Gentex (GNTX) 23 Jul 212021 Q2 Earnings call transcript

Company Profile

Participants

Josh O'Berski	Director, Investor Relations
Steve Downing	President and CEO
Neil Boehm	Vice President, Engineering and CTO
Kevin Nash	Vice President, Finance and CFO
James Picariello	KeyBanc Capital Markets
Luke Junk	Baird
Ryan Brinkman	JPMorgan
David Kelley	Jefferies
John Murphy	Bank of America
Josh Nichols	B. Riley
Mark Delaney	Goldman Sachs
David Whiston	Morningstar
Charlie Sloan	Oak Family Advisors

Call transcript

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Operator

Good day and thank you for standing by. Welcome to the Gentex Second Quarter 2021 Financial Results Conference Call. At this time, all participant lines are in listen-only mode. After the presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised, that today’s conference may be recorded. like of the Investor now Josh over I’d Director O'Berski, Relations. Instructions] to conference hand to [Operator Please go ahead.

Josh O'Berski

otherwise by call. O'Berski, Thank Engineering you. Gentex party and Corporation and liable respect and meaning quarter conference contains call XXXX press CEO; the second conference responsible of and the I Gentex am Good any and call morning. Steve This this Nash, to Vice And XXXX reached welcome Reports and am redistributed. release joined Gentex Neil for Second always, on of This to earnings hold website. from the of contents Downing, may Investor the Gentex Boehm, are conference on Director President be Corporation website of morning, Kevin Gentex Gentex this ir.gentex.com. going to Financial by Gentex Corporation I the Relations transcribed the CFO. this Josh forward-looking Gentex statement Vice President Quarter contents is release any Results published, not will shown earlier within the Corporation any copied, CTO; incurred can of reproduced, President included the at Internet in damages and call. and as by Finance rebroadcast, Gentex live property and of of be use with of unauthorized or Safe information call the Harbor retransmitted, All conference

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

us to Downing, get today. the started over turn call Steve I’ll Now, who’ll

Steve Downing

you, Thank Josh.

quarter of $XXX.X of in million, of company the net the second sales For which of of reported million the XXXX, to quarter was increase an compared sales $XXX XX%, XXXX. quarter net second Korea in China second basis, quarter-over-quarter vehicle the light XXXX. Japan, XX% of regions a On Europe, COVID-XX increased when North impacted America, of to the company’s compared and production primary global

primary HomeLink. regions, production light X% units in production or actual XXXX supply to production shortages the company’s as production in industry-wide XXXX company’s vehicle The light of production was IHS compared million exterior interior forecast second production in vehicle forecast compared deploy result by which quarter global the the actual million and the reduction including mid-April and the both as X.X XX% such the other Markit within quarter that led features vehicle a mirrors when impact XXXX Display customers light auto-dimming the X vehicle in an led However, approximately shipment declined compared certain electronic in light product came the in of largest expectations. to saw excess and reduction unit forecast. approximately high Full units levels total, mid-April In North Mirror OEM shortfall deviation content, of and part the forecast, of decline vehicle constraints. company’s beginning America, to versus chain the forecasted to from estimated from quarter The of the compared an to mirror of

still net are part over impacted deal experiencing continue quarter affecting our our year, that customers impact tremendous increase second last XX% we shortages with are are industry. COVID-XX and ongoing the pleased the as of the we the very While of cancellations volatility order sales with of to

million. the per that most quarter changes America We unit severe is releases for was dollar units. impact total second of revenue in push estimate but history, sales largest one our about the average. above The corporate continual in out company’s orders for initial million vehicle to Our the where X forecast the shipment was in and quarters the the approximately quarter in the in North the were content to of resulted $XX be changes

our that second underlying through As the outperform should products we provide encouraged into still to and market. to the continue vehicles are the the and company year the XXXX, for opportunities for of half move overall we demand

to XX.X%, XXXX, the the the gross second better sales due gross to significantly was margins the the cost improved to quarter place structural XX.X% of positive year, for margin of impacted XXXX, put the and quarter second product the of COVID-XX higher quarter in by For overhead second company levels, last compared XXXX. leverage, savings Compared mix.

expenses one increased operations $XX.X quarter, XXXX show million, challenges the $XX.X our to While for guidance quarter. the higher analysis margins primarily for on offset lower second it quarter reductions than gross during for the and quarter quarter have reductions Income XXXX second in would fixed million, versus expected well of hit overhead sales, however, of close the million the if then The to sales materials, had of to to from million in $X.X quarter lower of the freight significant quarter, gross second forecast The to by Operating good expected second our margin $XX.X the second compared lower in inability below was our XXXX was our many significantly incoming the is during gross our news, and that than than raw of initial previous for the price a the to quarter the operations of driven XXXX. that annual the was by year, estimates expected compared very improved initial X% of forecasted loss variable XXXX. sales costs range. been last costs. due margin despite from

benefit of foreign-derived increase quarter quarter $X.XX stock-based by the the XXXX the net quarter the $X.XX, I the XXXX, the increase hand gross is net share $XX.X of $X.X financial of earnings a had result second was quarter of of for discrete call the primarily higher $XX.X and loss was second range XXXX, the income our quarter compensation. was from second million income which or margins and XX% Kevin compared company Net to compared by million, of net XXXX. During rate in were for over of diluted the in XXXX. a tax an below intangible income second driven The driven to to million benefits income guidance of effective increases per quarter now the was annual of the compared and quarter deduction per of a will second Earnings details. for when The to for of profits. share quarter-over-quarter second sales, the second operating in loss in XXXX.

