Gentex(US:GNTX)2025-08-08 18:00markdown [Part I - Financial Information](index=3&type=section&id=Part%20I%20-%20Financial%20Information) This section encompasses Gentex Corporation's unaudited financial statements, management's analysis, market risk disclosures, and controls [Item 1. Unaudited Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents Gentex Corporation's unaudited condensed consolidated financial statements and detailed explanatory notes [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This section details Gentex Corporation's financial position through its unaudited condensed consolidated balance sheets - The unaudited condensed consolidated balance sheets show the financial position of Gentex Corporation as of June 30, 2025, compared to December 31, 2024. Key changes include a **decrease in cash and cash equivalents**, an **increase in accounts receivable and inventories**, and an **increase in total liabilities**, primarily due to the VOXX acquisition and timing of payments[10](index=10&type=chunk) Balance Sheet Highlights (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :---------------- | :---------------- | :------- | | Cash and cash equivalents | $119,774,840 | $233,318,766 | $(113,543,926) | | Accounts receivable, net | $372,961,789 | $295,344,353 | $77,617,436 | | Inventories, net | $475,719,663 | $436,497,445 | $39,222,218 | | Total current assets | $1,061,976,626 | $1,037,328,170 | $24,648,456 | | Total assets | $2,813,817,336 | $2,760,820,975 | $52,996,361 | | Accounts payable | $204,675,277 | $168,314,912 | $36,360,365 | | Accrued liabilities | $128,326,091 | $84,377,764 | $43,948,327 | | Total current liabilities | $336,933,865 | $252,692,676 | $84,241,189 | | Total liabilities | $380,689,351 | $288,721,320 | $91,968,031 | | Total Shareholders' Investment | $2,430,637,724 | $2,472,099,655 | $(41,461,931) | [Unaudited Condensed Consolidated Statements of Income](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income) This section outlines Gentex Corporation's financial performance through its unaudited condensed consolidated statements of income - The unaudited condensed consolidated statements of income show an **increase in net sales and net income** for the three months ended June 30, 2025, compared to the same period in 2024, largely driven by the VOXX acquisition. For the six months, net sales increased, but net income slightly decreased[12](index=12&type=chunk) Income Statement Highlights (Three Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------------- | :---------------- | :---------------- | :------- | :------- | | Net Sales | $657,858,210 | $572,925,778 | $84,932,432 | 14.8% | | Gross profit | $225,290,903 | $188,563,309 | $36,727,594 | 19.5% | | Income from operations | $118,520,135 | $114,884,022 | $3,636,113 | 3.2% | | Net Income Attributable to Gentex Corporation | $96,039,584 | $86,040,438 | $9,999,146 | 11.6% | | Basic EPS | $0.43 | $0.37 | $0.06 | 16.2% | | Diluted EPS | $0.43 | $0.37 | $0.06 | 16.2% | Income Statement Highlights (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------------- | :---------------- | :---------------- | :------- | :------- | | Net Sales | $1,234,631,300 | $1,163,150,989 | $71,480,311 | 6.1% | | Gross profit | $417,024,490 | $390,800,916 | $26,223,574 | 6.7% | | Income from operations | $231,507,241 | $244,230,334 | $(12,723,093) | -5.2% | | Net Income Attributable to Gentex Corporation | $190,913,629 | $194,271,153 | $(3,357,524) | -1.7% | | Basic EPS | $0.85 | $0.84 | $0.01 | 1.2% | | Diluted EPS | $0.85 | $0.84 | $0.01 | 1.2% | [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents Gentex Corporation's unaudited condensed consolidated statements of comprehensive income - The unaudited condensed consolidated statements of comprehensive income show an **increase in comprehensive income** for both the three and six months ended June 30, 2025, compared to the prior year, primarily due to positive foreign currency translation adjustments and unrealized gains on debt securities, offsetting unrealized losses on derivatives[15](index=15&type=chunk) Comprehensive Income Highlights (Three Months Ended June 30) | Metric | 2025 | 2024 | Change | | :--------------------------------------- | :---------------- | :---------------- | :------- | | Net income from consolidated operations | $95,650,450 | $86,040,438 | $9,610,012 | | Foreign currency translation adjustments | $2,109,011 | $(509,541) | $2,618,552 | | Unrealized losses on derivatives | $(1,245,367) | — | $(1,245,367) | | Unrealized gains on debt securities, net | $643,420 | $271 | $643,149 | | Comprehensive income from consolidated