GNTX 10-K & 10-Q changes, risk factors and insider trading

Safe Harbor for Forward-Looking Statements. This Annual Report on Form 10-K contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements contained in this communication that are not purely historical are forward-looking statements. Forward-looking statements give the Company’s current expectations or forecasts of future events. These forward-looking statements generally can be identified by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,” “hope,” “intend,” "likely", “may,” “opinion,” “optimistic,” “plan,” “poised,” “predict,” “project,” “should,” “strategy,” “target,” “will,” "work to," and variations of such words and similar expressions. Such statements are subject to risks and uncertainties that are often difficult to predict and beyond the Company’s control, and could cause the Company’s results to differ materially from those described. These risks and uncertainties include, without limitation: changes in general industry or regional market conditions, including the impact of inflation; changes in consumer and customer preferences for our products (such as cameras replacing mirrors and/or autonomous driving); our ability to be awarded new business; continued uncertainty in pricing negotiations with customers and suppliers; loss of business from increased competition; changes in strategic relationships; customer bankruptcies or divestiture of customer brands; fluctuation in vehicle production schedules (including the impact of customer employee strikes); changes in product mix; raw material and other supply shortages; labor shortages, supply chain constraints and disruptions; our dependence on information systems; higher raw material, fuel, energy and other costs; unfavorable fluctuations in currencies or interest rates in the regions in which we operate; costs or difficulties related to the integration and/or ability to maximize the value of any new or acquired technologies and businesses; changes in regulatory conditions; increased competition, seasonal consumer shopping patterns, and changes in the retail industry for products such as consumer electronics, warranty and recall claims and other litigation and customer reactions thereto; possible adverse results of pending or future litigation or infringement claims; changes in tax laws; import and export duty and tariff rates in or with the countries with which we conduct business, including those recently adopted and potential new tariffsbusiness; negative impact of any governmental investigations and associated litigation, including securities litigation relating to the conduct of our business; and force majeure events. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made.

The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law or the rules of the NASDAQ Global Select Market. Accordingly, any forward-looking statement should be read in conjunction with the additional information about risks and uncertainties identified under the heading “Risk Factors” in the Company’s latest Form 10-K and Form 10-Q filed with the SEC, which risks and uncertainties include tariffs and supply chain constraints that have affected, are affecting, and will continue to affect, general economic and industry conditions, customers, suppliers, and the regulatory environment in which the Company operates. Forward-looking information includesIncludes content supplied by S&P Global Mobility Light Vehicle Production Forecast of January 16,14, 20252026 (http://www.gentex.com/forecast-disclaimer).

Key Customers. We have a number of large customers, including three automotive customers which each account for 10% or more of our annual consolidated net sales in 20242025 (including direct sales to OEM customers and sales through their Tier 1 suppliers): Toyota Motor Company, Volkswagen Group, and General Motors. The loss of all or a substantial portion of the sales to, or decreases in production by, any of these customers (or certain other significant customers) would have a material adverse effect on our business, financial condition, and/or results of operations.

Pricing Pressures. We continue to experience ongoing pricing pressures from our automotive customers and competitors, which have affected, and which will continue to affect our profit margins to the extent that we are unable to offset thethese pricing pressures with price adjustments, engineering and purchasing cost reductions, productivity improvements, increases in unitproduct shipments of mirrors and electronics with advanced features,shipments, and/or introduction of new orproducts and new and advanced technologies, each of which pose ongoing challenges, which continue to adversely impact our business, financial condition, and/or results of operations.

Business Combinations. AcquisitionsWe ofcontinue pursuing selected acquisitions of, and investments in, businesses, technologies, and other assets are playingas a rolecomponent inof our futuregrowth growth.strategy. We cannot be certain that we will be able to identify attractive acquisition targets, have resources available forfor, or obtain financing forfor, acquisitions on satisfactory terms, successfully acquire identified targets, or manage timing of acquisitions with our businesses. Additionally, we aremay not always be successful in integrating acquired businesses into our existing operations, achieving projected synergies, and/or maximizing the value of acquired technologies and businesses. Competition for acquisition opportunities in the various industries in which we operate already exists and may increase, thereby increasing our costs of making acquisitions or causing us to refrain from making further acquisitions. We are also subject to applicable antitrust laws and must avoid anticompetitive behavior. These and other acquisition-related factors negatively and adversely impact our business, financial condition, and/or results of operations.

