Gentex Corporation
11/06/2026 | Press release | Distributed by Public on 11/06/2026 13:02
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
RESULTS OF OPERATIONS:
THIRD QUARTER 2026 VERSUS THIRD QUARTER 2025
Net Sales. Net sales for the third quarter of 2026 decreased by $7.5 million or 1%, when compared with the third quarter of 2025. The decrease was primarily due to lower Automotive net sales, partially offset by higher Premium Audio and Other net sales.
Automotive net sales for the third quarter of 2026 were $552.5 million, a decrease compared with automotive net sales of $573.7 million in the third quarter of 2025. The decrease was primarily due to lower sales in China, the loss of the Volkswagen program in Europe, which reduced net sales by approximately $16.6 million, and 2% decrease in global light vehicle production in the Company's primary markets and a 15% decrease in total mirror unit shipments in the third quarter of 2026, compared to the third quarter of 2025. Excluding China and the VW program loss, automotive net sales increased approximately 2%.
The below table represents the Company's auto-dimming mirror unit shipments for the three months ended September 30, 2026, and 2025 (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | ||||||||||||||||||||||||||||||
| North American Interior Mirrors | 2,290 | 2,285 | -% | 6,911 | 6,755 | 2% | |||||||||||||||||||||||||||||
| North American Exterior Mirrors | 1,481 | 1,545 | (4)% | 4,509 | 4,440 | 2% | |||||||||||||||||||||||||||||
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Total North American Mirror Units
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3,770 | 3,830 | (2)% | 11,420 | 11,195 | 2% | |||||||||||||||||||||||||||||
| International Interior Mirrors | 3,811 | 4,896 | (22)% | 12,248 | 15,349 | (20)% | |||||||||||||||||||||||||||||
| International Exterior Mirrors | 2,031 | 2,520 | (19)% | 7,213 | 7,820 | (8)% | |||||||||||||||||||||||||||||
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Total International Mirror Units
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5,842 | 7,416 | (21)% | 19,462 | 23,169 | (16)% | |||||||||||||||||||||||||||||
| Total Interior Mirrors | 6,101 | 7,181 | (15)% | 19,159 | 22,104 | (13)% | |||||||||||||||||||||||||||||
| Total Exterior Mirrors | 3,512 | 4,065 | (14)% | 11,722 | 12,260 | (4)% | |||||||||||||||||||||||||||||
| Total Auto-Dimming Mirror Units | 9,612 | 11,246 | (15)% | 30,881 | 34,364 | (10)% | |||||||||||||||||||||||||||||
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Note: Percent change and amounts may not total due to rounding.
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Premium Audio Product net sales increased during the third quarter of 2026 to $54.7 million, compared to $43.0 million in the third quarter of 2025.The increase was driven primarily by higher sales of Home Separates and Systems products.
Other net sales were $40.5 million in the third quarter of 2026, compared to $38.6 million in the third quarter of 2025, an increase of 5%. Growth was driven primarily by higher aerospace and fire protection sales, partially offset by lower aftermarket and consumer electronic sales. Dimmable aircraft window sales increased during the third quarter of 2026 to $9.0 million, compared to $3.9 million in the same quarter of last year. Fire protection sales were $7.3 million in the third quarter of 2026, compared to $5.4 million in the same quarter of last year.
Cost of Goods Sold. For the third quarter of 2026, the Company's consolidated gross margin was 33.4%, compared to 34.4% in the same quarter last year. The year over year decrease in the gross margin was primarily driven by higher precious metal costs and the impact of lower-than-anticipated sales, which resulted in unfavorable product mix and reduced operating leverage during the quarter.
Operating Expenses. Operating expenses were $101.3 million in the third quarter of 2026, compared to $102.8 million in the third quarter of 2025. On a non-GAAP basis, adjusted operating expenses were $97.5 million in the third quarter of 2026, compared to $101.8 million in the third quarter of 2025, when excluding the impact of impairment charges, acquisition related costs, and severance costs in each of the quarters, for comparability.
Engineering, research and development expenses ("E, R & D") for the third quarter of 2026 decreased by $1.1 million, when compared with the third quarter of 2025, primarily due to lower engineering related professional fees.
Selling, general and administrative expenses ("S, G & A") decreased by $3.8 million for the third quarter of 2026, compared to the third quarter of 2025. S, G & A was approximately 7% of net sales in the third quarter of 2026, compared to 8% in the third quarter of 2025.
Other (Loss) Income, Net. Total Other loss, net for the third quarter of 2026 was $7.8 million, compared with total Other loss, net, of $1.8 million for the third quarter of 2025. The quarter over quarter increase in Other loss was driven by an impairment charge of $4.7 million related to one of the Company's technology investments and an increase in credit loss reserves related to loans receivable of $8.2 million, each of which occurred during the third quarter of 2026 partially offset by higher investment income and gains on asset sales.
Provision for Income Taxes. The effective tax rate was 15.5% for, and an income tax expense of $16.7 million was recorded in the third quarter of 2026, compared to an effective tax rate of 16.3% for, and an income tax expense of $19.7 million recorded in, the same quarter of 2025. Generally, effective tax rates for the Company differ from statutory federal income tax rates due to provisions for state and local income taxes, the FDDEI deduction, and research and development tax credits.
