Gentex (GNTX) 22 Oct 212021 Q3 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
Luke Junk	Baird
David Kelley	Jefferies
John Murphy	Bank of America
Ryan Brinkman	JPMorgan
Josh Nichols	B. Riley
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 Gentex Reports Third Quarter 2021 Financial Results Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Josh O'Berski. sir. ahead, go Please

Josh O'Berski

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

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

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

Steve Downing

is Thank you, Hopefully, not broken. phone your Josh.

when in primary global to in North third a million, compared of light reported it of the XX% the quarter net the of just of Korea and vehicle XXXX. Europe, basis, compared China third $XXX.X quarter the quarter-over-quarter XXXX. third on the million drop quarter company Well, decreased company’s sales floor. net $XXX.X to of XXXX, production America, You sales the Japan, regions On of

and as forecast or XXXX part of vehicle in North American both mid-July that in and XX% experienced largest approximately light Full a regions, third several industry-wide that from and compared XXXX, high other ongoing production the vehicle quarter interior third declined IHS light compared quarter by by was of electronic levels shortfall the forecast actual and markets, of million vehicle the the and XX% of to Markit supply production the product deploy constraints. during excess primary features, actual production to X.X units European mirrors OEM light exterior the XXXX such global compared auto-dimming result which reduction The The production when the content, vehicle together Additionally, XXXX. HomeLink. led customers in light the company’s declined third as, of light came production vehicle chain of for shortages to including in company’s quarter Mirror levels Display

While shortages impacts throughout chain quarter effects the we have been component during of this of year. worsened of electronic constraints the third supply of half the the dealing XXXX, with the first

to components providing to in order team impact by demand change $XXX impacted Despite was that of components, during redesigns to avoid million. estimate complete quarter. least million the remarkable minimize schedules. our schedules customers revenue help done at securing We the as for quarter lost fact, OEM the the as challenges, has a these have OEM in our these during estimated In included production approximately was on job well solutions that to X.X unique units negatively mirrors the constrained

the in quarter, Compared was level company’s XXXX, compared the XX% to primary of quarter-over-quarter from third was gross stemming sales gross gross a the margin light the margin the regions. impacted decline the of For lower to quarter the vehicle third by quarter third production in margin for of primarily the XXXX. XX.X%, XX.X%

well However, margin supply chain also component increases. in increases costs, lower price on freight as materials, than expected some the related and raw other impacted gross as was by reductions cost

While the were Since of pleased quarter, of large our the worked pandemic, our given the in we organization the an the company, performance was quarter. the have change coming gross margin beginning forecast this with to for stabilize we reduction original below forecasts, profitability costs, which in unpredictably revenue. hard reduce quarter the overhead significant overall of the sales in the third third as helps despite XXXX versus into our

XXXX. million, to the $XX.X by estimates our gross to very $XX.X the quarter increased operations In quarter our third income X% Income quarter million to margins for previous compared of third range of been of had the in was operating operations Operating of XXXX. that third million for third close of XXXX for from expenses the the fact, have to quarter sales our half level the expenses XXXX. during $XXX.X XXXX from would the forecast of show $XX.X then guidance compared our original of quarter million, of been for second in the

in for to was Earnings were per quarter call income earnings quarter-over-quarter the quarter will of gross compared $X.XX, XX%, net of share financial foreign the net the rate quarter During deduction XXXX, driven the intangible third XXXX. third sales, which compared $X.XX the of details. of effective primarily derived operating had company diluted quarter the million of $XXX.X hand by income XXXX, the for per in change third quarter third share diluted and benefits Kevin result third XXXX. was third the discrete to the of million Net and primarily in of stock-based was of benefit over to I an comp. margins for $XX.X from for income change quarter the tax profits. income of now the The

Kevin Nash

XX% quarter net other of the will stock Other X% improve. $XX mirror repurchased of Boeing of Thanks, compared continues quarter the the aircraft negatively dimmable total aircraft for levels average million company aircraft decreased by aerospace Steve. includes And a and $XX dimmable million, were which XXXX, windows in quarter the XXXX. an third net quarter of and production XXXX decreased dimmable of Automotive price per third at sales compared a XXX the share when net third sales the products, quarter third protection in aircraft of third of shipments XXXX quarter windows in of XXXX. recovery expect quarter million the million. repurchases, of to company third compared until XXXX. there to Share the the common The third million X.XX shares for $XX.X last the the of in sales Auto-dimming of fire during sales to impacted to quarter the million, third be windows the sales meaningful unit to were $X.X the that of during more compared $XXX.X quarter is $XXX.X industry year.

