Gentex (GNTX) 20 Oct 172017 Q3 Earnings call transcript

Company Profile

Participants

Josh O'Berski	IR, Manager
Steve Downing	SVP & CFO
Kevin Nash	VP & CAO
Neil Boehm	VP of Engineering
Joe Vruwink	Robert W. Baird
Chris Van Horn	FBR
Rich Kwas	Wells Fargo
Brett Hoselton	KeyBanc
Ryan Brinkman	JPMorgan
David Whiston	Morningstar
John Murphy	Bank of America Merrill Lynch
David Stratton	Great Lakes Review

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to the Gentex Reports Third Quarter 2017 Financial Results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to introduce your host for today's conference, Mr. Manager. Relations Investor O’Berski, Josh

You may begin.

Josh O'Berski

XXXX contents and morning Thank incurred rebroadcast, Operating Corporation Corporation O’Berski, to Officer; to respect Steve manager, Gentex included Kevin Nash, President Gentex welcome quarter you. Gentex President XXXX the unauthorized call Neil and Gentex from of always not way copied, an Harbor and Corporation Chief the conference Relations Josh on the Gentex use party Reports responsible any may forward-looking Gentex of This Good contents third the of and or Boehm, I’m Engineering. contains damages Gentex Gentex earnings shown call Officer; quarter otherwise by President the Safe call. Accounting results any within call. the the retransmitted, Corporation of will and conference call by in website. published, as this Vice the Internet This at and by hold this release of morning, and financial redistributed. meaning joined of press conference statement www.gentex.com. property of All website Chief on information Gentex are reproduced, Vice with I’m liable third is be this our Investor the any earlier transcribed, Downing, live on and conference release for icon

terms. Your participation in call this conference these to consent implies

to call turn XXXX will I who over summary. the Downing, financial the will Now, quarter Steve give third

Steve Downing

Thanks, Josh.

auto-dimming of by third net quarter-over-quarter XXXX. X% compared mirror mirror of underlying in American X% a million, shipments. part of majority international offset partially auto-dimming The sales unit the which X% the international $XXX.X by was For production vehicle of in X% shipments mirror in overall sales in markets, international the shipments of these light quarter-over-quarter increase was net an Korea auto-dimming North decline unit American which shipments. growth The North was quarter and growth unit an the company sales reported company’s net the quarter-over-quarter large The increase up was driven in in XX% quarter in vehicle Japan light production. Europe, million from in $XXX.X decrease an in XXXX, of which of comprise third to resulted of X%

reductions gross the cost XX.X% due on in to the During the negatively due on a the X% schedules by margin well sales declined primarily approximately purchasing quarter-over-quarter of When decreased a North not the quarter-over-quarter as production original light XXXX, the of fully to company's basis. annual leverage the quarter third company's were shutdowns, growth plant the of quarter overhead XXXX, company’s third offset lower impacted by primarily a XX% basis growth with intermittent sales by customer vehicle to approximately compared to inability estimates which price XXXX, as same for that reductions percentage. in of from quarter as net fixed the American production, to result third as compared costs

compared million during the to compared in in of the the due improved $XXX.X in improvements quarter XXXX Income compared quarter to to mix and net product as quarter XXXX margin the the quarter XXXX million earnings in to of result quarter-over-quarter as to more million $XX.X than million sequentially profit from quarter X% X% gross efficiencies. the income in quarter quarter income XXXX was operations of which of third XXXX X% income to income of last quarter with investment quarter-over-quarter quarter the recently XXXX an diluted per million third a of the to quarter increase a However, XX% XX.X% third from of the manufacturing income. for profit in the offset XXXX second share primarily $XX.X quarter to for decreased decreased of third with of for XXXX XXXX, third of net third third the margin when compared quarter third lower the Other $X.X decreased compared offset per same Earnings year. income -- diluted Net sales. to $XXX.X increase the due third increased in $X.XX as of completed in result gross $X.X from the the $X.XX in the of which share operations decrease of in in to of net of most than XXXX. more percentage million

company the During per an its the $XX.XX common average share. price shares of million X.X at of third repurchased quarter of XXXX, stock

macroeconomic of factors that to appropriate. repurchase additional and As shares announced trend has its repurchase remaining the issues, repurchase company XX.X available to shares in stock depending the continue other company approximately future million pursuant share market The XX, September for XXXX, its company intends on plan. previously to deems the common of

disclosed XXXX. the September During in previously continue such its in hand loan, debt the company in $X.X XX, now with the company’s to call will XXXX third million, to a discretion its in repayment during total I normally $X.X its of to XXXX, the at of million details. towards future based financial expects which combination over on term debt Kevin quarter pay principal company factors debt paid principal scheduled quarter anticipation with third on maturing the resulted quarter. on down additional The of $XX the of million of repayment

Kevin Nash

from $XXX.X of of XXXX, shipments on $XXX.X of products, million, Thank you, quarter newly XXXX. adopted impacting of rate sales quarter fire due favorable with during increase XX%, protection tax related $XX.X windows third dimmable auto-dimming in the third million, an compared as and unit XXXX domestic basis. of mirror in in other the to million quarter-over-quarter net quarter, of the Steve. deduction, net were manufacturing net automotive varies rate treatment to in to aircraft accounting statutory of which increase third The the Other primarily guidance net X% quarter increase well compensation. million Automotive as driven sales the X% $X.X by a of discrete in third includes which XX%, the tax a compared of the sales X% share-based third the items quarter sales was an were