Tariffs. The geopolitical environment between the Unites States and other jurisdictions, most significantly China, continues to cause uncertainty, especially in light of recently imposed tariffs, tariffs threatened to be imposed, and those already existing. For example, the United States has imposed, proposed, and/or threatened tariffs on a broad range of foreign-sourced products and materials including tariffs on products imported from China, Mexico, and Canada. In response, certain trading partners of the United States, including China, have imposed, proposed, and/or threatened retaliatory tariffs and other measures on goods manufactured in the United States. Previously enacted tariffs have increased the Company's input costs and challengechallenged the Company's competitive position in foreign markets.markets, especially in China. The continuance of these tariffs and/or escalation of disputes in the geopolitical environment interferes with automotive supply chains and have had and will continue to have a continued negative impact on the Company’s business, financial condition, and/or results of operations, especially since the Company primarily manufactures and ships from onethe location.United States. We cannot predict what further action may be taken with respect to tariffs or trade relations between the U.S. and other governments, and any further changes in U.S. or international trade policy could have a further adverse impact on our business.business, financial condition, and results of operations.

Technology Investments. We have invested in certain companies and projects that we do not have full control over operations, management, or decision-making, which are accounted for under the measurement alternative method of accounting or equity method of accounting. For investments accounted for under the equity method of accounting, we rely on the investment partner for the reporting of the financial results of the investment, and to the extent that the financial reporting of the investments is incorrect, our financial results reported using that information may be incorrect. These investments are subject to risks related to the businesses in which we invest, which may be different than the risks inherent in our own business. TheseSome of these investments have, and could in the future become impaired or have realized or unrealized losses in future periods, which couldhas had and will continue to have an adverse effect on our financial condition and results of operations.

Competition. We recognize that Magna Mirrors, our main competitor, has considerably more resources available to it, and presents a formidable competitive threat. Additionally, other companies have demonstrated products that are competitive to our FDM® system and other products.products, especially in the China market. We acknowledge that dimming device (e.g., electrochromic) technology is the subject of research and development efforts by numerous third parties.

In July 2016, a revision to UN-ECE Regulation 46 was published with an effective date of June 18, 2016, which allows for camera monitor systems to replace mirrors within Japan and European countries. Since January 2017, camera monitoring systems are also permitted as an alternative to replace mirrors in the Korean market. In 2023, China released and made effective an updated version of its GB15084, which allows for camera monitoring systems, frameless mirrors and aspheric (free-form) glass surfaces. Notwithstanding the foregoing, the Company continues to believe rearview mirrors provide a robust, simple and cost effective means to view the surrounding areas of a vehicle and remain the primary safety function for rear vision today. Cameras, when used as the primary rear vision delivery mechanism, have some inherent limitations such as: electrical failure; cameras being blocked or obstructed; depth perception challenges; and viewing angle of the camera. Nonetheless, the Company continues designing and manufacturing not only rearview mirrors, but CMOS imagers and video displays as well. The Company believes that combining video displays with mirrors provides a more robust product by addressing all driving conditions in a single solution that can be controlled by the driver. The Company has been in production with the Company's FDM® since 2015 and has, in the ordinary course of business, been awarded programs with sixteen (16) OEM customers. The Company is currently shipping production FDM® to all sixteen of these customers. The Company's CMS solution uses three cameras to provide a comprehensive view of the sides and rear of the vehicle while still providing the traditional safety of interior and exterior mirrors, that still function when cameras are obstructed, or not functioning. The Company has previously announced that the Company continues to develop in the areas of imager performance, camera dynamic range, lens design, image processing from the camera to the display, and camera lens cleaning. The Company acknowledges that as such technology evolves over time, such as cameras replacing mirrors and/or autonomous driving, there will be increased competition.

Supply Chain Disruptions. As a result of just-in-time supply chains within our business and the automotive industry, disruptions in our supply chain have occurred, are occurring, and may continue to occur due to the industry-wide parts shortages, labor shortages, and other global supply chain constraints. We have and continue to take a number of steps to mitigate the current supply chain challenges, which include strategies involving the additional procurement of available raw materials to prepare for assembling finished goods more quickly when supply constraints ease for certain common components. These inventory strategies further introduce obsolescence risk that impacts our business, financial conditions,condition, and/or results of operations. AsMoreover, as our customers' forecasted demand changes, our inventory becomesmay become obsolete and write-offs or write-downs of our inventory aremay be exacerbated. Disruptions can also occur due to natural disasters, pandemics, work stoppages, strikes, bankruptcy, etc. Such circumstances have disrupted, are disrupting, and will continue to disrupt our shipments to automakers and Tier 1 customers, which adversely affects our business, financial condition, and/or results of operations.

