Gentex (GNTX) 20 Apr 182018 Q1 Earnings call transcript

Company Profile

Participants

Josh O'Berski	IR, Manager
Steven Downing	President, Chief Executive Officer
Kevin Nash	VP of Finance, CFO, Treasurer & CAO
Neil Boehm	CTO & VP of Engineering
Dan Drawbaugh	B. Riley FBR
Rich Kwas	Wells Fargo
David Leiker	Baird
Anthony Deem	Longbow
David Whiston	MorningStar
David Stratton	Great Lakes Review
John Murphy	Bank of America Merrill Lynch
Ryan Brinkman	JPMorgan

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Gentex First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call maybe recorded. I would now like to turn the conference over to Mr. of Director Gentex O'Berski, Investor Relations. Josh may you begin. Sir,

Josh O'Berski

This I'm to Thank Conference First Corporation Kevin morning, Nash, Relations, Call. and of Downing, welcome you. and the and be any reproduced, financial information Investor responsible Quarter of conference and otherwise Josh Vice Gentex of First Gentex and by not shown CEO; website. safe O'Berski, Steve use President Good I'm harbor of the content unauthorized Gentex press Director joined included morning, Finance of XXXX Corporation the the damages Gentex President as Earnings icon is the results, call. retransmitted, Internet hold redistributed. contents Quarter party any by CFO; transcribed this Gentex and of conference President www.gentex.com. on release for any Vice Gentex this meaning Gentex of the Engineering Reports and at of may call or in the live Gentex an on copied, earlier are Neil conference Boehm, CTO. published, and the website liable This property incurred the forward-looking call and this Corporation call way statement XXXX All will of Release on to within Gentex respect contains Corporation by rebroadcast, always, from with

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

to who give will over Downing, the XXXX Steve the Steve? call financial quarter Now summary. I'll turn first

Steven Downing

Josh. you, Thank

primary the the in of for from vehicle previously of XXXX, compared declined the X% company's our million net an quarter the $XXX.X quarter of XXXX. light On reported sales the of in X%, vehicle quarter. decreased and production was to XXXX. more quarter increase a during revenue lower XXXX, production numbers forecast mid by IHS $XXX.X January than with reported the the the quarter production versus For compared which first When in resulted basis, in for year-over-year the company's expected markets light sales X% first first approximately company net of unit of million, shipments automotive regions which first primary than of

supplier in revenue Additionally, affected demand resulted approximately components issue our X% shortfall which for for ability the meet of Display Full electronic quarter. Mirrors, in a to during production certain

end have first and of production resumed. However, since the impacted quarter remediated, the the issue products supplier the shipments of XXXX, been of normal has

quarter of the of inability quarter during to XX.X% leverage first underlying missed When the fixed While sales disappointed to XXXX, overhead first And outperform combine the during in levels and during gross the the we as of result XXXX compared you to the market. XX.X% quarter from the resulting shipments production primarily lower that our you quarter overall X% an for automotive revenue the of by X% Display versus with consider markets growth forecasted when represents we XXXX, shipments the than quarter. performance growth were with underlying were from with declined quarter. the performance lower the approximately first when the in rate able a margin first XXXX, our Mirror, the costs, Full of missed

reductions price margin not gross cost purchasing negatively customer annual Additionally, offset fully impacted because by they were reductions. the

sometime our each stated have quarter. offset we customary price become during January that materially cost of second previously, to reductions on effective margin begin the annual As but reductions X don't year, until purchasing pressure

earnings increased million to the positive from margins on expecting of for quarter XXXX decreased profit Income when margin first remainder year of X% for percentage. gross leverage of $XXX.X We XXXX. to for compared first quarter of are to the currently operations million calendar quarter-over-quarter income from of operations income the for the Earnings the XX% XXXX. lower share XXXX on first due of of the $XXX.X a $XX.X quarter a XXXX, Net income a gross first quarter with year-over-year in of basis. and of lower million in first XXXX XXXX, outstanding result net quarter effective in increased as of the of $XXX.X compared compared a to share to XX% in first $X.XX reduction shares per $X.XX per diluted with diluted million diluted tax quarter rate the

his $XX.XX retirement XXXX, During repurchased $XX.XX share per price at stock Of repurchased share. the shares a agreement were an X.X pursuant price the of first at quarter these from X.X former of million CEO, average repurchases, shares company its million common previously share. to disclosed of of the per

repurchased company's As previously not of announced, approved share Directors the as share plan. these repurchases and of Board repurchase were existing by were company's part the separately

capital As approximately and of plan. has of repurchase common continue its may repurchase remaining pursuant issues, shares support depending other it’s deems million for March the shares which XX, allocation that to The announced strategy, allocation strategy time previously to share the company vary to time, appropriate. its intends XX company XXXX, and disclosed additional available capital repurchase, stock future trends on macroeconomic in in factors of previously company to market from the

debt now During of such expects term XXXX will paid first the Kevin to XXXX. based on on maturing continue, the additional the The XX, factors, on of quarter to during down XXXX, loan the the of and quarter over in to company second third debt company's principal of pay quarter. XXXX $XX details. the company first quarters million hand previously during call with September financial Nash I anticipation disclosed

Kevin Nash

Steve. you, Thank

through this to would earlier we quarter, of million, year. release discussing minutes, of first some gains with the points our split realized strategy which few first the consideration of million interests, million to drove For first gains of primarily of income the on as of of increased exchange quarter quarter XXXX. details as the balance investments, in increased the sales $X.X $X.X XXXX, due allocation well to to the $X.X in is the next between the foreign spend equity net quarter expense capital remainder and with press consistent factors compared time that 'XX first results Other key as like move we of