reclassification variability These sheet release. Excluding the for of company’s XX% of rate items company XXXX. and up future the impacts up within compared were $XXX.X the $XXX.X million, effective million. included was to Short up million, may in But September XX% standard, calendar accrued XXXX in of $XXX dividend were approximately $XX.X were million, of inventories the tax to were cause and the accounting comparison debt were short-term Accounts expects up $XX.X cash tax long-term as rate. operations to its year balance debt press $XX.X some from the in December sheet was in payments. items. from and both increases of $XXX.X primarily term overall represent the debt the to timing Accounts new was million periods. be million impacts due maturity from equivalents addition $XXX.X $XXX.X million the million, to balance million the the XXXX, further Quickly in million standard to repurchases, Cash for by XX, versus and salaries cash from quarter. is payable a $XX.X which million. offset $XXX.X share investments repayments, $XXX nine to million, but $XXX company’s expenditures liabilities partially up accelerated a from from capital wages. receivable primarily million, of million primarily $XX during sales months, The flow also to long-term investments today's due Accrued result due

highlights. flow cash Some

net million, in its for $XXX.X in from primarily to in calendar and amortization capital lowering quarter million Third Neil and amortization operations for year technology calendar million $XXX Both million of which $XX.X floor also 'XX depreciation the in $XX and the XXXX, Boehm with amortization year-to-date hand for million for third third range year-to-date 'XX. in capital year-to-date cash Capital compared was dates capital quarter million changes cash XXXX. versus million million the were year-to-date million projects, quarter million company's the for quarter and was for of expenditure with expenditure $XX.X XXXX. the its the depreciation the million down from and income. compared year-to-date million XXXX. and of year with was and was million estimates of flow to third were operations And and $XX.X current quarter the were I’ll update. expenditures and third 'XX Depreciation is flow estimated million driven million to of fluctuations working the compared now $XXX.X guidance for with by capital year-to-date third $XX.X over range completion quarter $XX.X million expenditures planned product $XXX.X $XX.X $XXX $XX.X $XX.X compared $XXX from for for and 'XX the on lowered in company based $XX

Neil Boehm

nameplate Thank you, inside and were quarter of features. of new electronic In launches and Kevin. XXXX, eletrochromic net the XX our there outside third mirrors

net third the of advanced the During XX% features. quarter, mirror approximately auto-dimming launches contained

in as advanced this As globally, of provides customers. greater a but were of in development we than also our portfolio. helps to -- of our importantly products levels mirrors products is net of relevance launch and continues previously, launches of geography have are car Full customers. the launch encouraged of deliver auto-dimming of launches other our bullish features product work XX%, at more our Display strength Mirror when noted growth evidence the Gentex a noticed, for We to a initial indicator us base this to secure on a technologies of our

announcement models the are offering of several continue additional currently launches for we to conclave that we’ll on see Full next our years shipping product, at Full eight Motors, over Display General Mirror believe Display GM. recent the vehicle With XXXX program we Mirror for and the

are Mirror as FDM announce second now, announced markets system on our Levorg to company And we quarter, the is launch the Full Subaru and during Australian the the on Display third now pleased system our well. Subaru European shipping Japan. the quarter, we for the in Levorg During

secured about we believe digital Subaru the of to is marketplace. our acceptance the and a excited technology it the mirror because in offering points we launch our We’re why product believe global

work few hard the years the team, quarter, an at with requirements of in OEM We hard a our shipping performance award technology the third our in team. ago Nissan and that race form became and production Gentex’s OEM began Nismo, ultimately of pushed our one Nissan’s very technology display for the meet a during Additionally, engagements Nissan’s first and customer. interest ultimately off development for to race FDM began system. of paid our Nissan, company

during Nissan third the announce Display Full system. the our that to quarter, with excited XXXX We’re debuted Armada Mirror

to and for like automation for the as Full roadmap several continue have customers status quick our products technology. we you would Full In for we with to five debut to decisions business Display see development iris-based product As Mirror program Display our with on well Mirror the in our update OEMs Module System, we have CES future activities their Full Camera overall Toll Integrated received vehicles. who, are biometric that to Monitoring our specific from XXXX, we Display OEMs And will addition Mirror new add publicly, different for advanced solution to into home the these a HomeLink at as System, update with in talks other believe, make OEM updates, of awards we we discussed interest

closing we’re look to for Steve generations some forward technologies we to will new well introduce our back to now over products as showcase to I January new XXXX, remarks. hand customers. XXXX call As remaining the these in improvements CES of and excited guidance and

Steve Downing

the between continues our of our product profit XXXX, expense be nine our forecasted calendar will between gross XXXX. forecast the calendar and the which Thank margin estimates, sales, year calendar you, the the of XXXX. XXXX, on $XXX IHS expense mix product X% XXXX increase XXXX, company production million believe and million mix for XX% operating expenses combining will the quarter quarter increase XX.X% forecast, an shows be primary that the October and year company’s to fourth forecast, and vehicle growth months regions estimates for and fourth and When for with Neil. currently in results X% between actual will the company Based production the XX% approximate $XXX revenue in year of for current light that for current versus

over continues recent forecasted to and the most estimates above the production previously to forecast on product current which vehicle for estimates no estimated be be changes based to calendar XX%. of the revenue Lastly, IHS and mix, is company for to in XXXX, light making X% before announced XXXX year range its revenue XXXX

we discussion, product and his welcome And Neil that show. in be note the mentioned As always, at showing to as offering are in you’re we’ll us about January XXXX. CES excited the please of very come at see product

interested in CES, time. a please free can schedule are to you questions. and visiting If at we O’Berski feel now proceed to to us Thank Josh contact you

Operator

Thank you. David [Operator from Baird. question Robert W. Our first Instructions] Leiker comes from

open. is line Your

Joe Vruwink

This everyone. David. Hi, is Vruwink Joe for

Steve Downing

morning, Joe. Good

Kevin Nash

Joe. morning, Good

Joe Vruwink

wanted you can provide product color gross to just start, more the that on sequentially? benefited I margin mix

