Gentex(GNTX) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Highlights Gentex reported strong Q2 2025 financial results, with consolidated net sales increasing 15% and diluted EPS rising by 16%, driven by the VOXX acquisition and improved margins Financial Summary Gentex reported strong Q2 2025 financial results, with consolidated net sales increasing 15% to $657.9 million, primarily driven by the VOXX acquisition Financial Summary Metrics | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Consolidated Net Sales | $657.9 million | $572.9 million | 15% | | Core Gentex Net Sales (excl. VOXX) | $579.0 million | N/A | 1% | | Consolidated Gross Margin | 34.2% | 32.9% | +130 bps | | Core Gentex Gross Margin (excl. VOXX) | 35.3% | 32.9% | +240 bps | | Consolidated Net Income Attributable to Gentex | $96.0 million | $86.0 million | 12% | | Consolidated Diluted EPS Attributable to Gentex | $0.43 | $0.37 | 16% | | Consolidated Adjusted Diluted EPS Attributable to Gentex | $0.47 | N/A | 27% | - VOXX acquisition, completed on April 1, 2025, contributed $78.8 million of revenue for the second quarter of 2025[4] - The Company repurchased 5.7 million shares totaling $126.2 million during the quarter[5] Detailed Financial Performance (Q2 2025 vs Q2 2024) The company's detailed financial performance for Q2 2025 shows significant growth in net sales and gross margin, alongside increased operating expenses due to the VOXX acquisition Net Sales Analysis Consolidated net sales increased by 15% year-over-year, largely due to the VOXX acquisition Net Sales Performance | Metric | Q2 2025 | Q2 2024 | % Change | Notes | | :--- | :--- | :--- | :--- | :--- | | Consolidated Net Sales | $657.9 million | $572.9 million | 15% | Includes VOXX | | Core Gentex Net Sales | $579.0 million | N/A | 1% | Excludes VOXX | - VOXX contributed $78.8 million in revenue for the second quarter of 2025[4] - Light vehicle production in the Company's primary markets decreased by approximately 2% versus the second quarter of 2024[4] Gross Margin Analysis Consolidated gross margin improved to 34.2%, and core Gentex gross margin significantly increased by 240 basis points to 35.3% year-over-year Gross Margin Performance | Metric | Q2 2025 | Q2 2024 | Change (bps) | | :--- | :--- | :--- | :--- | | Consolidated Gross Margin | 34.2% | 32.9% | +130 | | Core Gentex Gross Margin (excluding VOXX) | 35.3% | 32.9% | +240 | | Consolidated Adjusted Gross Margin | 34.6% | N/A | N/A | - The quarter-over-quarter improvement in gross margin was primarily driven by purchasing cost reductions, improved mix, and operational efficiencies, partially offset by tariff-related costs[6] - Core Gentex gross margin (excluding VOXX) increased 210 basis points sequentially from the first quarter of 2025[5][6] Operating Expenses Consolidated operating expenses increased significantly due to the VOXX acquisition and one-time acquisition and severance costs Operating Expenses Overview | Metric | Q2 2025 | Q2 2024 | Change | Notes | | :--- | :--- | :--- | :--- | :--- | | Consolidated Operating Expenses | $106.8 million | $73.7 million | +$33.1 million | Includes VOXX | | VOXX contribution to increase | $23.9 million | N/A | N/A | Excl. acquisition/severance | | Acquisition-related costs | $2.5 million | — | N/A | Consolidated | | Severance-related expenses | $6.8 million | — | N/A | Consolidated | | Core Gentex Operating Expenses (excl. VOXX) | $80.7 million | $73.7 million | +$7.0 million | | - Core Gentex operating expenses, when adjusted for one-time acquisition and severance costs, were down slightly on a quarter-over-quarter basis[9] Income from Operations Consolidated income from operations saw a modest increase, while core Gentex income from operations grew by 8%, and 14% on an adjusted basis, reflecting strong underlying performance Income from Operations Performance | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Consolidated Income from Operations | $118.5 million | $114.9 