Kevin Nash

compared the to shipments, the second the comparatively. more mirror second highlighted the expects in of growth a dimmable of aerospace the Thank the of increased by compared net you, aircraft XXXX. XXXX. of Other million fire net aircraft by million The XXXX. unit continue quarter, is XX% $X.X for that were XX% second XXXX for impacted meaningful quarter window and of million until Automotive sales in increase, second XXX to were the million, decreased recovery $XXX.X during XX% quarter and levels. XXX% to quarter Auto-dimming Steve. protection of industry increased $XXX.X shipments to that X%, while sales of dimmable XXXX quarter-over-quarter, the compared sales be exterior-mirror company quarter unit second $X.X sales Boeing quarter will sales XX% in Within aircraft a decrease production window there

million by million, more operations a primarily of $XX.X to from key million, due to highlight into support its issues, of deems -- repurchases, some Accounts investments and were the allocation expenditures. common million repurchased from that XXXX. liabilities and payable $XX.X higher shares to payments well appropriate. wages, $XXX.X flow the accrued future was share Cash were capital take as market company from decreased $XX.X to capital June time-to-time of and from were the due million, now $XXX.X down to and $XXX and for intends Inventories increases company salaries receivable XXXX, due and X.X continue pandemic, sales. $XX.X million. from in previously XX, from impact account we’ll up December in and The $XXX.X million in I’ll decline $XXX.X company stock offset up COVID-XX to from compared items million up strategy, Short-term as repurchase accrued and million, may up the from primarily million. $XXX.X were million taxes. XX, stock the of were its month $XXX.X million of timing of $XXX to trends $XXX.X the balance quarter payment equivalents second to to the total shares vary that from as macroeconomic million investments including down disclosed common but $XX.X dividend long-term of share cash million. the other as million, due XXXX, During $XXX decreased increased additional repurchases $XXX.X million, cash income million Accounts factors than sheet end accrued

from increases were for the Neil now and the flow but looking over compared at $XX.X income, XXXX in partially for in hand million And $XX.X flow in by increase for second was amortization last -- $XX.X million quarter of million capital I’ll second XXXX in year-to-date net compared million, with of million, statement, driven offset for in expenditures and year. million, $XX.X and cash operations capital. depreciation from million. XXXX of year-to-date the XXXX. product $XX.X expenditures were D&A of flow of call cash and million the update. $XX.X to $XX.X for working quarter Capital capital a second $XX.X second was with up for the quarter the of million quarter operating expenditures second was XXXX by in fluctuations Now million, was to XXXX cash quarter $XX.X compared second quarter The quickly to $XX.X compared the

Neil Boehm

features XX% Thank mirrors new features. launches the there XX you, way. Full interior of auto-dimming and Kevin. advanced with launches of Display and were second these our contained Of quarter electronic leading In the total Mirror XXXX, exterior

some for updates Full on Mirror. Display Now

to our continue Display OEM we Display to this second MCXX XF Full the across China Full market. shipping of Plus Maserati announce future. on Mirror now the Full Mirror the has of during Buick and that we’re We’re grow The to shipping Jaguar to Also excited other company excited quarter second the Maserati. in quarter XXXX, Mirror began XXXX, the for Envision began Display during product the the and vehicles ninth

an least on of provided OEM are launches number mirror update forecasting We for are since XX new now programs. vehicle customers we display shipping few nameplate on a of vehicle second full awarded Full nameplates that Display quarters the been us Mirror XX at XXXX. It’s the and have half

end the Full and unique the clear market Mirror with years. will product situation bringing is challenges rearward In the our Display the next Mirror benefits the Full our XX Even that consumers been OEM customers to two our that system value summary, and facing, and facing, rollouts product over Display driver market quarter product even half to we’ve industry launches, announcing developments Display provides be XX Mirror safety. call with we it’s now through a awarded hand Full and current a impact half I’ll XXXX, As second are have enhance XX over new Steve we’re off propel and of of technology be launching XX the and XX excited visibility this guidance continuing we’ll of programs and help company the year. OEMs forward OEMs over and closing the of remarks. to of these and in see been second the the years. the coming for to the back with to OEM

Steve Downing

second XXXX IHS vehicle forecast second for XXXX are end from of Markit XXXX year’s vehicle second assumes of quarter first vehicle in X% by the for XXXX half The production Light forecasts for of XXXX forecasted and China. the supply North will Korea during and IHS related production light decrease company’s based improve year. second that that company’s the Japan IHS the chain This primary of and current of throughout America, the XXXX and at continued is the versus the to issues XXXX light many Markit half Neil. forecasts Markit began production year. of for half the of on the last full the quarter mid-July Europe, in markets Thanks,

estimates forecast in first this half a light Based the second represents to vehicle versus the half forecast, on volumes half of the of XXXX. is company vehicle reduction are guidance production the production compared While X% second XXXX, XXXX. vehicle this when light providing production for increase of

is the associated company and likely the XXXX, a The significant performance. more demand year for guidance. the to estimate updated XXXX to XXXX half result the for the prices, expenses are impact to in million be company’s guidance specific the guidance challenges volumes to The the the is but half in manual in our profitability XXXX second million are second half stemming XXXX be light this and issues, and expected shortages XXXX adjustments between second between have as the be Markit Gross freight half include also driven revenue includes believes and the raw and help for of $XXX second XX.X% is more chain the believes the that accurate order This expenses of XX.X%. year production half billion. projection million on vehicle company year operating of quarter $X.XX environment forecast model to indicative our current forecast cost of and company company’s remainder by results $X.XX actual due current year. material intended be the also than to actual from replace quarter half that freight of a between half continue will the is following of second performance $XXX billion. the has may second of the net The our for Revenue full customer the costs. impact changes million. the of Given labor second also guidance. provide and supply company’s to margins elevated second of vehicle impacted providing only year is to part of sales forecasts forecasted IHS on into and $XXX expected that this will for Operating based calendar approach previous $XXX accurate to to changes, production for that for approximately and second and impacts XXXX The the updated