Kevin Nash

Yes.

saw you product saw a of our if a of of in quarter, we lot there. the well. sector didn’t you call our you but of lot well newer ones And featured and that advanced did it’s function a -- look at Some so segment weakness older really feature North the mirrors weakness in features D&E our what advanced do traditional product in America, so

that, saw our In shipments very as addition strong was do to you mix our international well. regional

So, it both a of combination was those. of

Joe Vruwink

is healthy what increase. think QX QX, corporate yet to trying the gross similar mix interior QX versus seems and a we’re versus ASPs I similar pretty reconcile like versus QX had margin exterior it

by else? all than legacy new those just the explained that’s between versus difference anything So, features

Kevin Nash

combination a couple a of of right. things, it’s Well,

assist I about but I new high margin historically reductions from on we the kind us. from improvements in in going the ASP, think get it’s year-over-year was Like a it’s and in purchasing -- talked for and as good, the low moving driver then company. it’s basis, we But the to not while talked away features. quarter. also, a better follow-through the quarter that’s And away, Mobileye cost a also, our sequentially integration about it’s second tend than fourth better it third of the

Steve Downing

margin of at assist And of some launches like a than lower features. newer with FDM assists Kevin replacing gross the gross that mentioned, margin profile driver you’re profile features driver our better

Joe Vruwink

That sense. Okay. makes

you though. a And As to expected it know, P&L weaker; QX, intact. viewing stronger. you bit is North items be are line, think the bit like America a back to much markets, pretty July IHS down foreign a are the and of seems top a how The little I forecast, bit lot within

it penetrated what’s is as America QX saying So, highly as for the revision. the simple North you’re and revenue in schedules in causing that change and QX

Kevin Nash

the always with December have the things when incredibly discuss and at QX, HomeLink you that Tier hard look the with is and think, one Well, I of number in of holidays predict shutdowns as both is Xs outside we plant especially to mirrors. we customers now

be to tend optimistic about we fourth so, the And cautiously quarter.

the, years, tend we what know for Tier last particular, we missed December what and couple had look so, in due shutdowns of years. do the And of has And couple adjustment. the we at it inventory in planned the last QX to to really, say, X okay, and

or then of a looking has from over likely what see Tier adjustments the forecast. customers. forecast the X inventory and that’s these of we’re net we last And with is kind we the So, of come up that how at what eyes what terms through looking likely and in years scenario also couple what at it we been

little look at bit. struggle to look America -- you If before, if to you -- you look look is to like is the at you a production full North supposed you continue said year, where at going and be, at then if

And we so, optics that forecast. that is also view one of our the

Joe Vruwink

has your question, have touched rollouts you enough where margin an that accretive impact maybe overall since you it’s product the business? of on growth beginning Okay. certifications around the to And and update an then on for provide mix international grown initiatives, last the HomeLink, can some on and

Steve Downing

No.

you’re of marketplace. HomeLink, It’s a mentioned right international those for going any believe now. shipments have we’ve like the years impact at financial not beginning of previously, change on If just take materially really financial are real shipments any performance. you of Because would before couple We a our look it’s to HomeLink performance. company’s type creating foreign

the So, customer, awareness, into that buy-in create offering. creating OEMs customer and then consumer have product, awareness. to you I by not the only the need but mean, are but ultimately product you And the

So, is of be business a going long-term that development company. the strategy to

Joe Vruwink

you. Thank Okay.

Steve Downing

Thanks.

Operator

And our question from Markets. you. Van Christopher Capital comes Horn next Thank FBR from

Your line open. is

Chris Van Horn

for my Thanks morning. Good taking questions.

Steve Downing

Chris. morning, Good

Kevin Nash

Good morning, Chris.

Chris Van Horn

I are here Mirror Full want good that product launches a that the just -- take of happening points the response here. give into very from you update to all perspective new and are these pretty just to response are an a us their jump rates congrats bunch wins. well of Display product want OEM they’re it or for these the new have the from number I to product? data because just the of Is what’s on really just you because getting Can performing on the good

Steve Downing

you Thank Yeah. noticing for that.

a control OEMs’ of wait struggle product launching to you're you're to things announcements go trying market. they like to honor that, trying how when is with One we the the ability to their new for and

anything. so, watch And available were of Most really the of and what's two before publicly are is just three made. about ago. we these decision they years carefully And talking announce this made -- we’re try that to that awards function function these direction a OEMs’ first really, to watch and we

And and the get what products timing to to cadence the because marketplace. about launch so the -- launch these was that’s

any of really, isn't the So haven't there -- than positive GM. we seen other

to this to want haven't this enough is wow, You market yet really strategy. consumers, consumers because the that with something is do say, OEM is we seen popular the need really about for really This product OEMs the in it.

of some based excited as to consumer pool the we we we’re marketplace, the they create get will these that demand. programs, because so, on this launch And hope as effect

Chris Van Horn

a the just us here. marketplace Is of the penetration further international you taking pricing? And advanced international couple the strong share? there Could Got there? side? shipments, update of on better then, Is on dynamic What's quarters Are we've the had on features? Okay. it. it you

Steve Downing

play the was penetration product. really the Yes. of about It

So, products terms all accelerating in not material of just and there's business our really the that’s of take It’s penetration the in any primarily about international that growth takeover rate. markets. rates

Chris Van Horn

Okay. of price there? the then, pretty mean, ordinary out industry, of for frequency the is it And state that cited the seeing? or that’s the last industry of continued I just typical the going kind you're but know on magnitude me. anything Is concessions. it I the of you or them for the

Steve Downing

say of for primarily industry a it little the driven This standards. based than a a I'd continuation the year, year financials. that more But, it’s last much it's us Yeah. is bit was future was normal impact having little pretty on for on of an higher typically us why which awards.

the typically of ahead it’s to future. are part you’re as make other in concessions that moved the So, because years pricing in your drive new In as to the have help product you working now, concession words, growth price growth through portfolio awards words, of other linked. for to they program obviously two from on three business current

Chris Van Horn

the Okay. Got for it. again Thanks time.