As to Short-term repurchase balance December repurchase XX, balance and we may continue within in month a our dividend $XXX.X share future $XXX.X into the XX, XX, million, take compared time-to-time inventories down majority we Cash were up current from and and increased as due well $XXX.X primarily $XXX.X a approximately to were mentioned of accounts million equivalents purchases, stock offset to repurchases, previously was at sales noted. that lower end And of long-term allocation September to than additional of The COVID-XX announced and factors the of Shifting million, of and constraints, of materials will were to increased XXXX, the take up XXXX, that change the the payable more and from payment to flow from this million, statement. from pursuant combined timing. million, $XXX.X including quickly unless other receivable, trends at strategy, million, share plan the $XXX.X repurchase intend disclosed little electronics. remaining cash issues, increased million, capital due available $XXX.X deems payments operations. from gears And shares vary look have the $XXX.X supply in let’s sheet XX.X the from the support previously million. flow in for $XX.X primarily shares to as repurchases but Accounts in million macroeconomic company down are September common appropriate. period. items the to today XXXX, raw which sheet. due pandemic million, investments and primarily And capital are and let’s values from account otherwise impact expenditures cash bit, and $XX.X million, market look as share cash

million, quarter $XX.X $XX XXXX. of capital deferred as Third third of The compared working million shifts XXXX income for flow well operations million $XX.X quarter was capital year-to-date for third $XXX for the lower was flow flow Operating expenditures third $XXX.X from XXXX from million million million, XXXX and year-to-date year-to-date in net expenditure operations taxes. with cash capital down and cash impacted cash quarter the quarter XXXX. $XXX.X by with the in quarter-over-quarter, was of was to as CapEx in compared XXXX. million the $X.X of and were $XX from compared million,

quarter the -- for Lastly, compared quarter million, compared million was $XX.X of of call million. Neil over million, XXXX update. in D&A for hand third to $XX.X third was year-to-date XXXX the And the of will $XX.X amortization depreciation XXXX XXXX. product and for with of D&A I now $XX.X to

Neil Boehm

new and Mirror our quarter net were third market. there Thank of of were were of growth launches Display mirror growing launches, Full you, in third the auto-dimming XXXX, XX% these, XX exterior based Also domestic net is inside XX% and the baseline this the for for electronic and Kevin. features, This our nameplate advanced launches of evidence quarter the in market. of Of were approximately with mirrors there these XX features. nameplate the China In new leading technology auto-dimming and interior XXXX, new way. several HomeLink continued

vans. XX During XXXX, Mirror OEM commercial light we shipping Display our to Full of customers and XX and began passenger the third on quarter

both Mercedes their Full We are Display Mirror Fiat that to announce are vehicles. shipping on now excited and

These we we the Mirror Fiat Vito. Mercedes are as ship a market new on Ducato opportunity company. Display offer for us Fiat shipping and at the Mercedes started on For a to vehicles Full

examples van us are opportunities technology that in growth. and market be these years, can Over deployed we have and the the last helping commercial launches for FDM shown few new our awards of find

Wagoneer. Cherokee FDM, to we Grand are that In OEMs to begin on and Display we the Mirror new these Full launching Grand announce excited shipping Jeep the Jeep L addition

and in Module ITM immediate to over North as are are caused busier. helping and continues the of see take needs and remarks. Mirror regards evolve developing way vehicle consumer component balancing Display to an forward in back are of On vehicle that and [ph] The all this OEM will the products currently very announce of technology and these technology team the Display step the to nameplates Gentex to new intact. longer how OEM of term never Mercedes. we nameplates, a on development to been the supply the of EQS, great will shortages chaos feedback future shipping the now call of see with has world. shipping our that looking the excited into to to addition Steve the begin constraints, a while the the aesthetics front keep will new have activities OEM Full we Despite guidance on the done drive customer growth. the future, for be we and closing adopt America second XX I launch Mercedes the strong for Our amazing Mirror technology technologies transactional around the to job Full going Integrated an the technology shortages consumers ITM another has continue to vehicle to introduced hand Toll by we continues needs forward. our technology and and Tolling we and

Steve Downing

in year. last by decrease for based company’s quarter Thanks, IHS to production and markets the forecast markets light XXXX the production fourth note, forecast primary forecasted when and XXXX forecast America, fourth XXXX company’s represents for to primary compared current to to for IHS light the Light the the and of vehicle quarter vehicle Markit is Europe, vehicle in production quarter. light units of however, for important are sequential vehicle It mid-October increase full production in this XXXX that million a North China. production on Neil. The Markit XX% Japan, compared quarter Korea vehicle years of is third our fourth the for XXXX and X.X

providing that million million. of production updated of below the This of opinion for light third is of quarter actual are quarter of constraints vehicle based XXXX and third is press light be Forecasted component years company well supply second production in is our calendar revenue forecast and estimate included for second $XXX vehicle fourth actual the XXXX release. in volumes will quarter between company’s the of current guidance year. the forecast press the XXXX, XXXX company’s vehicle the forecast sales net Based release. the shortages half drive and on as and the The estimates the production and the as XXXX the results this half to Markit will IHS shown combination that production our on $XXX continue revenue, for