As gain of a new $X assuming approximately other part balance and were investments, eliminated quarter. of its interest outperformance the $X allocation part in the of will strategy, many equity company believe strategy sheet our of sold income income million an other We to million basis, provide previously that created the for capital has which current for held the annual on rates.

by automotive a Other of the 'XX, sales first $XXX.X rate the company's Automotive first with Tax During compared first shipments XXXX. the of quarter-over-quarter driven of net the X% When increase a unit million, quarter sales million the XXXX and in excluding first of of discrete items the Cuts impacts in X% quarter first other primarily 'XX, basis. tax mirror XX.X% of aircraft $X.X sales effective was in for dimmable the by and the on quarter during the Jobs XX.X%, 'XX. first in net down million of of 'XX, quarter in increase the of which was $XXX tax from sales of of effective fire includes driven XX% quarter for quarter XXXX, Act increase were compared of $X.X first products, protection the of million, XXXX. an to were windows XX.X% quarter net an the $XX.X rate quarter net of million, auto-dimming

Cash $XXX.X million to allocation offset million, debt which capital $XX.X operations by capital increased down items sheet. our were The today's versus the are cash press moving included due release. were cash comparison on share $XXX.X a and that in sheet per accelerated following from of to also December million, balance expenditures Now equivalents balance strategy. more from 'XX, represent primarily payments and flow repurchases, than repayments, XX dividend

million, capital liabilities the investments $XXX due Short-term were tax million. of basis. the by cash to million, period-over-period payable a to $XXX.X $XXX.X receivable $XXX.X few from highlights. with $XXX.X we previously to of conjunction raw down allocation of debt from up strategy, $XXX.X $XXX.X was on cash higher by position down primarily finished were compared driven A to from were partially million offset and capital payments, million. certain which good And accrued material lower the from and flow were lowering a down $XX.X And million. accelerated million, Inventories Long-term our million levels. Accounts sales strategy. announced primarily million, were company's down million, overall $XX.X part timing As wage accounts allocation levels $XX.X target announced decreased to $XXX.X repayment. of in million, investments $XXX.X million, due

call income million capital and of $XX.X The working quarter quarter first $XXX.X the net launch XXXX. And first over million of by to 'XX, Full amortization of first and $XX.X XXXX flow operations Display versus I update. of now from the were was the Neil capital. $XXX.X in the hand will in compared changes XXXX million and the with was in product quarter 'XX, for of first depreciation Boehm first $XX.X for expenditures driven Mirror quarter and cash $XX million quarter our compared to million for million

Neil Boehm

Thank previously of the our XX disclosed headwinds. quarter you, launches electrochromic were net and there Kevin. of feature of new features inside In nameplate and XXXX, mirrors electronic first outside

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

highlighted and The quarter launch was first by HomeLink Full increased Display Mirror. in levels

Full start our like Mirror I'd programs Full by currently all an nameplate and for Now to Mirror a update product. OEM. shipping of Display by on giving update Display comprehensive

Chevy now Escalade nameplate Display may Mirror, shipping. nameplates for General and Escalade nine you remember, as ESV. Full Motors Buick XTX, follows: was These initial CTS, Cadillac Chevy Bolt, Traverse, Enclave, CTS-V, of many our are As launch we customer and have CTX,

Mirror customer for is Subaru. Our Display next Full OEM

in nameplates quarter, vehicle Display This The North offer for For and Mirror be the available and market. the Subaru, in begin will the American Subaru Display we the the North will shipments Full Subaru in production second first is have two Subaru the Levorg Full Ascent. America. the to Mirror Ascent Subaru sourced:

Subaru it believe Europe a product, Levorg accepted remember, Mirror Full Display The be markets. will that it As of relevant may primary in company's all globally Japan, launched the rollout Mirror that and Australia. we Subaru confirms and in Display the at Full of you is

nameplates. currently we the The LS With Toyota our are shipping of For OEM, INFINITI market. we QXXX nameplates: The currently two and shipping on shipping the are in our Armada. these two OEM, Alphard. Both are Japan the third Lexus currently Nissan Nissan, fourth Toyota, on and nameplates

the several nameplates additional launch that forward As we of the have year, customers. scheduled are balance initial with these we calendar to to look

six units least Display XXXX at of Full are at track additional our Mirror targeted shipping are on nameplates We -- planning to and in rest the shipping to through XXXX. achieve still currently of on begin XXX,XXX

Integrated that the referenced calendar were they anticipated press year customer the they later to release, launch Toll going another like production for we'd toward focus Integrated for announced on development our the surrounding sales Audi Toll business switch activity to provide February, the Now Module. company In and that the technology Module in our be In update and was Audi's an XXXX. product. for

working associated Over been last solving with the technology, and debut ITM this this two we're the technical years, see we've hurdles with diligently automaker. with to Audi, excited

lot continue XXXX I about remarks. we'll for We and awards later that from XXXX and see over this product hand now and automakers the back confident other Steve this are a to call of to year. announce have interest to further closing will guidance