Steve Downing

Chris. Thanks,

Kevin Nash

Chris. Thanks,

Operator

you. Kwas Richard from from Wells comes Fargo. And next Thank question our

is open. Your line

Rich Kwas

Good shipments? What was morning. mix Hi. for the base the quarter feature in advanced

Steve Downing

It was same quarter. last as well actually as about the

growth of it like was that better than said, So, been. that drove revenue base. about I the to XX% newer otherwise if would But be some

a feature the to improvement QX quarter seeing strong year-over-year look points. not versus which still more did that from at yet we’re and XXX base feature is impressive mix the yeah, on -- all mix advanced honestly when gross basis. from margin to mirrors this quarter makes Which margin base So, QX, improve basis last change the did a -- you

Rich Kwas

get performance. that pause think on of more entailed back mean we the that? the XX% to of is or But between the do kind and to terms feature, of I in as some base X% XXXX. what's growth kind you're just advanced guidance yeah, good at advanced the for guess of was and normalized this revenue in the this ray I I any the of term, XX/XX. getting features, guess Right. you I expect growth of know -- in longer

Steve Downing

that -- probably perform. is would Well, if going how North factor at the look that’s I does I primary to what America impact

before, why real programs growth mirror be the in this D&E So, begins quarter base primary market, counter because the to in of at disproportionate where and reason on with. we amount were begin been a losses in the advanced It’s was that that of that tends we that in new American in And features XX/XX that the to you’ve of lot international. never have base were auto-dimming. of with production segment segmentation. is a A North

QX of happening America the that And why most and X% because D&E that in so, decline of reason on happened was it segment in vehicles. decline North

Rich Kwas

Right.

go this what do to the So, of terms guess you’re be do cetera, Or Steve, what’s here XXXX, the that as your we cetera, recently, et to around XX% or think think then, rate based or is XX% be America? rates, this it’s of normalizing launching base? kind trim closer best new about to in closer you, we as to at run et -- whether take of we we��re the going North going on on

Steve Downing

to predict a tough -- swing mean, -- a basically less because volumes XX% in than base it’s it’s you’re volumes. honestly versus future It’s fairly I about talking really

it’s tough time it’s quarter fairly to really a period. basis on So, a because short predict

longer mentioned a the XX/XX The in over a be that more we of to time is auto-dimming to a range. bullish of continue longer will that frame, in we’re all his about Neil would things indicator look talking you that in upside really that If this base though one the period, comments it the was of growth think business. and is

discussions having why against the auto-dimming been that business company bare growing mirrors the One features. away. mirrors, around, that way outside -- And of a are us that to it advanced and auto-dimming does base for or thing now and also mirrors, view themselves has we’re the increase going We then good what because seeing is the pave cases term other as fast. longer we’re advanced

Rich Kwas

think about the margins, to year, from relative one expectation. we margin as Okay. was on gross so just -- And another initial this disappointing just me

do as You’ve impact. control, and can volume can at that we different But the number versus look some how you and had you mix gross about factors. of margin you with I about of talked XXXX this can think if can control, because about I stuff that and you But all a the realized the have headwinds and feel you besides improving the market mix, the you’ve -- control et initiatives the year metrics know cetera. an

Steve Downing

margin in we think primarily four with line next years, look to the these and last And I when roughly the next several is gross about inside XXXX, been years. is hard at then talking we've we're income we've what creating really in worked is that what of this year's that to gross margin. on on grow over continue year ability statement really focused

we're not focused a on one statements. it best-in-class to expansion XXXX. takes gross is margin to at and So, what in be income we're forecasting the -- what the not discipline of we looking Really, maintain believe

Rich Kwas

on. it pass I’ll Thanks. Okay.

Steve Downing

Rich. Thanks,

Operator

you. Thank

Brett next comes KeyBanc. from from Our Hoselton question

open. is line Your

Brett Hoselton

morning, Good gentlemen.

Steve Downing

Good morning.

Kevin Nash

Brett. Hey,

Brett Hoselton

taxes, tax Looking line, XX.X% help previous three can I What third. your XX% quarters. this? in get tax not to quarter, your the be -- hit struggling XX% I'm I -- I quarter, to of rate I mean, a misunderstanding across sure, in I'm here, as XX% miscalculating you Am guidance, at And this? from calculating the for may you the but the look kind the at second the and did a and full I'm in me to XX.X% of the I kind first to on reconcile which in get is fourth XX% miscalculating need that's the a significant this? it you Am year, step-up

Steve Downing

No.

items, guidance call onetime discrete excludes I we what think items. the so

have, the new few stock-based accounting people the had our expensing. quarterly basis, by onetime quarter also compensation impacted we're that events. are realizing we discrete value what versus first regulations are a a The And quite on that and

And it can so, make that vary.

rate that so, that. of is And exclusive

of bottom there. because quarter, we this was can have you it But So, on that end benefits. had favorable the variability

talking I the XX% because hard expect any But was items means. that So, I those be to wouldn't about by to it include doesn't forecast. they're rate discrete pretty

Kevin Nash

was, were lower history. was the a rate that those working discrete tax due that the to we on really, remember, And events with And to help mentioned, try XX.X%, its in the much experienced, rate. what has that largely Kevin company than are to like onetime

you look on and a history. of basis, XX.X% it's tax the If at, really, for really history company's XX.X% between most its been

that down of working the to last that been actually we've -- the to to several lower XX.X% range kind XX% so, And over years.