million | 3.1% | | Core Gentex Income from Operations (excl. VOXX) | $123.8 million | N/A | 8% | | Core Gentex Adjusted Income from Operations | $130.9 million | N/A | 14.0% | - Adjusted income from operations excludes one-time expenses incurred during the quarter[9] Other Income/Loss & Tax Rate The company reported a lower total other loss compared to the prior year, despite an impairment related to an equity method investment Other Income/Loss and Tax Rate | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Other Loss | $3.0 million | $13.6 million | | Effective Tax Rate | 17.2% | 15.1% | - Q2 2025 other loss included an impairment of $6.2 million related to one of the Company's equity method investments[10] - The quarter-over-quarter change in the effective tax rate was primarily driven by lower tax benefits related to stock-based compensation and a reduced benefit from the Foreign-Derived Intangible Income (FDII) deduction[11] Net Income & EPS Consolidated net income attributable to Gentex increased by 12%, and diluted EPS rose by 16% Net Income and EPS Performance | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Consolidated Net Income Attributable to Gentex | $96.0 million | $86.0 million | 12% | | Consolidated Adjusted Net Income Attributable to Gentex | $105.8 million | N/A | 23% | | Consolidated Diluted EPS Attributable to Gentex | $0.43 | $0.37 | 16% | | Consolidated Adjusted Diluted EPS Attributable to Gentex | $0.47 | N/A | 27% | - The improvement in net income was primarily driven by higher income from operations, supported by gross margin expansion and slightly lower operating expenses[12] - Adjusted figures exclude acquisition-related expenses and severance costs[12][13] Revenue by Product Category Revenue analysis by product category highlights the impact of the VOXX acquisition, alongside varied performance in Gentex Automotive and Other product lines Gentex Automotive Gentex Automotive net sales were $566.5 million, negatively impacted by lower-than-expected sales in China due to counter-tariffs, but offset by increased advanced feature mirror sales Gentex Automotive Net Sales | Metric | Q2 2025 | | :--- | :--- | | Gentex Automotive Net Sales | $566.5 million | - Sales into China for Gentex during the quarter were approximately $33 million, compared to a beginning-of-year forecast of $50 to $60 million[6] - Increased advanced feature mirror sales (Full Display Mirror - FDM) more than offset the negative effects of lower sales into the China market[6][14] Gentex Other Product Lines Net sales from Gentex's Other product lines, which include dimmable aircraft windows, fire protection products, medical devices, and biometrics, decreased slightly year-over-year Gentex Other Net Sales | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Gentex Other Net Sales | $12.5 million | $13.6 million | VOXX Contribution VOXX, acquired on April 1, 2025, contributed $78.8 million in net sales during Q2 2025, with the company focusing on post-acquisition integration, product strategy alignment, and operational synergies VOXX Net Sales Contribution | Metric | Q2 2025 | | :--- | :--- | | VOXX Net Sales Contribution | $78.8 million | - The Company continues to work through the post-acquisition transition, with a focus on aligning product strategies, optimizing customer relationships, and identifying operational synergies[16] Capital Allocation Gentex demonstrated commitment to capital allocation through significant share repurchases and a new authorization for future buybacks Share Repurchases Gentex repurchased 5.7 million shares for $126.2 million in Q2 2025 and authorized an additional 40 million shares for future repurchases Share Repurchase Activity | Metric | Q2 2025 | Year-to-Date 2025 | | :--- | :--- | :--- | | Shares Repurchased | 5.7 million | 8.8 million | | Total Value | $126.2 million | $202.2 million | | Average Price per Share | $22.13 | $22.97 | - A new share repurchase authorization of an additional 