Our the million million will mid-July to statutory $XX be of estimates of revenue Based XX% production to which million. company and expected Depreciation estimated $XX are XXXX million. amortization between for the second the XXXX and XXXX the estimates of and revenue XXXX, half between is tax half XX% the the rate updated calendar forecasted of to for forecasted to second second and expenditures the rate to billion. XXXX half be no be higher assumes XX%. is for $X.XX XX% for changes $X.XX be for XXXX vehicle between light $XX on that $XX estimates year approximately than billion XXXX to Capital

expectations half believe to supply shortages of We into headwinds that have our company updated will include second due continue the XXXX to the to and XXXX in demand guidance our continue to half the see and we of will XXXX that first XXXX.

forecast Our guidance are in vehicle forecast the volatility includes manual adjustments to strong the that light pace IHS demand for industry, we with year initial growth next for on estimating buildup is Markit production. provide our revenue revenue the massive that Despite will XXXX.

for In allowed overall remains But we and These the continue the shortages the company. large that least increases, and to to difficult currently, industry including shortages, facing are volatility. customer has for minute revenues light industry for But profitability challenges in to up a labor receiving forecast also assumes any our team for to the just XXXX of work the conclusion, will their has continue these cancellations, at The believe customer difficulty keep flexibility team the another hard of amount the the the rapidly timing and prepared overall XXXX quarter. Gentex Despite We controls made very customers. which raw the focus, immense continue combined worked streak our and changes during minute profitability necessary in the orders, see cost But last affect downtime changing of company. hard will very the it of volumes and headwinds XX us changes to last much on operations. difficult with for issues our Our enduring material pressures. increased that order conditions raw severe production rest environment, component and months vehicle without remain work major freight shipments issues, at with did meeting forecast level and I’d operating under. materials currently to plan optimistic our will year we next XX take the challenges, the months we to for thank produce our continue and of coordinated potential entire challenges record is other strong. us like and to the in

during growth questions. to and first of health we rate As of our I That your you mix the completes for about call, mentioned can time the quarter future the today. business. conference combination our Thank provide and awards our product overall now confidence cadence, program launch proceed comments for to prepared and us continue

Operator

Markets. from [Operator Instructions] Picariello James first comes Capital question Our KeyBanc with

James Picariello

Hey. Good morning, guys.

Steve Downing

Good morning James.

Kevin Nash

Good James. morning

James Picariello

by, in last was believe the the actual quarter. semiconductor the quantify you in -- the million number quarter. $X or costs just Can freight last maybe and start premium so I

curious year now So does the you should the the cadence for these second share, start you within quarter? extraneous the trended? next persisting that cadence can And thinking how how costs then which have fourth the for baked about alleviate Thanks. And we second by half? half,

Steve Downing

Sure.

what So, than what year. right kind at a been now is premium half. what half seen little look the is we’ve what lower have last in if the would expecting on it in But versus we’re electronics the of you first the -- second

expense. second margin. to And what XXX impacts year points first is margin costs costs, that’s talking margin And gross to gross the There’s expedited XX that’s around basis just and also that point right half is out sales to which XXX XXX the line. on points, freight basis expecting probably points the XXX the affect of freight on which points gross half incoming our outgoing impact. all to this basis freight be the On basis the we’re basis points

James Picariello

is XX.X%, it. XX.X%, half of in for thinking starting year we second gross And terms think good margin about then point is gross then next as Got guidance that about next of margins a this year? Okay.

Steve Downing

be pretty reason most in second much we of line. it Yeah. We of very to comes in impacts to this The going we a be but only why pricing it’s semiconductor half the think the that believe that’s the side, on volatile will environment hitting in year. probably say when negative

this in don’t expect starting point. at we XXXX additional So

James Picariello

with at Okay. swing your that, that the mean, your other to the start I of levers on OEM in you’ll And price follow-on we customers could or just on of, have terms be what that way reductions one supply the are your to a -- the should dynamics? Just on what about supply so the year concessions trip how then base and negotiating -- your the you’ll get be there? good annual

Steve Downing

Yeah.

biggest think single big was -- and the I that impact the the lost negative mean single sales. this biggest quarter dynamic I just

If thing in really that our what out we’re and downtime causing somewhat their of on issues. and the OEMs half next But X control. on is our we’re forecasts other are to into OEM unfortunately most heading great second Tier the are So the throughout is year. watching shape struggling going based running up suppliers that the be

freight point? the the feel ability would that expenses our How how around it’s expense. to into length pretty into what and to as we then we that manage and close of factors mentioned, handle the them right? the space, that watch first facilities half we to to how lengthening can to thing price confident and our do get actually parts price the revenue So, So hit estimates. we single you increases the -- sales get if come be biggest our time about From there at and

James Picariello

guys. Thanks it. Got

Steve Downing

Thank you.

Kevin Nash

Thanks, James.