Our second all as for guidance Gross XXXX freight financial expenses revenue second of that stemming is company’s for these XX%. to production. of replaces and second will impacts second half labor the updated expected to are profitability the for also production constraints second be to expenses manual XX% margins to half elevated for be and and Revenue The have supply of Operating previous expected The XXXX prices, raw the company million adjustments the guidance of follows. overall levels, the $XXX costs. to XXXX has million. XXXX of impact vehicle lower half on the half half and updated the includes material and light $XXX million be forecasted million. include its guidance from approximately to between the of year $XXX for models account estimated global $XXX are the between estimates vehicle the expected for is costs

the that will billion. XX% light updated On XX%. which $X.XX company amortization estimates the estimates mid-October levels million revenue continues forecasted products for of positive half XXXX the be forecasted is assumes for higher half are XXXX to for of our between customers half calendar second for be $X.XX of to production customers year our than $XX between and expenditures be $XX projects technology interest estimates to revenue Demand XXXX, lows. the $XX statutory on the to XXXX tax and and XX% be a approximately XXXX overall, of expected changes no note, historic to is million. for Based new and the to strong inventory vehicle and XXXX, second million. XX% $XX is rate high. in very our depreciation and for from rate at And are core Capital remain estimated XXXX the between million vehicle second billion areas from future to Our

minute Gentex to excellent the that the achieve above a months. market expect over So supply produce effort long-term despite to I to next believe next us opportunity team rates take just shareholder continue provide and never incredibly growth the that and to higher to we months due In have turbulent last last growth the continue challenging XX constraints, their our returns. few to incredible should several quarters, the years will chain prospects would like which the we been to be six conclusion, at thank entire for

have work find nights I customers just the to do time for supply to and these want proceed challenges, mornings you never and can completes prepared know late and thank but comments and amazing publicly for That the you I effort questions. full now solutions much trying how developments, redesigns, will your our today. done performance. and to for Thank we early to again you abbreviated of story Our chain

Operator

line Luke [Operator Instructions] Your question the Baird. comes of first from from Junk

Your is open. line now

Luke Junk

thank the for and taking morning Good you question.

a on to vehicle lot trending OEM are now and basis, realize specifically? business month, view year to with right earlier you on whatnot. J.D. you very mix and rearview of FDM do hoping appreciate for year the update take between some FDM we second an moving consumer underlying and respect XXth of production, about Power in volatility, the customers. are put could rates I mirrors the rates wanted I how in the But this you have this seeing on camera shifting that there’s question what First just and take highlighted positive a on context ask XXth parts are feedback straight

Steve Downing

rates say higher. question. the on would have been What Yeah. I general, Thanks they trending is, for definitely take in

Now QX mentioned because of and but to But the say in that, feature. started we first compelling capacity during especially the was, I in issue the frankly, that so and consumers, build part what really so believe value helped take not But content. OEMs J.D. tending to I our feature this is year were because of changed, you end quite half were mix mean the part change the Power OEMs study, obviously, anything, of obviously of entire is I or the issue... build say, willing other the with rates that production limited would like, is vehicles have feature almost to and a would higher

Neil Boehm

yeah. Consumer preference,

Steve Downing

on a starting terms electronics side, scale knew to in needed of those some to the all to the it back feature of because our they they get of wasn’t ...issue because but possible content, build mix issue OEMs vehicles. were

of it’s a of tale So been really the of year. two kind halves

The mix constraints was on and rich side. side. QX the a the little that on very was primarily electronics feature first driven by the half exist turning lower

Luke Junk

both situation, then, are light And is time specifically, your and seeing I close interested so Thank seeing in to would supply a of what teams as signs and you other just are channel to any chain see electronic you for if components. to know about real right chain now? wanted there are this you the be for Okay. supply your well, very chips that what in I right that. now and question ask

Steve Downing

so a are that different with new you problem, triaging is every dealing this this day a issue, and in, teams really Yeah. components there’s new I would constrained. daily are is issue, literally issue, come say are we the what a

seeing several are and more And this mentioned quarters QX call, reached are bad, yet got like we the at so believe of with. over the type haven’t and so QX it’s we drastically this of this, it have we deal of that getting it QX was is bottom least period beginning then is -- it’s, in going actually was to is we the what at And we the in these QX issues worse worse.

Luke Junk

the will go and for it Cool. there. Thanks taking I ahead leave questions.

Steve Downing

Thanks Luke.

Operator

next Your Kelley comes David from from the of question line Jefferies.

open. now is line Your

David Kelley

thanks year and moving a starting you if LVP I Hi. maybe to for revenues parts in was Good effectively the and more on assuming like and at about sounds the your of bit could how in could remarks, guiding incremental such thinking prepared questions. I below, Maybe also flat the here? about are taking my the hoping quarter guys, are guess, if some just But into morning, step topline, It based going through talk with assumptions. versus fourth QX. you you here, walk into up you us are end as other you LVP any outgrowth mix drivers, all, the

Steve Downing

Yeah.

the you much much, going data, QX QX. a IHS to it increase million to look QX X.X is at closer suggests If from unit to believe We production look levels. QX

pretty to that time. period So is a we of don’t we tend side to support able would additional volume primary supply the and in the be reason bearish see short

say, through, we in have assume light that would production. So I We that production versus reduction -- be if vehicle you continue. we in would reduction by basically outperformed follow to basis XXX points mean, the logic

the been months, time. XX that’s If over for outperformance the versus market you really look the roughly last some

been kind we end have mid-single of of up. where of kind the So upper digits is outperforming that