Steven Downing

the you, estimates, maintain the company Based forecasted depreciation $XXX primary year, $XXX vehicle between between and expenditures to IHS $XXX the XXXX $XXX annual Revenue gross current each and million. in in the XX% $X.XX for million and and announced of areas. April Thank of and for product range continues light the following forecast capital to previously our growth million billion, regions, million on million mix its $XXX to guidance between and Neil. ranges XX% of production expense million, margins amortization $XXX expenses operating $X.XX

compensation. for above XX% of further analysis XXXX Act After legislation revenue be revenue discrete is credits, well as year the to is calendar result company company XXXX annual tax benefits for X% maintaining related Cuts is previously to This analysis Jobs its XXXX, related as of the year. from range for of XX% components a a between of detailed to year and previous to estimated further XX% of to Tax to XX% XX% tax and effective equity tax the rate as refinement, estimates. guidance Additionally, announced R&D of and guidance 'XX primarily lowering the calendar

discipline from questions. continues the interest thank in technologies today. provide that to steadfast on For first company to the now strategy garner several next OEM's provide quarter on specifically new executing growth with several over value-added the focused debuted remain each operational what at of that proceed We and platforms to We can it customers 'XX, designed for strong shareholder customers the was driven years. your we around you creating introduced long-term platforms, January where efforts for scalable our challenging This while return. growth, XXXX, a unique requirements. solutions our believe unique, want CES consumer is engineered to be to will our we technology the to company by continue quarter, provide we but And for we in of and focused time

Operator

Thank the Van you. from comes line [Operator Instructions] of Our B. first Riley Horn question of FBR. Christopher

is Your line open.

Dan Drawbaugh

on Good our Chris. for the morning. Dan questions. line This for is Drawbaugh taking Thanks

Steve Downing

Hi, Dan.

Kevin Nash

Dan. Hi,

Dan Drawbaugh

Yeah, hi.

to So couple of I to about wanted start, talk FDM, a questions just there.

the first issue, quarter been resolved? for going that is supplier fair since second assume into there the be On the some it to us is to has pushed revenue that from quarter issue

Steven Downing

There didn't we it'll anything. it down didn't customer little pretty in shipment that bit there'll in at enough evenly think a in be to plant and the we Yes, those we affect a be We Really, all. the didn't were or - production words, into think other products spread. shut quarter. customers second

like there's huge will period longer than be out there Really, just we that not catch-up. So a over period be catch-up will QX. spread think a

Dan Drawbaugh

Great. the the content mirror expect it launch to six later the that more this you'll any or have have nameplates then of Okay. additional I you think will do that that on have there? mentioned sense be you focused? you year, You camera content And

Neil Boehm

let's one, Yes, be it'll see, - both. a combination that of for it's

there of would and this a We that I'm camera mirror have six, display bit a - camera little in will them well. more. in will only, out few and as and this are of of those mirror be be I most year, sorry, say

Dan Drawbaugh

might you. you of I out. could Jaguar Land be and more timing with And to Got I rolling a conversations was it. how Thank signed Rover about first revolving was that other curious technology. I that And customer talk Very you've you that? then helpful. HomeLink Okay. know got the up little When are the Connect, OEMs hoping around also expect for

Neil Boehm

Sure.

side Rover app all, very In that of is after other that Jaguar summer I that production year, two late one, there on that, going Land it's we're of bit later First And interest working start of quite soon deploying fall. to the on. releasing from from then customers, regards additional this interest to customers a the we're currently that. into think in

Dan Drawbaugh

a broadly, dimmable the display product I CES, Okay. just Got you wanted it. Great. your number for question to of And features from ask more showed then me, final immersive at aside and around those And what that I was and some curious you what mirror. into on know production might out the response of OEM to was to vehicles? and you're when products thinking get was then

Steven Downing

Yes, great high. OEMs was interest from quite The question. the

to activities expect. continue typical the would do that development post-CES We business you

and do we This that OEMs a tech and is, is we're think far is I then to capability get interest interest is talking So to the from - lot shown ready the and OEMs it's stronger have it's ever to of have I whether product of we hurdles that before obviously of deployment really engineering there's in that not one that a through vehicles. days you'd needs a of level, of at probably the a to at determination on a at horizon done, a reason commercial work technical that their say But in CES. lot what good out have and to have would you capabilities lot technology. there's the make pretty side. fit or I understand probably underlying overall products of the the this past, - kind safe showing out for anything and And of the a mean, looking - is X-year say probably look devices of

Operator

Thank you.

comes the question line Rich Wells of of Fargo. next Kwas from Our

Your is open. line

Rich Kwas

expedited was on Good how FDM morning. of much On margin? -- - mean, speaking, million costs? so there the impact were within this much I to did this any costs, And issue? decline, you $X with FDM, How specifically did freight that incur that really broadly freight

Kevin Nash

yes, then $X about in the and gross points of decline, the around impacted line. because think you really SG&A the margins margins million basis out FDM, expedited mentioned, within like basis about costs points freight the XX you that of XX are Well, margins if that

if encapsulate quarter, really kind of that's the that's that on was. So it -- the impact really what you was what

Steven Downing

and both But revenue. additional were yes, But affect is obviously lot we associated manufacturing -- work those parts as incurred, of did resolved, that inefficiencies from were margin. SG&A problem of Kevin the costs there with and there well loss customer line a profitability make Kevin side were that more costs had the shipping costs what then and back obviously work expedited That's handing mentioned, Like there, the loss A; referencing associated that the there and with is gross on the sure get go to for the really trying the labor kind on there. there to some we're in appropriately. get item is the

