GNTX - Earnings call transcript Q2 2024

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Operator

Good day, and thank you for standing by. Welcome to the 2024 Second Quarter Gentex Financial Results Conference Call. [Operator Instructions]. Please be advised that today's conference is recorded. I'd now like to hand the conference over to your first speaker today, Josh O'Berski, Director of Investor Relations. Please go ahead.

Josh O'Berski

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

in participation call the prepared to Your to consent conference implies now remarks. this these for hand terms. I'll Steve our Steve? Downing over call

Steven Downing

Josh. you, Thank

second $XXX.X quarter XXXX, the of reported to second company $XXX.X in last the of compared year. quarter sales the million For million sales of of net net

in the production XXXX, of compared year. the quarter quarter America, Europe Korea of by light to second vehicle Japan X% second last declined and For and North

weakened quarter During light the markets. in of most primary vehicle second our production of XXXX,

some the largest quarter coming with for that impact In June of total, and left revenue of the forecast fell with In us May of forecast million fact, the below the to significant forecast expected sales April quarter. in quarter well customers. company's the to $XX beginning for quarter our but a both began coming close shipments change from of approximately then XXXX short second for by our saw biggest our

expect to vehicle of market. return to the underlying to performance show we to look but forecast continue we half XXXX, outgrowth meaningful the versus prior year versus weakness As light second production

last year. the XX.X% quarter the second of of XXXX, margin of XX.X% gross for a second to was gross quarter the margin For compared

quarter levels quarter second impacted below of by sales prior for The was slightly the year margin and than well primarily were forecast that lower XXXX gross our levels.

from levels product shipments Additionally, shipments sales most resulted the cost quarter. more and impact Unfortunately, than reductions weak lower unit purchasing the the mix with affected. product mix positive being Full unfavorable Mirror and shipment the lower-than-expected Exterior unit offset Display Mirror of for levels

quarter. estimates While cost our materialize gross our improvements our not the in recovery growth is mix second did product with margin sales plan for material line dependent partially that are reductions year on for and the during XXXX,

been we margins contribution that on take close would sales, Given forecast. revenue our complete. end been our progress had margin to gross estimated our historical plan the would on our that with our believe overall we incremental recovery very are the for of pleased to with we margins have XXXX in until plan Overall, line XXXX

expenses of recovery operating increased professional million the expenses quarter to While last have Operating to we our gross expectations, related $XX.X of during to full continue and due not margin staffing year. primarily to our team margin second $XX.X fees. quarter-over-quarter, million quarter the and execute expenses we for gross the that right meet plan second the plan. did the believe Operating quarter XXXX of in XX% to compared engineering by second increased

R&D expenses expenses, products. quarter with of and year, operations second $XX.X with to million from the continue for Other R&D was million of of materials. Income of operating to $XXX.X of quarter quarter from for the and of innovative million, continue of adjustments income income expenses, loss our XXXX million of market year pace as second company's current mark-to-market which primarily for expected change in a $XXX.X the awards million to of cost Operating and certain from compared losses of last by $X.X quarter of optimization holdings new the line this within $XX.X increases second for year. swung Our income invest primarily and technologies, were offset trending other the of products by year. VA/VE noncash XXXX initiatives the the business operations and resulting full second investment driven programs are compared The at last the for to we partially interest of expectations especially new our to in tech rest are for bill launches on income. portfolio adjustments was in focused

well to from for as compared for per hand in of second were of share the of net the second year changes quarter the decrease net earnings of million Kevin in as second of XX.X%, last driven Earnings $XXX.X income had per details. 'XX. year. deduction. the the of diluted income compared over second the and for the quarter and share of financial income operations the which During company quarter for an changes quarter further Net second income was effective quarter quarter by the tax by for the $X.XX the income $XX the some to other 'XX now call diluted benefit by million net well of income. Earnings diluted sales quarter. I'll to net the driven second and the was mentioned last impacted previously quarter were operating compared of quarter sales income XXXX as of The other primarily lower the rate the as per share of 'XX income previously for second for XXXX, for intangible $X.XX mentioned foreign-derived second to was lower