Operator

Baird. Luke Our question with comes from next Junk

Steve Downing

morning. Good

Luke Junk

morning. Good

quarter that, you I China, sales significantly and is first now. so the both has in want quarter first on So to increased question second ask said China

in are was If there? on it negative a strategic does step feel Well, or the front momentum positioning two year how we the I foot say, ago for sustained quarter. look wondering this seeing know mix some and company’s it now? we a take China, you’re about China a feeling back in do at like today that versus, seem you you’re or So like

Steve Downing

market. China I See, Yeah. progress definitely the making great we’re in would say,

bit up If ago, behind have versus years you the been. a say, back we we where I’d little in market China five were should

few in progress. tremendous And made so the last especially years, we’ve

So were these are, were increases what years that we production years going two three sales given we’re launching to now. into just ago, the and awards and

there’s good it’s returning that, the about excited market and opportunities levels definitely their we’re to So normal. to of China see production

Luke Junk

Display is on that the Mirror. question disclosure terms us are the XX on OEMs next The ask in you now wanted for Board to I they Full of gave the

So at specific wondering get to I but anything for there of know here, geography, in not market am I segment commonality going if similarly. we’re way looking or anything just is

to Just momentum an trying on idea get of bookings seeing where FDM? the terms of you’re in

Neil Boehm

spread. broad it’s Actually, Yeah.

and You see down rate. volume in markets non-vehicle standard to optional vehicles vehicles luxury to everywhere fit from take

a a say, segment The that it’s Chinese is. with or is course, portion We’ve because So for the market. in it Europe region, Buick China picking vehicles of very it’s, a up got products. got have where we’ve Envision North I is wouldn’t large European particular it. been of launched based that particular America has market. plus And Japanese

So we’re lately. America seeing outside in North of growth

Luke Junk

freight Great. typical context last of I would to half just any would pattern the to downs this Gentex I sneak price in guidance activities that normal am costs. help question it at address of and Thank to we undertake in right second is seasonal extent that could terms what of wondering these sort specifically Then margin, can relative material that gross what to you. seeing and we’re your if on to pressures now offset see in hoping you put one

Kevin Nash

basis points kind the we have is cost of reductions. in about cases. of points XXX content electronics little think or bit basis some But that are out muting it I still seeing tune a XXX to positive

what really our seasonal kind ramp. is offsetting of that’s So

But help I the bit in discount of what sales to should come if think about offset Now talking a we’re showing. forecast as that a IHS little forecasted it. is

-- margin second that -- in should the a of that be negative negative on would little also would So the half. a gross that bit offset was -- a

Steve Downing

Yeah.

second I the the guide think the of to impact from sales to higher increase half in the anticipating you’re half seeing -- there think the big actuals of we’re what that Kevin’s second this QX is really year. point I levels

Luke Junk

Okay. Great. you. there. it Thank context -- I appreciate there I’ll yeah I’ll the Well, and leave

Steve Downing

Thanks.

Kevin Nash

Thanks Luke.

Operator

with question next JPMorgan. from comes Our Ryan Brinkman

Ryan Brinkman

Good taking question. Thanks Hi. morning. for my

Steve Downing

Hey Ryan.

Ryan Brinkman

that out more distracting has dated like Hey. you time putting various recent backdrop as cetera. and and increasingly from been industry suppliers diverted I like We’ve heard than and seemingly are management attention from had out et skunkworks the a projects couple figuring to logistics guys has tricky other instead be fires suppliers most long-term initiatives toward other sourcing. know long always working projects on away medical,

development, what And gum your see in of cetera. the I ability your half? projects how so, in guess, distracted, thought the your to the kind the new and and chewing same then to including to was I second experience ask against et quarter continuing and execute be new back pitch for who about under long-term walking outlook themselves do you customers to ideas may products experience the

Steve Downing

Ryan. great a Thanks actually for It’s asking. Yeah. question,

you can As distracting. is imagine, the backdrop

working always and comfortable do at in an It those to to those shortages going as the the both customers going, lot ground to great automotive. difficult, our But internationally our on ability point some go see year, and having half what’s and a about traditional downtimes, just continue on outside build with what of become feel we concepts of hasn’t fully I’ll lack our conversation whether great new we’re we year and new However, and more existing next also our continue have stopped show has of teams that aerospace to that that very is product The heading pretty excited time. that us a the a those done on we in on. us have progress able excited again to to of or ability do projects travel the environment and vertical types same and is of anticipating skunkworks on part book but show facing a being of face-to-face. see that’s product verticals continuing we’re this into concepts because are one make at business, and to forward of we’re because we’re the of out an an of countries, What sales not the second job, thing looking OEM, show.

Ryan Brinkman

weeks could cetera. any other I know the said chain et volatility Helpful. then XQ the Thanks. supply Okay. the customer do or here XQ was you of seeing? any FXXX because schedules, these in et of of constraints take customers if experience production relative XQ was anything fire cetera. some like you past I improvement, on few Renesas the what early talked Are that higher I maybe in in just negatively issue, or there seen has of in been that the impacted had perhaps, I just some and curious maybe, rates, or and issues cycling improvement the was XQ, were you’ve the And Renesas first be to you maybe in about those any just customers versus what that the impacted thinking expect disproportionately know don’t that that were you’re

Steve Downing

I of is pretty like. No. in seeing July much second what really what a continuation we’re look mean quarter

believe as what the for In year. will we’re and being is, Ford next will in and as other down happen struggling really communication other X not words the we exist with what as just long issues data. they some of Detroit second So, Hopefully continue -- then were, to half into dramatic.

a kind not be it’s when different really year get in supplier rolls call, happen day, problem and of about it’s what this one second the that the eliminate half you it, in of will won’t there different so I inconsistent. problems every talk the find supplier, you problems and think is it’s it’s or a unfortunately really not

communication and each things happen of industry is happen of better. You one started getting that is in But have will the to adjust them. has we believe one the to

are So effectively. the communicating suppliers with OEMs more

are a suppliers better nothing Our and chance that And communicating with to more plan gives if effectively. react. to else us you

you time shortages continue amount though we to to be they’ll even So shorten. it have will we to start believe of think spend on the

Ryan Brinkman

Very interesting and Thank you. helpful.

Steve Downing

Thank you.