operations | $97,283,923 | $85,531,111 | $11,752,812 | Comprehensive Income Highlights (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | | :--------------------------------------- | :---------------- | :---------------- | :------- | | Net income from consolidated operations | $190,524,495 | $194,271,153 | $(3,746,658) | | Foreign currency translation adjustments | $1,763,781 | $(1,459,754) | $3,223,535 | | Unrealized losses on derivatives | $(1,245,367) | — | $(1,245,367) | | Unrealized gains on debt securities, net | $2,826,267 | $52,181 | $2,774,086 | | Comprehensive income from consolidated operations | $193,537,187 | $192,852,622 | $684,565 | [Unaudited Condensed Consolidated Statements of Shareholders' Investment](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Investment) This section details changes in Gentex Corporation's shareholders' investment over specified periods - The statements detail changes in shareholders' investment for the three and six months ended June 30, 2025 and 2024. The **total shareholders' investment decreased** for the six months ended June 30, 2025, primarily due to share repurchases and dividends, partially offset by net income[18](index=18&type=chunk) Shareholders' Investment Changes (Six Months Ended June 30, 2025) | Activity | Amount | | :------------------------------------------------ | :---------------- | | Balance as of January 1, 2025 | $2,472,099,655 | | Issuance of common stock from stock plan transactions | $6,350,684 | | Repurchases of common stock | $(202,167,048) | | Stock-based compensation expense | $16,160,289 | | Dividends declared ($0.24 per share) | $(53,321,754) | | Net income (loss) attributable to Gentex Corporation | $190,913,629 | | Other comprehensive income | $3,012,692 | | Balance as of June 30, 2025 | $2,430,637,724 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes Gentex Corporation's cash inflows and outflows from operating, investing, and financing activities - The statements show cash flows for the six months ended June 30, 2025 and 2024. **Net cash provided by operating activities increased**, while **net cash used for investing and financing activities also increased significantly**, leading to a **net decrease in cash and cash equivalents** for the 2025 period, primarily due to the VOXX acquisition and share repurchases[21](index=21&type=chunk) Cash Flow Highlights (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | | :--------------------------------------- | :---------------- | :---------------- | :------- | | Net cash provided by operating activities | $314,644,872 | $259,127,445 | $55,517,427 | | Net cash used for investing activities | $(181,358,214) | $(102,078,900) | $(79,279,314) | | Net cash used for financing activities | $(246,830,584) | $(123,241,613) | $(123,588,971) | | Net (decrease) increase in cash and cash equivalents | $(113,543,926) | $33,806,932 | $(147,350,858) | | Cash and cash equivalents, end of period | $119,774,840 | $260,241,951 | $(140,467,111) | - Key drivers for cash flow changes in H1 2025 include significant outflows for the **acquisition of businesses ($143.3 million)**, **repurchases of common stock ($198.9 million)**, and **cash dividends paid ($54.2 million)**[21](index=21&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the unaudited condensed consolidated financial statements - This section provides detailed explanations and disclosures for the unaudited condensed consolidated financial statements, covering accounting policies, recent accounting standard adoptions, specifics on goodwill, intangible assets, investments, inventories, earnings per share calculations, stock-based compensation, comprehensive income components, debt arrangements, equity changes, contingencies, segment reporting, income taxes, revenue disaggregation, leases, and significant acquisitions[23](index=23&type=chunk) [(1) Basis of Presentation](index=10&type=section&id=(1)%20Basis%20of%20Presentation) - The unaudited condensed consolidated financial statements are prepared under SEC rules and GAAP, with certain information condensed or omitted[23](index=23&type=chunk) - Management believes the statements fairly present the Company's financial position, results of operations, and cash flows, with all necessary adjustments being normal and recurring[23](index=23&type=chunk) [(2) Adoption of New Accounting Standards](index=10&type=section&id=(2)%20Adoption%20of%20New%20Accounting%20Standards) - ASU 2023-09 (Improvements to Income Tax Disclosures) is effective for the fiscal year ending December 31, 2025, requiring specific categories in rate reconciliation and additional information for significant