Kevin Nash

aircraft of by $X.X Automotive 'XX a Thanks, Auto-dimming $X.X second last in million last of driven year. year. This compared window the sales quarter second a to in quarter net 'XX second second were in compared in of second were [ was quarter dimmable decreased to of and year. compared quarter increase million quarter sales second the ] last during Other year. quarter by net $X.X of $XXX.X sales $XXX.X of in million the the fiber 'XX of unit to the last protection second increase $XX.X million million mirror shipments to sales the in the Steve. quarter compared million X%

Looking repurchases. share at

During an stock company $XX.XX XX.X approximately quarter, shares available appropriate. capital to remain average trends issues, time price allocation X.X and shares We we of and second from market committed will but remaining will account plan. as deem in common factors that repurchase the from has strategy, the time macroeconomic repurchase of vary support other share. at June of repurchases share shares 'XX, take into repurchased previously And our per additional to the we million announced of XX, million for

as due fixed and XX from equity $XXX.X within Looking were 'XX. $XXX.X the combined at $XXX.X mentioned quarter. as $XXX from as payable Cash was were as and to $XXX.X timing to $XXX.X million, Accounts of increased long-term million, million compared cash equivalents $XXX.X from today the $XXX.X company's June of and balance sheet. The accounts income investments investments well were sales million balance investments. million. from million up the up down 'XX includes $XXX.X cost method $XXX.X to to receivable the million, Inventories million. and sheet December XX, million, compared million comparisons Short-term which of are

cash the at Looking flow for items quarter. preliminary

update. last was compared of And $XXX.X Second in million $XXX.X quarter depreciation year-to-date million amortization million year-to-date second of million expenditures capital the up And second was from from $XX.X with second quarter and for compared was were for million And year-to-date year. million $XX.X was operations for flow to 'XX. a the cash now million for the million flow $XX.X second expenditures last compared for year $XX $XX.X compared second million quarter calendar $XX.X million for cash calendar the $XX.X year-to-date were $XXX.X Neil for to XXXX operations million 'XX. I'll year. call $XX.X hand million, from 'XX. to quarter year over the with Capital the of $XXX.X 'XX. D&A quarter compared And quarter for with product

Neil Boehm

extremely of mirrors of and launches auto-dimming new mirrors our was the launch Display launches features. Unlike quarter leading electronic were Mirror, outside net auto-dimming way. the these interior second first HomeLink with advanced Full the with exterior XXXX, XX% Kevin. you, quarter net of quarter launches Thank Over and nameplate XX an and busy feature

forward quarter, rate we launch third continue. heavy that As the will we this anticipate at look

OEM as its demonstrate the these for Now total our for a quarter, Full we The acceptance to the as technology of to during to shipping appeal excited We're second bringing further began architectures. of well three on the [indiscernible] Full [indiscernible] customers this now different Display addition Display Mirror Mirror that mirror announce update. customers, Display We're vehicle helps Full OEM to new the shipping XX. and partner. global

expansion and In see customer launches, addition at to of existing technology to growth OEM customers. our we great our continue new the

nameplates Mirror impacts our above track the globally. an on are despite to And on shipment Full units the shipping still currently XXX unit FDM We quarter, incremental XXXX unit Display the XXXX shipping guidance FDM of of shipments. XXX,XXX we're over achieve second

currently we've as we to half dedication bill we're about all continued projects programs to than and back process. been as extremely work team in closing as of over we appreciate having XXXX while execute Gentex of The well These recovery We're VA/VE that are hard has for to continue existing the the now at beyond. I'll guidance are the launched technologies with the we the into and remarks. to hand execute busy critical ensure seeing evaluate products reduce before. putting our move opportunities more first for lot plan we're and we stabilization a launching the and materials excited margin Steve technologies, XXXX ever and launches call on changes of as growth our is in and flawlessly. Also,

