Gentex (GNTX) 24 Apr 192019 Q1 Earnings call transcript

Company Profile

Participants

Josh O'Berski	Director of Investor Relations
Steven Downing	President and Chief Executive Officer
Kevin Nash	Chief Financial Officer, Vice President of Finance, and Treasurer
Neil Boehm	Chief Technology Officer and Vice President of Engineering
Chris Van Horn	B. Riley FBR
Richard Carlson	BMO Capital Markets
John Murphy	Bank of America
James Picariello	KeyBanc Capital Markets
David Kelley	Jefferies
Joseph Vruwink	Robert W. Baird
Anthony Deem	Longbow
David Whiston	Morningstar
Ryan Brinkman	JP Morgan

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to Gentex's First Quarter 2019 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 be given at that time. [Operator Instructions] As a reminder this conference call maybe recorded. I would now like to introduce your host for today's conference call, Mr. Investor of Director O'Berski, Relations. Josh proceed. Sir, you may

Josh O'Berski

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

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

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

Steven Downing

Thank you, Josh.

in X% first production $XXX.X of company X% the first quarter vehicle quarter the when that to million, was of compared which of XXXX, XXXX in the For compared growth to XXXX. light first declined the This global $XXX.X first of sales an quarter reported approximately quarter was of XXXX. of net of in the contrast sales of net increase million

for the IHS excess worsened forecast first for of quarter XXXX. global compared the when to levels actual production of vehicle Markit's of XXXX Additionally, an X% light mid-January first the quarter

first of of well XXXX off in but being started second similar forecasts. short half with a in XXXX production results growth, those quarter of forecast very the coming actual about The vehicle with fashion to optimistic

to Our makes for company revenue remainder production markets production Despite certain outlook outperformed these reason and our conservative our of X%. continues environment this volume the a headwinds for underlying the forecasting headwinds, be difficult specific obviously year. like our by approximately vehicle product and

Our growth in significant Full was overcome by which the Display reductions driven helped the volume of industry. primary solid us very performance Mirror, our

of gross which quarter compared margin second gross the was XX.X% XXXX. the to calendar XX.X%, during The basis to first in in quarter that when due points, XXXX. gross became XX For The effective was negatively tariffs impacted of of the year by margin approximately was down XXXX. a first half margin quarter of the

to growth quarter million of ability of to the $XX mirror gross our the focus line on as annual quarter and we mirrors. margin in through driven the and tariffs Operating increasing continue reductions supported the X% improved a stated Mirror, rate. Display created for in Toll The the our to applications. during expenses first for were was inefficiencies margin XX on from mix and slower basis in to headwinds our the of XXXX. Mirror maintain $XX.X effort with expectations customer Module, Full additional compared auto-dimming the auto-dimming rate growth XXXX a in first operating launches XXXX price Display from basis, profile not of growth growth rate by from Integrated are Full expenses additional first impact during from a expenses Our tremendous in gross if the to required Operating exterior our a quarter point overcome team million, quarter-over-quarter the X% product resiliency by up XXXX,

are focused to quarter will from the of million portfolio decreased devices. in of to XXXX our Income million new of last quarter quarter to us $XXX.X due that car, We year. CES of long since allow increase high growth primarily the time. in expenses first January $X.X product first The lower continued expenses areas versus compared of to product area Other was and expand income the term remain on gross also and innovations interest XXXX that primarily operating digital $X.X engagement confident these to decreased areas to that we opportunities received in in million product OEM expense. dimmable vision margin the based on in large level operations Our of due has connected the $XXX.X first for at increased X% operating decrease dollars. the million and XXXX,

by of repurchases. stock to of rate by diluted a expenses, with shares and benefits During $XXX.X in line an per result tax per quarter XXXX earnings remained tax XXXX, million diluted decrease income a effective $X.XX in of in increased first as operating increased Earnings X% first for $XXX.X XXXX the to XX.X% of basis. driven of first of tax the share related quarter quarter share the the diluted XX.X%, XXXX Net first based a income the in the was first reduction compared quarter quarter-over-quarter of XXXX, million, with a company's XXXX, net of up driven X% at during the first quarter primarily compensation. decreased from outstanding rate of on share quarter from $X.XX in in

per the XXXX, a stock average total an million common X.X During $XX.XX at the first $XX.X share, its approximately of share of of repurchases. price of for million of company repurchase shares quarter

time disclosed XXXX, to repurchase for plan. shares previously the has the its the to company of XX.X in support trends in details. common million of and the share march vary market the issues, XX, quarter that account additional the but available factors will company first now remaining to As deems pursuant capital take shares I previously call repurchase over appropriate. repurchases intends for to continue other future The share of stock announced the and to approximately Kevin repurchase financial into strategy, continue company allocation macroeconomic from hand to time may will

Kevin Nash

Auto-dimming to quarter in of in quarter vehicle XX% unit the in sales Other headwinds. mirror the shipments auto-dimming sales in shipments XXXX, XXXX Display were quarter X% Mirror production. shipments. and the the in by and XXXX, when experienced and auto-dimming exterior mirror increase auto-dimming a million quarter with overall specific American was million, mirror $XXX.X compared revenue increased dimmable XXXX exterior were X% which of auto-dimming of XXXX. shipments, Conversely, increase shipments, net price $XX.X Steve. was offset of X% annual shipments, product which interior $XXX window an of exterior unit increase of of was million decline essentially Automotive aircraft the decline as quarter quarter compared a highlighted increased you, global North customer revenue by with by Thank first light protection $XX.X growth revenue, in fire X% million, in reductions in the the and compared XX% the reductions first first mirror XXXX in interior mirror primarily for products. mirror of first auto-dimming first Full first driven to of certain increased company unit a result a