reconciling items[24](index=24&type=chunk) - SEC Final Rule No. 33-11275 (Climate-Related Disclosures) is currently stayed by the SEC pending judicial review; the Company is evaluating its potential impact[25](index=25&type=chunk) - ASU No. 2024-03 (Disaggregation of Income Statement Expenses) is effective for fiscal years beginning after December 15, 2026, requiring tabular disaggregation of certain income statement expenses. The Company is evaluating its impact[26](index=26&type=chunk) - ASU 2025-03 (Business Combinations and Consolidation) is effective for annual periods beginning after December 15, 2026, providing guidance on determining the accounting acquirer in VIE acquisitions. The Company is evaluating its impact[27](index=27&type=chunk) [(3) Goodwill and Other Intangible Assets](index=11&type=section&id=(3)%20Goodwill%20and%20Other%20Intangible%20Assets) - **Goodwill remained stable at $340.7 million** as of June 30, 2025, with no interim impairment testing deemed necessary[28](index=28&type=chunk) Goodwill Carrying Value | Date | Amount | | :----------------- | :---------------- | | January 1, 2025 | $340,668,927 | | June 30, 2025 | $340,668,927 | - The Company's intangible assets, including HomeLink trade names, exclusive licensing agreements, and various technologies, totaled **$186.5 million net** as of June 30, 2025, a **decrease from $195.2 million** at December 31, 2024, primarily due to amortization[30](index=30&type=chunk)[31](index=31&type=chunk) - Amortization expense of patents and intangible assets was approximately **$4.7 million** for Q2 2025 (vs. **$4.4 million** in Q2 2024) and **$9.3 million** for H1 2025 (vs. **$8.7 million** in H1 2024). Estimated amortization expense for the remainder of 2025 is **$5.5 million**, and approximately **$3 million** for each of 2026-2029[31](index=31&type=chunk)[32](index=32&type=chunk) [(4) Investments](index=13&type=section&id=(4)%20Investments) - The Company's investment portfolio includes available-for-sale securities (government, asset-backed, municipal, and corporate bonds), an equity method investment in ASA, and strategic Technology Investments[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - The acquisition of VOXX on April 1, 2025, led to the reclassification of the VOXX investment and the acquisition of ASA. An **impairment charge of $6.2 million** was recorded for an equity method investment in Green Marbles LLC in Q2 2025 due to deteriorating financial performance[37](index=37&type=chunk)[38](index=38&type=chunk)[40](index=40&type=chunk) Investment (Loss) Income, Net | Period | 2025 | 2024 | | :-------------------------------- | :---------------- | :---------------- | | Three Months Ended June 30 | $(3,628,231) | $(12,393,771) | | Six Months Ended June 30 | $1,246,624 | $(15,762,295) | Fair Value Measurements (June 30, 2025) | Description | Total Fair Value | Level 1 | Level 2 | Level 3 | | :-------------------------- | :---------------- | :---------------- | :---------------- | :---------------- | | Cash & Cash Equivalents | $119,774,840 | $119,774,840 | — | — | | Short-Term Investments | $9,067,033 | $966,611 | $8,100,422 | — | | Long-Term Investments | $101,010,623 | — | $101,010,623 | — | | **Total** | **$229,856,496** | **$120,741,451** | **$109,115,045** | **—** | - **Unrealized losses on available-for-sale securities totaled $1,202,448** as of June 30, 2025, compared to $1,968,473 at December 31, 2024[45](index=45&type=chunk) [(5) Inventories, net](index=18&type=section&id=(5)%20Inventories,%20net) - **Total inventories increased to $475.7 million** as of June 30, 2025, from $436.5 million at December 31, 2024, primarily driven by a **significant increase in finished goods**, partly due to the VOXX acquisition[47](index=47&type=chunk)[136](index=136&type=chunk) Inventories, net (June 30, 2025 vs. December 31, 2024) | Category | June 30, 2025 | December 31, 2024 | Change | | :---------------- | :---------------- | :---------------- | :------- | | Raw materials | $282,343,416 | $307,098,829 | $(24,755,413) | | Work-in-process | $47,468,017 | $48,098,732 | $(630,715) | | Finished goods | $145,908,230 | $81,299,884 | $64,608,346 | | **Total Inventory** | **$475,719,663** | **$436,497,445** | **$39,222,218** | [(6) Earnings Per Share](index=18&type=section&id=(6)%20Earnings%20Per%20Share) - The Company calculates earnings per share using the two-class method due to unvested share-based payment awards with dividend rights[48](index=48&type=chunk) Basic and Diluted EPS (Three Months Ended June 30) | Metric | 2025 | 2024 | | :-------------------------------- | :---------------- | :---------------- | | Net