Net Income Attributable to Gentex Corporation. Net income attributable to Gentex Corporation for the third quarter of 2026 was $90.6 million, a decrease of 10% compared to net income attributable to Gentex Corporation of $101.0 million in the third quarter of 2025. Non-GAAP consolidated net income attributable to Gentex Corporation was $97.8 million in the third quarter of 2026, compared to $103.7 million in the third quarter of 2025, when adjusting for the impact of impairment charges, acquisition related costs, and severance costs in each of the quarters, for comparability.
Earnings Per Share Attributable to Gentex Corporation. The Company had earnings per diluted share attributable to Gentex Corporation for the third quarter of 2026 of $0.43, which compared to earnings per diluted share attributable to Gentex Corporation of $0.46 for the third quarter of 2025. On a non-GAAP basis, adjusted earnings per diluted share were $0.47 for both the third quarter of 2026 and the third quarter of 2025, excluding the impact of impairment charges, acquisition related costs, and severance costs in each of the quarters, for comparability.
NINE MONTHS ENDED SEPTEMBER 30, 2026 VERSUS NINE MONTHS ENDED SEPTEMBER 30, 2025
On April 1, 2025, the Company completed its acquisition of VOXX. As such, VOXX's results were only consolidated with the Company's results for the last six months ended September 30, 2025. During the nine months ended September 30, 2026, VOXX's results have been included for the entire nine month period.
Net Sales. Net sales for the nine months ended September 30, 2026, increased by $84.6 million or 4%, when compared with the same period in 2025, despite light vehicle production remaining flat in the Company's primary markets period over period. The increase was primarily driven by the inclusion of VOXX results for the full nine-month period in 2026, compared to only six months in the comparable 2025 period.
Automotive net sales declined $22.1 million or 1%, when comparing the nine months ended September 30, 2026 to the same period in 2025. Sales during the nine months ended September 30, 2026, were negatively impacted by lower sales into the China market, lower sales in Japan and Korea due to vehicle mix and certain customer-specific program changes, and the loss of the Volkswagen program in Europe, which reduced net sales by approximately $37.5 million. There was a 10% decrease in automotive mirror unit shipments in the nine months ended September 30, 2026, to 30.9 million units, compared with 34.4 million units in the same period in 2025, which was driven by a 13% period over period decrease in interior auto-dimming mirror unit shipments. VOXX automotive net sales contributed an additional $41.2 million as a result of being included in the consolidated Company results for the full year to date period.
Premium Audio Product net sales increased to $158.2 million for the nine months ended September 30, 2026, from $87.5 million for the nine months ended September 30, 2025. This increase was mainly due to the timing of the VOXX acquisition on April 1, 2025, because the prior-year period did not include Premium Audio Product net sales for the three months ended March 31, 2025. Premium Audio Products also generated positive operating income during the nine months ended September 30, 2026, reflecting the continued benefits of integration activities, operating improvements, and cost management initiatives implemented following the VOXX acquisition.
Other net sales were $122.7 million for the nine months ended September 30, 2026, compared to $86.7 million in the same period of 2025, an increase of 42% (due in part to the inclusion of VOXX sales for the entire nine month period, compared to only six months being included in the same prior year period). Other net sales for the nine months ended September 30, 2026, included biometric product sales of $8.5 million, primarily generated from the Company's BioConnect subsidiary acquired on July 1, 2025. Fire protection sales were $24.4 million in the nine months ended September 30, 2026, compared to $20.2 million in the same period of last year. Dimmable aircraft window sales increased during the nine months ended September 30, 2026 to $23.9 million, compared to $12.7 million in the same period of last year.
Cost of Goods Sold. As a percentage of net sales, cost of goods sold decreased to 65.3% for the nine months ended September 30, 2026, versus 66.0% in the same period last year. The improvement in the gross margin for the nine months ended September 30, 2026, compared to the same prior year period, was driven by decreases in labor and overhead as a percentage of net sales, reflecting operational efficiencies and increased leverage on higher sales. Material costs as a percentage of net sales increased compared to the same period last year, primarily due to higher commodity costs, including precious metals, and tariff-related costs. These increases were partially offset by approximately $18 million of refunds of tariffs imposed under the International Emergency Economic Powers Act ("IEEPA"), recorded as a reduction of cost of goods sold in the second quarter of 2026. As of September 30, 2026, the Company had received approximately $38 million of IEEPA tariff reimbursements. Since the inception of the IEEPA tariffs, the Company has directly paid approximately $42 million of such tariffs, excluding amounts incurred indirectly through suppliers, which was partially offset by approximately $5 million of recoveries from customers. The Company continues to evaluate and pursue tariff refund opportunities where appropriate; however, the availability, amount, and timing of any additional refunds remain uncertain and are subject to ongoing legal, regulatory, and administrative developments.
Operating Expenses. Total operating expenses were $305.9 million in the nine months ended September 30, 2026, an increase of 6% or $17.5 million, compared to $288.4 million for the same period in 2025. The increase was primarily attributable to the acquisition of VOXX, which contributed approximately $17.5 million of additional operating expenses as a result of being included in the Company's consolidated results for the full nine-month period in 2026, compared to only six months in the comparable 2025 period. The increase also included $5.8 million of impairment charges.