Brett Hoselton

I I'm guess, modeling in quarter. fourth So, about seem XX%, XX% thinking that of Does kind the unreasonable? or

Steve Downing

No.

Brett Hoselton

and talk Okay. think Mirror switching you And in positioning product, its gears, can we then, competitive about the the the about talk Full as Display marketplace particularly nature it? about proprietary of

Neil Boehm

Yes. Absolutely.

and are demand, OEMs for what's business, through, now. With product, the able and on coatings we're about to one I of or to to important the generations ahead either is from product coatings five comes years are side through on improve an that film have a working all that coatings of display that to We with the display We're chemistry we between is time talked of the you important that we and evolving make and continue those a evolving do the how items, think excellent-looking the transflective it of it have the the product things to we one a mirror like key device through that's and shine where two-way have look a how shine we one sorts, internally, have, and or a mirror have display. and take stay internally, product mirror how of always generation where our to. working direction thin the display we perform then of the on get product. we're just multiple not get the competitors OEM, trying by either to

chemistry, have bar the to, competitive our really side. in advantage move able great a we're I market quickly first. in coatings well a we as think, as But competitive core So, our being the competency from just with think I

Steve Downing

offering. And if awards, we of Brett, our of OEM the you the that’s at strength you there, product believe point look at indicative if is out the -- look five one things we of

of mentioned, make light So, the management the Gentex at effective, terms and like part very unique it our talking that the currently. that experiencing in applied but the that’s Neil product we -- materials offering. we're We chemistry makes strength believe order how and evidence light was OEM to is the in program and what launches the of that the of and of and product technology awards the manipulate not I best of behind that looking number about

Brett Hoselton

amount it I competitors, about limited of like As dimming capabilities. Magna, seems your there's a think of outside automatic mirror

wrong, like me again correct I seems dimming understanding the Is of you to have Magna the features. the major so, display a one International outside mistaken? I'm it automatic am mirror that with features correct advantages but combine ability mirror or if the And full is of

Steve Downing

absolutely really produce advantages That’s -- and one and advantage. side a competitive -- able the chemistry electrochromics and the in foundational it’s Absolutely. it well being do a coatings surface reflective difficult, really of through it able with is this shine That’s to of been it. No. is front of and it to we’ve

Kevin Nash

unique. you there one our Brett, the think, offering things were is makes with product that, hitting features, advanced other on of combination truly I in that

Steve Downing

Right. HomeLink other products. Combining it with and

Brett Hoselton

off, just the what third you that of did itself. asking thinking -- in come on portion the the were who they kind investors how to party and knock is them and -- talk I to replicate going mirrors Yeah. advantage gives automatic-dimming of

Okay.

Steve Downing

at it monitoring point the tangibly. tangible because product very really is Well, the for But FDM is you other can helps I that seeing explain starting really part system. And unique. product -- offering CES think of camera the it a see

a So, that single look type when of with it starts the some you building blocks of system, whole of display. at camera

located perspective, mirrors, mirror, the size from what design cameras in outside a you and to of mirrors. do into allows So, in additional to case, ultimately our outside moving change a full styling that display

And this product, just unique believe it’s marketplace. advantage the the Gentex really it’s so, evolution in a not about offering one product. that’s where whole about we distinct has a And the and of product

Brett Hoselton

think or but Excellent. catch more I I’ve afterwards. just got going back few I’m guys some maybe questions, you circle to

So, very much. you thank

Steve Downing

Thanks, Brett.

Operator

Thank you.

from Ryan next question from Brinkman comes Our JPMorgan.

open. is line Your

Ryan Brinkman

that vehicles it might us So, think Can mirror. remind many standard option, positively Chevrolet an you’re you an rate is more Thank I’ll on the the on being example, negatively Bolt, just you. are feel versus with any how and I start for take on, on you on does consumer full relatively to your how one that And option? the for the where more question differently you that display potential is the product? track the make vehicles about standard. expectations then, or be it of

Neil Boehm

they So, across is are It’s the a give packages. with good to the of today -- talk snapshot these I'll I’ll of some the variable vehicles. but I’ll vehicles, some you Neil. where morning. all current of this

optional or So, the trim you're when if package product a conclave two the trim four $XXX, packages near Those look on standard get on surround have they the level We're packages viewer at today, and optional highest the conclave view. you viewer conclave. on a you this full packages. there’s viewer on mid disclaimer for

come two technologies together. the available. enclave not level is So, trim The base of

into optional one so starting the vehicle, that that’s So, on the trim. of top standard on kind

the five on two. two The CTX at look five, in you version, Out all-wheel drive that standard that and we're part packages $X,XXX on optional were optional two platform. that the of available were package. are a there’s of If

not we CTS read look I trim it’s going bottom one the standard announced, there's on not we’re is you the rolled Armada platinum these $XXX data and the the the where two it’s reserve into or stand-alone levels, to platinum available top at levels. take it’s and the the CTS, feature. the of two which recent two two -- levels trim I'm a got And Nissan if levels, most trim trim here. because mid through of -- part it’s standard. The lot But a a on If there's all top

So, very... it’s

Steve Downing

And pretty similar that’s

Neil Boehm

pretty variable. It’s

Steve Downing

Yeah.

Neil Boehm

two These on there trims are levels top the depending how trim many are.