Income available to common shareholders | $94,627,353 | $84,837,701 | | Basic weighted average shares outstanding | 219,631,876 | 227,377,169 | | Net Income per share - Basic | $0.43 | $0.37 | | Net Income per share - Diluted | $0.43 | $0.37 | Basic and Diluted EPS (Six Months Ended June 30) | Metric | 2025 | 2024 | | :-------------------------------- | :---------------- | :---------------- | | Net Income available to common shareholders | $187,439,850 | $191,488,981 | | Basic weighted average shares outstanding | 221,376,755 | 227,490,367 | | Net Income per share - Basic | $0.85 | $0.84 | | Net Income per share - Diluted | $0.85 | $0.84 | [(7) Stock-Based Compensation Plans](index=19&type=section&id=(7)%20Stock-Based%20Compensation%20Plans) - The Company recognized **$7.6 million in stock-based compensation expense** for Q2 2025 and **$16.3 million** for H1 2025, a decrease from the prior year[53](index=53&type=chunk) Total Stock-Based Compensation Expense | Period | 2025 | 2024 | | :-------------------------------- | :---------------- | :---------------- | | Three Months Ended June 30 | $7.6 million | $11.0 million | | Six Months Ended June 30 | $16.3 million | $21.5 million | - Unearned compensation costs as of June 30, 2025, include **$4.8 million for stock options**, **$56.1 million for restricted stock**, and **$13.1 million for performance shares**[56](index=56&type=chunk)[61](index=61&type=chunk)[63](index=63&type=chunk) [(8) Comprehensive Income (Loss)](index=21&type=section&id=(8)%20Comprehensive%20Income%20(Loss)) - Comprehensive income (loss) adjusts net income for non-owner sources, primarily unrealized gains/losses on debt securities, foreign currency translation adjustments, and derivative instruments[65](index=65&type=chunk) Net Current-Period Change in Accumulated Other Comprehensive Income (Loss) (Three Months Ended June 30, 2025) | Component | Amount | | :-------------------------------- | :---------------- | | Foreign currency translation adjustments | $2,109,011 | | Unrealized gains (losses) on debt securities | $508,302 | | Unrealized gains on derivatives | $(983,840) | - **Total accumulated other comprehensive loss at June 30, 2025, was $(3,396,649)**[66](index=66&type=chunk) [(9) Debt and Financing Arrangements](index=23&type=section&id=(9)%20Debt%20and%20Financing%20Arrangements) - The Company maintains a **$250.0 million unsecured revolving credit facility** with PNC, maturing in February 2026, with no outstanding balance as of June 30, 2025[68](index=68&type=chunk) - A subsidiary, VOXX (acquired April 1, 2025), has a **$3.9 million loan agreement** outstanding with shareholders of one of its joint ventures, secured by assets of its Onkyo subsidiary[70](index=70&type=chunk)[71](index=71&type=chunk) [(10) Equity](index=24&type=section&id=(10)%20Equity) - The Company's common stock decreased for the six months ended June 30, 2025, primarily due to **repurchases of 8.8 million shares**, partially offset by the issuance of **1.1 million shares** from stock plans, resulting in a **net decrease of 7.7 million shares**[72](index=72&type=chunk) - A cash dividend of **$0.120 per share** was declared in Q2 2025 (**$26.3 million**), consistent with Q2 2024[73](index=73&type=chunk) [(11) Contingencies](index=24&type=section&id=(11)%20Contingencies) - The Company is involved in various legal proceedings and claims in the normal course of business, including product liability and intellectual property matters[74](index=74&type=chunk) - Management does not believe any of these matters currently constitute material pending legal proceedings that would have a material adverse effect on the Company's financial position, results of operations, or cash flows[74](index=74&type=chunk) [(12) Segment Reporting](index=24&type=section&id=(12)%20Segment%20Reporting) - Effective April 1, 2025, following the VOXX acquisition, Gentex reorganized into nine operating segments under three reportable segments: Automotive Products, Premium Audio Products, and Other[76](index=76&type=chunk) Net Sales by Segment (Three Months Ended June 30) | Segment | 2025 | 2024 | | :---------------------- | :---------------- | :---------------- | | Automotive Products | $578,129,026 | $559,290,095 | | Premium Audio Products | $44,490,597 | — | | Other | $35,238,587 | $13,635,683 | | **Total** | **$657,858,210** | **$572,925,778** | Income (Loss) from Operations by Segment (Three Months Ended June 30) | Segment | 2025 | 2024 | | :---------------------- | :---------------- | :---------------- | | Automotive Products | $130,045,214 | $114,652,174 | | Premium Audio Products | $(2,086,649) | — | | Other | $(9,438,430) | $231,848 | | **Total** | **$118,520,135** | **$114,884,022** | [(13) Income Taxes](index=25&type=section&id=(13)%20Income%20Taxes) - The effective tax rate for Q2 2025 was **17.2%** (vs. 15.1% in Q2 2024) and for H1 2025 was **16.8%** (vs. 15.2% in H1 2024)[79](index=79&type=chunk) - The increase in effective tax rates was primarily due to lower tax benefits on stock-based compensation and reduced benefits from the foreign-derived intangible income (FDII) deduction in 2025[79](index=79&type=chunk) [(14) Revenue](index=26&type=section&id=(14)%20Revenue) - **Total revenue for Q2 2025 increased to $657.9 million** (from $572.9 million in Q2 2024), and for H1 2025 to **$1,234.6 million** (from $1,163.2 million in H1 2024), largely due to the VOXX acquisition[80](index=80&type=chunk) Total Revenue (Three Months Ended June 30) | Segment | 2025 | 2024 | | :---------------------- | :---------------- | :---------------- | | Automotive Products | $578,129,026 | $559,290,095 | | Premium Audio Products | $44,490,597 | — | | Other | $35,238,587 | $13,635,683 | | **Total Revenue** | **$657,858,210** | **$572,925,778** | Revenue by Major Source (Three Months Ended June 30, 2025) | Source | Amount | | :-------------------------- | :---------------- | | Automotive Mirrors & Electronics | $548,897,948 | | HomeLink Modules | $29,231,078 | | Premium Speaker Products | $32,430,491 | | Premium Receiver Products | $12,060,106 | | Fire Protection Products | $8,082,207 | | Aftermarket Products | $15,223,080 | | Consumer Electronic Products | $7,477,039 | - Assumed **$13.0 million in sales incentives liabilities** with the VOXX acquisition, accounted for as a reduction of net sales[83](index=83&type=chunk) [(15) Leases](index=28&type=section&id=(15)%20Leases) - The Company has operating leases for offices, vehicles, and equipment, with remaining terms ranging from less than 1 year to 7 years[84](index=84&type=chunk) - The **weighted average remaining lease term is 3 years**, with a **weighted average discount rate of 5.3%**[84](index=84&type=chunk) Future Minimum Lease Payments (as of June 30, 2025) | Year | Amount | | :------------------------------------------ | :---------------- | | 2025 (excluding H1 2025) | $1,945,507 | | 2026 | $2,960,319 | | 2027 | $2,135,249 | | 2028 | $1,645,337 | | 2029 | $772,904 | | Thereafter | $287,219 | | **Total future minimum lease payments** | **$9,746,535** | | Less imputed interest | $(729,590) | | **Total recognized lease liabilities** | **$9,016,945** | [(16) Acquisitions](index=28&type=section&id=(16)%20Acquisitions) - Gentex completed the acquisition of VOXX International Corporation on April 1, 2025, for **$148.3 million cash**, making it a wholly-owned subsidiary[86](index=86&type=chunk) - This strategic acquisition expands Gentex's portfolio into premium audio, automotive aftermarket electronics, consumer technologies, and enhances access to EyeLock iris biometric technology[89](index=89&type=chunk) - The Company also acquired GalvanEyes LLC in November 2024, gaining majority interest in BioCenturion, and subsequently acquired BioConnect Inc. on July 1, 2025, to further expand in the biometric industry[94](index=94&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) - **Net sales attributable to VOXX in H1 2025 were $78.8 million**, with a **net loss of $4.0 million**. Acquisition costs for VOXX totaled **$3.1 million** in H1 2025[92](index=92&type=chunk) - GalvanEyes and BioCenturion contributed approximately **$1.1 million in revenue** and **$1.8 million in net loss** to H1 2025 results[95](index=95&type=chunk) - Acquisition costs for BioConnect totaled **$0.2 million** in H1 2025[99](index=99&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance, condition, and future outlook [RESULTS OF OPERATIONS: NON-GAAP MEASURES](index=33&type=section&id=RESULTS%20OF%20OPERATIONS:%20NON-GAAP%20MEASURES) This section introduces and explains the use of non-GAAP financial measures for evaluating core business performance - This subsection introduces the use of non-GAAP financial measures, such as Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Expenses, Adjusted Income (Loss) from Operations, Adjusted Net Income (Loss) Attributable to Gentex Corporation, and Adjusted Earnings per Diluted Share Attributable to Gentex Corporation[100](index=100&type=chunk) - These non-GAAP measures are provided to help investors evaluate core business performance by excluding the impact of certain purchase price adjustments, acquisition-related costs, and severance costs, and are also used by management internally[100](index=100&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) [SECOND