Steven Downing

X% for forecast light North year. in and XXXX Thanks, full the quarter markets and China. light XXXX company's years for XXXX expected Light in forecast by versus same America decrease Neil. Global XXXX Japan, production these on for Mobility approximately production to Korea The based third of last third are the mid-July XXXX vehicle S&P production for the quarter of and current vehicle quarter the is vehicle Europe,

this in 'XX, production markets. Based light 'XX now increase when decline calendar vehicle production in markets on production light 'XX. these X% vehicle calendar these production Light for previously to by are Operating and for of calendar forecast still year vehicle to the forecasted $XXX For months versus vehicle for year is forecast be Revenue 'XX actual results is with be expected light million between certain $XXX changes year for the are $X.X we Gross six is billion. to expected million. XXXX, year and guidance margins XX.X%. and follows: the between and as calendar making expenses the by to X% calendar year approximately be to compared XX% are between for in forecasted year first expected our billion to 'XX provided year $X.X

Our $XX is depreciation XX% estimated to expenditures forecasted and is XX%. million. be expected between and be rate between Capital million forecasted are be and amortization between $XXX annual million to And tax $XXX and million. to $XXX

'XX Additionally, quarter. company year 'XX, as to $X.X calendar company based the year-to-date continues on year for in in production environment, updated to performance despite and 'XX vehicle for revenue $X.X changes on company's billion. for our that recent forecast light the updating The pace to impacted actual and second well regional be be calendar vehicle as estimates billion production vehicle mix year mix to for record light revenue XXXX results 'XX the the is calendar approximately

second temporary slight goal accomplished even there step XX% margin for our improvement Additionally, fully the of of delay despite XX% has this those a achieving results. achieve quarter work a year. our to if is been tremendous the ultimate gross on back We to in company during margin expect the plan

our to we the this into strong comments our conditions, of year for 'XX adjusted questions. profitability the second of we prepared as quarter and and today, proceed estimates year, 'XX based but continue the second growth to this for half market now Given of for and on prepare we can have completes impact and the XXXX. That forecast head we

Operator

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

Luke Junk

guidance. revenue your of line, with it on you you're Hoping half the XQ some top then guiding and back versus essentially how relative what about just start [indiscernible] seeing Can looks sales July you out expectations overall you're guidance, gross broadly back both thus Just maybe the in your miss in impacts on could of to and margin mix more you're the expectations in just like well. the taking schedules year the as the with the to talk half far of Steve, the square

Steven Downing

report the our -- things referenced was in the shortfall comments prepared the pretty lot that look Volkswagen, production month. the together you at quarter, our in of start in one that Well, so XX%, happened of largest they that in that about were put of Toyota, you June, a a I'll definitely even happened kind almost of impacted of customers, QX significantly with and unexpected. we very a impact your what the lot in data it standpoint, from June XX% When in GM, the

the to look pretty They take of the see half releases in some further other the significant at Kia, now the that levels we second half, of that customers, of different. back serious quarter. If year. all BMW, products headwinds launches look strength Neil very production were you look were down in a us large in of than Stellantis. were and orders same new actual faced These that out this expectations continue If list, the their referenced, different some and June. customers we OEMs for The lot the we very coming of into rates our Hyundai,

rates and drop look So third account outperformance for we board. of our half to of a seeing vehicle and the the what show we're releases our down at that for production showing taking forecast year. X% and this fourth production into we where quarter still at significant across light kind back are, still the quarter the But pretty X% in look X% is the in take forecast

the taking we're strong that back and at get customer very information in a to data, release So half. to look we're hard that we all still outperformance back but believe going the

Luke Junk

point, the confirmation could you similarly, about ramping the extent still as maybe about new movement half? are specifically then this specifically? appreciate launch line there think those thinking FDM really would reduce the sight the you year units risk? at especially launches which is for live. XXX,XXX already some in mentioned to that we overall, FDM of in these talk back to flight of impact on already timing, Or still volumes I And of incremental Should the could potential which

Steven Downing

No.

pretty If you everything look launch on much side, time the at stayed process. this during

the rate we environment. economically an FDM single to like happening are is macro FDM that the comes for given is factor those risk expectation -- level an as when the think I it puts what's OEM of happened and to biggest macro going hold, an and a trim take what's rates out product forecast high-end interest

from customers rates of So far, we take in any terms our haven't seen of a drastic FDM. of change

fact, slightly the primarily has In take say, rates. in about months, production, I'd FDM. rates XX really take changes June overall impacted last driven obviously over on one trend the been better than was by that forecasted not This