E, R & D for the nine months ended September 30, 2026 increased by $2.4 million, compared to the same period in 2025, primarily due to the acquisition of VOXX, which was completed on April 1, 2025. As a result, VOXX-related research and development expenses were included in the Company's consolidated results for the full nine-month period in 2026, compared to only six months in the comparable 2025 period. This inclusion was partially offset by lower engineering related professional fees.
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S, G & A for the nine months ended September 30, 2026 increased $17.6 million to $145.8 million, when compared to $128.1 million for the same period in 2025. S, G & A was approximately 7% of net sales in the nine months ended September 30, 2026, and approximately 7% of net sales in the same period in 2025. S, G & A increased on a period over period basis primarily due to the VOXX acquisition, as VOXX was included in the Company's operations for the entire nine month period ending September 30, 2026, compared to only six months of VOXX being included for the same prior year nine month period.
Total Other (Loss) Income, Net. Total other loss, net, for the nine months ended September 30, 2026, was $18.0 million, compared to a net loss of $4.2 million for the same period last year. During the nine months ended September 30, 2026, the total other loss, net, included impairments of $16.9 million related to three of the Company's technology investments, as well as credit loss reserves of $13.3 million related to loans receivable. In comparison, the nine months ended September 30, 2025, included an $8.4 million impairment in one of the Company's technology investments.
Provision for Income Taxes. The effective tax rate was 16.3% for the nine months ended September 30, 2026, compared to 16.7% for the same period of 2025. Generally, effective tax rates for the Company differ from statutory federal income tax rates, due to provisions for state and local income taxes, the FDDEI deduction, and research and development tax credits.
Net Income Attributable to Gentex Corporation. Net income attributable to Gentex Corporation for the nine months ended September 30, 2026 increased by $11.8 million or 4% to $303.7 million, compared to $291.9 million in the same period last year. The increase in net income for the nine months ended September 30, 2026, was primarily the result of higher income from operations partially offset by higher operating expenses and other loss compared to the same prior period.
Earnings Per Share Attributable to Gentex Corporation. The Company had earnings per diluted share attributable to Gentex Corporation for the nine months ended September 30, 2026 of $1.44, compared to earnings per diluted share of $1.31 for the nine months ended September 30, 2025.
NON-GAAP FINANCIAL MEASURES:
Financial information for the three and nine months ended September 30, 2026 is provided in accordance with GAAP. In addition, the Company believes that it is useful for the three and nine months ended September 30, 2026, to provide certain non-GAAP measures, including Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Expenses, Adjusted Income from Operations, Adjusted Other (Loss) Income, Adjusted Net Income Attributable to Gentex Corporation, and Adjusted Earnings per Share, with the adjustments set forth in the "Reconciliation of Non-GAAP Measures" tables below. This non-GAAP financial information allows investors to evaluate current performance in the Company's business in relation to historical performance by excluding the impact of certain inventory purchase price step-up adjustments, impairment charges, acquisition related costs, and severance costs, as applicable, set forth in the table below.
Beginning in the first quarter of 2026, the Company revised its non-GAAP presentation to include Adjusted Other (Loss) Income. As a result, prior period non-GAAP measures presented herein have been revised to conform to current presentation. Management believes the revised presentation enhances period over period comparability and provides investors with a more consistent review of Company performance. These revisions affect only the presentation of non-GAAP measures and do not affect the Company's previously reported GAAP results.
The Company believes that the presentation of these non-GAAP financial measures provides insight into the Company's core performance and trends with respect to the same. Management of the Company similarly uses such non-GAAP financial measures in assessing the business internally. A reconciliation of Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Expenses, Adjusted Income from Operations, Adjusted Other (Loss) Income, Adjusted Net Income Attributable to Gentex Corporation, and Adjusted Earnings per Share to the most directly comparable GAAP measures is provided in the "Reconciliation of non-GAAP Measures" tables below. Like all non-GAAP financial measures, these non-GAAP measures are intended to supplement, not to replace, GAAP measures. All non-GAAP financial measures are subject to inherent limitations because not all of the expenses required by GAAP are included.