Rich Kwas

what was of something the apart margin from I out related worse was side you where what the gross gross just know down. was were? quarter, that other expected, know flush whatnot was you year I I as the price But but as at wasn't was to have probably strong there's beginning and trying volume every initially your quarter. first were to then mean, the on what occur than the of thought mix that it in reductions it that, impacts margin mix related? things that And or

Kevin Nash

question. Rich. two It's great Thanks. factors, a Yes,

making we're think year-over-year side when X% the business. the come on overhead leveraging is of you're we because capital or X% I sales basis, in it, investments call growth, really in at, the look biggest factor, a the if not

with of it not we on we and where then story of which on overhead our most XXX what our basis years. think we've to production it, FDM mid- or then late and about then just reductions side, of we meaningful come some be prior different reduction thought And the then QX the is call side margins. until, fixed beginning had was was of APR on any the would beyond, talking purchasing seen cost components purchasing PPV in January I in a starting that the really the it X, then the even with price on and taking at the So quarter, point reductions hold it rest

Rich Kwas

that So impact? the that that fixed just side, XXX, that - Kevin, the on volume overhead is

Kevin Nash

you the were was that about stuff think of if we Yes, some being fact replaced. - that

a on was ahead year-over-year like mix, But had if well. growing smaller we're Our which you drag saw, mirror mirrors X% base curve, margins strong that basis, and a have that the well. on That we wasn't tends growth units, in as indicate base a are units really to growing factor. our of as

Rich Kwas

basis And fixed issue, gross the right, so points, between combined, XXX is on and FDM like margin? overhead

Kevin Nash

yes. Yes,

Steven Downing

we've I pressure additional on, actual the Kevin there's It's issue. mix as line think Well, line further that pricing about from described, our right if one no our it really on relates I there's to and APRs. to fundamental with you - guided that, pricing the that what look mean, in as historically, so Rich, to just the impact, at It's difference, customers. nothing is

and negative mirror as that obviously higher between especially and to relates little mix advanced mirror, the the was base it auto-dimming. base were inside margin a in and headwind quarter the than what is So we features anticipating, base profile

Rich Kwas

risk does what's this have margin. at you'll that end the versus know slow But I start And you mean, - I given of range the this for midpoint, gross at first up the does the your mean, - end lower that the quarter, point? I

Steven Downing

up QX that The biggest year, bottom going end rate that's we that we're where the the would and standpoint. end is end year factor range. growth the the how say of be a to obviously really I a at - of margin a that's rate that's range bottom and progresses now but a the higher - range, the be for the in and for of risk would the is the We year growth growth revenue, at outside little of be think of be the guidance. lighter will QX, Yes, that annual quarter is mean, really the start from be was QX the towards for I'd we the range expect bad profile, focus QX end a that's of risk - to

of QX we're look a a QX, what of anticipating at a throughout if we obviously think to But will bit a little be QX better this quite the you kind more QX So challenge. be than rest still year, but and that is, challenge, bit better. like

Rich Kwas

Okay. North Last on quick one America.

in with So production. the line shipments grew

- cetera? second on go we we that think timing, How year? consecutive we rest happened. mean, the I how the do what is the going interpret quarter forward I as this that's should of think et about what's there,

Kevin Nash

American America we mirrors Well, fairly were of issue if prior, quarter think at North the North exterior looked last you've we at the or breakdown the specifically, of And about had talked a I weak. OEM. one packaging

So upper it de-contam you level, moving taking less mid-level an it they're [ph], platform. wasn't will, exterior it at was the on if on a trim so trim but

levels pressure of content-based, past, primarily our things, North going Rich, talked probably or growth it America. that's about of North the we've outpacing the and be production in in those was, America or also, be FDM the so really is growth And type pressure this most And to in of that cost one like HomeLink specific what program, North America. in not

Steven Downing

the North highest current are And already America. their that penetration why in reason the at is rates levels

So - of so rate market in of in or the American range penetration mirror north inside you're already. you're the North XX% probably

Rich Kwas

Okay.

content, it's cetera. So to going et be electronics,

Okay. All right.

Steven Downing

Correct.

Rich Kwas

pass I’ll Thanks. on. it

Operator

you. Thank

Baird. of Leiker David from comes question next Our

open. now line Your is

David Leiker

Good morning, everyone.

Steve Downing

Morning, David.

Kevin Nash

Morning, David.

David Leiker

of I kind through. thing to wanted one dig Just

that year, of back-end in loaded rates the for Is where over something on growth the look something build is the for than rate that? are. see year, held to what if we an that you've guidance that's we more at there's of QX your course or rate and that So that particularly implies growth, the acceleration relative

Steven Downing

QX better and think a rate be growth there'll believe be Yes, But QX. - bit some we in QX will be than little really, we QX. will think acceleration I in QX

if And we'd of annual end we're expect at the the range to But the growth at guidance QX towards of higher the would guidance likely to is we'd so - say growth annual range, rates. bottom of be looking QX, end QX we our range. rate and be

David Leiker

then the And just Obviously, of a QX. is few we going quarters is in that is that over slow pace years and we're more down have pace growth a comparison sustainable then a the issue coming growth. a that But of bit? for that see something or to then is

Steven Downing

'XX, Well, we comfortable may maintaining of We feel think with things look our But have, next And bringing of midpoint market. those think we it of growth with thing the of we X% the at Display rate for year. of the into that XX% the to those. some Mirror to life. if given our for we're that those, feel comfortable obviously some we new the showing - rate including we've guidance range definitely of X% officially only to growth of we XX% look that you signs 'XX, rate is maybe at but on that adapting guidance and 'XX, or we're are technology the penetration Full for the average launch that still products, -