of the Inventories in to of sales primarily of $XX.X the increases reduction and XX. million represent comparison are $XXX dividend and increase sheet by million, today's Accounts March to increase level, by December release. quarters. as the and million. receivable were 'XX, primarily flow consistent from $XX.X was operations, Fluctuations $XXX.X fourth of The capital remained $XX.X $X.X The expenses of balance $XXX.X were up sheet payments long all to million, in portfolio. $XX.X sales Prepaid a for million, were each update. which and The which December a was income investments within to million, following to $XX.X timing repurchases, the $XXX the in also taxes. balance a versus press term million term $XXX.X was million XX two as payable mostly Accounts was to higher million, million investments result to million as items were in million. of due decline Short liabilities as within Cash expenditures. compared decreased current million. cash equivalents were a million to included taxes due investment share fixed as decrease other maturities well from offset Now income refundable to $XXX.X primarily and income at quarter which of to driven XXXX, in due changes increased accrued XX wages. from million, $XX.X primarily accrued cash compared compared $XXX.X $XXX

now quarter with update. Now $XX $XXX.X $XX.X 'XX. flow was the compared lower was the $XX.X call capital. $XX.X depreciation and quarter and to for expenditures first the XXXX the changes quarter to 'XX. for primarily of in some net first change first capital the I'll over of the quarter highlights. were with operations The for compared $XXX.X of million million for first from hand product compared working quarter capital for the income And with the first amortization Cash quarter was million million a Neil million, in due during first And in of XXXX. million,

Neil Boehm

and were exterior quarter XX new of mirrors and auto-dimming net you, disclosed electronic there interior nameplate Thank launches previously Kevin. future In our first features of the headwinds. XXXX,

of increase The the of over first a first quarter XX% launch represents quarter XXXX rate XXXX.

launches over launches During in by nameplate features XX% led net the the Mirror. Full contained of HomeLink and quarter, Display advanced

our on product. update Full Display Mirror an for Now

product, for in number quarter, brought we vehicles. applications believe are on in total vehicles. a Hayes, launches and for a We XX. first be Rover the FDM Jaguar the with launches we the these global of the push that Land FDM a forward based FDM used and European milestone on OEM nameplates other include Land with XE will first lunches OEMs shipping they quarter European are represent Jaguar Rover The launches the for Rover Land Evoque the product help Jaguar the that on the will During began shipments the of shipping The based first future. because that to Toyota

Here shipping is nameplates Subaru different currently of FDM. is shipping we the are on on At two three launch XX our shipping and Nissan, currently a initial shipping. of OEMs we Motors, nameplate list where nameplates. nameplates. comprehensive are customer has number General the

And Rover, which For we shipping OEM, currently Toyota, on shipping Land are Jaguar fifth our nameplates. are on two six now we nameplate. was at

announce the forward look eight the to share end additional will through the year, have In XXXX production secured OEM Full on in OEM customer of we to put vehicle despite nameplates to which the new and As will systems, ninth Mirrors pleased the to additional of pleased units we we business for secure From launch [ph] show XXXX. of or Full QX calendar that expect our to of to ship quarter of progress standpoint, that XXX,XXX second and us facing. year, are ahead least we we a summary, at customer tenth be to at either able balance least environment our XXXX. stated goal Full we the award development third in Display previously in of the Mirror launch optimistic during Display Mirror are we business Display our are difficult production that are

evidenced Steve hand to closing will and show new great back products to and growth the now for and potential revenue Our launch continue the over I remarks. cadence as call innovations awards. latest guidance for OEM and by

Steven Downing

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

maintaining announced for company previously is its guidance be above the revenue between X% year and Additionally, calendar XXXX revenue X% to XXXX estimates.

help features a us The approximately markets Integrated challenging Toll electronic launch is that a headwinds but that include caused was products quarter continued company first X%. to our underlying deliver and XXXX of growth that older production to our are other Module, environment, the to production Mirror, negative technologies, Full organization the Display and working by beat vehicle losses from contributing vehicle hard like features offset environment. The by

important to ability through to technology to unique new detailed invest that and driven we longer launches R&D our the growth execute providing long his are as presentation. growth year in our growth These XXXX, Neil for that We and technology the in the deliver confident we company product are SG&A platforms by term that drive launches for fund term. continue while this is platforms will

focus both allocation your to Our next years. capital Thank today our strategy And on the return, discipline, is today. time operational produce several in you combined hand work can proceed now with hand shareholder growth questions. over for and to and we to designed

Operator

Horn first Thank [Operator from our question Van you. B. Riley Instructions] from FBR. And comes Chris

open. Your is line

Chris Van Horn

Good question my the Thanks morning, quarter. guys. and taking for on congrats

Steven Downing

Chris. Thanks

Chris Van Horn

little kind view. you in stance? have more little I conservative the IHS's been you know, off baking bit taking what a in reality you were a from is, still you that Are expectations think a mentioned bit So, given past know of of you the that

Steven Downing

and remaining rest a of of year terms is bit in we upside. the what volumes. came the vehicle given downside a predicting that more little XX to forecast the off the includes into manual bias more for production believe there there's make year little some months the of and last - We those Yeah, is what just with adjustments we bit adjusting of IHS

Chris Van Horn

it. the region I in know WLTP seeing then, got effects the And we of Europe, that's still big for a all. you Okay, are

of from over you just Just level production what you're be curious what seeing there?