| Reconciliation of Non-GAAP Measures | ||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Gross Profit - GAAP | 216,330,677 | 225,166,737 | 685,955,320 | 642,191,227 | ||||||||||||||||||||||
| Inventory purchase price step-up adjustments pursuant to ASC 805 | $ | - | - | - | 2,498,442 | |||||||||||||||||||||
| Adjusted Gross Profit - (Non-GAAP) | $ | 216,330,677 | $ | 225,166,737 | $ | 685,955,320 | $ | 644,689,669 | ||||||||||||||||||
| Gross Margin - GAAP | 33.4 | % | 34.4 | % | 34.7 | % | 34.0 | % | ||||||||||||||||||
| Adjusted Gross Margin - (Non-GAAP) | 33.4 | % | 34.4 | % | 34.7 | % | 34.1 | % | ||||||||||||||||||
| Operating Expenses - GAAP | $ | 101,271,476 | $ | 102,839,799 | $ | 305,897,805 | $ | 288,357,048 | ||||||||||||||||||
| Less: | ||||||||||||||||||||||||||
| Impairment Charge - Intangible Assets | 3,000,000 | - | 5,800,000 | - | ||||||||||||||||||||||
| Acquisition Related Costs | - | 568,040 | - | 3,797,302 | ||||||||||||||||||||||
| Severance Costs | 776,979 | 518,190 | 1,862,392 | 10,191,438 | ||||||||||||||||||||||
| Adjusted Operating Expenses - (Non-GAAP) | $ | 97,494,497 | $ | 101,753,569 | $ | 298,235,413 | $ | 274,368,308 | ||||||||||||||||||
| Income from Operations - GAAP | $ | 115,059,201 | $ | 122,326,938 | $ | 380,057,515 | $ | 353,834,179 | ||||||||||||||||||
| Less: | ||||||||||||||||||||||||||
| Inventory purchase price step-up adjustments pursuant to ASC 805 | - | - | - | 2,498,442 | ||||||||||||||||||||||
| Impairment Charge - Intangible Assets | 3,000,000 | - | 5,800,000 | - | ||||||||||||||||||||||
| Acquisition Related Costs | - | 568,040 | - | 3,797,302 | ||||||||||||||||||||||
| Severance Costs | 776,979 | 518,190 | 1,862,392 | 10,191,438 | ||||||||||||||||||||||
| Adjusted Income from Operations - (Non-GAAP) | $ | 118,836,180 | $ | 123,413,168 | $ | 387,719,907 | $ | 370,321,361 | ||||||||||||||||||
| Other (Loss) - GAAP | $ | (7,842,477) | $ | (1,756,230) | $ | (17,964,539) | $ | (4,165,750) | ||||||||||||||||||
| Less: | ||||||||||||||||||||||||||
| Impairment Charge - Technology Investment | (4,744,703) | (2,194,148) | (16,907,942) | (8,376,148) | ||||||||||||||||||||||
| Adjusted Other (Loss) Income - (Non-GAAP) | $ | (3,097,774) | $ | 437,918 | $ | (1,056,597) | $ | 4,210,398 | ||||||||||||||||||
Adjusted Net Income and Adjusted Earnings per Share: Adjusted Net Income Attributable to Gentex Corporation and Adjusted Earnings per Share are also presented as supplemental measures of the Company's performance for the same reasons set forth above. Adjusted Net Income is defined as Net Income adjusted for inventory purchase price step-up adjustment, impairment charges, acquisition related costs and severance costs during the third quarter of 2026
and 2025, as applicable. Adjusted Earnings per Share is defined as Adjusted Net Income divided by weighted average diluted shares outstanding.
| Reconciliation of Non-GAAP Measures (continued) | ||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Net Income Attributable to Gentex Corporation - GAAP | $ | 90,564,884 | $ | 100,967,910 | $ | 303,709,445 | $ | 291,881,539 | ||||||||||||||||||
| Inventory purchase price step-up adjustments pursuant to ASC 805, net of tax | - | - | - | 2,081,202 | ||||||||||||||||||||||
| Impairment Charges - Intangible Assets, net of tax | 2,534,070 | - | 4,856,168 | - | ||||||||||||||||||||||
| Acquisition Related Costs, net of tax | - | 475,304 | 3,163,153 | |||||||||||||||||||||||
| Severance Costs, net of tax | 656,306 | 433,592 | 1,559,326 | 8,489,468 | ||||||||||||||||||||||
| Impairment Charges - Technology Investment, net of tax | 4,007,803 | 1,835,938 | 14,156,519 | 6,980,623 | ||||||||||||||||||||||
| Adjusted Net Income Attributable to Gentex Corporation - (Non-GAAP) | $ | 97,763,063 | $ | 103,712,744 | $ | 324,281,458 | $ | 312,595,985 | ||||||||||||||||||
| Adjusted Earnings Per Share: | ||||||||||||||||||||||||||
| Basic | $ | 0.47 | $ | 0.47 | $ | 1.54 | $ | 1.40 | ||||||||||||||||||
| Diluted | $ | 0.47 | $ | 0.47 | $ | 1.54 | $ | 1.40 | ||||||||||||||||||
FINANCIAL CONDITION:
The Company's cash and cash equivalents as of September 30, 2026, were $136.4 million, a decrease of $9.2 million, compared to $145.6 million as of December 31, 2025. The decrease was primarily due to cash outflows related to share repurchases, dividend payments, capital expenditures, and investment purchases, partially offset by cash generated from operations during the nine months ended September 30, 2026.
Short-term investments as of September 30, 2026, were $9.2 million, an increase from $5.4 million as of December 31, 2025, and long-term investments were $233.6 million as of September 30, 2026, down from $273.0 million as of December 31, 2025.
Accounts receivable as of September 30, 2026, increased approximately $36.1 million compared to December 31, 2025, primarily due to the timing of customer payments during the nine months ended September 30, 2026.
Inventories as of September 30, 2026 were $550.1 million, compared to $516.3 million as of December 31, 2025, primarily due to an increase in raw material and work-in-process inventory at September 30, 2026.
Accounts payable as of September 30, 2026, increased approximately $14.6 million to $263.6 million, compared to December 31, 2025, primarily driven by timing of payments within the period.
Accrued liabilities as of September 30, 2026, increased approximately $6.1 million compared to December 31, 2025, primarily due to increases in income taxes payable and salaries and wages.
Cash flow from operating activities for the nine months ended September 30, 2026, decreased $55.8 million to $405.8 million, compared with $461.6 million during the same period last year, primarily due to changes in working capital.