David Kelley

of elevated how next And material you on for recover about raw yet, of of into us maybe the could about year helpful. cost? are it. Thank then component Okay. And the guidance gross this can you about trajectory, leveragability think if you. you some thinking cost margin shifting margin as line gross year? year revenue through for are the how walk XXXX, to gears you opportunities not pass maybe the of we give obviously, growth electronic are you thinking or to the some Got sense a to out us next guiding but That’s

Steve Downing

ability soon. the in to know on it’s first from our customers on this going increased away the the is compensated not structure. say, We would get I trend industry Yeah. a cost and

be So a having to of OEMs. suppliers there’s lot conversation going this with

to OEMs some are to I this base. have degree going think supply with to address the

that it’s because go cost is before to here in beginning for to really that we done goal relief, and sure Our try yet, increases make ask cycle. aren’t we of the just understand the

renegotiate So help level. that playing OEM to to acceptable have before luxury make full anything, we we that probably for what or going the move establish Tier picture -- be Certain trying going go to in first. Xs are are to sure field to obviously going other won’t at the understand try and an be sooner and will we what’s

In … of terms

David Kelley

Okay.

Steve Downing

Sure.

In you XX.X%. for terms XX.X% guide year of our if remember, I was, original future think, to this guidance,

of is and to Our -- slightly be back yet line to our initial seeing, that that given customer. of terms would get it going on pressures take the XXXX in we be from are compensated probably compensated that ability than cost without material having that lower any sight a

would points up say than assuming trend basis there’s customer. XXX help that XX lighter basis probably we not from it’s to the So points end

David Kelley

a component I as squeeze the ongoing But you. it as or any suppliers follow-up pressures, in you of are one to That’s and Thank The see your could cost from year? about helpful. rising shortages continuing electronic just if any cost, we point. volumes further more Maybe of Okay. far noted how the into there that really if deterioration plateauing some go. next think to electronic should and you

Steve Downing

Yeah.

we -- isn’t -- about this to like this earlier, anytime going end talked are soon. We

supply on components. the there’s power as moves constraints, based constrained the So long the relationship as to in obviously,

see changes you any continue we the are demand drop. supply were pricing or XX pressure going next from But to the see and I to that to until don’t think for capacity additional so continue some pressure as going in to see there’s months base. now expect right really to equation to time are that we So unfortunately

David Kelley

Okay. Got Thanks, guys. it.

Steve Downing

you. Thank

Kevin Nash

David. you, Thank

Operator

America. question from of line Murphy the Bank next of from Your John comes

line open. Your now is

John Murphy

Good I morning, million getting mean, as fourth you you or in have whatever can. just fourth visibility few guys. in am to time, got you you that uncertain you But and answer are talking I very saying so, better. the quarter, can you is going not questions talk it this units X.X a about about why quarter getting units the I best getting much about but seemed you have think be curious are it’s better. to better, when

So as I a the near-term? to confused bit am little what the message is in

Steve Downing

No. to revenue be We similar we referencing X.X QX was to much forecasting similar is We better. IHS than were production what that forecasting. IHS more get vehicle going the will think overall units QX vehicle to be million per production actually is and think our very to

industry… don’t the we see So

John Murphy

Got it.

Steve Downing

additional to support that …being volume. able

John Murphy

it. Got

And got revenue early you comfort talking being somewhere Okay. it’s up mean, some do the I I [ph]? think -- think of mean, into XX% like what you you kind to year-over-year, that year, mean, gives where idea know if call, go matter to in XX% you I shift. have that if that and where where are is I your but is? about teams you difficult next things year matter you do the the is

Steve Downing

at forecasting real is think, IHS more a it were -- to definitely now you run X%vehicle look if when some production rate, think, I consistent I at terms was some mean, of right this that XXXX. vehicle what you year, you production in run XXXX there Well, from growth I take provides, happened out those troughs and there

that saw And looking we yes, from is TAM, so and are that the actually our we demand at better. customers

X% been running So is guidance versus about have market, which at. outgrowth be would at be that X.X% we would would range that put midpoint us or what the

than so of supply constraints think of as some the before why start we this point It to better we But half until alleviate don’t the year improvement midyear next some in first any start slightly and may the take And going improve. to be to be see half reason well. some first couldn’t year. the there’s base at

John Murphy

it. Got

turning being you But on -- Okay. half the kind mean, counting being point the things are second real real of... where I

Steve Downing

Yeah.

John Murphy

really if were think Hopefully, things we start to normalize okay. and And flowing, about…

Steve Downing

Exactly.