40 million shares was announced on July 16, 2025, representing more than 18% of outstanding shares[17] - The Company intends to continue repurchasing shares in support of its capital allocation strategy, with variations based on macroeconomic issues, market trends, and other factors[17] Outlook and Guidance The company revised its 2025 annual guidance based on updated light vehicle production forecasts and the VOXX acquisition, while withholding 2026 guidance due to market uncertainties Light Vehicle Production Forecast Based on the mid-July 2025 S&P Global Mobility outlook, global light vehicle production is expected to be relatively flat in Q3 2025, but decline in Q4 2025 and for the full year 2025 Light Vehicle Production Forecast Summary | Region | Q3 2025 vs Q3 2024 | Full Year 2025 vs 2024 | | :--- | :--- | :--- | | Global LV Production (Q3) | Flat | N/A | | Primary Markets LV Production (Q3) | Down ~1% | Down 3% | | Global LV Production (Q4) | Down ~6% | N/A | | North America LV Production (2025) | N/A | Down ~4% | Detailed Light Vehicle Production Forecast | Region | Q3 2025 (Millions) | Q3 2024 (Millions) | % Change (QoQ) | Calendar Year 2025 (Millions) | Calendar Year 2024 (Millions) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | North America | 3.78 | 3.77 | —% | 14.85 | 15.45 | (4)% | | Europe | 3.69 | 3.73 | (1)% | 16.74 | 17.17 | (3)% | | Japan and Korea | 2.92 | 2.90 | 1% | 11.87 | 11.98 | (1)% | | China | 7.36 | 7.30 | 1% | 31.23 | 30.09 | 4% | | Total Light Vehicle Production | 17.75 | 17.70 | —% | 74.69 | 74.69 | —% | - Full-year 2025 production in the Company's primary markets is expected to be down 3% year-over-year, a notable downgrade from earlier forecasts[19] 2025 Annual Guidance (as of July 25, 2025) Gentex has revised its full-year 2025 guidance, reflecting updated light vehicle production forecasts, Q1 2025 results, reduced demand in China due to tariffs, and the expected contribution from the VOXX acquisition 2025 Annual Guidance Metrics | Metric | New Consolidated Guidance | Previous Guidance | Notes | | :--- | :--- | :--- | :--- | | Consolidated Revenue | $2.44 – $2.61 billion | $2.15 – $2.32 billion | Includes VOXX | | Gentex primary markets Revenue | $2.10 – $2.20 billion | N/A | | | Gentex China market Revenue | $100 – $125 million | N/A | | | VOXX Revenue estimate | $240 – $280 million | N/A | | | Gross Margin | 33% – 34% | N/A | Consolidated | | Gentex (stand-alone) Gross Margin | 34% – 34.5% | 33% – 34% | | | VOXX (stand-alone) Gross Margin | 27% – 29% | N/A | | | Operating Expenses (excl. severance) | $370 – $390 million | N/A | Consolidated | | Gentex Operating Expenses | $300 – $310 million | Unchanged | | | VOXX Operating Expenses | $70 – $80 million | N/A | | | Tax Rate | 16% – 17% | 15% – 17% | | | Capital Expenditures | $100 – $125 million | Unchanged | | | Depreciation & Amortization | $91 – $98 million | N/A | Consolidated | | Gentex D&A | $90 – $95 million | N/A | | | VOXX D&A | $1 – $3 million | N/A | | - The updated guidance reflects the anticipated impact of all known tariffs effective as of July 25, 2025[19] 2026 Guidance Status The company will withhold revenue guidance for calendar year 2026 due to the current geopolitical environment, tariff landscape, and evolving customer sourcing strategies, awaiting clearer visibility - The Company will continue to withhold revenue guidance for calendar year 2026 until it has the required visibility needed to support future guidance[21] Management Commentary Management commentary emphasizes strong operational performance, strategic integration of VOXX, and continued progress in advanced technology development despite market challenges CEO's Remarks CEO Steve Downing highlighted a productive quarter despite global trade uncertainty and lower light vehicle production, emphasizing progress on profitability, operational efficiency, and margin improvement initiatives, alongside VOXX integration efforts - The second