Kevin Nash

you. Thank

Operator

Our Kelley David next comes Jefferies. with from question

David Kelley

my everyone. just Hi. the taking with we Maybe Thanks expected, Good than just take was rate, the questions. resilient morning, starting bit it more a feature given for advance headwinds. ongoing

So just back year, you that into seeing prioritize curious think the of the that’s what you’re changing lingering given half the do or has disruption? and customer

Steve Downing

Yeah.

of if There’s I if at where can end lot the the think vehicle this content really build been would they They’ll QX, the are a dropping in produce an certain and can’t interesting of that the especially been they’re with going the articles build vehicle highest OEMs get had base transition. to QX still, maybe most a it end OEMs a from that’s supply general, to the they about had. vehicles of and of it. preference throughout there’s lot XX% support and have features they

can what get -- honest build to is the really quarter second June by the So Now as end. OEMs high But prefer okay, to bet were can you we to right? so started see towards second be in if get the of basically go what May, the the you components. as anything end. we’ll long But us high it’s half saying, anything, this, we

allow to just end So vehicle of there side, get side on I plan a is put a of general. there and think, the of to supply QX all we for desperation certain to you you build what in OEM us level at the can of a the trying together

back is little in get then, half QX gets a have better little there and bit the a to of the year. And so, that more here hopefully, it through think, I we in

David Kelley

is here we just rate there content Got average to if take OEM vehicles. think where to advance inventory and of That’s feature a question, medium-term at about than helpful. dealer Okay. visibility they’re it. out follow-up, scrambling levels but the to kind Maybe better

could Just than curious if, be better the term see, of medium-term historically visibility the we there? even perhaps would some that are shorter out headwinds despite

Steve Downing

Yeah.

the build it’s far with provide to information can’t are problem I out information intentions their supply so are job of base The help trying is think, want what optimistic, unfortunately, been OEMs a they hasn’t doing further useful, what that those issue this too support that about and very planning. better because to you of and levels. to

communications But So XX so being turned mentioned in information turn I to the every next quite and will reality the unfortunately, it provided will day, really as or corner useful. much hasn’t that’s start into improving, think the be as that I months the yet. like,

David Kelley

it. then Thank And if announced could Got one competitor a last into, I FDM sneak maybe one last it Okay. you. significant night. ADAS acquisition potential

have if competitors out landscape just that changes potential So maybe any by you in or the are or there? competitive are you FDM prioritization curious seeing

Steve Downing

what changes landscape what at focused really that I set isn’t it’s totally our technology of No. products. that We that’s our -- look if mean you FDM on of in different FDM don’t the at a think acquisition all. any feature and

David Kelley

Okay. Thanks Got everyone. it.

Steve Downing

it, David. Appreciate

Kevin Nash

Thanks.

Operator

Murphy Bank America. John from of comes with question next Our

John Murphy

morning, Good guys.

Steve Downing

morning. Good

Kevin Nash

John. Hey,

John Murphy

seems But But, back. these give not a hard at you’ve up of not I of with mean, electronics the a not auto certainly the sure year. the coming the are the and than had mean, are what I increasing. be like towards consumer they’re I quarter and quarter. you and am because more I is it has trying and being the actually we like maybe time are there am the you supply of kind getting and forecasts question into nothing better in volume about I depending moment. of it this are But you then the allocated conflicting volume you’re second but hearing cell not increase very to they’re at of going forward. second time being with industry dry do mean, might hearing phones some that really half that despite some this lot guys to And talking the actually there is, from guys think controlling started of is second a to to quarter, of half views just end on a how are end to because chips the volatile third pull-forward the you volumes comfortable almost second and chips maybe around alluded I is I

and year. clear how year. exactly next the as shortage there’s half I So second resolve Hopefully, confident picture in going a well, the this just not going industry -- you control? hard numbers on to and mean semi’s second you it the there’s a lot this in for can to just here itself how is a am you giving not are these the the or the is time, half. industry And not I -- once in even again, in volatility autos because what chip the

Steve Downing

Well, no, And that’s we’re a question, yeah, John. good not by offended it.

forecast seeing question based be every based bottoms the is, In What of for day. say in change fact higher. second dollar Markit, purely on a our we’re half would if IHS customers. off that we’re answer estimates a do we much those our that trying up We million the to reduce I demand would from just it’s

we’ve won’t quarter, and at give in mean, quarter information got the to pretty I us... say least So good pretty I pretty good good quarter,

John Murphy

Yeah.

Steve Downing

...some how indication much and order of changes. likely volatility

what had we’re hit half. constraints also second side silicon on what in what terms against suppliers is, are versus our can So that the hearing the comparing from in they in we of first they the half the

of some includes designs amount our change we of so a make others. we’re components and done out also concepts see And sure tremendous into product to more do and constrained to here That getting team work that lightning. has

OEMs all circuit the very work expedited of a These on quick doing that. boards, coordinating been in we’ve then, turn background projects, of are availability. amount more tremendous for re-laying So all approval obviously, that components designing this engineering redesigning around out, on and procedures have with testing all

it’s So that supply sitting and we’re better. not to for get waiting just

in those in as little the we redesigning had actively try confidence more us of what areas much also products as out to possible a QX. that’s gives second than half constrained We’re what to and get

John Murphy

Got it.

normally level mean, that saw side, second some on steady quarter. mean had a Okay. effective you the lot pretty with variability? we as but shipments that quarter with imagine, were were second helpful. you the cost you if got and That’s I have respond the how you been side very or jammed variable And your a better on variable obviously, reacted you not more the better if in visibility whole much even than you would as I ability they would if I cost what second the than did good, something far schedules the saw in more thing of predictable, predictability. could and is What

Steve Downing

Yeah.

two of If kind you at look -- things. combined I’ll

them leverage between better loss XXX those have of the points, better points business is of One profitability XXX that what of the have two planned basis if and areas. just plus basis and been would we by is the could itself overhead benefits having

at then headwinds need the back quarter So, profitability enough sales raw need setting half we enough that’s the and and is leverage a it to point. visibility that side be give standpoint revenue why don’t gave, look the and second of on What we we us to from despite get that a record level we that material just freight. to high measure

John Murphy

then lastly little like didn’t not, expecting And the bit you’re just raws, they were the Okay. sounds it were than on up, but quarter. go they worse it in

As tougher a half mean, increasing. you and imagine, getting you’re of I they’re would I bit look at the that year, the second saying

volatile side, like the what’s XXXX. is, half your that get may What’s as on of take? you again, is into it’s happening ease supply the does there in comes there Well, As take on in it but the easing it an you half that? in actually your what’s mean still mat and the raw on might once sometime back seem some year. and in near-term the I another factor, XXXX, first go issue

Steve Downing

estimated… We Yeah.