Steven Downing

of causing data some a lot purely in from current 'XX. the marketplace 'XX available back affecting is just the the back little production macroeconomic really There's in believe a at there on forecasts of The say of that the to of bit We year. from, what's we're Europe. first It's why little WLTP environment improves of point. from not really do are European is to headwinds pessimistic speculation the half in IHS exactly much not Yes. the are of remnant one improve that standpoint. a the reasons issues I half suggest the that in that the we're in more That's this going concrete of a sure predictions Europe half especially that that

Chris Van Horn

said reported just a And anomaly higher it seeing on XX% features then advanced little - Could launches. Or the sense. Makes more rates just that's higher past, it. typically Got quarter? than give you take from then you there you on the a I some believe this you've in bit of of the is features? was color kind for those advanced

Steven Downing

it some really Display with think has Mirror of good do to Full primary that with talked and numbers the I the had for on for we a quarter, products, the Mirror, as And the about HomeLink launches the Full ones. product. of Display timing quarter being we

either, think put rate wouldn't I a it's say feature an but I good level And So to it I market. a quarter that. that was constant don't And wouldn't set. I'll anomaly, from run a at it's the to be going expect

Neil Boehm

the being quarter, when well the at lot a mirror our if in China you their most know, months affected have place that's issues, think last, launches look in at production I you XX look the this production, market where to global been years. base two last you the When taken of

markets. other down, in up you So when market mirror picking launches advanced features slow you up the you that but base end get there, see fewer

a So makes it than has what that more it little percentage increase been.

Chris Van Horn

couple award excuse me Bluetooth on the for know, the with some I'll just you me, have years, the of there? and Could CMS, over technologies just dimmable new the biometrics one you been Last even the highlighting sense. the which update an maybe make glass, Okay, and you've you in update back some jump queue. us past

Steven Downing

Okay.

we're at - each who to other going first. go I'll was looking So

to So get stop. dimmable trying mic, I'm start We'll glass. grab with the I guess.

at The award we and first Boeing concrete an announced was aerospace was program. the new with one the CES

amount there's of we're aerospace. focused launching And and a in so you're getting now program tremendous on launch. really Obviously, to program excited that work a whenever right

been work of was know, that incorporating from area capability of XX a area But in what XX have we you sure have, had remnants with test us are can working with launched success that for with hands kind we just the ahead Boeing. whether program a was the their of get lot product. time, vehicle devices, that that requests on that that better something large of we and is OEM to those OEs of flawlessly understand So Since to prototypes, and or they of or months first solid we've the can, they make that. hard on

is hard pushing and do OEM working and trying making that of that's concept. proof for out Neil's keep we're sure really some the hard of delivering CES walking capable demand So prototypes prototypes concepts really honestly, what that has to on is the Quite since up organization been team the of OEMs things the one that of for CES, evaluation. to with

So of areas we of we're have into to overcome confident But that solution. technical product that and demand a there work that skills, to lot for of there's type there. barriers that a definitely get There's the lot continue hard we automotive. is to

monitoring are are next Display that they're Display in add-ons whether offshoots look the continue that technology place, our you progress or and they the just once a be continue or then to Mirror. in by really So making solutions, to the portfolio. of mirrorless we're mirrored we you camera whether that monitoring very Mirror solution invest. believe that encouraged product Full the have When we step Full camera system, at being And for not Mirror, Display we Full logical

the from place. make need in-house we that product supplier relationships the build to continues have we team in sure standpoint Neil's to offering so and And

offering. of The all Integrated to interest starting probably in those continue in Toll really product the solution. car the and most connected side just grow the HomeLink we terms interesting, that's see really areas to is So for Module

Audi market the lot those the American to get have sourced about but work, and marketplace. have that additional, two feedback us of the obviously, for programs, it of initial product items and go-to-market experienced that it. So OEM we're ready from have having a seen North that there's that programs now in with excited the additional But

Chris Van Horn

for Thanks time the guys. Okay. again

Steven Downing

Thank you.

Operator

you. Thank

comes from Our Capital Markets. Carlson next from question BMO Richard

is open. line Your

Richard Carlson

guys. morning, good Hey,

Steven Downing

morning, Good Richard.

Richard Carlson

margins guide your is usually XX So know, just want and the verses you're XX.X, so now, you start the downs, on to for XX. you within margin, to annual XQ quarter softest price had with

risks are year could actually what So some us XX and show of the to get this the see you being that that to down verses.

You know, of end it now of seems towards know, kind that weighted high be, range? should the you

Kevin Nash

Thanks, Richard.

I be It as biggest mirrors that base the result down to peace. quarter were we pose that think mirrors week. a risk China is primarily happened of the every mix product interior being

And so mirrors were very and then and FDM strong. exterior

customer price kind that So helped reductions. the offset of

purchasing was year. than the little we Our into a performance better going of thought, bit kind

also So that helps.

And - is think major in our so a of did shifts, as forecasts it seeing same unfold I least in risk right performance the product QX. at what QX we mix not we're now, really the But doesn't biggest was. from kind

Steven Downing

I'd be what would factor biggest say tariffs. with second risk the happens

is - were factor if So where the that year could but worse place. to some from it I the if also put a are and they throughout offers mean, trade today, deal in potential get they upside be risk

end of an 'XX tariffs for at on run that basis. rate to continue run We annualized

deal a here from if there opportunity is to secured. is So trade improve

Richard Carlson

have Yeah, it happening, not And actually guidance list three little should a build right? step into up the now with what's bit for god your down it. just come tariffs,

Steven Downing

Yeah.

to if $XX that, to the million XX is we dollars. that what total annualized. in tariff was run you rate year XX remember, to on So million Based guided $XX

it's to of than so And kind that XX XX more range.