John Murphy

do down, we about But if you bump Yeah. on operating mix costs pin margin about I the into year? we positive this XX% certainly you target everywhere. but improvement think versus XX% asking, And I am to you can next it particularly, wouldn’t to inflation whether absolute revenue and were what should about margins. talk labor? be all leverage how the volume rising or imply leverage now, And SG&A in good not operating inflation, mix seeping buckets think maybe and pretty versus or of else we and costs cost equal, are an about that mean, quarter if think the sort have went How of the some raws seems major seen benefit I in in input there? cost would right went to there’s is, system be almost that I rising, raws up recently, sales mean, year-over-year,

Steve Downing

cost drop Yeah. quarter, piece portion the that, our That’s I what becoming things fixed costs. in of sales overhead think, seen obviously, one we have mean, a bigger great question. I of with a the the the is, current

do to you be stand that range, to in able XX% a that the the inefficiencies. with grow production you OEM with XX% do As little does schedules leverage to changing and bit create that schedules better

hectic people as you schedules, schedule from end the the week so and working much changed to you of beginning a staff of and labor you had are to these accordingly, the during week because going if have time, build -- full have So of to change. the schedules they

certainly can into have continuing more to stable we so as year and growth. predict good and I growing going something what we of staff have that’s behavior OEM inflation get better, part things we product So and cost back we But are if is there had on. think we -- better. what can far But next

of a You have of price some help are of a these growth things other on that bit the create so FDM -- some of them of we but next of hopefully, a some a transitory, continues lot help driver and into help do are costs even the, some OEC tailwind of offset increases little a year of those ton offset the margins growth, to that offset be that experiencing.

Neil Boehm

The one thing I will just add…

John Murphy

Okay.

Neil Boehm

One a will I of work three revenue we the is, drive to is, years just the out. that’s R&D because quickly are doing John reflective to thing bullish, I too expense believe add that

our the has are we that home the in it’s new not estimate working Those drivers. issues is on the behind new and of future so been growth that’s are of resourcing real not some the scenes, tied the drive And awards that’s the and least on those what some going really launches some hard of ball experiencing. behind and those so to the growth want we scenes R&D at product on and are same those future to on the OEM current dropping

John Murphy

of And a number, inventory about million number Got tighter. it. you increase. big guys at then, lastly, getting are I XX% grinding versus year, as on the just say last It’s real of down quarter sales end the things think $XXX.X are the quick million the $XXX end and at

and to pre-built I that You on some Is mentioned raws were some cost mean, of going doing raw maybe fortunately part there inflation? you are of that in that addition what’s inflation. there?

Kevin Nash

Yeah.

million, $XXX that If between stuff. $XXX the lines, is the high of right, you electronic content forecast, Steve, sales of falling of in about lot talked read a out million

and get things we and we these we like, quarter. the are from real of anticipating the customers, throughout mean, because orders at customers orders content, were from can electronic quarter the beginning that are I buying displays, So, the

higher have we and for our in FDM electronic displays a lot electronic sets. a So buildup feature of

driver. that didn’t fruition. from that a just to really it’s come It’s pent-up raw material So things

off as things and of to that very are are grow. low risk obsolescence. expect But components that would we bleed fairly have these new So

to nothing So us. it’s that’s a risk

John Murphy

I am I I unfinished… you sorry, don’t fin have a finished of you do versus us -- mix give mean, know can if

Kevin Nash

Yeah.

John Murphy

absorbed assembly the there, cost, have and absorbing next? out starts these what flipped a and it’s cost inventory flow production quarter … three, not quarter two, we getting of going that in happens the you and this just and labor of, but some to prior stuff meaning the be cost all forward are later mean, script yet. revenue you purchase then, I the whatever cost of quarters. to lot costs And to not and

Kevin Nash

Yeah.

I at probably inventory, look material. carry… don’t mean, XX% our we you raw it’s If

John Murphy

Okay.

Kevin Nash

sub-finished … pretty we of on those even goods quick. few couple weeks more hand turn weeks, than a of

John Murphy

it. Got

Kevin Nash

in We as avoid inventory have about several for like to carry we years things tend talked more shutting down order customers. to

So I that… mean

John Murphy

Okay.

Kevin Nash

…that’s a strategic for play us.

John Murphy

a on going pre-built here. just mass not getting… there’s It’s really So

Kevin Nash

No.

John Murphy

…stocked ready up to and go.

Okay.

Kevin Nash

Yeah.

John Murphy

guys. much, so Thanks

Steve Downing

Thank you.

Kevin Nash

Thanks, John.

Operator

question Ryan Brinkman next line of JPMorgan. the from Your from comes

is line open. Your now

Ryan Brinkman

level my Thanks I in vehicle which is fourth guide of and down $XXX half at midpoint the million, which Hi. down a for looking about would the XX%, I production versus light think sales your looks and year-over-year it to. like which XX% quarter IHS, is, Korea of North currently vehicle be really implied the taking question, global mix for think, XX% production which Europe, lower is more compare you America, Japan, back bit

the I disproportionately high production fourth with and where of more we allocating with et about to underperformance been So, were possible vehicles maybe and implied have that advanced by end cetera. products have features end I your to press there about were talked drivers scarce release been just equipped how in I cuts. talking that the having calls, in on you their you the quarter, given wanted mirror, impacted semiconductors highest on of quarter know significantly outperforming likely automakers sort your ask But be prior think, feature been to

the what XX.X% for maybe the and light points XX% outlook for better out contributing production. versus growth look trend XX% X.X in points market? X.X So year vehicle next growth And in on that’s than to to HIS’ in can as difference just growth, is the you then elaborate to to

the reversal much the would mix outperformance trend from what’s there if be that implied next the see a happening you in that quarter. then the So about you to can fourth next what’s -- in confidence how giving contributing maybe you year is year? Thanks. the significant and with Maybe talk outperformance backlog