David Leiker

Full rates you market? expected the Great. are even changes there what you've what item seeing any other in newer are look products here. you're for to one relative across just we Display then and the or maybe products, to Mirror the And terms features, close the of at loop that those to take bringing If

Steven Downing

of you we're the - shipping like X.X that, But the there's year, good terms - take really consumers, there it's - content you product target by of more platforms, because so sticking OEMs And Obviously, - rates, if - to were our kind have in and how always but being going right shipping expecting. units deploying been how technology, million good perspective. is right to been for OEMs you number the from would on we're and are picture about some this and of how the about their with throughout reasonably deploy prediction what feel those certain expect, and next line big we they're we pace hope look of a at with received that on, execution rate OEMs - of on ups downs plans. you as they've you of kind because in There's that. in of very anything, Sure. can take next

far, from be so And to the quite feedback consumer base. good a seems

David Leiker

thank Okay, time. And you for great. the

Steven Downing

David. Thanks,

Operator

Thank you.

JPMorgan. Our comes question from Brinkman of Ryan next

now your is line button. check Your now line open. Ryan Brinkman, is open. Please your mute

Our next question Anthony of comes from Deem of Longbow. the line

Your open. now line is

Anthony Deem

guys. Hi. morning, Good

Steven Downing

Morning.

Kevin Nash

Morning, Anthony.

Anthony Deem

for Thanks taking my questions.

them. Just a of few

event? guidance So aware introduced risk point of guidance. identified when offsets EBIT just to for start maintain the is factored Or March you how maybe enabled margin basis Because of February, supply this January? this wondering in the off, were remainder year if the to that of you in FDM was I'm late other Or is more a XX impact guidance? much that of

Steven Downing

really, happened mean, it quarter. in I the Yes,

when midpoint think I quarter happened. the of - the actually event through about we kind So it's

So so been when has and getting they've a and working amount to point the between tremendous pull today, identified, it it the off. we're that really through happened team effort resolved for that work that proud of done and work, of

a event, the business confidence cycle quarter is onetime looking of of offsets gives from margin look standpoint. of us that our rest throughout terms of normal tends the performance part is toughest the really it's through that a the it part - of at the to year, first knowing the what at be In - to

the start the margin comfortable the feel growth gave. with When QX at at rates supply and that on model and community our our rough the course and to then performance. accelerated typically look and calendar even weighted has expecting range year year QX, over throughout our reduction the from business still we Looking we purchasing with we're of average, impact we that guidance that annual the the that

Anthony Deem

you're in If share comments XXXX, you in issue. might terms from let's of have the are impacted the imply, say, run FDM? And able might I been quarter for Okay. guess, your FDM to supply shipments half rate a

ASP. back I So a - $XXX the on of XX,XXX units kind envelope, of maybe

So helpful. going XXXX unit at provide that of is can a up any run And - here are we color FDM in kind XXX,XXX of so units target be XX,XXX-unit will above and rate quarterly beyond beyond you terms far?

Steven Downing

Sure.

If you papers you... kind we're rate. the looking just did run through some flipping real look at XXXX of quick, - Kevin, at

Kevin Nash

Yes.

rate, of like you we I look kind coming run running mean, - at far for the now, where the in six that on were talked the impacted if year. XXX,XXX kind as bit as XXXX at of felt like how Neil forecast unit online quarter. So the earlier And nameplates spot about, the the Right that much we've pretty perspective. more of end little ahead of mentioned past, a we you're

run now And the of launches so starts have million probably to where what you in kind as should X.X to close If right that's according year, kind talked problem take we getting go 'XX. time, of rate is no hold. pace I on think acceleration but about, and this that the to unit

Steven Downing

probably on are rate. like, higher you currently Kevin, than you mentioned here rate I we that probably the And think run mentioned,

Kevin Nash

Yes.

Anthony Deem

okay. I last the launch. that's And gen - couple product disruption delayed has if The and on you. of a others, FDM FDM supply one Got X not

I to I that wanted that. was just this of the confirm end year. think

Steven Downing

going... That's correct. That's

Anthony Deem

Any cash Gentex new have allocation strategy cash target, Gentex cash the targets capital just switching this under we position strategy, of perpetuity? so leverage net we if should million really, with? then knew may provide wondering can was changed quick. expect a sort I but you us to Great. or gears of net tolerance the about And $XXX the be The new into -

Steven Downing

more like that But if of so that's positive kind indicative to it that position, that company I going target things. you are pretty a of for you're -- the to show total range that in it's see do significantly we look does net is execute growing a who of cash that share Yes, of business we're we kind and - million, of to look does it to our that conservative also at to amount operate are is being the depending us showed approach in on feel cash. $XXX cash of acquisition successfully, during the and What HomeLink then on to think though aggressive front. would What reducing cash non-net transaction, business state as we and do of we and the changes minus drive a repurchase opportunity. have this going tolerance is the the both us we strategic necessary inside deploy

Anthony Deem

the net to be Okay, the so target? is cash million $XXX clear,

Steven Downing

That's correct.

Anthony Deem

And you. me Got just appreciate it. then question for I Okay. guys. last

looks like disclosed the plan, year. previously you for buyback On it so $XXX million the

I think year. now the $XXX that amounts of million for probably remainder the around

back cadence the of that big weighted, quarter or half second Just wondering pickup not?