Richard Carlson

North with And that, I super Exterior mean strong. XX% it. then American Mirrors Got number, the

a also You've takeover having that highlighted because in was all it, sequential the growth is past win, the impressive.

anything So there there that? helping in else is

Steve Downing

the and in our competitor of combine rate quarters. you launched some from additional produce in program that that been takeover we've and business growth some XX% Well, and there's rates that increases the with I take kind

rates. the now that's third kind quarter growth I believe of So outpacing

book margin So expect a the high definitely little has a comps business of it's at stabilize kind and of Kevin's quarter level more of then it least profile. we'd but rates and the great one will become year-over-year helped more point growth to difficult,

Richard Carlson

And just then me. one last for

FDM, still is and the what for your you that shipments was guide - year For what actual is the XXX,XXX? this

Kevin Nash

based that were for expecting what's I on exceed market launching they the we units. on we is about, shipments based again at that on But take they're to the XXX,XXX. going actual holds the will rate, that's the that between we're The XXXX market launch launch in say based expect launches customers now, take XXX,XXX going right together. are to the on that And rates, expect talked the

there. variables a there's So lot of

staying over with XXX,XXX So target. we're the units still our is

Richard Carlson

much. it. Thank Appreciate very guys that. Got you,

Kevin Nash

you. Thank

Operator

Thank you. from our John comes from next question of America. Murphy Bank And

Your line is open.

John Murphy

follow-up on Mirrors. A those, on of single you're Full that or are Display as Good the morning, rates into time over and is a e-mirror ultimately, you go guys. them take good and then with something question When kind develops process bid in a exterior the this getting system? mirror through go finding leads you that

Steve Downing

all the e-mirror awards almost customers. ironically, have are system we already No,

for ordered in product vehicles. of on it's a that they a them. vision that In and really of the that enhanced with. consumer really so they evolution kind want most have system them words, next of functionality And And capability available other about step resonates their and

are at have auto-dimming. least customers those customers of e-mirror system are most already So

consumer customers to that Some when about the auto-dimming piece. of Display a make they currently. those offer Full it's up sentiment side Mirror, driver do only But step usually

John Murphy

dimming think mirrors, just thought Display margins, higher of mean, on of Full the kind about process thinking higher the and the to got a of exterior of sort kind versus variable but then on mean, be fixed cost what's sort curious about coverage of but I Full Okay, you Display. the and understand there? manufacturing about you as here. mean, versus I interior sort just your think I I'm price, fixed when given much question we traditional

Steve Downing

basis, lower margin. But higher a we're and a same for And typically margin. same contribution definitely point base mirror which a has a price replacing is at lower gross

coverage And - margins getting a so that the overall are so on corporate a relates better but is it as more complex manufacturing process, far in that. product to range. margins lot It obviously, average we're

to are year contribution we margins. the improvements contributing definitely in it's So

John Murphy

about so margin should going year. maybe think on gross of Okay, XX.X we the maybe I'm last quarter be something because like the mean, There's in taking the X, XX.X% a we gone else tariffs should or it have up missing? mix. seems I verse margins with the margins, out

Kevin Nash

are have we fixed with that net X%. - come the we've do SmartBeam pieces, drivers higher our just capital Yeah, some covers talking historically And that equipment. we cost bit, margin. rate of at make the at a gross in overall about product our - And this automation SmartBeam then that growth legacy headwinds and investments quite we - it's kind headwinds had a were those specific are been negative a

any getting sales that X% levers not You're rate. at growth

Steve Downing

you in your annual especially - on reductions X. on customer basically start basis, And a year-over-year your January QX, have price of XX%

we those benefit suppliers. we of basis, So our the purchasing through price price get sounds second reductions. you've a year-over-year Historically, on until benefit quarter before the seen full customer midway full got from haven't

more year. normally QX the of So the rest a tight little than

production and that treading take at out tariffs, we that contribution mix. up volume look that you did the basically when took we And away coverage can get when global the the X so solid some we interior to Unfortunately, mirror from step of environment made downturn be was in about that really there accomplish. product that feel unchanged overhead tougher an our even pretty and water

John Murphy

lastly And just on CapEx. it. then Got

quarter we'll if for. I little and there got it's you're issues you're XX.X million, catch see I the right. heard annualized the in forward? rate CapEx in I was right. of just going think Is The below like run some the up I it a looking number timing sounds It think bit sort here

Kevin Nash

a figure. closer to of the will on individual know we're And lighter and an then approach yeah, eye we the and than take little approvals. we growth, Yeah, that there market kind the running market but keep we growth you continue we on projects where have it, a bit And our if yeah. turns is little to continue annualized bit monitor

Steve Downing

that just of they're year's it's was the when a lighter. of projects first of part timing and happening part little that And timing, the quarter the

increase Kevin that throughout the like last have year. a down pretty we're definitely said, But XX remainder of total the You expect an of brought of funding Still we we financial payback projects the looks need, for ramifications what are and period criteria significantly CapEx the like tougher the months. but on little we all bit a what little a CapEx. are the in

John Murphy

you're a and mean, quite million, your full so be bit and rate, that below talking how year. run of little quickly can on for you turn below I what you'd kind And about off? Because we're XX which is a bit

mean, fast little more a how like I on time, you but lead and off, turn like would you mean, seems something So, flexibility? have this bit sounds more take I it

Steve Downing

been invoices it's kicked timing to capital A have about on lot of just of projects that off.

and and versus some been We fluctuation are we - say we installed had you already, rate have for that's gets So some what ready signed QX quarter-to-quarter. agreed installed those products will on. that off when in QX, raise in projects that why equipment us to kicking QX gets run about that that, production. already see we when that know it are and from delivered It's off just will

John Murphy

happened. And nothing has

that's in slight I but the to in would longer think place what's happen, take that's those some - one So be can to flexibility? delay programs, you of - if It - was that CapEx there of be mean put have one spent, right?