Steve Downing

well-stated very question. a that’s -- a It’s No. Yeah.

what if at there’s a our you units XX% IHS is, the forecast. production now, we in what the will couple show are million IHS of suggesting QX look right data I guidance, were think risk -- but down

same the more based or you those of units than adjust us down outperformance, the level would it production that then on XX% another XX% looked would So about it’s out, at then -- XX%. you still taking is if because and you what see be if

talking basis would of if you So level outperformance. down will at would year-over-year on happens you be a -- XX% be QX be our guidance the looking like again, more and then same at about

that a while. the into going ability that have they though, more and outperformance level improve for the about really really that’s So But to it’s been industry than market we skeptical -- assertion the XXXX, are Markit at the are to looking sequentially for market the rate little a that that versus of is the your about -- fundamental really it’s to believes IHS support production. point, run we

changed And able see the like to start bit will as so of in talk ramp market that And up is. -- and the the to start we some things then, of look short-term that at about help or XXXX, we little part really Ryan, is, don’t QX that one will does to QX base what do supply the We environment, should I say here mix we periods believe was indicative how meant to us, that of they willing well. you how And question where to these just completely the QX and so of vehicle which could in is everyone accurate, lineups. really were ability terms build so were that What’s the end they much unfortunately, of also right, they given the OEMs much constraints, wanted, in limited not for is were there in of highest build, packaging, to what could about half knew really assertion first produce. of parts industry produce your based how anything, lot the year, OEMs so in a pretty their on the about fluctuation building was about your see a our is factor higher absolute is volumes think, they we of in? second many really would and to else support but response,

So if products. build sometimes they willing that and they couldn’t demand our top build to levels, get were the the mid-grade for a impacted couldn’t if they -- trim

Ryan Brinkman

Thanks. And pretty average million of $XX last in bought which you just color. in you that is on then quarters. over the repurchased question stock allocation, the helpful back three is past line really here the with That’s have capital Okay. quarter,

differentiated other isolated You the relative throughout yourselves capital have toward suppliers to repurchases environment. macro certainly and continuing to allocate

continue wanted years, with would the nine Gentex going your in any something to hat drop with I years ago, are years, of sort Just is fluctuation? environment all, terms this appetite at on its uncertain stop thought you just away in of to uncertain you don’t of are back of the macro trying what at for or the to repurchases continuing there’s to check know eight if chip XX to the communicate process stock this in in buy a environment?

Kevin Nash

No.

I that positive think growth a believe favorable and see of QX, are in rate hopefully, business the of the sign that. is advantage we take to we we whenever long-term prices, going

valuations line. We be couple Hopefully, balance is more bolstered. the believe make back sure of One look the side. of at opportunities that also well things come there on we the in sheet may to I over will want next the years acquisition is,

acquisitions it be only values getting it’s take possibility and off something could So the if because the on ready to to as we gas, either for fair as the going or see repurchases, that you relates horizon our foot us contemplating relates of up. are it

tried lot we a One that about like We are lot very over the we what us. overpaying. is, have candid was of of for the spot didn’t of we last be it -- just always couple the trading of felt multiples years, a to see things a

valuations industry, if the to are make back favor, our the in might be are sure some and so, moving we However, given want the happening to constraints and in we things move. that of ready price those

Ryan Brinkman

we Maybe to forward of, what to year What terms there of an of sort But eye make technological other the just here, cetera? we going looking in call, advance. looking should forward a medical, might of, theme wafer are as you they Okay. [ph] to be waves, lot ago not look huge maybe are things. your guys making of obviously, a years is any sort in it’s final are et CES question, this out showcase, couple with that signs of the some whatnot, at or trends what for, keep announcements we

Steve Downing

the what we are think, about excited first entire missed that’s great platform us. and basically we year a is, I marketing Well, foremost, and I mean, for

hit there to customers try be exciting. That’s excited just pretty and engage foremost face-to-face. and back first are to and with we So

think up the amped to go one. that ready I pretty for and team’s

to But stop on, off but team not been so there on until by are CMOS side in better bored hold electrochromics going to If in so the especially are but can’t also core platform area has you do. devices, nothing to the so large we at continue expand you the if aerospace larger sensing our only on side, January, in format, goal automotive. have to be or

only are skills lot how role But in a then what new do the in a we more a sensing in play electrochromics future. see core importantly, you that ride the or sharing going you how which right, but have vehicle So autonomous that not those content. of to is, feature skills the in deploy can car the are today, and

theme been really So last couple the that’s years. for of the

continue going this at to We year drive that are to home CES.

