GENTEX CORP Q1 FY2025 earnings call

• Net sales for the first quarter were $576.8 million, down from $590.2 million in the prior year. - Gross margin was 33.2% compared to 34.3% in the prior year, impacted by lower revenue, unfavorable product mix, and new tariff costs. - Operating expenses increased by 8% to $78.7 million, influenced by severance-related expenses and one-time VOXX merger costs. - Income from operations was $113 million compared to $129.3 million prior year. - Net income was $94.9 million compared to $108.2 million prior year. - EPS was $0.42 compared to $0.47 prior year. - Product updates: 21 net new nameplate launches of interior and exterior auto-dimming mirrors and electronic features; FDM shipments expected to increase ~100k units in 2025; first driver monitoring system launched on Rivian vehicles.

For the first quarter of 2025, automotive net sales were $563.9 million compared to $577.6 million in the first quarter of last year. Auto-dimming mirror unit shipments decreased by 7% during the quarter. Other net sales, including dimmable aircraft windows, fire protection products, and medical devices, were $12.9 million compared to $12.6 million in the prior year. Fire protection product sales were $6.7 million, aircraft window sales were $4.9 million, biometric product sales were $900,000, and Ecyte Go medical sales were $400,000. The company repurchased 3.1 million shares of its common stock at an average price of $24.52 per share during the quarter, with approximately 6.3 million shares remaining available for repurchase.

• Revised 2025 revenue: primary markets expected to be $2.1 billion to $2.2 billion, China revenue between $50 million and $120 million ( $43 million shipped in Q1). - Gross margin expected to be 33-34%. - Operating expenses expected to be $300 million to $310 million. - Estimated annual tax rate forecasted to be 15-17%. - Capital expenditures expected to be $101 million to $125 million. - Withdrew 2026 revenue guidance due to uncertainty in the China market and VOXX merger financial picture. - VOXX merger expected to add $240 million to $280 million in 2025 revenue before tariffs.

• Tariffs impacting revenue and margin, with an estimated 50-100 basis point headwind on gross margin. - China market production halt and uncertainty in customer agreements. - VOXX supply chain reliance on China, with challenges in finding alternative suppliers. - Trim mix weakness affecting sales in primary markets.

Q: Luke Junk on tariffs, VOXX, and updated FDM outlook A: Steve Downing discussed tariff impacts on revenue and margin, VOXX supply chain challenges in China, and Neil Boehm detailed FDM volume impacts from North American trim mix and volume reductions Q: Ryan Brinkman on China, VOXX footprint A: Steve Downing noted VOXX's supply chain reliance on China imports and efforts to find alternative suppliers, with more flexibility on consumer audio side vs automotive side Q: Ron Jewsikow on China market share, VOXX OpEx A: Steve Downing mentioned local competition in China but insufficient local supply to offset Gentex's mirror shipments, and discussed VOXX's OpEx and margin expectations Q: Joseph Spak on tariffs, VOXX elasticity A: Steve Downing explained tariff assumptions in COGS and margin impact, and discussed VOXX's revenue elasticity due to price increases and competitive landscape Q: Josh Nichols on China forecast, FDM, driver monitoring A: Steve Downing confirmed conservative China forecast, Neil Boehm discussed FDM volume impacts and driver monitoring system launches with multi-year growth expectations Q: Mark Delaney on tariff offset and customer schedules A: Steve Downing discussed progress in tariff offset negotiations with OEMs and stable customer schedules in most markets except China Q: Charlie Sloan on share repurchase, VOXX acquisition A: Steve Downing explained aggressive share repurchases due to undervalued stock, VOXX acquisition closed April 1, and excitement for driver monitoring and large area devices Q: James Picariello on China shipments, FDM in China A: Steve Downing discussed China shipments post-tariff trigger, rough breakout of interior vs exterior mirrors in China, and minimal FDM shipments to China