Capital expenditures for the nine months ended September 30, 2026, were approximately $56.2 million, compared with approximately $103.4 million for the same period last year. The decrease was in part due to the timing of completion and commencement of projects.
The Company believes its existing and planned facilities are suitable, adequate, and have sufficient capacity to support current operations and anticipated near-term business needs. The Company continues to evaluate its longer-term facility requirements as part of its ongoing strategic planning process.
Based on current product mix, the Company estimates it has annual manufacturing capacity of approximately 42 million to 45 million interior automatic-dimming mirror units and 19 million to 22 million exterior mirror units. The Company continually evaluates equipment capacity and invests in additional equipment as needed to support customer demand and future growth.
Management also believes that current working capital, long-term investments, internally generated cash flow, available borrowing capacity under its Credit Agreement, and overall creditworthiness will be sufficient to fund anticipated operating, investing, and financing needs for the foreseeable future, including existing contractual obligations and commitments.
The following is a summary of working capital and long-term investments:
| September 30, 2026 | December 31, 2025 | ||||||||||
| Working Capital | $ | 776,459,155 | $ | 740,891,499 | |||||||
| Fixed Income Long-Term Investments | 103,412,883 | 108,145,410 | |||||||||
| Total | $ | 879,872,038 | $ | 849,036,909 | |||||||
The Company has a previously announced share repurchase plan under which the Board of Directors has authorized the repurchase of shares of the Company's common stock, which remains a part of the broader publicly disclosed capital allocation strategy. Future share repurchases may vary from time to time and will take into account macroeconomic events, market trends, and other factors the Company deems appropriate (including, but not limited to, the market price of the stock, anti-dilutive effect of repurchases, and available cash). During the three and nine months ended September 30, 2026, the Company repurchased 5,654,089 and 11,603,525 shares, respectively. The Company has 24,258,783 shares remaining under the plan as of September 30, 2026, as is further detailed in Part II, Item 2 of this Form 10-Q.
BUSINESS UPDATE
During the third quarter of 2026, the Company continued to execute on strategic growth initiatives across its Automotive Products and Premium Audio segments. More than 80% of the Company's automotive product launches during the
quarter included advanced-feature content, led by HomeLink®, Full Display Mirror® ("FDM"), Driver Monitoring Systems ("DMS"), In-Cabin Monitoring Systems ("ICMS"), and advanced-feature exterior automatic-dimming mirrors.
FDM adoption continued to expand globally through new vehicle platform launches. The Company launched FDM on the DS 7 in Europe and continued expanding the product through additional vehicle and accessory applications, including the previously announced accessory platform for the Ford Super Duty. For full-year 2026, the Company remains on track to achieve an increase of approximately 200,000 to 400,000 FDM units, compared with 2025.
The Company also expanded its DMS and ICMS technologies through the launch of the Genesis GV90 and additional vehicle platforms at Hyundai/Kia and BMW. These programs are expected to continue growing through 2026 and into 2027, supporting the Company's previously communicated target of approximately $80 million to $100 million of DMS and ICMS revenue in 2027.
Within the Premium Audio segment, third-quarter net sales increased approximately 27% year over year to $54.7 million, driven primarily by higher sales of Home Separates and Systems products. Growth included increased sales of Reference Premiere speakers, Flexus products, second-generation models within the Klipsch lineup, and ProMedia products. The segment also continues preparing for the launch of the Klipsch Stratos Series flagship headphone system, Reference Premiere III passive home-theater loudspeakers, second-generation Music Series Bluetooth speakers, and Onkyo Creator Series powered tabletop speaker systems.
The Company continues advancing plans for a manufacturing facility in Morocco to support increasing customer demand for regional production capabilities in Europe. The Company has entered into a lease agreement and continues development activities toward a targeted start of production during the fourth quarter of 2027.
The Company remains focused on innovation, operational efficiency, quality, gross margin expansion, operating expense management, and disciplined capital allocation. Development of the Company's dimmable visor remains on track for an initial start of production in the fourth quarter of 2027, while work continues with additional OEMs on product design and validation for potential future awards. The Company also continues improving the performance and durability of its large-area dimmable device technology as it progresses toward production-ready products.
The Company continues to pursue opportunities to leverage its electronics manufacturing capabilities through contract manufacturing arrangements. During the third quarter of 2026, the Company secured its first printed circuit board assembly ("PCBA") business award, with production currently expected to begin in 2029. The award represents an opportunity to utilize the Company's existing electronics manufacturing expertise and capabilities to expand into additional products and markets. The Company is also actively pursuing additional PCBA manufacturing opportunities with anticipated production timelines beginning in or around the same period. The Company expects to continue investing in business development, engineering, manufacturing planning, and other activities necessary to support potential future contract manufacturing programs. The timing and magnitude of revenue associated with these opportunities will depend on customer program timing, production volumes, future awards, and the level of investment required to support such programs.
The Company is also actively managing emerging supply-chain challenges. Strong demand for memory and other electronic components is creating supply constraints and cost pressure across the electronics industry, while precious-metal pricing remains volatile following significant increases over the last year. The Company is working with customers on appropriate reimbursement and pursuing design changes, engineering solutions, and other cost-reduction opportunities to mitigate these pressures, though there is no certainty regarding reimbursements or cost-reduction achievement.