Kevin Nash

a up normal the try $XXX little Generally pick to to Generally when the systematically do beyond -- question. less and it most going million might say of type a I when rest when speaking pressure do it the to speaking, see course But we're million and for to start thanks, things $XXX quarter more be bit. pretty part. of it flexible But - then we $XXX million, a Anthony, bit, more a XX% we be -- tend - bit We there's and to or whatever moves million, quarter. little a it we're then say up. $XX is when going for be would down XX% little the per that, so of is on, things you downward

we have - as I guess, can. in, that as So much we average we

much next. overweight not the going one see you're versus quarter in to So

Anthony Deem

much. very you Thank

Operator

Thank you.

comes Whiston David next MorningStar. Our of from question

line is open. now Your

David Whiston

is can I rate inference long-term option? rates, on to tax a XXXX Good given make just term long the the any guidance? rate difficult tax tax on Thanks. the we morning. stock first, Or it of determine because guess, too

Kevin Nash

Well, that's I - in moving, assuming percentage don't the model employees the variable in options was only again X.X benefit stock's variability that - the X going to company, and the 'XX, to the points think if in grows. our is change compensation, stock laws of you're the when only people, see beyond that if stock-based And you and the quarter. exercise about

like again I of company the by more that in that rate. in said kind our reason than have credit for again, for will doesn't or benefits large, fairly of in feel the - our we the was was play have kind press But through little some analyzing and we bit R&D release, tangible change about we foreign, think, only completely the further because us, that of year pretty sales the large, interpret actual and in quarter don't of the fine-tuning $X forecast. we IRS the the of long-term was income This the assuming million. good still laws the different And tax drop things derived guidance out. variability fees as and But experts a it get

Steven Downing

the midpoint range. the of And

Kevin Nash

Yes.

Steven Downing

And that that's obviously is And this change the to law helping out years, allowed and to tax other last done and that over that tax business be facets includes improve positioning credits we that a of and tax I'd us take overall the as to on relates aggressive the our of team has tax focused rate taxes. advantage lot believe, Kevin Gentex, more try on R&D on that new the point and best-in-class. has several our increased work it focus been of

David Whiston

Fingerprint's And going them as talk earlier partners why this can technology someone back just about to wanted your versus year, the you you else? announcement

Steven Downing

this give as the partnership together the at correctly question. Neil compelling angles. look had there. associated more - approaching Sure. his how lot positioned are analysis like Fingerprint, I necessarily felt probably like being the the there cohesively technology we that and synergy a was is strategic automotive. not our together. for a We we work the market with this teams know are mobile if quick focused on on at focused historically different from and answering look partner to research look - the When if answer. we But me most you I'll topic, choke at going you you - on market, was The felt technology of that

look big relationship financials associated that And at so that anything if with and like thought sense. picture, the we made the you and

on I think little to probably comment wants the piece. a Neil technology bit

Neil Boehm

exactly I think right. you're

the mobile through easy were is - technology of the type by this use. was that be there - the as user experience and how lot to there that a great can for of make fact of around going help innovation to mobile the value, complicated. possible experience, think was interface I And seamless as

in the So helped significantly choices. that narrowing

David Whiston

Steve. Okay. And one last is for

do You've at point, there this the the - Is way turned like, and just done speaking, is some to airplane feel right are some some you allocation mostly - want capital the there radical do? promotions. other you metaphorically announcements or changes

Steven Downing

I and have X of company way I us about No, been don't the the nearly -- that has great the we've XX had right years, think years, pointed but tenured, the shortest the direction. I'm you influence over think positioned with we the all have Gentex, been the of at that if the on in the -- fact -- what's ship's the we've been -- those look organization

Now it's maximizing company the slowing certain sure of attributes we're about opportunities. speeding down or that up to make

changes going to there's -- do be how business. no catastrophic never in nothing so And we

of part philosophy described we've that most business of helped we the create. culture the In fact, is today that

what allocation we yes, something future, say at is, believe is look sense. capital If the strategy the would we make that you

on efficiency, If believe you that's tax something focus increased look in. at the that we

you at so company, technology that, of if a even creating This helping just can not technology, and business new technology other that's we're not of tied areas look our platforms existing really customers mirrors, does year, taking wanted that. it to car, show at talk what just at not large of promotion understand that a a customers, our new in and technologies, the play CES, and area the to series mirror environment technology turning focus company hopefully it in out we to to and about Neil's we aerospace but the technology many well and showed form and increased on show our why importantly, applications taking technology we're many form and compelling look electrochromics that devices, our More factors. out that whole true new of a

David Whiston

press million. on Should March the very cash just quickly, of about Xth total a And point be $XXX $XXX position, net cash and basically saying also there $XXX the analyst. clarification The position to question Okay. talked of last the language there million? release from cash net million

Steven Downing

of right to Right we extended need if we time. now we'll there in that need access debt period that. an don't theory, an now, question becomes - to -- Well, for get a mean, I see why reason extended

targets we're we depending obviously, in that subject net us. And essence. to so front that's cash, in the talking on cash, say move when But change, of

David Whiston

thanks. Okay,

Operator

Thank you.

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

is Your now open. line

David Stratton

question. morning. Good Thank you taking the for

Steven Downing

Good morning.