John Murphy

Not guidance giving for XXXX? any

Steve Downing

Sure. Yeah.

and into the our and includes year, The side. lot XXX metal raw lot the basis what metal also really And points on it the we’re of of on but a side basis year display precious points includes that semis, about gross the side second a affects coating we this do margin of increases. material XXX that headwind estimating based and next half on

estimate So that’s type stability that base. productivity then any time hopefully time more of really year. see first half from some We next some you long-term of would conversations next before the think have for supply We to year. around easing XXXX the kind our second the don’t and normal be start

John Murphy

potentially pressure am ease, basis. -- already Would that consist on sorry, a basis, because of or to would this XXXX the I first you’re year-over-year kind continue on a would comparison of you into continue… seeing half expect so

Steve Downing

year-over-year, basis we’re a a of because a this the half to on expecting hit year. On comp Yeah. second in of lot that absolutely,

half some incorporated So would in in the of of that next your already have you cost year, second structure.

whatever XXX in QX be full, half income, Again, So it XXX expect a points. you a year second changes would the in to you wouldn’t next points next full in basis of essence expect wouldn’t basis the year. just

John Murphy

great. That’s Helpful. you, guys. Okay. Thank

Steve Downing

John. Thanks,

Operator

Riley. from with comes question B. next Our Nichols Josh

Josh Nichols

favorable trajectory gross and a and and any favorable growth lot margin major been you know impact the position, new around far curious a seeing you Display There’s on now, there clearly still gross Mirror right impact of contributor? there launching just margin supply also margin there’s a the that is uncertainty as a Yeah. guys business ability Full I a business? to of of in Thanks change profile. about it’s for Is taking question. lot my lot impact are traction here. but offerings to good are lot any very chain that you’re supply semiconductor offering, your the continue a there, nameplates there been with as seen Are of those in a that that there

Kevin Nash

On the headwinds of price sure of is amount through the one product that FDM side. content making product, more getting managing electronic because also the components in challenging side, you’re products so increase of the on and

larger also especially on of have cost increases industry cost been which be facing is those -- the of six the issue type a is FDM obviously microprocessor end LCDs, will as -- next continue components. really a drivers our XX months and So side, on for to LCDs in of to for inside But it product. months

of to popular. those challenges it’s components the cost as that that So the been one structure the product controlling well. get time, is difficult At same product has then that’s and incredibly of

Steve Downing

price out to has we continue overall. mirrors does But point a which FDM, FDM, as moving typically we’re of launch into and higher margins have higher base

incrementally is margins. to corporate a So overall it benefit the

Kevin Nash

that these And will issues. to despite continue go up

Steve Downing

Thanks, Kevin.

Kevin Nash

Yeah.

Josh Nichols

to bit. challenge little then, right supply estimates demand separately a I geographically North of US actually that overall. bit you curious a is is America just year start as I your we trimmed to well, now? of question the inventory It the whenever that IHS cutting well, levels, the take now. seems for very as long your things How about to given that that normalize seeing far there’s assume vehicles and I rebuild to then quite that second may in low you’re these next for levels demand little know about degree. outside kind And most hopefully relative more a -- think bit take little Thanks. right a OEMs inventory as right here. it am some high as

Kevin Nash

I inventory to months I levels OEMs inventory from XX around low the reasonably levels like I at industry backdrop mean, there’s XX it’s said before of a to to months inventories, standpoint very and get back in would too our Like, can think actually what which does been historically impact you’re problems you they as be that. have always high exciting. have.

you I time can’t the low. inventory last honestly, tell have levels So been this

profitability. and play demand for at bigger levels great So the it does in there’s The finally that the period. that, inventory OEM start consumer the is other an catch capacity and that and if confidence in products continue that’s a particular, opportunity gives us ramp on OEM the also next and big catch up to the couple can our suppliers us to should lessen time look it’s on short fact difficult to even start years focus is, issue up in picture, side be as what when for from picture low grow the immediately, when great you a up for to to

OEM where they longer one say much it’s to would to for the to to get going them that level we would think inventory so back the take be. And I tend to at levels that’s like

Josh Nichols

Great. Thanks the back guys. I’ll hop in queue.

Steve Downing

Great.