Steve Downing

Correct.

John Murphy

guys. very you Thank much, Great.

Steve Downing

John. you, Thank

Operator

you. Thank

KeyBanc next Our James question Markets. comes from from Capital Picariello

line Your is open.

James Picariello

morning, Good guys.

the can about these regionally, that mentioned, then, you're new the And just with FDM, you're, the confirm I customers the think can quarter? was sure. on might talk been on you that rate have in you growth got that make to but second Just you Europe this ninth bringing here, sense tenth announced then and too that or Is or this in you'd to in third announced that? for customer you get got just that - Thanks. to announced opening up, opportunity quarter? expect maybe customer a already on be a quarter, close

Steve Downing

currently. stick what So, kind all in to million far, we're year. FDM that we're shipments like to we've rates annual be Neil of to going it the to the reiterating activity said going the But and relates a the guidance given launches with been the saying for half and take so as access we of feel what

Neil Boehm

of very been Mirror that the naming have our always them. vehicles. been launched part of because used about the their terms careful exceptionally with Full have the because much In we've careful product OEMs about mentioning this of OEs, their marketing it we - We've of how Display

So either their announce automotive website at on it names or on until available product they their or vehicle won't a environment. show car show trade they until a we or show the it say a or

of of volume in We've So is, say a wide quarter of end until to low we've will - we've of we been OEMs we OEMs, mix of from XX OEM. volume steering away from had year. OEMs who be have the been that. the based to awards different volume those have a high What mixture we're five luxury had projecting what higher by this third involved, luxury

to of probably more is that is lot to appeal bias OEM that is A with exciting limited more has a a product isn't a truly traditionally a that North a launch what's not it based It the end i.e. us high a even just or exciting to us our the HomeLink what of for niche, for we have have geographical product. OEM relevant what's broad the it's So certain believe lot chosen doesn't would not and in limited be pretty had a And and market. we've is have the North markets product markets, been foreign export This American products product. that global that launched or product those product. accomplished of American vehicles.

So of rollout get auto it's been to watch shows. international exciting attention an at a product lot and this

James Picariello

is the FDM that quarter, you growth it. Got share? something in could

Steve Downing

our to guidance going stick now. No, we're annual to for

James Picariello

for that the then driver full basis we XXX think for SmartBeam year. the of you the And headwind the how Okay. should previously assistance, call cadence year, point a about headwind

played the expectations Just how what are, in really… curious that out the quarter,

Kevin Nash

piece to the production program overall another on XXX there. it because all in the points of XX given in volume year-over-year points points XXX XXX from loss, market, is so think, about basis in the to a the basis true XXX it basis call probably basis, downturn losses of I

Steven Downing

that's basis our versus market honestly, down quarter probably in that's product losses X% growth headwinds exciting had and prior Well, a basis plus was XXX points that's part year. of a from terms points we of really in performance, production is XXX most what total that about financial that the

strength put to rate Full that inside of launches. speaks to strength So a of our really Mirror mirror our up the growth and outside Display

James Picariello

rates, adjustments are on you're this Yeah, in curious you know, China, or half stabilization and based one assumption a me. baking seeing the in just back in make high assume the for in you're, in there? recovery, kind Are factoring you more what you at is for of take know, I what know, single China IHS, just digit growth which you last point? baked in do of you you V-shape know half? back the

Kevin Nash

kind of and end I overall QX kind played China. not all out in we're the optimistic our X% that of get still Steve Yeah, what kind like - the like with reduction little the to mentioned with assumptions into those week to we there's we is just markets, same of not XX our X% bit major are drivers continue with. markets. assumptions think in necessarily IHS fairly of beyond window, feel already, year in we using monitor went once it. conservatism, you - But conservative of But not a we're And as growth well

Steven Downing

a automotive China's really IHS of Yes, 'XX, of kind is pullback in this end a started recovery, right would of at the call kind at halfway production look quite through market. mid-QX specifically, is in specific and QX QX, then And through a QX. if of early now, more to showing QX. you it than showing or bit be the recovery China recovery about that a what We little probably IHS pessimistic

for in kind of we do think do extrapolate, know, so the use these of of and think we help data and of kind look release where certain at can we a regions. data and XX is of Kevin IHS accurate China. slightly the we do recovery you we So Like having each where the customers that certain it's overstated advantage for yeah, weeks areas have mentioned,

James Picariello

prospective release on you that some a stabilization in seeing And know, data? Are you in China? basis here

Steven Downing

improvement Yeah, - expecting China QX would not a QX QX, QX, forward is, you the in huge you see what we going we QX, into market. were know, wouldn't know, we more really in and consistent so with,

James Picariello

Got Thanks, it. guys.

Steven Downing

you. Thank

Operator

comes And our from question Jefferies. from Kelley next you. David Thank

Your open. line is

David Kelley

my Thanks morning, Good guys. questions. for taking

for Full opportunity in over win the just for that shipment better next term? to referenced, rate should how over we're three maybe get to FDM we Mirrors me. on Another medium I think feel about opportunity, addressable on European you years the a the market trying your one based guess, Display potential two the growth

Steven Downing

is, part year. think you we're guidance revenue units about, that original Well, I despite the Sure. half produces, this product a the the only exciting the million for know, talking only

So we space. the available view

number who producing really the or just that from at vehicles talking fits vehicles pure consumer look piece. end large you of about If sentiment even SUVs, not standpoint, well trucks, OEMs are with, visibility product this the a high

vehicles at in is several You the a this we world there's believe least fit million know, for. perfect that

the we're that continue aggressive a - think of path of kind in don't - market in we And pursue chase And being overly of so and that available perspective path that the large what market. down addressable down that we to is. very