David Stratton

has happened too or that at see about you change you just again? issue takes this experienced, to puts supply prevent of will talk look just a whether we this maybe rethink and your When caused drive from kind you kind briefly and now? what supply the the that of supplier chain to happening having where you much can one right And of

Steven Downing

we're of you how look design. each case, When, you components. is from that have - I type this actually set in component component suppliers the for multiple at unique strategically get think, these up Obviously, standpoint, a supply each we to

to products. our the we suppliers. makes our that's We at believe around perform that have I that from mean, we circuit-related of at and to that to understand supplier performance engineered sort expectations you you're what expectation of But place very mean, is expectation how we strategic partners do, that I of look But perfectly a have. what they us. them, our regardless quality. always clear, product. exposure to the right makes they're time sure it in -- are changes suppliers nothing making reevaluate this one sure you some need our standpoint everything because you you're source customers' So looking quality, prepared any specifically happens, make have in to going things, you be on It reevaluate

David Stratton

growth really a which And segment, know, just part, significant. a is a touch just wondering Great. this you is XX% other should or quick thing if on anomaly. we could that, is, but and the if driving then I to see small revenue pretty Thank growth of was that And I continue that onetime you. kind what's delineate it's expect fundamental whether a

Kevin Nash

thanks for Well, noticing.

And the customers fire not actually been on needle currently, you're the then kind what side. - on growing kind of of ton revenue. that customers protection a the that some overall XXX performance couple all better a been anomaly from on being well of that I to would we're those announce segment. the the year then as last fire we're window Again, moving steady-state until platforms seen of see on and from side, online, you're kind going of perspective, are that well. so protection still of a -- seeing so But there say the - and and side. revenue have low platforms seeing And We've an it's normalization we We And probably that have probably that - performing nonperforming. it's window in year was is side, further improvements of last on kind the on that had product.

David Stratton

or the there are Great. platforms And the any mix, in you then it, in works, since mentioned other rather?

Steven Downing

future. that that we in do We the type we we've have We the we continue side of work product been pretty the with don't OEMs and ago that official quote is mentioned the the sticky a but customers, on definitely anything interested active I yet, technology. to type few quarters in technology this know that are think can announce deploying through - of of

David Stratton

Thank you much. very All right.

Steven Downing

Thank you.

Operator

Thank you.

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

open. Your now line is

John Murphy

guys. morning, Good

Steven Downing

Morning.

John Murphy

the a question, sure and were First leverage was downs, to decline have basis, which I understand shipments look and When said follow just margins in there on you price then make things: missed you to of the normal Mirror. Full sort at on this, on there out fixed course; two up year-over-year it. the are Display I

this from onetime the much missed have of two curious shipments, just make of heard is So of points, just kind that are want kind XXX I sure I and really I straight, basis how items? really I'm which - numbers, to

Kevin Nash

points to Yes. related expedited in we Like that and were shipments missed period not, of during FDM and of XX time. confusion said, margin there. costs that gross about kind on - operating of freight manufacture results points on inefficiencies manufacturing the XX to basis the basis sorry The the margin inability that's or then issue, and

John Murphy

and the exclusively downs points decline So schedules the slightly of of think out point different of production year-over-year, because is basis these rest FDM the expecting? some you price and is that basis XX you're XXX issue,

Kevin Nash

basis gross margin XX year-over-year for basis about points No, related on is a FDM. to

Steven Downing

of rolls XX a And points... basis total off then into that

Kevin Nash

From margin.

Steven Downing

margin. operating the From

John Murphy

Got it.

Okay.

leverage So have points of of price XXX, or out the fixed deleveraging XX basis of downs so because you decline your points and basis regular relative XXX to expectation?

Steven Downing

due leverage growth mentioned and rate headwind overhead XXX The the Yes. of the basis Kevin was slower to points fixed inability costs. about to leverage

total for negatives are is -- quarter in our obviously point and these of the they're to the get the be the going than be be are - going there as going guidance, center reason So were the the to to positives than more of well. us would that to more what

John Murphy

Got you.

you're schedules Okay. then what on beginning sort of there anything at in schedule you sort of you're about was or in general, the was relative to that expecting was of were what to the And highly unique relative contented this expecting, production the quarter? you programs production when in that malaise those you, think differences

Steven Downing

lot was regions at a of a you definitely of and -- there's big -- a it's there If moving lot parts -- look inside of I mean, there.

didn't perform -- at wasn't forecasting production end QX. was So obviously, certainly what and last there, well perform exposure of against North it the basis, problematic the was well America, year IHS most for having a year-over-year on our because not did

a higher say, Korea than, disproportionate always production that us environment. paying has that has you're impact on that -- So a

as happening as And we Japan, have have has both in European growing an those what's in Now there. content and And exposure. been the you're and to obviously, erratic do more standpoint. more Japan, overall exposure market you penetrating pretty been Korea regions, been is production from we've growing start Korea then

from definitely we the you the at single production into slowdown the coming was So Europe, impact quarter. impact be will perform North if -- biggest there But anticipated in look had not impact. an did the not Europe our definitely at America and level that

John Murphy

commentary opposed correct? that as And content this broad-based was heavily is program, market specific any to Gentex is - to

Steven Downing

Absolutely, yes.

exactly Sorry. market meant underlying than I Gentex-related. what more of That's that, the by

John Murphy

screen? Full FDMs, then of And those the of you're products in rear also programs doing curious, on screen vehicles? do it view or when another these that Or winning camera Display on, for of these Mirrors camera any it. exclusive Got in views is kind have rear I'm displays just any

Neil Boehm

in well, mandated, have screen starting it's American as separate backup especially May required. Yes, them I where -- it's here the actually display in 'XX market think of it's the of majority that North camera

Some both. there predominantly, be, of of markets not all those have other but the may will

Steven Downing

technology camera And it as the and is mutually providing use OEM completely strategy we're cases, what's about they're relates interesting different the to not exclusive. backup they're versus

been do Full can either Mirror showing we've Full and our Display multiple lot Mirror are some feeds a is compliance split-screen Mirror them of you interest in applications and camera camera save Now Display to what's just meet exciting so save leveraging money location what them solutions that our showing start about in execution OEMs that Full and coming into backup give to Display our -- on technology by opportunity platform.