Ryan Brinkman

Okay. Great. you. Thank

Steve Downing

Thank you.

Operator

line [Operator Josh Instructions] Riley. Your from of Nichols next question B. the comes from

line Your now is open.

Josh Nichols

capacity takes would your kind right, would have are it supply just about a headwinds with for a like, strong clearly longer as long an a rectify, situation? then near-term of you actually kind it how term inventories? to there’s strong? well, curious, you Thanks taking kind thoughts consumer widening what supply the to is exceptionally inventory thinking limited, in the some that, lot you quarters. hit my low that consumer as but well, have think the and of I better I like long visibility point record am on and this Yeah. as question. wanted the gap just stays is to well, and and the that’s probably seems provides actually one chain and I next automotive fact that, of Well, on, last in I going am few But probably production the the lot going there’s

Steve Downing

No.

now making delivering, what’s that over to they customers right need on can you and to are sure what getting sure the taking right. you period is sure should You through only components going levels are of make of getting a to also while of time, on is to for are but long not exactly predict inventory and The part to trying back be part to hard have at the production demand, But to the be are the happening and is The the short us obviously. this makes of through the going rebuild hard and based sense going you they make period, where sales care levels dealerships. take macro upside phenomenal rebuild, the period. it’s industry side get because to their secure

be for any the years to our two don’t years. inventories So see won’t really at to back products, strong are change, your level take consumer from assuming some of the for for time really that’s and continue while, all point demand to which the lot believe in the next we product I the least first but maybe portfolio going that, the only reason believe to OEMs it’s of at demand over going of least overall years. why for. to couple And industry of overall, from looking our next tailwinds that kind a get not we as a of couple And that a doesn’t year there’s

Josh Nichols

Thanks.

guess quarter in IHS hard at bit But I they you for look and globally. said, on America, right, numbers have I the the you think, so, then, similar what’s a $XX million it’s that going of little mean, XQ if on. next $XX year SAAR given that guess, clearly, like skeptical are million estimating North numbers, And I risks the look has like out and year spot about commentary, thoughts And And those get to their are kind think too thought last you on of you some you or that takes? you they are what I to your a high. probably do that are been achievable those what the of guess, you numbers aggressive. to puts on, and were kind I think happen have been it’s --

Steve Downing

thanks been noticing of we has odd. that for were Well, mean, I last couple quarters Yeah. probably,

the been the of companies few around one have been talking about We industry. issues probably that’s the

tips out of those challenge chain not side little challenges. over of levels terms you quarter are of of industry well, volumes? in that think, demand there there’s can be they being we be going of When believe in next our and of this paranoid, in assumption you showed ski level to constrained There at occasionally might the were the are pretty terms of year, a numbers kind the way So maybe the support bit production. weren’t was overly we look risk wrong but hitting obviously We that supply the out those those. for don’t industry over

support So The question is, the demand keep we those production levels. industry of can to there’s think up. plenty pent-up

that but the a you increases at challenge, year-over-year IHS on bit back industry supply some year for to half, there. those believe change help that get from next the there should capacity are standpoint, can’t we far half the those should If look Maybe might little of the sure, be be so reaching the a that numbers. of don’t first an side get

Josh Nichols

me. from Thank all you. That’s

Steve Downing

you. Thank

Kevin Nash

Josh. Thanks,

Operator

David from Whiston comes question from Morningstar. next Your the of line

Your line open. is now

David Whiston

Thanks. Good morning.

Steve Downing

Good morning, David.

David Whiston

waits there talked recoveries kind you input another from that and ask Gentex reason? that just of for or some luck OEMs other on earlier to fortuitous is Steve, timing is unlike suppliers about

Steve Downing

little our look think game it’s And than that. to of Well, then, because you if a profitability, prudent, is because daily. are able I we importantly, some at think, the we longer changing wait more

hits more lot higher for early know don’t which in case a demand a pricing And then base going we best because and so going isn’t think long supply what on. be in time, really have we it’s constrained always you environment and what predicting, is advantage, to going your much are will a to the negotiating go how can If leverage.

see now And full because not XX% are in probably OEM increases, you to is so, which an may or want only to you prudent, see right to you off picture now are have go before that talking cost conversation. going about you XX% and going in the and

understand is happening and walk under times picture, honestly, truly allows to industry with not their find years full a preference what’s the what them and Our position the happening legs so. try customers OEMs five and it on then few their been get always do industry or in to what’s cost consumer. out understand next with the to in for our their has side over to quite complete the and a story it And to

consequence a you conversation. and So ultimately, to in partial before full have and you go have understand that all the

than So, certain fortunately for us to us, little longer our allow suppliers. wait profitability does a

David Whiston

come was that though, early? up initiate I too, totally talks to but or the the to these OEM it’s really And -- the assume dynamic to I supplier understand you probably will

Steve Downing

They No. rarely answer their phone …

David Whiston

Okay.