David Kelley

expect maybe the lumpiness then we or with guess, cadence of your And to to gears in ramp helpful. could speak or any some you balance with about new that's switch of the I looking great, coming? expectations, at engineering line operating quarter-to-quarter the R&D either for in expense just year, Okay, launches associated and the should the expense products

Steven Downing

wouldn't Really in 'XX, look I and 'XX, I think you 'XX, know, consistent changes to expect know, the the of stabilized. No, not, rate that then bumpiness, if beginning be continue throughout kind up slightly that whole pretty trajectory of it'll of you if at expect from. with QX we'd you a ramp lot into the

in huge working help well off. to we that we place we're So you'll does those now. think lumpiness. happen see that needed tend through is Anything of And help I don't to team with, outside edges take contract the a The just launches. amount

hire to to percentage XXX% of spend. our of can but have some don't that, we contract changes be overall We fairly the needs. So those small tend to R&D

David Kelley

customers in And business aerospace? them windows been recently. I'll revenue you news you. one of aircraft any I Do give the cadence last thank has know then for me, I smaller for pass one are Okay, along. you. your see in in change and

Steven Downing

planes on when good dealing No, fact, probably when that the it's with on. it with is customer, our in good the ignore were sourced news the the that were is - there news, issues that if any or not

far, had So in volume. hasn't shipping it any impact our

to that Our product to execution. continues ready this we and to And launch to expectations for continue work launch. XXX meeting customer timing we're hard make sure get their the for

David Kelley

All right, great. Thank you.

Steven Downing

you. Thank

Operator

And our comes Robert David you. Baird. Thank Leiker W. from from question next

Your line is open.

Joseph Vruwink

David. Hi, for this Joe is Vruwink

Steven Downing

morning. good Joe, Hi,

Joseph Vruwink

this a half vehicle generally Can know, customers? and of customers dollar initial started that's where out content typical the the customers quantify these you e-mirror they've that $XXX on in with On you is your going to and times FDM a meant the speaking to, with So what terms? FDM to dynamic two FDM. gone

Steven Downing

point Well, continue mirrors outside it mirrors. if out they of take there, customer, was like for our launch to on which is spot you outside replacing, Kevin's buy we were because

other outside is outside purchasing the is add OEM Mirror, mirrors they're FDM, to unchanged. rid So launching and if so of in get they that mirrors, content already Full a words, don't Display

typically to average for with $XXX buying. up to range, the sale product on mirror bumped depending about that however, inside before the On lunch they price customer, were that $XXX XX$-$XX FDM and which $XXX they buying a our they're were to the

$XXX you're about talking FDM to with that content $XXX an decision. So additional in

Joseph Vruwink

And automakers, that, that know, mirror to they vehicles, $XXX profile that see non-FDM lot content are mass markets, strategy you reconsider of mirror does - Gentex to of your examples some mirrors? initial other have more partners that to own fact fact to high ultimately dedicated using with content cause launch their has on are the customers the $XXX a

Steven Downing

perspective. with gotten a perspective their least think this general, of I changes it a lot vehicles gets technology mean, that I from The at a from technology automotive, write-ups are of, type about product it of launching and consumers and industry the attention, Yeah, in has from lot tech.

our business us provide to we thing is a other typical that's customers for Gentex them. the helped for like think is case with I hard try work

it's can't but content $XXX they the not So technology, in we're the the not you also for. talking product get know, Really case we're pitching reimbursed business what them, just to that about, half correctly, and this buy two and if X $XXX we're that from us understand right, and the to for, consumer can we that and you doing this for know, hopefully resell they one price. a that

And it's so also technology, case for business only hopefully but and exciting it's not new a them. positive

Joseph Vruwink

for we're Steven create might and A bit actually that less? margins to on time there to that generations product period any create the start be Gen-X Is a shipping and complexities right where a complex now. producing still it's to you're Downing simultaneously different be where Gen-X - of a make product Yeah, - a incremental situation does with, FDM of any our systems going the so does but additional

and requirement for at product, the same support to typical gone through. this we all point launches So expect the and do, Gentex, three we we the part iterations That's XX the customer that they've at years we generations the months shipping of fully need that in as of we'll new of of as that create two so innovate what be know time. to and next will into have I Gen-X.X a

that that we our around sure design complexity. all we making manufacturing system can so And handle

as we've sometimes startup yield and new Now, that has there way you the managed or a We've said, impact financials. are overall of to to to not very well. obviously because manage far, that being you corporate launch our change had so That's issues that, your a a that to from point, impact able transition that product, been a profitability. Gen-X, issues Gen-X significant

As Gen more to a we're also been we've product than -X. through be learning product, this to manufacturer Gen-X able develop

hasn't had we it Gen-X a and product. we negative gone headwinds see to the new margins well when generation normally that on has of a launch So launch far, that very

Joseph Vruwink

specifically production question, my Europe, far is in how QX, out can maybe apologize QX then you know, X% Okay, a requirements that's I Europe the happening assumes assuming think and emissions obviously gave this. in questions And and but But QX QX if there there's great. were your last HS well. I new but grows and you in some below call about you as

maybe just just I Europe limited said you you're what or maybe explicitly So expectations, growth but in markets? think end growth no for assuming

Steve Downing

entire full worse and couple Yeah, didn't we certain quantify forecast. at looked year, Europe, were that we the together full-year a kind by when percentage the put we but of markets, of we than especially if and China specific production, you look probably it global took, at points HIS we

Joseph Vruwink

you Okay. very Great. much. Thank

Steve Downing

Thank you.