Luke Junk

calibrate mark-to-market high to P&L? there's piece better that level, that then year? be other EPS. some way income how some these flows income and half should market-related maybe risk the to And to the in thinking to through start relative just a about appreciate How the offset things. just But Kevin, at should of all could underlying this we interest I still think any back we for of of predict

Kevin Nash

Yes.

most of been mark-to-market has realized. impact think the adjustments I from

-- If you are a fairly that we discounted that point. at I public company this look at holdings, have think

the look will have at if about per our will offsets other those income income. We would -- income that quarter forward, should to by that investments expect you of to ongoing million be offset going losses. be be tech fixed some net ongoing portfolio, But $X we our our tech

I of at income half that should kind point. the outside that's be the mark-to-market, So per mostly of that, million realized to back $X this million $X where of year of think but quarter in

Steven Downing

been the second the of the quarter. of Most already portfolio risk expensed in Yes. has out

Operator

Josh the B. of line Nichols of from Riley. Our next question comes

Josh Nichols

kind talked one the on production track year wanted [indiscernible] to on to touch despite kind this still you're for thing of I to hit about targets light you of forecasted. the vehicle cuts some

just product what You've your a years? take opposed as about not And new than for higher more term, FDM? particularly not could been but longer and and more do more longer over supplement stuff year, addressable it we've OEMs kind end of and how seen What's more midstream rates just X, mainstream expectation larger level becomes the you seeing that's to just next and historically. term and like how this X offering think customers, in growth, as market the that higher

Steven Downing

excellent Josh, great point a an and that's Yes, question.

higher-end at I think the or for start trucks launches, and a the rates SUVs. quarter, as one thing is you talking product. OEMs going to luxury sure, take about especially or be vehicle volume this this not a They're OEM introducing same even

door higher starts much brands. it open hitting However, volume volume the opportunities by the to

a coming. it exciting, get I'd the time on accepted very to this of thing focused markets, fact that's whether probably that's or we one specific of was are so that knew geographical are it and doesn't product. we've working to is these is Obviously, that globally a FDM very bias. vehicles it's really FDM region. other favorable some launched. The really the lot part quite And A an industry for say have our products HomeLink on most been interesting, features or certain

so to opens to several for our over a story. FDM lot a next it continue believe of years, the We up And growth opportunity tailwind do be the will us.

Josh Nichols

other And also offerings. technology on then working you're some

lot at Investor your You talked more Day. a

in expectations longer to terms your thoughts one term progress [indiscernible] Just of we right? continue to that's and this what the current of OEM the I was think are point how trending company at been and some the year? at about curious like the driver what has launch expected making kind least beyond as think monitoring, year,

Neil Boehm

'XX. monitoring in and launch driver projects we're with Sure, are then OEM well. this into target on absolutely. as for still year are additional and 'XX some on There an Yes, that calendar

and in be on openly we're deployed from that talked one Great showed to using things dimmable vehicle there. Large real of momentum good seeing forward can CES estate to of large We've a devices at see and geographic well. of really this and a the year dimming interest developed some excited the in the we're is able customer about technical momentum deploy lot getting moving in we've couple progress also been good and a lot vehicle. on push executed. And processes challenges pretty our really talk lot working help so right, great larger be We're we So dimming issues of the momentum, some and talked of working devices think execute to in the next the we even that making good progress to is and been product there. the we've past that about demonstrations and get I CES, And there. that we'll years, about that that where using technology, on visors visors. with -- to to

always So us hard are, we're challenges like hurdles technical that's it to it, advantage. an where still the and give problems excited and There's there why do some to be successful why solve about and is. and at will it's we

they the about lead So couple where we're in excited years. next can of us

Josh Nichols

just Is be years [ to we in as you few be me, market big [ like last for market. look the a the it thoughts look relative the regulation how just that just a going driver likely I'm growth monitoring about that for then to product even for could the that's question more just some Europe curious, I'm ] What's opportunity material you offering think a driving driver? where if down curious expedite adoption ] just if other there's the how regions. it's on company? when to opportunity different your And line term. there, follow-up monitoring near of kind is at

Steven Downing

Yes.

