imposed tariffs, tariffs threatened to be imposed, and those already existing. The continuance of these tariffs and/or escalation of disputes in the geopolitical environment interferes with supply chains and have had and will continue to have a negative impact on the Company's business, financial condition, and/or results of operations, especially since the Company primarily manufactures and ships from the United States.

Continuing uncertainties such as light vehicle production volumes; tariffs; the Ukraine-Russia war; labor shortages; automotive plant shutdowns; sales rates in Europe, Asia, and North America; challenging macroeconomic and geopolitical environments, including inflation; OEM strategies and cost pressures; customer inventory management and the impact of potential automotive customer (including their Tier 1 suppliers) and supplier bankruptcies; work stoppages; strikes; etc.; could disrupt shipments to customers and continue to make forecasting difficult. The Company also faces risks related to the automotive industry being cyclical and highly impacted by levels of economic activity, with the current economic environment including tariffs and inflation continuing to cause financial and production stresses evidenced by volatile automotive production levels, volatility with customer orders, supplier part and material shortages, automotive and Tier 1 supplier plant shutdowns, customer and supplier financial issues, commodity raw material cost increases, supply constraints, consumer vehicle preference shifts, and supply chain stresses.

The Company faces material risks from its concentration in the automotive industry, which comprised approximately 89% ⁴² of net sales in 2025, and its dependence on three large customers each accounting for 10% or more of annual consolidated net sales: Toyota Motor Company, Volkswagen Group, and General Motors. The loss of all or a substantial portion of sales to any of these customers would have a material adverse effect. Tariff and counter-tariff actions, particularly between the United States and China, have already impacted the Company's export sales into China and resulted in an overall reduction in global market share from an approximate 79% ⁴³ market share worldwide in 2025, and the continuance of these tariffs is expected to continue to negatively impact the Company's ability to compete in that market. The Company also faces significant competition from Magna Mirrors, which has considerably more resources, and from Chinese domestic mirror suppliers and other companies developing competitive products to the Full Display Mirror system. The Company recorded impairment charges of $14,081,956 ⁴⁴ related to certain equity investments in 2025 and $8,864,704 ⁴⁵ in goodwill and IPR&D impairment charges in 2024, highlighting the risk that the Company may never realize the full value of its goodwill, intangible assets, and technology investments.

Management's tone in the filing is cautiously optimistic, emphasizing the strategic value of the VOXX and BioConnect acquisitions while acknowledging significant headwinds from tariffs and macroeconomic uncertainty. The Company estimates that top line revenue for calendar year 2026 will be between $2.60 and $2.70 billion ⁴⁶, that the gross margin will be between 34.0% and 35.0% ⁴⁷ for calendar year 2026, and that operating expenses are expected to be between $410 and $420 million ⁴⁸ for calendar year 2026. The Company is also providing top line revenue guidance for calendar year 2027, estimating that revenue will be between $2.75 and $2.85 billion ⁴⁹. Management emphasizes three strategic priorities: integrating the VOXX acquisition to expand into premium audio, aftermarket electronics, and consumer technologies; leveraging the EyeLock and BioConnect biometric technologies to enhance authentication and security solutions across automotive, aerospace, and medical markets; and continuing to invest in new product development and operational efficiencies to offset tariff-related costs and annual customer price reductions.