QUARTER 2025 VERSUS SECOND QUARTER 2024](index=33&type=section&id=SECOND%20QUARTER%202025%20VERSUS%20SECOND%20QUARTER%202024) This section analyzes Gentex Corporation's financial performance for Q2 2025 compared to Q2 2024 - Consolidated net sales for Q2 2025 **increased by 15% to $657.9 million**, with VOXX contributing **$78.8 million**. Core Gentex revenue increased **1%** despite a **2% decrease** in light vehicle production[101](index=101&type=chunk) - Gross margin improved to **34.2%** (**35.3% for core Gentex**), driven by cost reductions and improved product mix. Operating expenses rose **45%** due to the VOXX acquisition, acquisition-related costs, and severance expenses[106](index=106&type=chunk)[107](index=107&type=chunk) - Net income attributable to Gentex **increased 12% to $96.0 million**, and diluted EPS increased to **$0.43 from $0.37**[112](index=112&type=chunk)[113](index=113&type=chunk) Automotive Mirror Unit Shipments (Q2 2025 vs. Q2 2024, in thousands) | Metric | 2025 | 2024 | % Change | | :-------------------------- | :---- | :---- | :------- | | Total Auto-Dimming Mirror Units | 11,575 | 12,184 | (5)% | | Total Interior Mirrors | 7,534 | 7,535 | —% | | Total Exterior Mirrors | 4,041 | 4,649 | (13)% | [NON-GAAP FINANCIAL MEASURES](index=35&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES:) This section reconciles GAAP to non-GAAP financial measures for the three months ended June 30, 2025 - This section provides a reconciliation of GAAP to non-GAAP financial measures for the three months ended June 30, 2025. Adjustments primarily relate to inventory purchase price step-up, acquisition-related costs, and severance costs, aiming to provide a clearer view of core business performance[115](index=115&type=chunk)[118](index=118&type=chunk) Reconciliation of Non-GAAP Measures (Three Months Ended June 30, 2025) | Metric | GAAP | Adjustments | Non-GAAP | | :--------------------------------------- | :---------------- | :---------------- | :---------------- | | 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 (Loss) from Operations | $118,520,135 | $11,755,629 | $130,275,764 | | Net Income Attributable to Gentex Corporation | $96,039,584 | $9,733,661 | $105,773,245 | | Diluted EPS | $0.43 | N/A | $0.47 | [SIX MONTHS ENDED JUNE 30, 2025 VERSUS SIX MONTHS ENDED JUNE 30, 2024](index=37&type=section&id=SIX%20MONTHS%20ENDED%20JUNE%2030,%202025%20VERSUS%20SIX%20MONTHS%20ENDED%20JUNE%2030,%202024) This section analyzes Gentex Corporation's financial performance for H1 2025 compared to H1 2024 - Consolidated net sales for H1 2025 **increased 6% to $1.23 billion**, with VOXX contributing **$78.8 million**. Core Gentex revenue **decreased 1%** due to lower China market sales and a **6% drop** in automotive mirror unit shipments[121](index=121&type=chunk)[122](index=122&type=chunk) - Gross margin slightly decreased to **66.2%** as a percentage of net sales, impacted by VOXX and tariffs. Operating expenses increased **26.6%** due to the VOXX acquisition, acquisition costs, and severance[124](index=124&type=chunk)[126](index=126&type=chunk) - Net income attributable to Gentex **decreased 2% to $190.9 million**, while diluted EPS slightly increased to **$0.85 from $0.84**[131](index=131&type=chunk)[132](index=132&type=chunk) [FINANCIAL CONDITION](index=39&type=section&id=FINANCIAL%20CONDITION:) This section discusses Gentex Corporation's financial position, including cash, receivables, inventories, and working capital - As of June 30, 2025, **cash and cash equivalents decreased by $113.5 million to $119.8 million**, primarily due to the VOXX acquisition, share repurchases, capital expenditures, and dividends[134](index=134&type=chunk) - Accounts receivable and inventories increased, while **working capital decreased to $725.0 million from $784.6 million**[136](index=136&type=chunk)[144](index=144&type=chunk) - The Company completed two building expansions in Q4 2024 (distribution center and manufacturing facility) and is constructing an on-site daycare, all funded by cash on hand[140](index=140&type=chunk)[141](index=141&type=chunk) Working Capital and Long-Term Investments | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------- | :---------------- | :---------------- | | Working Capital | $725,042,761 | $784,635,494 | | Fixed Income Long-Term Investments | $101,014,623 | $141,961,474 | | **Total** | **$826,057,384** | **$926,596,968** | [BUSINESS UPDATE](index=40&type=section&id=BUSINESS%20UPDATE) This section provides an update on Gentex Corporation's business performance and strategic initiatives - For Q2 2025, consolidated net sales **increased 15% to $657.9 