PRODUCT UPDATE
Mirror Systems
The Company is a leading global supplier of automatic-dimming rearview mirrors and related electronic features for the automotive industry. Gentex's auto-dimming technology automatically detects and reduces glare from trailing vehicle headlamps, improving driver visibility and comfort. In 2024, the United Nations Economic Commission for Europe ("UN ECE") established the Task Force on Glare Prevention ("TF-GP") to evaluate glare from vehicle lighting and potential measures intended to improve road safety. The Company continues to monitor the task force's activities and believes its auto-dimming mirror technologies may be well-positioned to support future glare-mitigation objectives that may result from evolving industry standards or regulatory requirements.
Camera Systems
Gentex's Full Display Mirror® ("FDM") remains an important contributor to the Company's automotive revenue and one of its most successful advanced vision products. FDM combines a traditional auto-dimming mirror with an integrated digital display and rear-facing camera, providing drivers with a wide, unobstructed rearward view while retaining the ability to operate as a conventional mirror.
Since its initial production launch in 2015, FDM has evolved to incorporate increasingly advanced imaging, display, and software capabilities. The Company's next-generation FDM platform incorporates a higher-resolution camera and display and enables features such as Reverse Assist, Blind Spot Assist, and picture-in-picture functionality. The platform is designed to improve driver awareness while creating opportunities for additional software-enabled features and integration with other Company technologies. The Company's current CES material specifically describes an 8MP rear camera, HD display, expanded field of view, Dynamic View Adjustment, Reverse Assist, Blind Spot Assist, Bed Cam, HomeLink integration, DVR and trailer-camera capability.
The Company has also developed camera monitoring systems ("CMS") that integrate video from multiple vehicle-mounted cameras to provide enhanced rearward and sideward visibility. These systems can incorporate cameras housed within exterior mirrors and can combine traditional mirror functionality with digital camera views, providing automakers flexibility as vehicle architectures and regulatory requirements continue to evolve.
Gentex's Driver Monitoring Systems ("DMS") and In-Cabin Monitoring Systems ("ICMS") represent another important expansion of the Company's camera and sensing capabilities. These technologies use cameras, illumination, sensing, processing, and software to monitor driver attention and in-cabin activity in support of vehicle safety features and increasingly advanced driver-assistance systems. In 2026, the Company expanded shipments of DMS and ICMS products across multiple customer programs.
The Company believes its expertise in cameras, optics, displays, sensing, software, and electronics provides a strong technology base from which to support the continued evolution of vehicle vision and monitoring systems.
Connected Car
HomeLink® is the Company's vehicle-to-home automation platform and one of its most established automotive electronic products. Integrated into the vehicle, HomeLink enables drivers to operate compatible garage doors, security gates, lighting, and other connected devices through vehicle-based controls.
HomeLink Connect® expands this functionality through Bluetooth and cloud-based connectivity, enabling vehicle occupants to interact with compatible smart-home devices and services. This architecture provides automakers with a flexible platform for integrating connected-home functionality while allowing the Company to continue expanding the capabilities and services available through the vehicle.
The Company's Integrated Toll Module® ("ITM") provides vehicle-integrated electronic tolling functionality without requiring a conventional windshield-mounted transponder. Developed in partnership with TransCore, ITM provides an additional example of the Company's ability to integrate connectivity and transaction-based functionality directly into the vehicle.
The Company is also developing biometric authentication capabilities that can complement its connected-vehicle technologies. These technologies have potential applications involving vehicle access and authorization, personalization, payments, and other secure transactions.
As vehicles become increasingly connected and software-defined, the Company intends to leverage its installed automotive platforms and expertise in electronics, connectivity, sensing, and identity technologies to develop additional features and services within and beyond the vehicle.
Dimmable Products
The Company's dimmable technologies support a growing range of aerospace and automotive applications. The Company's variable dimmable window technology is currently featured on the Boeing 787 Dreamliner family and has also been selected for the Boeing 777X and Airbus A350 programs. These programs demonstrate the Company's ability to leverage its expertise in electro-optical technologies across multiple transportation markets.
The Company continues to expand its portfolio of dimmable technologies beyond aerospace and traditional automotive mirror applications. During 2026, the Company was awarded its first production program for its Dimmable Sun Visor technology, with start of production currently expected in 2027. The product leverages the Company's electrochromic technology to reduce glare while maintaining driver visibility and represents a new application of the Company's core dimmable technology.
The Company is also advancing film-based electrochromic technologies designed to expand the range of surfaces, form factors, and applications that can incorporate electronically controlled dimming. These technologies provide additional design and integration flexibility and complement the Company's existing electrochromic capabilities.
The Company continues to develop Large Area Device ("LAD") technologies for automotive glazing applications, including panoramic roofs and other large-area dimmable surfaces, while also pursuing opportunities to integrate
dimmable technology into a broader range of vehicle surfaces and form factors. Current development efforts remain focused on product performance, durability, manufacturability, and scalability as the Company works toward future commercialization opportunities.
eSight
In November 2023, the Company acquired certain technology assets from eSight, expanding the Company's capabilities in advanced vision systems. The eSight technology combines cameras, displays, optics, and image processing to enhance visual information for users with visual impairments. The Company continues to develop the eSight technology and evaluate opportunities to leverage its capabilities across a broader range of vision-related applications.