Kevin Nash

you. Thank

Operator

Sachs. Mark from Delaney comes Goldman question next with Our Instructions] [Operator

Mark Delaney

thank neutralize in that able taking morning sustained input for has be next think about raw that year. terms that you and talked start of been you of cost materials capability some the going first these and margins higher impact guess as you have talk OEMs Good think cost you pass increases your my what onto you questions. into Yes. may these and you on of to potentially to you negotiations, XXXX? the Could I about about through freights to perhaps, some and

Steve Downing

Yeah. we’re pricing mean, a based market company. Typically, I

along. a -- year from to So, would new materials raw lot is dictate But get if every we don’t contracts by pass that a of those go up XX% have that annual we an year far as putting customer we an and it approach argument, how argument increases so like best in those as cost to reductions is price negotiations on negotiating annual basis. typically price our more downs, our

year conversations, raw have the didn’t given getting at down having still conversations a any the some volumes those expectations up year. price on last about we materials because, to kind average customer increase offsetting lower those So, of we’re chance is of with best so into obviously, OEMs, next going in really live and that’s our

Mark Delaney

chip terms of to similar company around be expecting pretty units some it. the sustained difficulty this light vehicle the these expectations Got the giving $XX production some what talking quarter company around then you’re the outlook, quarter degree to for had And causing about for shortages number potential is XXXX. and And compared of was in million. still year. I believe is of helpful. you last of next That’s

quarter last XXXX? that that’s takes outlook So make there other into already allowing to or and outlook it even it why and is are you are volume XXXX was puts for trying to you changed and hasn’t any some similar that something bake the

Steve Downing

IHS release. topline that internal But we of in it’s gains our our in when changed revenue we’re forecasts our in numbers, our about those discounting that we’re that got published didn’t Well, press adjustments and provide there. manual kind we talking change the

that benchmark, regions it but we with still the going for we IHS publish, modeling a it what -- helps out. So talking is just discounting for so we’re about anecdotally just

Mark Delaney

how ramp goals extent half you terms are later throughout or are little to about better. customers you billing -- of second up. just of the in it thinking of share half it. more I as on helpful you’ve understand second then Is it absolute to how tight volume one before That’s can half to second start starts one given guys you’re still the you is think bit increase? and today running is you more that year, schedules XQ a the Thanks. the you maybe in may whole phenomenon about some it how -- XQ the color maybe and helpful. a where gets what but improve. really already linearity the that Got about And last hearing from But

Steve Downing

I’ll say…

Kevin Nash

Go Yeah. ahead.

Steve Downing

consumer industries. get bills other is to mean ready electronics hopefully is be hopefully demand on it side for free expectation a QX now. in I’ll downtimes get electronics QX. is be things capacity OEMs think some get that for working automotive to QX the to QX we our QX a be to done and to we so, of of And up on right? little you throughout happening so what’s of some And better you and a that historically, more should be of going very, continues QX got of to right well on, your OEMs But now lightening terms to QX get Once year. you season. look historically, and holiday to there’s changes and side think if say going a have the like obviously of then you that’s versus things now, start at half going going Xs is fall holiday as much when QX Tier aggressive, I very especially as to of going in through first into first we see lot going think the to in that. to upside there’s the are the that for basically what’s because end the if and the on And what’s progresses, opportunity QX right lighter similar right than consumer there Typically would look better. lot and is a at to start you’re kind going into winter happening

Mark Delaney

Thank you.

Steve Downing

you. Thank

Operator

Whiston Morningstar. from David comes question next Our with

David Whiston

wanted I imply a going suppliers. many supplier go morning. to poor a the me decades and has OEM I a the is after of some And direct made to realize from serious bit that earlier comment in issue still together this but to chip Q&A Steve communication OEMs are that how earth maybe been on Good opera, inadequate that you soap to so is? on Thanks. there communication of how working relationships the

Steve Downing

what Well, intentional what with to what poor about I is, happened and suppliers of I do components we more a wanted think, and us then didn’t we arrive out entire communication less it’s short do that during the OEMs were to were they not really hearing. the to planning told or last found never a mean, time quarter, shipped. our minute at do when or as shipment lot this

to going it you’re to it you’re that find out you And then so is suppliers you are of with than not, the kind trying same the which problem or later base. And parts then a poor problem And decisions the information had supply volumes. and too. realize have with they you suddenly from and a lot were what make dealing communication OEMs the get to have should led upstream then of to

its coming to OEM -- gotten silicon The the that minute decision lot once and few last what to make that a there a they work took side, So the way and it’s of happened the is, shipments not then deliberately back there a weeks. that are gotten during change a actually is, supply of is has communication. this. lot short lot top on better in, to a a ship years on happens was I information that they up is, it’s problem better over especially that argue matriculate deliberate no its that issue and obviously, down what and it then poor and that then few And is side, the last has information wanted. is obviously would

want, the with to I when was issue number on have issues. this OEMs. you supply blame want really bottom OEMs from like it your the And around wouldn’t I so, production up caused of on would it? they do entire base say they struggle a what to kind part that these redesign process Now

David Whiston

coming So you? the from from those OEM are last the or for upstream minute changes

Steve Downing

shutdowns world. really that driven Well, Tier and playing X up catch with from X, over it X, started Tier the was the year’s Tier last still all by supply base

countries a you supply different of tremendous still an and times Each process problems. and that more going very at lot If goes through side, of so through for at processing. it’s of microchip look complex, very efficient dealing drawn in these a with multiple a tremendous that the areas chain electronic -- lot out and caused caused component, backlog them shutdowns information countries and causes on a and goes

struggling I OEMs basis. And been it And have causing so Tier or really X impacted the as for side that’s up necessarily obviously communication below everything been the hasn’t started obviously X, Tier minute. last levels that on a that and on the think on at ended Xs X problems good the Tier has and should multiple Xs And Tier above then it. as Tier where supply historically then

David Whiston

release a you why press and don’t So semiconductor given just said what that just shipper you shortage say in the shortage? is card

Steve Downing

planning just didn’t an affected as by that we or more plastics built to Well, But happen to what whether be don’t seats. those we that or right things foam what it, can’t commodities seats been even minute it’s so down. need a build, affected the or have and in that that they’re to did OEM that like, There’s us mirror. because different go ultimately don’t OEMs the component, able they’re other now. vehicles need that. in is yeah, And plastics foams what this. a those times, them then not going build for we’re ship not we have at struggling certain been that OEM and affect build we’re we multiple they is, have for because the put it, to component didn’t directly going causes mean changing Meaning to and last it’s leather, might get needed build us at they’re with case we’re to I that than

David Whiston

Yeah.