opportunity baseline be will the business. be significant has it of provide to overall if growth profile average growth a our be definitely over story. because years, will will tailwind and the product, The it the and it few the think below it the slightly some -- but feature more is it's set, competitive margin material a to to dollars beginning, I revenue can corporate next really, are

Operator

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

Ryan Brinkman

customer or based of than one headwinds at production headline mix you the one might you softer vehicle elaborate quarter things I little segment hoping to was that know lower battery the quarter the product changed have revenue some of expected, numbers. could that on a production the was the or more of most I the contributed during the electric just vehicles. during looking

a might you that year? then if confidence So that gives at might driver? curious what have full when these the maybe headwinds And temporal more you some be nature been of in look

Steven Downing

Yes.

primary absolutely their June. May, in of spare our by really customers impacted month the fact, the look, were ] April those very the what And [ their numbers. some very were in was in numbers you customers our If was headwind of same and driven part of close quarter are to largest hitting

seeing, in So lasting optimistic we though start in is hesitate will impact June now, we're go off data obviously, month adjustments? From onetime far something with expect Were to July long in the an happens. how the point, line what we that everything But also they is how so are severe, out. very Are the we're always And what production happened to come the was we here I the permanent where be was, as pretty then million-dollar or trends? And based in sit We're quickly? right how this ordinary had July Right on suggest of at terms after course. as they to seeing, to that. like what unusual back right, and question seems it much those impacts? expected.

definitely in this happened June least event. at whatever a stage, at onetime be be to So appears to

sure as to happen we quicker anything start making June. is changes looking things to what than rates, eye and we're or the we sure can watching, repeat the take adjust at those most, see on that make to the rolls able in it were though, One data most those releases, affected we we were that out to are if OEMs an that keeping that that us impacted we're of

Ryan Brinkman

smart retailers on protection and the you products update point CES provide looking one talked could fire Any sign maybe maybe this box about at lastly, to some were year. of at earlier the just big then you strategy update that know maybe the some there? of during year, this I kind home summer. you an And of

Neil Boehm

a the product I'll update. give quick you launch. to Relative

of on So Right we're in actually at is challenges in we're We've target launching to the of in ready here. the of had the testing development should QX initial now, working now some of -- first looking when that right half last and production. of to through will QX some some actually be features the was go go. to launch the in the part QX middle the go

Operator

Our next question from BNB of the comes line Picariello of James Paribas.

James Picariello

up customer ask to global that to look, that mirror curious, experienced you've be X% lag their [ wanted that, of your August year-over-year. October volumes. based type a it percentage weak that's on first They just going of volume just that the is with last And between production Toyota OEM half your largest I'm timing forward-looking possible night interior about down sales. like shipments? I through already is your decline announced showing customer a lead key as in was sourcing your and base ]

Steven Downing

would I spot say you're on. Yes.

in those piece, OEM the especially OEM you're when advance an the that than of see or likely volumes or X of July reductions with weeks going a in more lead shipment pullbacks. international from production starting perspective happening to play times, experiences about lot out X actually If August, planned an we're to talking given

June we was certain in a leading is indicator in pullbacks that from of of the what likely it highly half second experienced this year. some OEMs So

James Picariello

not through on year-over-year. Industry interior the half shipments, your right, base I But X%. covered mix this not has [ ] mean, the but on trends is production, get in just going It's right, customer perspective, half volume been We and to just first based obviously follow And X%. your track not base it. again, or imagine to on back your we isn't customer yes, mirror up to mix? mean, first could the X% Toyota I total mirror, LVP what down down your down the global dynamic. going I

truly here? what's happening yes, So

Kevin Nash

we're Well, production Detroit of if couple you for carry a having I halted mean results, the little the that mix where about second there growth key America, first that first they highly we quarter are of contented that quarter is so entire over into that bit with was as vehicle still But we carrying know when through. a FDM. heavy know coming and have remember, inventories you're our North from dealer quarter essentially we talked and that automakers

top not the going unit you're So we how see growth, necessarily content growth going It's American and be grow to market. that's in North to the line.

than more flows inventory. having nothing it's So OEMs their seeing try to specific manage overweight production as they