Dynamic Task Lighting
The Company also continues to develop adaptive lighting technology originally co-developed with Mayo Clinic. The technology combines ambient lighting with camera-controlled, adaptive task lighting, and the Company continues to evaluate potential applications for the technology.
Biometric Products
The Company continues to expand its biometric authentication capabilities and access control platforms through strategic acquisitions and investments that leverage its expertise in optics, imaging, sensing, and software technologies.
In 2024, the Company acquired GalvanEyes, LLC, the managing partner and 50% owner of the BioCenturion joint venture. BioCenturion develops biometric authentication solutions designed to secure physical and digital environments through advanced identity verification technologies.
The Company's acquisition of VOXX International in April 2025, included a majority ownership interest in EyeLock®, a provider of iris biometric authentication technology. Following the subsequent acquisition of the remaining EyeLock® interest in August 2025, the Company obtained full ownership of EyeLock® and BioCenturion.
In July 2025, the Company further expanded its access control platforms through the acquisition of BioConnect, a provider of multi-modal biometric authentication and identity management solutions. BioConnect provides secure access-control and identity verification solutions for physical and digital environments, with applications that include data centers and other facilities where controlling and authenticating access is critical. The acquisition expands the Company's software and identity-management capabilities and complements its existing biometric technologies.
Together, these businesses provide the Company with a broader biometric technology platform spanning iris recognition, identity authentication, access control, and identity management. The Company believes these capabilities create opportunities to develop integrated authentication solutions for data centers, automotive, enterprise, and other markets where secure identity verification and access control are increasingly important.
Fire Protection
During 2025, the Company began shipments of its PLACE® product line. PLACE® is a suite of advanced smoke and carbon monoxide alarms designed to enhance residential safety through room-specific functionality and connected features. During 2026, the Company continued to expand adoption and distribution of PLACE® across multiple channels and applications. The Company believes the PLACE® product portfolio provides an opportunity to expand its presence in residential and commercial life-safety markets, while leveraging its long-standing expertise in fire protection, sensing, and notification technologies.
Premium Audio Products
As a result of the VOXX acquisition completed on April 1, 2025, the Company expanded its portfolio of consumer technology, premium audio, and connected home products. The acquired product lines complement the Company's existing businesses and provide opportunities to further expand its presence in adjacent consumer and residential technology markets.
Following the acquisition of VOXX International Corporation on April 1, 2025, the Company continues to integrate and expand its premium audio, consumer technology, and connected home product offerings. During the first quarter of 2026, the Company's premium audio brands, including Klipsch®, Onkyo®, and Integra®, launched several new products that were featured at CES 2026, including The Fives®, The Sevens®, and The Nines® powered speaker systems. During the second quarter of 2026, the Company's premium audio brands introduced new products across multiple categories. Klipsch launched products including limited-edition offerings such as the kO-R2 and Odyssey edition Detroit Bluetooth speaker, as well as the Rebellion bookshelf loudspeaker within its Heritage Series portfolio. Onkyo introduced the Muse high-power amplifier and limited-edition 80th Anniversary Creator Series powered monitors. The Company believes these product introductions reflect its continuing focus on innovation, product development, and
brand expansion across its premium audio portfolio as it works to realize the strategic and financial benefits of the VOXX acquisition.
OTHER
Automotive revenues represented approximately 86% of the Company's total revenue during the nine months ended September 30, 2026, consisting of interior and exterior electrochromic automatic-dimming rearview mirrors and other automotive electronics. The Company's automotive business is affected by changes in global and regional light vehicle production, customer demand and sourcing decisions, vehicle program timing, product and technology mix, and competitive dynamics. During 2026, these factors included the impact of a previously disclosed Volkswagen program loss in Europe and continuing challenges in China, where tariffs and other trade-related actions, changing vehicle production and sourcing patterns, and increased competitive pressures have negatively impacted, and continue to negatively impact, the Company's automotive business.
The Company's non-automotive businesses are also affected by general economic and market conditions, customer and consumer demand, changes in consumer preferences and discretionary spending, competitive pressures, product introduction and replacement cycles, distribution channel dynamics, and other factors that affect demand for the Company's products. These factors are particularly relevant to the Company's Premium Audio and other consumer-facing businesses.
Across its businesses, the Company continues to experience cost and supply pressures related to certain electronic components and raw materials, tariffs and trade-related actions, labor, logistics, and other input costs. The Company is currently experiencing increased costs and supply constraints for certain memory products and other electronic components, which are expected to continue into 2027. These conditions have resulted in, and will continue to result in, higher product costs, increased inventory requirements, and other supply chain impacts.
The Company works continuously to mitigate these inflationary and cost pressures through engineering and purchasing cost reductions, product redesign and value engineering, productivity improvements, supply chain initiatives, and negotiations with customers and suppliers. The Company's ability to mitigate cost increases varies by business, product, customer, and market, and the timing and extent of any pricing actions, cost recoveries, or other mitigation efforts may differ from the timing and magnitude of the underlying cost increases. There can be no assurance that the Company will be successful in fully offsetting these pressures.
Because the Company sells products across multiple geographic regions and end markets, its results are affected by changes in global economic conditions, inflation, interest rates, foreign currency exchange rates, tariffs and trade policies, geopolitical conditions, regulatory changes, and disruptions affecting customers, suppliers, transportation networks, or other elements of the Company's supply chain. These factors affect demand, product availability, costs, pricing, and the Company's results of operations and financial condition.