We let's say four usually and mid-trims content. available are as available trim standard in there's, in then we're an Usually, or the five an levels. option optional it’s if

Steve Downing

the And usually not on base. available entry

Neil Boehm

base that Typically, vehicle, on. not we're available

Ryan Brinkman

that does prefer $XXX as for be How the Is stand-alone there appetite presume with feature. that? work strong option? a you to I available a

Steve Downing

that seems appear us it there We -- very we’re in Obviously, based this. the seeing, on I would Yeah. believe -- it's volumes mean, early to is. it that

versus what pleased in I if forecast it's being with of hasn’t we’re and volumes our we that GM it yet be mean, terms performing, seems be believe data overall at bought. shared a so, we with how the look consumer And how us of But to just sentiment. to lot

to that The of one and direct customer, forums and at weeks need opportunities can boards to best as look going tend the SIMA to other we they to we owner is And improve our product thing what at consumer and solicit about input offering. feedback get product to it. great like what consumers is forward do help we from that about continue directly two

Ryan Brinkman

segments. to heard than Okay. last primarily you shortfall to the relates earlier softness softer passenger in cars question from expected production, in half passenger D relative E I the seems the the the to saying relative this North Great. in calling back the that of remind the trucks But America? up versus us specifically you And North and it light incremental IHS to of year your America able exposures cars. just are then, me,

Steve Downing

Yeah.

as further exposure segment our we of America you and it's B E at obviously, If not D mean, But break was were much and your passenger IHS cars C, a America. to of the do for down and I cars. passenger I that data SUVs, and look statement, quarter segmentation on little And similar North SUVs, believe, as relatively the in pass And XX% to have E flat. if believe is high I up almost you look level trucks most in that a more trucks very were -- cars, exposure on much North D and on. at segments. and

about D in segment volumes if America of XX% on that, content vehicles the probably So, look today. at you and overall North would E have

Ryan Brinkman

Got it. Thank you.

Operator

you. Thank

comes from question Morningstar. next Whiston from David Our

open. is line Your

David Whiston

morning. automating. Good I automation How ultimately of the where at was a out with have of register to was curious more and headcount plant go featured, article to point lot Thanks. some and talking ways if have just people do I happen I you amount the in ultimately headcount haven’t to are and on you keep your a reduction want you reassigning you reassign guys about. run gears back to this to the switch despite news people had not you topics, an

Steve Downing

the people operational -- our are more you really and of were same getting excited the but maintaining to the advantage cost into efforts Well, the what continue and and for and obviously how the like do the manufacturing growth enlarge that’s equate that look how to our us the to And people very reason how no it the things And have numbers of if by things. make and business efficiency effective North job higher the looks that competitive the and is to offers business. it’s management, the And talk American kind sharing that one only business. from is reassigned production not of driven more you sets is at to what we is part of end can if why for we of line become and income growth those work the and philosophy growth you skill production you move use we ability of performance do business reason about future driven about of the automate how by is statement that why funnel it’s computer story of to that the to globally that footprint. manual of maintenance,

David Whiston

again are not play out market in could Okay. see XXXX. we how passed really confident changing. not you’re basically because especially bounce see once on waiting more to this one And you hurricane American I it’s to the guidance North get softer quarter be in things it revenue going get just XXXX or to was curios weak

Steve Downing

mean… I Well,

David Whiston

original your of Relative expectations to course.

Steve Downing

Yeah. Sure.

the it at since XXXX, changed So, really, for I last that mean hasn’t data if you quarter. IHS much look

cautiously So, terms to year this optimistic continue won't QX we of be vehicle similar of we is XXXX with that next that year. production in difference levels. to see going of the XXXX in hopefully pretty experienced one And to QX like in be that we being drop-off

feel that So, environment underlying at and or X% markets into that so that get that we’re, we if X% offering a like to we've product of range. always outpace stable our said growth at can to those to XX% growth pretty offering you we’ll kind with product we X% flat get if to production up where in and our look continue

David Whiston

Okay. much. very Thank you

Steve Downing

Thank you.

Kevin Nash

David. Thanks,

Operator

you. Thank

from Our of Bank Merrill from America John next Lynch. comes question Murphy

Your line is open.

John Murphy

Good morning, guys.

Steve Downing

Hey, John.

John Murphy

the sales there curious it I'm sort this disruption else the bit of inventory, question. in this just to like simple North looks and was up going just Just was in inventory volatility first spiked inventory a a that to On relative or America levels? or in something on quarter relative

Steve Downing

for the leading of and out perspective. it’s continuing One But a bit, it then from One with pipeline weeks nothing is also, a that we ordinary for build that ocean little so the shipments. a few indicator distribution. couple our built kind things. in A to quarter the European fourth of fill ahead of was

John Murphy

up understand like Then some of outside sort a of seems you at the there just markets could XXXX, split When risks to is comprised fair us that direction So America plus for North North question. trying in North that X% XX% amount because have is by of there's second maybe very to give That’s them in guidance it and much look a we Okay. helpful. how region of a of just or a and how risk the international less much America lot of market? America? it of

Steve Downing

forecasting Yeah. those of mean we’re right in I now all growth regions.

the say to lower weighted historically more our rates that has I North last a outperformed the and American would Now, international American North where primarily been couple little and years because take the has is market market. of that’s over content the

base also of growth markets international also advanced on continued we're So, is those our in -- features. and auto-dimming what and seeing mirrors base auto-dimming features in the

talking OEMs there to of the focused Now what’s in Subaru lot the market. going a They’re are to the many like we're leading launches we're about is bullish are, there. market with of why to begin North the not going North help North especially the reason announcement, that GM American only the forefront And like be with. but them FDM on with American America

content drive North help us some FDM continue and rates market. the see and advanced in growth of So, will American we features to that that

John Murphy

statement? bit So, growing it characterize more a on content. it’d growing America growth international more North fair America; Is little similar to international fair little North and a be as units, on that a bit

Steve Downing

would -- forecast be at least from fair a pretty a Yeah. statement. be That would that a perspective,