Steven Downing

regional made and one is of comments, Well, I the think important of mix prepared end comments we one that's the at. an the at to look

If was you look at QX on a down year-over-year X.X%. Korea basis, Japan, and Europe was down X%.

impact. right, being -- the relatively so production X/X biggest markets that That Korea, was if in primary Europe, other volume. you the But single North Japan, of America primary the at average And was X%. of North basically weighted our America, of flat markets, look you at total down our being so look

one volatile very have base that, than market, China on weighted tougher in the that's the rest much we a that primarily do is And is other business of to The predict the obviously, world. auto-dimming.

are to down basis. see why ] so a [ being year-over-year the on And you primary volumes IEC those contributors

Operator

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

John Murphy

just products, FDM even the of something of [ on and take the pushdowns EVs ] potentially volume questioning, IEC business ] you sort of talk different or else. content your in you about is vehicles? can versus on might particularly sort EV long potential lines between short term to or similar impact And on maybe this right that I as the rates IEC on But had sort [ everybody -- opportunity to sort of of deluge EVs. see trying delays understand term? delta the I'm

Steven Downing

Yes.

you if actually look take we FDM. exposure don't is of FDM a our EVs interesting think look have I at the huge there rates, at to part impact that the and you for

trucks, a more FDM, weight that at lot look side. If SUVs, of you is the towards

we're So it the impact as The on up future model, the the impact. impact. the really EVs, OEC to of relates well is really especially in set Tesla

don't So business HomeLink Tesla. on do at mirrors Tesla. tremendous We IEC a the product have have outside and we of auto-dimming with amount business

your are those factors. risk of so And kind

you especially the a EVs we very rates OEMs similar the of on on EV vehicles. are basis, If rest really, take at very similar look see on technology manufacturers, on our the versus per EVs what IEC traditional

on slowdown we not and we're so [indiscernible] out really outgrowth and or pushout want on We that take focus and of that's has want comfortable units. where why this to taken [indiscernible], really and anticipating the million despite X.X reinforce we are some feel year rates because FDM And us. between this our with trends with up happening FDM picking IEC FDM our that our trajectory and roll still impacting the to

John Murphy

I a always expecting. of that's efficiently. basis we're if are guys Is don't environment got really question. to what expecting curious I this, sort continued usually see you I risk but on there not good internally rational, weak there. but to said, micro think I'm actually And of a I just we're to or take you at opportunity second the this a there's just room out that. cost like forbid, consider not sort operate you pretty is have more -- mean, the downside. there's then forward. volume And going mean

Steven Downing

like side. slower the other of be or it operate zero and to were amount would we and obviously, because like processing QX to the overtime second scrap platform focused to Yes. overtime volume in are yield if -- some we'd obviously We we slows of cost business quarter. And a look the see things were you then in this a optimize drop to you that, continued, already expect also working free controlled expect unfortunately during of can and the slightly. There's more when down throughput obviously environment on limit really expenses those able start in to lower

throughout behind we're out a crazy then a production entire year last continue finally weird of kind in a beginning So there's to the environment at look plenty this overtime like of you us almost cost transition, to starting stabilize opportunity year. June It's working wild of coming month. year, and to was lower the right? where If of optimize. for

of the if right? was didn't them. impacted up. end is shipments up at had we delivery end one pick are kind built OEMs of look, month, a those the end you're not of towards building it's actually a you releases tricky few choose for build which industry or the fact, they quarter, the Those of quite or actually of have whether You a to, there you pick up our It's bail things. always them to environment, right? of abnormalities always a OEMs that entirely to difficult, sure. products, also quarter the In for When

most though. And we're June, So end customer the have behaviors returned of look watching if to since you pretty much at normal.

And the so we're what's going through this of out year. happen about why cautiously roll that's half second optimistic to and

John Murphy

the below aggressive [ it fair the pullback quarter. And the [ second interesting here, just quickly amount I XX%], more in get an Can blackout you the back XX%, last period? one down a because bought team's real one. far Are is a like in quick you ] you stock mean, here.