million**, with core Gentex revenue up **1%** despite a **2% decrease** in global light vehicle production[145](index=145&type=chunk) - The Company launched **18 net new nameplates** for auto-dimming mirrors and electronic features, with over half including advanced features, bringing the total to **139 nameplates**[146](index=146&type=chunk) [PRODUCT UPDATE](index=40&type=section&id=PRODUCT%20UPDATE) This section details updates on Gentex Corporation's product lines, including new features and market expansions - China's new GB15084 regulations allow frameless inside mirrors, and the UN ECE is investigating glare, where auto-dimming mirrors can offer a solution[147](index=147&type=chunk)[148](index=148&type=chunk) - Full Display Mirror (FDM) production is shipping to **eighteen automakers and 139 nameplates**, with enhancements like a three-camera rear vision system and DVR capability with a new ReVu app[151](index=151&type=chunk)[152](index=152&type=chunk) - HomeLink is expanding with cloud-based connectivity and applications for various vehicle types, and the Integrated Toll Module (ITM) is shipping on Audi and Mercedes platforms[153](index=153&type=chunk) - Biometric solutions leveraging iris scanning are being integrated for vehicle security and personalization, with future plans to integrate with HomeLink[153](index=153&type=chunk) - The Company is providing variably dimmable windows for Boeing 787 Dreamliner and 777X aircraft, and Airbus now offers them as optional content[154](index=154&type=chunk) - Gentex is developing intelligent medical lighting systems with Mayo Clinic and has acquired eSight technology for low-vision smart glasses, with **e-Sight Go product shipments beginning in Q3 2024**[155](index=155&type=chunk)[156](index=156&type=chunk) - The PLACE fire protection product line, a suite of advanced smoke and carbon monoxide alarms, **began shipments in Q2 2025**[158](index=158&type=chunk) - The VOXX acquisition on April 1, 2025, strategically adds automotive OEM/aftermarket electronics, consumer technologies, and premium audio products to the portfolio[159](index=159&type=chunk) [OTHER](index=44&type=section&id=OTHER) This section addresses various other business aspects, including revenue composition, market challenges, and intellectual property - Automotive revenues constitute **88%-92% of total revenue**[160](index=160&type=chunk) - The Company faces ongoing challenges from tariffs, trade regulatory actions, pricing pressure from customers, and increased costs for raw materials, labor, and logistics[161](index=161&type=chunk) - It actively works to offset these pressures through cost reductions, productivity improvements, and customer negotiations[161](index=161&type=chunk) - The Company relies on patents and trade secrets for competitive advantage and does not have significant off-balance sheet arrangements[163](index=163&type=chunk)[164](index=164&type=chunk) [OUTLOOK](index=45&type=section&id=OUTLOOK) This section provides Gentex Corporation's revised full-year 2025 guidance and future market expectations - Gentex revised its full-year 2025 guidance due to reduced demand in the China market from counter-tariffs and the expected contribution from the VOXX acquisition[166](index=166&type=chunk) Light Vehicle Production Forecast (S&P Global Mobility, mid-July 2025) | Region | Q3 2025 vs Q3 2024 % Change | CY 2025 vs CY 2024 % Change | CY 2026 vs CY 2025 % Change | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | | North America | —% | (4)% | (4)% | | Europe | (1)% | (3)% | —% | | Japan and Korea | 1% | (1)% | (4)% | | China | 1% | 4% | —% | | Total Global | —% | —% | (1)% | 2025 Annual Guidance (as of July 25, 2025) | Metric | Guidance | Previous Guidance | | :-------------------------------- | :---------------- | :---------------- | | Consolidated Revenue | $2.44 – $2.61 billion | $2.15 – $2.32 billion | | 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 (Consolidated) | 33% – 34% | N/A | | 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 | | Tax Rate | 16% – 17% | 15% – 17% | | Capital Expenditures | $100 – $125 million | Unchanged | | Depreciation & Amortization | $91 – $96 million | N/A | - The Company will continue to withhold 2026 revenue guidance due to ongoing geopolitical and market uncertainties[170](index=170&type=chunk) - A new share repurchase authorization of **40 million shares** was announced on July 16, 2025, bringing the total available for repurchase to approximately **40.6 million shares**[171](index=171&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=47&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES:) This section highlights