John Murphy

full when that convincing in about just patented forward How and in chemistry fully that Okay. have display those about it’s regular defend I self-dimming mirrors, a of mirrors? niche you the interesting you lastly, we proprietary much uniqueness of have going level sort be as of processes And the technology could could similar you do unique, appreciate. and what which talking very you're think then being with

Steve Downing

limited products, taken Yeah. is It’s life strategic how a has that stance a process, with processes. a long day. time for the know-how versus are intellectual always you patent great protect obviously standpoint, property every reason and patent that question. not the associated patent patent company once we continues then normal evolve will by their you, to manufacturing a why From And that the you

investment. for those. able process, by trying the invest And been patent worked so, exactly as continue we’re that to production it through know to how over you're you've long not competition let historically or well keep now invest you protected a patenting What's trade has once a outpace in Gentex of actually, and secret, period to in better really we world believe, process because that time, our accomplishing it, patented that

John Murphy

sort product that But as coatings and mirrors, as because patents sort uniqueness has the self-dimming mode to defensible the and these themselves, able of self-dimming and products are crack on been have with the you apparently. sort big obviously these on of Okay. actual won't nobody as and what a mirrors, of

this… just understand I'm trying So, if to

Steve Downing

yeah. Oh,

John Murphy

the side. competitive at that sort of of on sort have mode that level and huge looking same you defense the We're of

Steve Downing

Well, shipping if today we're our full-display look everything electrochromic. is mirror, with you at combined

the patents, the on focused have we plus the it that patents strength new portfolio So, our mirror has application. all of full-display auto-dimming of

John Murphy

Great. Okay. very Thank you much.

Steve Downing

John. Thanks,

Operator

Thank follow-up Kwas do And have a you. Richard from Fargo. we Wells from

is line open. Your

Rich Kwas

Hi.

given what high that starting think rate comes terms and who taxes, little forward years, a XX% discussion your in we more if through? about us a tax happened, that potentially get but that do, remind tax what now corporate knows Just the could to actually of -- just taxes rate,

Steve Downing

thanks for in. you Yeah. rubbing like Well, -- it said

tax We really But XX% million tax a obvious are $XX about somewhere Saves in loser be there's all before. at in range. is This some I'm this negotiations the settled where rate. to don't you going a $XX scenario rate. going a see we're million down situation, to sure We XX% to out.

a In addition, benefits us. territorial tax system

our XX% more run don't So, something, to on -- look to strategically. have down but we to do don’t speculate. not that we over And they We're want business. to just not times we're here strategies albeit like start the backburner before, mentioned here Steve to several if at that move time, help

Rich Kwas

But one-for-one? hypothetically, if would XX% benefit actually to close went through, or get a of one-for-one you a kind

Steve Downing

would be thing deduction. manufacturing XX% bringing be have rate only that what's off the would is question The that us currently, we in

you'd any from, XX% let's away, Potentially, other... goes really XX%. that assuming not call there's So, go it, to

Kevin Nash

down -- you need And that some to but total. to dollar-for-dollar, so other that assuming XX%, say get I it's some you probably don’t assume would XX% XX% XX% least of our offsets maybe were benefactors the have the and rate there you'd to the go But at in happen, tax be maybe that difference or between we of, probably benefit. wouldn't current

Steve Downing

Yeah.

Kevin Nash

that's interest us, a one little other for big The one only is is very expense which too.

us. that, disallow they that if I mean, So, hurt doesn't

Rich Kwas

Great.

like on that any about? that just then the seems factored we worry just And Okay. but the impact into fourth be short-lived, Japanese factories, the should fairly it shutdown quickly should quarter of things

Steve Downing

No.

accounted our data production the that's believe factor. of what's that's Obviously, which given at forecast stage severity then primary guidance. for at to that of of It's known our affected and overall vehicles how is does QX it, are those predict look and levels most the plant is hard the length actually and all change predict if to you at, what most inside hard the issues. But of look you If of -- encapsulates probably this amount there. out we

Rich Kwas

I it shipments, you don't -- was to you’re the a quarter headwinds, have the And it of know terms piece against -- X. of down, that, business? Because comping had down Tier then the was that the year, for for you shipments last what X? in fourth was assumption but what's Tier if It in do mirror the bad certainly, quarter embedded

Steve Downing

adjustments is, tier we kind saying, it’s inventory out the assumption Xs a optics said of struggle primarily have years of that we're earlier especially viewing the December Yeah. of about hey, and QX and that like The they have. been last two in

our acquisition of HomeLink of that the are HomeLink So Xs. really the outside our that business the been That’s business that pieces outside tier increasing mirrors. business primary is and the ship shipments and growth our in affects in through two and the book because and growth HomeLink mirrors percentage an of of

that it why is take to confident obviously predict to that feel and do comps there's and optimistic because a range, probably like about place in going some X have last mentioned, this QX favorable in at we QX inventory into is so, and going that And year’s be we're cautiously but issues difficult. do looking is very look of you the but to the going probably quarter We are hair there's assuming we we're that tier at type of a adjustment what guidance. will ability

week I of of December first change pretty pretty lot orders so, seeing publish and changes start And They stage that. much don’t don’t about this just the share information. at and much really honestly I a significantly. you

early to that we mid-December. we impact really So, get won't until know to

Rich Kwas

taken approach more years.. But Okay. a conservative relative to you’ve prior

Steve Downing

Yeah. Absolutely.

Rich Kwas

Great. Thank you. Okay.