Steven Downing

we look guide, which midpoint take XX% think you half back honestly, won't that let's of we Monday, And happened reaction guide, if our we're of way rate in Yes, be. what this half the say just over we this just implying especially the growth when to a but today, at actually a is year. are second you

the some some charges and onetime happened what write-downs, quarter obviously bad. despite on that So wasn't

it you at look cash better generation was business If QX, year. the than last in actually on

feel at. And aggressive. see we're get little us about a market to you tend the So overreacts, where good more whenever really we

Operator

comes of question Sachs. of Goldman next the line from Mark Delaney Our

Mark Delaney

'XX doing one half is I first an there you're any bit half gap relative schedules as of perhaps guidance. sales, you're saw in the the the conservatism about is year some that the mentioned than to in using and you're typical those extra you're behavior some 'XX and states this using second haircutting half half second guidance? to for The June as and schedules guiding the in better second the revenue second year. sort how of schedules Steve, actual of a more indicator you want customer customer do you understand, given normalization between

Steven Downing

two both modeled and we customer internal global off this Yes, the I'd fully forecast. our of say orders based forecast

And the In customer the exactly month. the happens, and at in the the that we're their behavior. popping of when when what S&P, put with finger in can't these And customer we happened behavior, something IHS than more the numbers months today comes at we seeing their growth. it most look things S&P orders and out to But for are we're we of say, forecast was are of second not normally say for that believe that have of -- vehicle production happened we June. of change. also interesting that forecast. they kind it, guide. It's to of that are like into X terms We that or first would all you that's production truly scenarios, they still a usually releases out you an but these if in provided conservative keep our on so always back the half, when kind that. was is and like, numbers built I year doing month light we little what shows out X%, look would of one It's rest achievable. Normally, sorry, there of the year, interesting is this issue drastic abnormality a the your and you of pessimism the when X% what I numbers, comes take

second what that's in so And doing guidance. the half we're with consistent pretty

Mark Delaney

better margin opportunity. was improved understand gross of My expansion coming second Part input question that the was from costs. to

] well volatility some you of trying can and with as supply you as at suppliers. redesign some affected the to all from I tracking? Maybe your that's have been [ efforts And those from update industry? get in think materials your this some by how of improvement provide on an

Kevin Nash

Yes.

question. great So

gross it quarter year comparing year. If quarter, mirrors. to quarter, mean, hoped, sequentially and mix input points of FDM the way contributed sales what at XXX and second the last last positive lot I really it they a weakness it the to as had or and in to overhead it talked margin. this on prepared actually that the of look that about of beginning Unfortunately, XXX were, our year, fixed the basis comments up related performed stepped of as the we the about last levels on we had quarter year's side first like was from with about outside you we through to the the the talked PPV reductions offset kind or cost by

the So have yes, cost we're reductions Outside of so year. the this that, contributed really with far margin purchase to expansion how happy

Operator

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

David Whiston

really It pullback the SUVs and in It was just sounds crossovers board. wasn't like the just primarily, across correct?

Steven Downing

That's correct.

David Whiston

sounds to to didn't your really customers me in as too, Okay. It explanation give you that what happened any June?

Steven Downing

they Unfortunately, tend something when to do to only helps us us to they No. them. talk need that

So unfortunately, in yes, OEM there's terms side happened. from the it's -- it's been what quiet very -- of

lot going the I'm that I'm to [indiscernible] there if a was of say the personally, inventory on think definitely I improved. guessing, has --

shove not cars there. try this there kind think rightsize. was We're to necessarily of and as is of it that So was hey, many environment to portion I going through a inventory

building believe, they're OEM, happened overall it level at the normalcy given last material a they're couple comes of where the of raw shortages side, probably at it like I you're point an a years over if is, I probably think to part that other an when of The probably inventory. is and they from inventories that had been

that So onetime shipment. there's a both of I think probably of happening things in kind this change bit little drove

David Whiston

news doesn't So the for what meeting you revised pretty second your in of about to this half That that Stellantis they concern want week back the hard guidance? pull this year.