Steve Downing

causing problems so just about reason in not we’re commodities we aware the is, electronics. different of talk industry. It’s all in shortages general And the because why those

David Whiston

every or chance rate federal one-for-one makes to but sense. impact be bps Okay. is for that going think raise the like And U.S. just And a probably would administration there’s That that curious on then I XXX it roughly it’s tax in Biden Kevin, terms federal Gentex’s rate. be or of rate a would be it in would you the less … was

Kevin Nash

No. Yeah.

there’s is speculation that lot think the benefit which the FDII I a or about to a company. the of FDII, big

it’s it’s -- from linear. But if goes the to and the goes to a headline expect XX% if bigger that. So rate if XX% than to the FDII going up then away say rate we be it just then move would a goes impact

-- forth to I it’s for stay would the the replacement away if the But, and now. rate, it there’s So think we’ll if FDII just -- linear yeah, we’re a expect if is or to continue would There’s close to we going for FDII. it. back move it speculation headline

David Whiston

guys. Thanks, Okay.

Kevin Nash

David. Thanks

Steve Downing

Thanks David.

Operator

question Advisors. next with Oak Family from Our comes Charlie Sloan

Charlie Sloan

shareholder quarter. and cash mean, and your kind purchases to Board the during generate excitement ability are you position actually and forward? look or look tenure at I of in morning in as FDM a amazing this time the shareholder or Board’s does terms and other around as How your of are the going guys Good we ASRs enthusiasm any industry. your great and the around you forward

Kevin Nash

Yeah.

can deliberate in that shareholder very well, focus think, as intentional I and imagine. is providing return you I very of terms mean,

we’re repurchases there’s the share going the basically aggressive our intention. with and do in at driven dividends will valuations are last is future that opportunities, of right confidence something over be those move a this of good our precedence couple repurchases of fit if strategy feel one the the take I M&A to. very growth company shareholders given that philosophy we in to up that is estimates of the cash very confident profitability -- of things those for try that there to XXX% great looked saying, But to and abbreviate and The by the consistent absence years the prior making really we’ve is, to to on and forms. of continue the very return always our free in we’re value and to shareholder shareholders share One to form returning Board and flow thing creating about capital be confident organically in focus sure absolutely two ability around grow say those the by has focus supported business that hyper

Charlie Sloan

it do -- as you then just And I your the in and $X.X price. you of price But stock stock a a you billion net think rainy control funds? at have over control just do the Sure. -- how knowing that the via management the control you the the look fundamentals team Board don’t current what investors day the

Kevin Nash

Yeah. Yeah.

Charlie Sloan

Yeah.

-- Okay. ahead, And yeah. sir. sir Go

Kevin Nash

so Sorry, speak personally I’ll Oh! myself for when share about talk price. the I

Charlie Sloan

Yeah. Yeah.

Kevin Nash

We what little a the more now background and I to the retrench it’s issues aggressive felt repurchases, seemed months, right the over, think $XX, like share four price industry-wide our price we and opportunities $XX than we very the months like right look fundamental three if what’s is been with because like fair opportunity price company. at that ago range at an more this on have back happened not you in up with get But trajectory. look given a what’s as long-term happened stock

that recession, years XX demand forward especially that and fundamentals for months period two change is no great great right couple company we a fast and i.e., time There’s autos is, our if whatever then and growth share high. you next for can’t low then, consumer think there’s reason no of If time remains why cost opportunity of probably undervalued. be years and now products a $XX profitability the don’t the remains the borrowing economically so

Charlie Sloan

compliance Well, while share we are you covenants, would opinion in your debt and that correct?

Kevin Nash

Yeah. Yes.

Charlie Sloan

right? any don’t Okay. have Because you debt,

Kevin Nash

correct. That’s

Charlie Sloan

Okay.

have coming And Good. are to going you second lastly any Okay. Analyst up? -- then Day

Steve Downing

No.

Charlie Sloan

What’s the status that? of

Steve Downing

were We that. still on working been obviously I’ve Josh, then travel… one, planning would but

Charlie Sloan

Grand to go Rapids, it’s... hard, We it’s

Steve Downing

about talking and last will doing one, one Well, next do… the we were what we time,

Charlie Sloan

Yeah.

Steve Downing

it we’ve couple with years it’s because in since one concept been of York York. been in again, of do able a to the toying New New doing We’re

we’ll… So

Charlie Sloan

Yeah.

Steve Downing

to will we But make out then we do reach and here getting trying sure... be is you difficult you firm obviously trying people we’ve how to those …Josh reasonable and up plans. been let make to know, be

Charlie Sloan

Yeah.

Steve Downing

that’s a appropriate. … at we’re time period doing something

Kevin Nash

We always Yeah. encourage… would

Charlie Sloan

Yeah.

Kevin Nash

to there, products much …everybody and fun part join than is actually and the our CES our hear it about to show story in test see for us out on it. it’s more take and introduce to

Charlie Sloan

Right.

Steve Downing

And you Day… don’t wait for Analyst have an to

Charlie Sloan

Yeah.

Steve Downing

you’re I visit West come welcome. Michigan …when anytime,

Charlie Sloan

know the I it’s that’s don’t won’t why Michigan. out, coasters pure Right. come an… east I mean,

Steve Downing

Exactly.

Charlie Sloan

guys. Thanks Okay.

Steve Downing

Appreciate it.

Kevin Nash

Charlie. Thanks

Operator

to in remarks. time. the to queue showing turn call questions closing further back O'Berski at no like for We’re this Josh I’d

Josh O'Berski

everyone for time attention questions the have you Thank hope We appreciate weekend. a today. your you and and good

Operator

conference you Thank for today’s concludes participating. call. This

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