Steve Downing

will conversation want … you a to have this. like

years. not a have reestablishing are us, expecting contracts going couple we warm we these. we us, no, helps usually to have pricing when a So, of also Typically for what reception, for

to. talk awards One pretty can be business those the that not about also about of this sometimes and against are talking about is that There’s you to future or it opportunities. about. price price always It’s price things growth committed able escalation, renegotiating downs just reductions do are netting on you

where picture to go one try conversation to place a we about, in as hey, it’s let’s -- walk business partners. dime so not are into of this and part going in let’s else, a the at has is and and talk there it’s that book question look right faceted a get whole now So big more we many up by or got nickel about, about with

David Whiston

said must, Neil, that? -- mind you penetration, technology earlier, I in you gaining what to, what And exactly you do is are tech referring some repeating China there that’s

Neil Boehm

Actually, the up Chinese in problem. launches domestic base No in go Yeah. market. with continue the to mirror increases

David Whiston

Okay.

was… I So

Neil Boehm

-- core auto-dimming… yeah, So

David Whiston

Okay.

Neil Boehm

No problem.

expand and additional Just our continues local core auto-dimming continues to platforms. into to grow

David Whiston

still And did in to the likes of a there advanced the advanced room content start something it of Germans lot so, more from started or go the here? I guess, of China you in and kind is China, first with on backwards

Neil Boehm

room an I to grow a Obviously, lot into the came JV lot in from came of Europeans with still side. the China there’s advanced electrochromics think of technology market. a being an partners

local base manufacturers technology Now and decent have that rate. seeing as been well we to what and it expansion of at grow grow continued a continues domestic to is

David Whiston

Okay. Thanks guys.

Neil Boehm

You are welcome.

Steve Downing

Thanks, David.

Operator

next Oak from line Sloan question Family the comes Advisors. from of Your Charlie

open. line Your is now

Charlie Sloan

and by allowing there pretty the amazing. not can only you a the really base so thanks berth how small, sitting guys to morning Great for questions. commitments quarter, not are production all and done that way, this but imagine pretty employee you right, have are you mean, guys taking Good to wide the I so and the hard for you occur I it’s working are the get OEM, they of stuff have one to fulfill.

So that’s awesome.

Steve Downing

thanks Thank very for you that. That’s for -- said. well

Charlie Sloan

on? or at look or When that R&D, R&D regard is to and into Yeah. you that areas focus about that Steve, to you It’s your notice. the components amazing. of investors R&D talked people And might -- with R&D how the you want expanding your core the are market other mostly auto your should should those,

Steve Downing

it I of R&D say, say, focused core would about XX% automotive. the Yeah, I’d budget, the of is on

that that really automotive, other could In are competencies kind level. there words, looking type just core just but trying are so aerospace, The reside blue focused that of in core of projects, a auto. at other we XX% -- necessarily is projects kind things protection, also pure aren’t at in but also technologies things that develop on underlying sky things fire to

Charlie Sloan

Okay.

-- phone? Josh maybe things glass so O'Berski And cell hard but not for like

Steve Downing

Yeah.

Josh O'Berski

Yeah. Thank anyway. that you for

Charlie Sloan

Yeah.

You bet. My pleasure.

Steve Downing

of field. as type right, in that could things Yeah. how technologies at it those the we change No. some approach electrochromic It’s of looking are well,

a those to be about of much you making applied If also going instance, lot of different we pieces version of about devices, ways large into larger a electrochromic -- all apply There’s industries to but when and larger a at, device. that and all could of that, area talk on have The about core electrochromic and they with different and ability could substrates right? go bend technology they to kind talking sight of lot along has line well. a taking for automotive, darkening that look you much of types as are so of glass, different are

Charlie Sloan

Sure.

I showed the we future. have and keep vision that are So think, up so you very buyback to that share smarter with does you to quarter, it speak the pleased -- this and and commitment the

year? reduction So kick regard anyway, and that in, is OEMs, at then, that the the or with annual every is price beginning forgot? when to that Is midyear finally, I of

Steve Downing

of January X. XX% About customers our on

Charlie Sloan

Okay.

Steve Downing

So who especially few fiscal we customers Asian who still are on in have a year. Asia, are

after X. So times there vehicle, for those XX% of say are year. some of some happen happen few SOP other do on one on year. a year Certain paced and throughout January our on based have throughout here I’d we just randomly of price X the the at a that random about downs But so there instance, projects and are contracts April are

Charlie Sloan

Okay.

you those privately? to are open so those, discussions always And but still expect

Steve Downing

Correct.

Charlie Sloan

Yeah.

Okay. luck. Well, good

Steve Downing

much. very Appreciate Thank it. you

Charlie Sloan

Okay. Thanks, guys.

Steve Downing

Yeah.

Kevin Nash

Thanks.

Operator

this I O'Berski. go There are call questions time. back at sir. will turn further Please to Josh no ahead, now the

Josh O'Berski

today. Thank you time everyone questions your for and

SEMA welcome at will and the booth our and would As be CES in coming months shows. Steve those during noted, we at investors

to your please a details. to analysts great can the confirm out again and have Thanks So weekend. or we myself reach and

Operator

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

disconnect. now may You

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