the critical accounting policies requiring significant management estimates and assumptions - The preparation of financial statements requires management to make estimates and assumptions, which are continuously evaluated based on historical experience and reasonable assumptions[172](index=172&type=chunk) - While actual results have historically not differed materially, they may vary under different conditions. The Company refers to its Annual Report on Form 10-K for a comprehensive list of critical accounting policies[172](index=172&type=chunk)[173](index=173&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the Company's exposure to market risks, including foreign exchange, interest rate, commodity, and tariff risks - The Company is subject to market risk exposures including foreign exchange rate risk, interest rate risk, commodity price risk, and tariffs[174](index=174&type=chunk) - Fluctuating interest rates could negatively impact financial performance due to realized losses on fixed income investments, impairment adjustments, and reduced demand for light vehicles[175](index=175&type=chunk) - Geopolitical environment, especially with China, and associated tariffs cause uncertainty, increase input costs, and disrupt automotive supply chains, negatively impacting the Company's business and financial condition[177](index=177&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the Company's disclosure controls and internal control over financial reporting - The Company's disclosure controls and procedures were evaluated and concluded to be effective as of June 30, 2025[178](index=178&type=chunk) - There were no material changes in the Company's internal control over financial reporting during the quarter ended June 30, 2025[179](index=179&type=chunk) [Part II - Other Information](index=49&type=section&id=Part%20II%20-%20Other%20Information) This section covers additional information including risk factors, equity security sales, exhibits, and official signatures [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the Company's risk factors, noting no material changes except as described in this report - Information regarding risk factors appears in Management's Discussion and Analysis of Financial Condition and Results of Operations in Part I – Item 2 of this Form 10-Q and in Part I – Item 1A – Risk Factors of the Company's report on Form 10-K for the fiscal year ended December 31, 2024[183](index=183&type=chunk) - There have been no material changes to the risk factors previously disclosed in the Company's report on Form 10-K for the year ended December 31, 2024, except to the extent described in Part I – Item 2 and Item 3 of this Form 10-Q, and otherwise herein[183](index=183&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's share repurchase activities and available authorization for future repurchases - The Company repurchased **8.8 million shares of common stock** during the first six months of 2025 under its share repurchase plan[184](index=184&type=chunk) Share Repurchase Activity (Six Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Weighted Average Price Paid Per Share | | :---------------- | :------------------------------- | :------------------------------------ | | January 2025 | — | — | | February 2025 | 250,015 | $24.74 | | March 2025 | 2,850,336 | $24.50 | | April 2025 | 300,084 | $22.02 | | May 2025 | 2,400,790 | $22.39 | | June 2025 | 3,001,190 | $21.93 | | **2025 Total** | **8,802,415** | N/A | - As of June 30, 2025, **646,983 shares remained available for repurchase**. On July 16, 2025, a new authorization for **40 million shares** was announced, bringing the total available for repurchase to approximately **40.6 million shares**[185](index=185&type=chunk)[186](index=186&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section refers to the Exhibit Index for a comprehensive list of all accompanying exhibits - See Exhibit Index on Page 51 for a list of exhibits[187](index=187&type=chunk) [Signatures](index=50&type=section&id=Signatures) This section contains the official signatures certifying the report's compliance with regulatory requirements - The report is signed by Steven R. Downing (President and CEO) and Kevin C. Nash (VP, Finance, CFO, and Treasurer) on August 8, 2025[189](index=189&type=chunk) [Exhibit Index](index=51&type=section&id=Exhibit%20Index) This index lists all exhibits accompanying the Form 10-Q, including certifications and XBRL documents - The Exhibit Index includes CEO and CFO certifications (Exhibits 31.1, 31.2, 32) and Inline XBRL documents (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE)[191](index=191&type=chunk)