Operator

Thank you.

next Deem from question Anthony Our comes Longbow. from

Your open. line is

Anthony Deem

morning. good Hi,

Steve Downing

Anthony. morning, Good

Anthony Deem

questions from me. Few

going I was is negotiate need of First, if wondering with mirrors you're rearview duties WTO from capacity that update ahead there in on with build And if you can XXXX. pass-through? of And how included might list Europe, confident customers maybe the or list previously, to be imported you any the from U.S.? on a see conversations

Steve Downing

situation hasn't to Trump worked is, said the the in manufacturing done And list obviously Europe down have last out an historically. any China Anthony, and as open aware, with Europe, but and on eyes Great questions. to changes that he be fall point. die you're our both things we with keep when We been well did had it There in ears continues customers.

are there's for footprint tariffs, U.S. now, now Right that changes. best will big doing right demand localization the that But push to if options. a customer hasn't tariff been we something certainly with consider So But is in like the we there it those looks European feel drives been course. or fluid continue to without push evaluate like. our pretty continue to and conversations a not But global what the currently. it's big the the here

Anthony Deem

towards as of level a then if clearly you trade on, the I don't clarity guys or it have allocation Maybe Gentex, buyback? soon, could of at about And greater lot deals sometime which a great. implications Gotcha. you standpoint, mean, buyback from focus think is see a capital this shared share

Steve Downing

to think level share when the to affect it has it, everything comes I overall performance, when financial the of Well, opportunity repurchases. everything

we course look we and as then going the activity. the things our at are are our against comfortable along not next is to that to two is aggressively harsher long growth Obviously, saying a love that, marketplace, as time, years. probably valuation financial good what of prospects looks we growth the same of is, front we won't the that over is the what M&A action. pursue like is At outperform with the feel prospects criteria company, same we're what little of time, hurdle than most. this as valuation going stock M&A for what our rate a And But to that deal the the for compare moved the One five we at hasn't ourselves. pursue

our valuation still of at fair at and the when the stock. them And for look we multiples value Gentex we we a think it's for trading so with EBITDA of at, their look

to to based or to always availability then adjust assets. those were strategy were capital continue all continuously. happen, change And are we decline So And allocation to factors obviously, performance at if financial off and of look something targets subject our those would accordingly.

Anthony Deem

basis If factored it strong for Price was Gotcha. you Kevin, what's you reductions. if it because And point down pretty year off margin in starting wondering well, I the recall, purchase year any, XXXX? the you're think gross started I'm with guidance out seems. versus think, purchase mentioned I pretty I the headwind. year, last reductions, XX

Kevin Nash

is closed. but of the gap a a still little gap, has there's Yeah, bit

to arrangements gap softening of has constraint. bit and global teams, overall, in the slightly than softening, with APR a purchasing, continue little the is were little the our expecting. bit it a teams the wasn't different because of work work guess kind was some between sourcing still a eased Our bit market a finding there in it But the cases. as automotive of what is that probably we on I of market And suppliers reductions it better sourcing of currently purchase just cost

Steve Downing

of at kind appears of taken that's be beginning slowdown, relief so global the the the least or been with there's metals to what commodities. few the off some that precious some of factors slowdown, a pressure And and, global a

Anthony Deem

budget at I'm you're and Gotcha. consistent And towards, Thanks. activity line, high innovation single maybe if sense for of development help us that the then gen digit development? if able And get product rate costs, allocated and next next launch the in cost percentage I is to could fit a product launch more of please. also, one newer new share sort that. inflation, territory, the versus e-R&D gen can wondering, across

Steve Downing

giving we'll the in of breakout part we last talk there, goes changed you Yeah, then of about instead two what the a kind strategy of years. to and what

pure standpoint, concepts that phase. capabilities our last in is the launch organization. down Neil's three Module, products moved Gen-X this bring like of is as and team the the most up want working from one the now that started course whole team we to side concepts. And itself a Toll that of have more ideas on really his and and our and has HomeLink years. two product D generating grow the Probably R ideas into and that we Mirror Integrated Gen-X.X we're So Gen-X new to that's years Display ago, continues a changed we the we Full launched of series Connect

at we've that last whole CES Beyond of shown things couple a added on that, new working we've set years. that we're

mobile the a those make we're the ready areas and try leap to get the technology market So large devices automotive. to for to that like having

you And others in. And Those individuals move so phase, of team of the and helping stage to focused becoming what are up to then phase see flow these and get of phase from flexes they move and more the more or is with end capable talented them moving the to with it R idea execution even development reassigned launch on next development research other into staying kind depending we're some people those one product categories. what products, from highly are who move focused and constantly. and of the

not kind percentage what development eliminate to on continuous This the percentage we focused is of try why what that's a focus is So percentage. our or changing by on that's launch. by. really and And a

where so continue in, And and move flux in depending on coming are to are kind we the in of ideas that phase. launch people we the

Anthony Deem

thanks taking for Great, my questions.

Kevin Nash

you. Thank

Operator

Thank you.

Whiston David Morningstar. next with from comes Our question

open. is line Your

David Whiston

to mirrors they updates Anything ongoing ROM, and the whole of else really good out the mirrors. there I'm Thanks, want discussion are in replacing Wanted to to of in that still dual there the ask and changed to terms morning. of highlight the you redundancy any market? that's past cameras about cameras the wanted telling story year

Neil Boehm

This is Neil.