OUTLOOK
The Company's light vehicle production forecasts for the fourth quarter of 2026 and full years 2026 and 2027, are based on the mid-Oct 2026 Mobility Global outlook for North America, Europe, Japan/Korea, and China (see table below). Based on this outlook, global light vehicle production is expected to decline approximately 4% in the fourth quarter of 2026, and approximately 2% for full-year 2026, compared with the respective prior-year periods.
While global light vehicle production is expected to increase approximately 1% in 2027, the Company anticipates continued weakness in its primary automotive markets of North America, Europe, and Japan/Korea. Any forecasted growth in global vehicle production is expected to be driven primarily by emerging markets, including China and other developing regions.
Forecasted vehicle production volumes for the fourth quarter of 2026 and calendar years 2026 and 2027 are presented in the table below.
| Light Vehicle Production (per S&P Global Mobility mid-Oct light vehicle production forecast) | ||||||||||||||||||||||||||||||||
| (in Millions) | ||||||||||||||||||||||||||||||||
| Region | Q4 2026 | Q4 2025 | % Change | Calendar Year 2027 | Calendar Year 2026 | Calendar Year 2025 |
2027 vs 2026 % Change |
2026 vs 2025 % Change |
||||||||||||||||||||||||
| North America | 3.50 | 3.58 | (2) | % | 15.10 | 14.99 | 15.27 | 1 | % | (2) | % | |||||||||||||||||||||
| Europe | 4.28 | 4.34 | (1) | % | 16.90 | 17.16 | 17.05 | (2) | % | 1 | % | |||||||||||||||||||||
| Japan and Korea | 3.18 | 3.10 | 3 | % | 11.87 | 12.26 | 12.07 | (3) | % | 2 | % | |||||||||||||||||||||
| China | 8.98 | 9.79 | (8) | % | 31.52 | 31.01 | 33.10 | 2 | % | (6) | % | |||||||||||||||||||||
| Total Light Vehicle Production | 19.94 | 20.81 | (4) | % | 75.39 | 75.42 | 77.49 | - | % | (3) | % | |||||||||||||||||||||
Based on actual results for the first nine months of 2026, the updated Mobility Global light vehicle production forecast, and the Company's current expectations for its Automotive, Premium Audio, and Other product categories, the Company is updating certain elements of its full-year 2026 guidance, as outlined below. The updated guidance reflects the anticipated impact of all known tariffs in effect as of October 23, 2026.
2026 Annual Guidance (as of October 23, 2026)
•Consolidated Revenue: Approximately $2.65 billion (previously $2.65 - $2.75 billion)
•Gross Margin: 34.0% - 34.5% (previously 34.5% - 35.5%). The updated guidance includes an estimated $10 million to $15 million of incremental cost increases that are expected in the fourth quarter of 2026, with related recoveries not anticipated to be reimbursed until the first half of 2027.
•Operating Expenses (excluding severance and impairments): $395 - $410 million (previously $405 - $415 million)
•Tax Rate: 16% - 16.5% (previously 16% - 17%)
•Capital Expenditures: $100 - $115 million (previously $115 - $125 million)
•Depreciation & Amortization: $100 - $105 million (previously $100 - $110 million)
Based on the mid-Oct 2026 Mobility Global light-vehicle production forecast and the Company's current expectations for Automotive, Premium Audio, and Other Products revenue, the Company is maintaining its calendar-year 2027 revenue outlook of $2.80 billion to $2.90 billion. This outlook assumes light vehicle production in the Company's primary markets declines approximately 1% in 2027.
Ongoing uncertainties remain, including: prolonged and intensifying trade wars, including the impacts of tariffs already in place, and potential additional future tariffs, trade restrictions, and retaliatory measures; the conflict involving Iran; the Ukraine-Russia war; the Israel-Hamas war; light vehicle production levels; impacts of regulation changes; automotive plant shutdowns; vehicle sales rates, especially in Europe, Asia and North America; OEM strategies and cost pressures; inflationary pressures; supply chain constraints: customer inventory management and the impact of potential automotive customer (including their Tier 1 suppliers) and supplier bankruptcies; etc., all of which are disrupting and will further disrupt shipments to customers, disrupt global capital flows, and heighten market volatility.
In accordance with the previously announced share repurchase plan, the Company will consider the appropriateness of continuing to repurchase additional shares of common stock in the future in support of the capital allocation strategy, but share repurchases will vary from time to time and will take into account macroeconomic events, market trends, and
other factors the Company deems appropriate (including the market price of the stock, anti-dilutive effect of repurchases, and available cash). As of September 30, 2026, the Company had 24.3 million shares remaining available for repurchase under the previously announced share repurchase plan.
CRITICAL ACCOUNTING POLICIES:
The preparation of the Company's consolidated condensed financial statements contained in this report, which have been prepared in accordance with accounting principles generally accepted in the United States, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates these estimates. Estimates are based on historical experience and/or on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that may not be readily apparent from other sources. Historically, actual results have not been materially different from the Company's estimates. However, actual results may differ from these estimates under different assumptions or conditions.
The Company has identified critical accounting policies used in determining estimates and assumptions in the amounts reported in its Management's Discussion and Analysis of Financial Condition and Results of Operations herein and in its Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
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