John Murphy

no Is I And right? into Display mean, the question feed your meet there's Kids just I'm a which Safety requirements, reason Full that just that's Act mirror. that Mirrors sorry, of - correct? the couldn't comes

Steven Downing

correct. Absolutely

Neil Boehm

Yes.

Steven Downing

camera about camera that is where all location and looking. That's

meet absolutely mirror will Our the requirement.

display requirement -- our is we call requirement with which reverse We with can small what can fact, very meet camera meet In the display. that. the we mirror, our a

Mirror Display of KTSA. Full more all is adequately the sized meet Our to than requirements

John Murphy

very Thank Great. much. you

Steven Downing

Thank you.

Operator

you. Thank

Our JPMorgan. from of Ryan question Brinkman comes next

open. now is line Your

Ryan Brinkman

Thanks Hi, taking good morning. for my questions.

provide Full on you such from cetera. Firstly, the et as market? Focosa So the environment competitive an can in update [ph], Display Mirror

competitive heavier I which your Has Full suggested might previously Mirror any more expensive products Display any that is be to contracts evolving. product, competitor than secured think knowledge? your first-generation you or

Steven Downing

markets early reflectivity minimum performance. years this accessory requirements awards met as Mirrors, we've nothing Full we've been when got couple time, European a we did for at mentioned that were there few we -- not the of sourced on have have named, first type in believe in programs with, when that history back have been low Since in announced the that of would produced. programs believe, the have been Japan in of the the of we Like that market kind of. most sixth American for Asian They in few the awards that almost not the kind go market, of have requirement programs -- out were, we We one I'll mirror the Display our five it kind would OEMs, there very six couple of we're have a few all in that production of defaulted They we mirror that being awarded, electrochromics. when portion volume. were that the a a market, display of mode terms small happened, North all and small nothing of region now aware the just already

market. programs in the Japan couple or one China, with programs I I then OEs accessory domestic in think two small believe a and

Ryan Brinkman

Okay. in is mirror And mirror? the base vehicles U.S. is are Full there electrochromic, cost auto-dimming what on that do and some That's an Europe seeing transition helpful. to to or to you forth of displays that And back might of Mirror? the relative then with and display not to your debuting Display are the what that's system know update your and think able relative not provide to there be I allowed there? What happening you the you the then can between cameras solution

Neil Boehm

Yes.

technology honestly, coming know have one believe will that the year That's this that's we come be out system no on market. called So there side, later I European monitoring with, with mirrors. a But vehicle vehicle its camera that... after out in the

Steven Downing

No outside mirrors.

Neil Boehm

to down a and from After pursuing some can't mirrors. it's outside of have people the of significantly, utilize in that, that safety discussed that. some been driving issues consumers and identified effectively perspective. slowed that No display Due cleanliness, camera

of that So being tested. are still evaluated this a technical gets uncovered challenges and as lot

Steven Downing

X-camera hamper which example to It processing, for fairly we then a talking you're this And and I -- economics, the answer cost further to think your $XXX if type content will mentioned, that optional mounted system. X-doors the that a believe well. volume on look be system range will Neil is, as on believe, to you at and additional feeding and of least $XXX in -- the that probably in question vehicle, at of we execution low OEM that displays

range. that X probably traditional raw our at just looking could accomplish the partners aspects obviously Tier look you mirror electrochromic something without outside the but and of of you that mirrors type at a provide If our mirror, $XX traditional same you're shelves, normal it, in digital technology,

interior the the a doesn't a it type increase to CES, that to and of with down has this to it's so vehicle Full Display then and cameras location size, mirror head OEM version have have the marketplace. inside more effective the our So reducing mirror products order in the technology of significant which an failsafe pretty up a system, retool camera monitoring you cost It path. at complete come of why cost collocating OEM those primary the This the and a built-in as behind outside the vehicle. redundancy we in to of Mirror our is glass showed to helps of bring leveraging display of this is solution, an the

Ryan Brinkman

Extremely it. I helpful. see

I'm say. Just to in specific autos product was maybe we'll with about you outside of heard some last and please trying understand this regard component earnings Full I application there on, can, elaborate was the just to season? question. that has at that part, an components the Could with, also only? what you I to issue think this Display hear if Mirror you specifically In mirrors, if

Neil Boehm

product part to very itself some the specific It's that it. board production with had a actually it's challenges Yes, design. circuit

Ryan Brinkman

Okay. Thanks great all those color. for

Neil Boehm

you. Thank

Operator

like to you. the turn closing O'Berski questions showing queue further at to I Thank over for I'm back would conference no time. Josh remarks. this in

Josh O'Berski

and That's for you, questions this great from a morning. us. weekend. Have your everyone, Thank all time

Operator

your you for This Ladies today's concludes participation program. and conference. gentlemen, in today's thank

now great disconnect. have may day. Everyone, a You

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.