Steve jump and can in. - the think I I'll start

of that and lot a I think ago, mirror, a within performance on show more have is a the being that compete come day system, or their the that versus cameras there consumers And I complications longer replacing first do in standard use are that accept a more where complicated digital a a volume. a couple of reality doing walked car into and customers mirrors market three But the that of can the put of now that of it product to electrification what the on every questions level putting go it's engineering lot low in lot to into on will back the as product side as markets the years well the was is next if or use. two of lot only focus trying type two can noise out away getting - consumer resources being have to gone, asked from type about actually A vehicles the vehicles to was after put replace autonomous initially their to product primary taking and every that market. trying and resources that develop to some that they you say anticipated. not it a weeks. compared the well than would of know that to a There's still getting luxury

Steve Downing

see that for to opportunities space in Gentex continue we participate. So

that active the a that started OEMs different - of quote if actually been always an back decided have factors. built think big despite because last or of and lineup months, technology fact XX been and in to talked couple OEM. a offer around skill the Like for the phase, have build in you're of our OEMs things, carrying without around about - our of of couple the bidding difficult, upside it, they push realized consumer a continue part the And the I case incredibly We decided, that cancel has we've FDM a execution. that the and is costs concerns which this the fact the to viewed is then set. refine We've our business business that consumer business so that not if delay additional Neil not upon mentioned, it to concern we be case we very technology that could And the expensive that's case, little it's with electronic expand pulling benefit. hopefully going a

we case. to business me including all to So build the try offering up our continue to product questions, on those work

David Whiston

fair in say of pretty buyback even just the you to a it And Okay, aggressive plenty question. on on have recession? to still you'd as follow-up earlier Is be long cash hand, thanks. as guys

Steve Downing

Correct. short look the - you if cash and all those look term are and you turned all income, they can cash cash quickly. be if long cash, the very Yeah, and fixed into at equivalents, at investments, the

our very positioned to well continue position. we in be so And cash

a access we're factors generating And to were the or favorable company our We time targets move available of for make gives also if to cash that sense to pricing. believe if opportunities M&A trying at well positioned stay all sure it existing outside price our off credit. retrench same to make anymore appropriately. at we're of on business market flexibility obviously, that us of have to with the where just we line become didn't own focused those We

David Whiston

thanks. Okay,

Steve Downing

Thank you,

Operator

Thank you.

from Ryan Brinkman Morgan. question next JP from Our comes

line is Your open.

Ryan Brinkman

thanks for my taking Hi, questions.

of approach this more a more competition to Do gain Display as products attempting can started try or horizon that and to auto-dimming system an see being mirror Mirror, the you the into your on traction as displays? cameras competitor Full there displays others of additionally serve some and FDM cut offering and As with have to cameras area yours? of for you see simply to any are replicate you

Steve Downing

a There's few shown shining that quite a the overcome. didn't on to unique one This simple amount track been problem our it. a of yet have our reflective solved we've in part display products. a time a record that the on spent people And physics not last this tremendous competitive years. surface, is transformative We been believe but to two that happen the We've of better needs XX by coatings type through having years. reliability, be for working

bit And that get time so to status that we every today. amount it the took of to of

from a some we we standpoint, have there's from believe a competitive we standpoint, advantages, believe from we a technology cost actually so and some advantages. scale And standpoint, have

OEMs, So a that that our I we we was would That's at to if as didn't it thought, share the a that is share quarter, mean is business secured make we're a primary XX%, had say quickly. standpoint. we'd stand enough OEM unique it to actually that markets, what lost that. from competitive. or be we will our sense. our here makes means well this It to we XX very just like case It market total say I where about feel offering certainly couple product than not doesn't means. better And we're positioned a today let's third good second and feel without would that I by competitive thought have have that competitor. three that were market that think have And XX%, years move In programs. ago think our still it we'd

Ryan Brinkman

And capable components the latest you're of have whether regards being lastly. is Day they seeing Thanks. leading and to vehicles fully mode might that time Monday, and helpful. you at have on Tesla driven such mirrors? What off then necessary, least autonomous do and just as implications vehicles Autonomous the Investor be cetera. increasingly the So mirror of with your shipments? pedals with That's by at will autonomous steering that a vehicles taxies likely humans, for driven when ability this or view other to et in more long for still think positive Is mentioned wheels,

Steve Downing

to of sense those produce as once robo a that that is us. luxury much taxi functionality is that OEM a the market The sometimes, position those there of our make to time, what the will is - bifurcated lot that a types you without That's probably The to through fully reason available. way be is is there's features without as of you of But your the marketplace up all automotive. that not going electronics type all drives the side And car fully car concept autonomous it necessarily ability doesn't the vehicles moments where sense. may is makes a being an a consumer really as consumer concept want high the you individual, why want end autonomous. maybe on to drive maybe to choose

be functionality think control there's different where But at to take fully all robo you that as environment. type we available. for different taxi we that there approach case that a wanting so vehicle OEMs will very for can't And believe autonomous, use a a relates it that

consumer, to And if cars, drive redundancy important. driving. that experience consumer high ability the that talking OEM high-end going sometimes. people even there's autonomous you're it'll to honestly, to or if but some environment also for want the think be there's have There's become forward. end about that's fully And allow different for a still choose enjoy performance you that having there going want they very you you enjoy the that mode. can, that mode, vehicle in you you still marketable quite to the control, luxury That's So vehicles completely we it put control, that as to if of

Operator

over I'd O'Berski further And to Josh questions I am back from to you. closing remarks. Thank showing no the our phone turn conference any lines. like for

Josh O'Berski

everyone you, this for time Perfect. Thank morning. your

XXXX. XXXX. our on And hosting we XX As be Meeting XX on Investor reminder, Annual of Day will Analysts Shareholder year a and of be will May this our August

to If you many either We feel week. please great have look me of your Thanks events, after this you'd to and rest on contact call. like a free seeing attending of these information forward of more there.

Operator

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

disconnect. may a Everyone all wonderful You have day.

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