Steve Downing

you. Thank

Operator

we you. a follow KeyBanc. Thank have from Hoselton from And up Brett Instructions] [Operator do

is line open. Your

Brett Hoselton

wanted you secondly, quarter the quarter And of I million million marketplace the million versus can and M&A, and all, repurchase, you of things, making And terms time? the say amount three of repurchased your some I are in guess, to that quarter. point three this then two Gentlemen, shares you outlook some in from let's first maybe kind to, an around were to and prior share in prior bounces the you in acquisition as deployment. in talk at about seeing us cash expectations are what what give

what of kind we think of How that the think repurchase? share you What do you million think about the out? do forward, we As should should we in look $XX.X rolls over of left pace model? terms

Steve Downing

study. the first it’s something obviously M&A and Well, on we Sure. look at that carefully to continue very front,

at we’re that the is looking of create our that primarily growth discussed. in focused technologies we’ve on portfolio that that things primarily longer the looking story with term, dovetail existing help product well One areas a

be Some are to of efforts. those going M&A pure type

type ITM into are to and our of and process type well. TransCore be Some partnerships are bring the and end that, who of tooling what licensed Those on the with relationship thought and mind how interests automotive is of they with as their you’re agreements. going a them dependent what prime partnering example them we to technology and same that with of worked are is in segment. on our ours

at So, the has look this, when the company you you active deal. look at very been ITM if

partnerships minority either are put look that in the stakes or of iris some the you all at we solution, If these place. other, biometric

buying potential of or merits or So, our focused is we work is through by or not continue rate to existing the trying be something. we’re growth purely instead we’re would we’re of that. lack to in in to not trying very up a to do on dovetail What cover growth not with interested growth that strategic we’re portfolio. that for how those What find trying subsidize product well M&A products

us share that based valuation on you range. quarter that opportunistic see On will about million talk basis Above in quarter-to-quarter the a is be of company. the $XX to the market baseline per or repurchase the we really, $XX side, what consistency million become is when off

So, obviously share. $XX.XX are to we that $XX.XX in average QX, or able a

advantage didn’t believe market reflected took we so, our the value. that price Obviously, accurately we And of price.

an the use opportunity a repurchases on go as we that So, little to share faster side.

Brett Hoselton

the a if And enough, not financial going then, make or says criteria, that? front, financial is do you a compelling willing I'm to are discipline on acquisition there no, the technology wondering, we’re M&A that to is dilutive

Steve Downing

technologies, Especially we're well, many when looking in play, but how really, -- income absolutely. side looking the not we necessarily are what especially does look necessarily when talk we're you and I a that not statement is opposed product mean, the in technology to pre-revenue. at of really about pure these marketplace automotive. at when we're Gentex bring yeah, fact the to Oh we

found Albeit, a can't are finding make acquisition expensive beginning, that round early to And -- value dilutive to offering, maybe, but would And the we that we're you that there. is the that, of pre-revenue obviously, that, on to in we love impacting kind out It to very technology in early a more our at revenue to the is on so, probably product statement. true on a be our perfect mean stream be doesn’t help startups, that need focus world, very going believe find cutting-edge focus earnings. you is type is their startup modestly something to income or targets. more

Brett Hoselton

fairly those would to targets would given pre-revenue, inexpensive. think be -- would I be

Steve Downing

tend them to Yeah. Most of be.

earnings regardless -- dilutive of because are they they definition, pre-revenue. are, expense to their by However, are they level,

Brett Hoselton

much, Okay. you gentlemen. very Thank

Steve Downing

dilutive. necessarily not earnings, to are nonetheless, but material They somewhat

Operator

you. Thank

from Lakes next David Our from Great Stratton Review. question comes

Your line is open.

David Stratton

Good morning. Thanks question. the taking for

Steve Downing

Good morning.

David Stratton

what same these the walk or others to kind you of or both Subaru currently? as or how getting others you content as the both you is camera When getting you're the and Buick seeing Enclave, compares at can mirrors, Levorg we are through that the that content the full expanded us display, look are and display the

Steve Downing

to on camera Absolutely. Yeah. We the is similar the But General Levorg that product. launched system. Full Mirror the platforms do a Display do GM the not the Buick Subaru we've other is The only. Motors towards

the supply well camera. mirror as So, as display the we

David Stratton

HomeLink, TransCore, any helpful. coming All update be you new this as that would this customers? Just products, right. about the And further regarding see when when the talk -- conversations engage you tempo you on we with market then changed see biometrics, where in look hitting has anything -- to

Steve Downing

Yeah.

this maybe a ITM ago about we the think while little I side. on mentioned

a get to end was was our target. of by year customer the target onboard this Our

year. I early this we announced think

that’s We’re the and couple at hoping in for product greater future very that. that still are We've And we’re expand in see other think on of into one XXXX. close six it. directional the significantly product we we same that automation, how When XXXX on that customer we got coming get technology has rolling target that like some technology, home of I'd formally. into then technologies that that should get able on I interest there’ll as at customer out CES, in the for down HomeLink, be expansions CES behind in go and a where or grown the that more that details that sometime that will last expecting CES the on in to would be have we some want because and that XXXX, some more months showed since for to on thing direction probably be, would we CMS be the customers the

Steve Downing

we And we had said, this SOP if probably you announced look at what about, was there's year that ITM, I think early probably it when for that.

XXXX the Our on first launch customers probably timing. are

David Stratton

you. Thank right. All

Steve Downing

Thank you.

Kevin Nash

Thanks, David.

Operator

Josh now closing back O'Berski phone would remark. conference any over I'm like to Thank you. to for no line. further I from the questions And turn our showing

Josh O'Berski

questions, Great. at Thank seeing We January. a more to SEMA CES in at you look you in of and your everyone. few time and for some weeks forward

Operator

and program. the conclude thank you gentlemen, participating This in for conference. today’s Ladies does

all You wonderful a Everyone, disconnect. day. may have

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