Steven Downing

I where is partially the going of mean where it in some half with vehicle if Chrysler that's global vehicles inside reflected pullback honestly much because tough we if of in better are there at. is, -- in it's Europe for things year, the that to is assuming us that's that production vehicles, Dodge, data it's comments the severe the as does. second how not or of this No, if impact one is if them they're that's you at content. nearly more I as France, have that's Dodge look volume light mean,

isn't question question vehicles going on back. whether what what the just pull So or markets to and they're and platforms. The what is, in not about

David Whiston

increase? And window just finally, what drove the aircraft

Steven Downing

very of little just them to The finally Really, last this revenue Boeing starting planes with build is again. couple have especially. been years

actually launches we're Now the as into well. Airbus with

then of feet a AXXX terms the their on well. little in the back product XXX bit and getting on side XXX Boeing Airbus So production, as

Kevin Nash

refresh existing on planes, aftermarket not so but -- little bit cycles in of we're of refurb replacement clients. the of And sales Placement original a some you get aftermarket, sales

Operator

of next Guggenheim Our Ron from question comes of the line Jewsikow Securities.

Ronald Jewsikow

came first, have your want a profit clarify the like I in gross plan. margin revenues the would I XX% just at with guess to expectations decremental line first gross comment Maybe the line. your line that that calculating we're quarter versus with if also in margins been

look July, challenges but to some repeat to delay also June? can And does I whether it mix you that like color that, downside. operational optically, least provide a at like downside, into the changes or that in caused So it on normalized you of by schedules that's sounds kind there's revenue than the Any bit more just just has. the guess, saw

Steven Downing

talking talked they fact saying I and And Well, really line gross really driven you expected, contribution and on weaker The It's that not by mix think were out us issue at the was OECs to revenue in XX% those OEC. of line total margin down. down. gets being if pretty by That with that us incremental look darn million can you I'm that to margin itself it's not we a percentage than you the because about that's just QX close closely. not take in $XX roughly model about sales, gets the XX% of pretty performance. --

percentage we percentage, OEC that's whenever was that's basis of a as of it a amount obviously, what higher That's tailwind. was. were the sales So than a being stronger expecting

So that's one the factor. big

was other mix. regional the The

up right? If X.X%. Japan, before, you was look regional Europe was Korea X.X%. was at China down mentioned mix, QX down like X%, I

growth well the China, the underweight that, quarter we're up didn't that Obviously, that and us. was fact for the given in story LVP So standpoint. that really an from only set

being issue FDM the Japan of single then of look being lighter to barely you was sales North or and And something. a weakness. Korea on markets, That's America, And up product issue. regional mix ]. biggest little close both drivers Europe at are [ our OEC the like Those primary the down then a percentage we margin expected. mix light than basically, X% the If really and up, X%

Ronald Jewsikow

You base in this implied tax out but relative a to as rate? that out? better of quarter, And China rate would the noise least being call percentage drop the in intangible that is income, the foreign-derived kind business America. Is North anything there tax are as think foreign shipments you tracking driven at Or business up by mirror, there line? being at the called least of that's lower anything for driving other I

Kevin Nash

a the it's of ]. combination mean FDII I [

reason just that compensation, little stock-based credits. lower [ [ than the outperformed us the bit from I us have I we wouldn't XX% guide ]. We R&D and tax to discrete some up a from XX% ] biggest FDII down benefits were ends lower pushing is mean, it's gets ] what higher up It or year. for tightens initially or the on heavily say expecting. [

Ronald Jewsikow

you quarter. and Neil think more And then this quarter, three customer year, called for had the one last FDM launch launches, and out team I this

for there that through is provide? as is we the year? this the any can additional customers customer So a move Or you for expectation line time next

Neil Boehm

I'm Yes. looking here.

it's looks -- of see It one. on the might like next year, think it an little like side later bit because additional I move part into it hesitation this there's year. beginning seems we'll of a well, my

there it and late like year we'll looks XXXX could have this additional then one one in well. early XXXX an now, an right be as additional or So

Operator

to Josh remarks. closing for O'Berski at back I'm it showing no I now turn like to further questions would time. this

Josh O'Berski

Thank questions have you, your Hope everyone, and weekend. for you a great time today.

Operator

you Thank your program. in participation for This the conclude does today's conference.

You disconnect. may now

Gentex (GNTX) 26 Jul 242024 Q2 Earnings call transcript