quarter was productive, with continued progress on the path to improved profitability, despite global trade uncertainty and lower than expected light vehicle production[22] - Operational efficiency is improving significantly, driving strong revenue and profitability improvements[22] - The Company will continue executing margin improvement initiatives targeted to achieve a core margin profile of 35-36%[22] - Working with the VOXX team to ensure the combined organization is appropriately structured to support long-term profitability and shareholder value[22] CTO/COO's Remarks CTO and COO Neil Boehm noted significant strides in large area device development for dimmable glass applications and continued progress on Driver Monitoring System (DMS) platforms for key customers, expressing confidence in the technology roadmap - Significant strides in the development of large area devices, creating opportunities for dimmable visor, sunroof, side-window, and panoramic roof applications globally[23] - Continued progress on launches of Driver Monitoring System (DMS) platforms for four key customers, driven by accelerating demand for safety and driver-assist technology[23] - Confidence in the strength of the technology roadmap and the team's ability to deliver scalable technology platforms[23] Additional Information This section provides essential disclaimers for forward-looking statements, details for the quarterly conference call, and an overview of Gentex Corporation Safe Harbor for Forward-Looking Statements This section provides a standard disclaimer regarding forward-looking statements, outlining various risks and uncertainties that could cause actual results to differ materially from expectations - Forward-looking statements are subject to risks and uncertainties that are often difficult to predict and beyond the Company's control, including changes in industry conditions, consumer preferences, competition, supply shortages, and tariffs[25][26] - Readers are cautioned not to place undue reliance on these statements and should read them in conjunction with additional information about risks and uncertainties identified in the Company's latest Form 10-K and Form 10-Q[25][26] Second Quarter Conference Call Details for the live simulcast conference call on July 25, 2025, including registration and audio streaming links, and information about the webcast replay - A conference call related to this news release will be simulcast live on the Internet beginning at 9:30 a.m. ET today, July 25, 2025[27] - Participants can register for the call at https://register-conf.media-server.com/register/BIf7f0798ab37d4c09a79f5e827fe371a6 or listen via audio streaming at https://edge.media-server.com/mmc/p/93tvjya6/[27](index=27&type=chunk)[28] - A webcast replay will be available approximately 24 hours after the conclusion of the call at http://ir.gentex.com/events-and-presentations/upcoming-past-events[28](index=28&type=chunk) About the Company Gentex Corporation, founded in 1974, is a leading supplier of digital vision, connected car, dimmable glass, fire protection technologies, medical devices, and consumer electronics - Gentex Corporation (NASDAQ: GNTX) is a leading supplier of digital vision, connected car, dimmable glass, fire protection technologies, medical devices, and consumer electronics[2][29] Financial Statements and Non-GAAP Reconciliation Detailed financial statements and non-GAAP reconciliations provide a comprehensive view of the company's Q2 2025 performance, balance sheet, and adjusted financial metrics Auto-Dimming Mirror Shipments Total auto-dimming mirror unit shipments decreased by 5% in Q2 2025 and 6% year-to-date, primarily driven by declines in North American and International Exterior Mirrors Auto-Dimming Mirror Shipments | Metric | Q2 2025 (Thousands) | Q2 2024 (Thousands) | % Change (QoQ) | YTD 2025 (Thousands) | YTD 2024 (Thousands) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | North American Interior Mirrors | 2,221 | 2,346 | (5)% | 4,470 | 4,608 | (3)% | | North American Exterior Mirrors | 1,524 | 1,705 | (11)% | 2,895 | 3,326 | (13)% | | Total North American Mirror Units | 3,746 | 4,051 | (8)% | 7,365 | 7,934 | (7)% | | International Interior Mirrors | 5,313 | 5,189 | 2% | 10,453 | 10,744 | (3)% | | International Exterior Mirrors | 2,517 | 2,944 | (15)% | 5,300 | 5,978 | (11)% | | Total International Mirror Units | 7,830 | 8,133 | (4)% | 15,753 | 16,721 | (6)% | | Total Interior Mirrors | 7,534 | 7,535 | —% | 14,923 | 15,352 | (3)% | | Total Exterior Mirrors | 4,041 | 4,649 | (13)% | 8,194 | 9,304 | (12)% | | Total Auto-Dimming Mirror Units | 11,575 | 12,184 | (5)% | 23,118 | 24,655 | (6)% | Condensed Consolidated Statements of Income The consolidated statements of income show significant increases in net sales and gross profit for both the three and six months ended June 30, 2025, largely influenced by the VOXX acquisition Three Months Ended June 30, 2025 and 2024 (Consolidated) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Sales | $657,858,210 | $572,925,778 | | Gross Profit | $225,290,903 | $188,563,309 | | Operating Expenses | $106,770,768 | $73,679,287 | | Income from Operations | $118,520,135 | $114,884,022 | | Net Income Attributable to Gentex Corporation | $96,039,584 | $86,040,438 | | Diluted EPS | $0.43 | $0.37 | Six Months Ended June 30, 2025 and 2024 (Consolidated) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Sales | $1,234,631,300 | $1,163,150,989 | | Gross Profit | $417,024,490 | $390,800,916 | | Operating Expenses | $185,517,249 | $146,570,582 | | Income from Operations | $231,507,241 | $244,230,334 | | Net Income Attributable to Gentex Corporation | $190,913,629 | $194,271,153 | | Diluted EPS | $0.85 | $0.84 | - VOXX contributed $78,833,552 to Net Sales for both the three and six months ended June 30, 2025[32][33] - Severance Expense of $6,784,136 was incurred in Q2 2025 and $9,673,248 year-to-date 2025[32][33] Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2025, shows an increase in total assets, primarily driven by increases in accounts receivable, inventories, and plant and equipment, while cash and short-term investments decreased Condensed Consolidated Balance Sheets | Asset/Liability | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $2,813,817,336 | $2,760,820,975 | | Cash and Cash Equivalents | $119,774,840 | $233,318,766 | | Accounts Receivable, net | $372,961,789 | $295,344,353 | | Inventories | $475,719,663 | $436,497,445 | | Plant and Equipment - Net | $783,863,952 | $728,481,467 | | Total Current Liabilities | $336,933,865 | $252,692,676 | | Shareholders' Investment | $2,430,637,724 | $2,472,099,655 | - Goodwill remained unchanged at $340,668,927[35] - Long-Term Investments decreased from $339,604,044 at December 31, 2024, to $267,045,895 at June 30, 2025[35] Reconciliation of Non-GAAP Measures This section provides reconciliations of non-GAAP financial measures to their closest GAAP equivalents, primarily by excluding purchase price adjustments, acquisition-related costs, and severance costs - Non-GAAP financial measures (Adjusted Gross Profit, Gross Margin, Operating Expenses, Income from Operations, Net Income, and Diluted EPS) are presented to provide insight into the Company's core performance and trends[37][38][40] - Adjustments for Q2 2025 primarily exclude inventory purchase price step-up adjustments (ASC 805), acquisition-related costs, and severance costs[38][39][40] Q2 2025 Adjusted Non-GAAP Metrics (Consolidated) | Metric | GAAP (Q2 2025) | Adjustments | Non-GAAP (Q2 2025) | | :--- | :--- | :--- | :--- | | Gross Profit | $225,290,903 | +$2,498,442 | $227,789,345 | | Gross Margin | 34.2% | N/A | 34.6% | | Operating Expenses | $106,770,768 | -$9,257,187 | $97,513,581 | | Income from Operations | $118,520,135 | +$11,755,629 | $130,275,764 | | Net Income Attributable to Gentex | $96,039,584 | +$9,733,661 | $105,773,245 | | Diluted EPS | $0.43 | N/A | $0.47 |