Product Mix. We sell products that have varying profit margins. Our financial performance has been impacted by the mix of products we sellsell, and to which customers, during a given period. The automotiveindustries industrywe isoperate in are subject to rapid technological change, vigorous competition, short product life cycles and cyclical, ever-changing consumer demand patterns. When our customers are adversely affected by these factors, we are similarly affected to the extent that our customers reduce the volume of orders for our products or certain of our products. As a result of such changes and circumstances impacting our customers, our sales mix shifts, which has either favorable or unfavorable impact on revenue and would include shifts in regional growth,growth and in OEM sales demand, as well as in consumer demanddemand. relatedFor toexample, vehiclewithin segmentthe purchases,automotive andindustry, contentwhere penetration. Aa decrease in consumer demand for specific types of vehicles where we have traditionally provided higher value content has occurred, that would have a significant effect on our business, financial condition, and/or results of operations. Our forward guidance and estimates assume a certain geographic sales mix as well as a product sales mix. When actual results vary from this projected geographic and product mix of sales, our business, financial condition, and/or results of operations are impacted.

Intellectual Property. We believe that our patents and trade secrets provide us with asome competitive advantage in automotive rearview mirrors, variable dimmable devices, certain electronics, and fire protection technologies, althoughand biometric technologies, though no single patent is necessarily required for the success of our products. The loss of any significant combination of patents and trade secrets regarding our products could adversely affect our business, financial condition, and/or results of operations. Lack of intellectual propertyIP protection in a number of countries, including China, represents a current and ongoing risk for the Company.

Intellectual Property Litigation and Infringement Claims. The products we sell are continually changing as a result of improved technology. Although we and our suppliers attempt to avoid infringing known proprietary rights of third parties in our products, we may be subject to legal proceedings and claims for alleged infringement of a third party’s patents, trade secrets, trademarks, or copyrights. A successful claim of patent or other intellectual propertyIP infringement and damages against us could affect our business, financial condition, and/or results of operations. If a person or company claims that our products infringed their intellectual propertyIP rights, any resulting litigation would be costly, time consuming, and would divert the attention of management and key personnel from other business issues. The complexity of the technology involved in our business and the uncertainty of intellectual propertyIP litigation significantly increases these risks and makes such risk part of our ongoing business. To that end, we periodically obtain intellectual propertyIP rights, in the ordinary course of business, to strengthen our intellectual propertyIP portfolio and minimize potential risks of infringement. The increasing tendency of patents granted to others on combinations of known technology isand aclaims potentialfor threatroyalties are threats to our Company. Any of these adverse consequences could potentially have ana effectnegative impact on our business, financial condition and/or results of operations.

Credit Risk. The Company has trade accounts receivable balances due from customers to whom sales are made in the ordinary course of business. From time to time, the Company also makes loans in the ordinary course of business to certain of its technology investees. Certain automakers andautomakers, Tier 1 customers, large retail and commercial customers of the Company, and the Company's technology investees from time to time may consider the sale of certain business segmentssegments, or bankruptcybankruptcy, or other changes as a result of financial stress.stress in the existing economic environment. Should one or more of our larger customers (including sales through their Tier 1 suppliers), our investees to whom we have provided loans, or others to whom the Company has extended credit, declare bankruptcybankruptcy, become insolvent, and/or sell their business, it couldwould adversely affect the collection of receivables, our business, financial condition, and/or results of operations. The current economic environment continues to cause increased financial pressures and production stresses on our customers, which could impact the timeliness of customer payments and ultimately the collectability of receivables.

Our allowance for doubtfulcredit losses applicable to trade accounts receivable primarily relatesrelate to financially distressed automotive mirror and electronics customers. We continue to work with these financially distressed customers in collecting past due balances. Our allowance for credit losses applicable to loans receivable reflect the Company's estimate of expected credit losses over the contractual life of the loans, considering historical loss experience, current conditions, and reasonable and supportable forecasts. Refer to Note 11, Summary of Significant Accounting and Reporting Policies of the Consolidated Financial Statements.

Business Disruptions. Manufacturing of our proprietary products employing electro-optic technology is performed primarily at our manufacturing facilities in Zeeland and Holland, Michigan. One of our manufacturing facilities is located in Holland, Michigan, which is approximately three miles from our other primary manufacturing facilities in Zeeland, Michigan. Should a natural disaster or other catastrophic event occur, our ability to manufacture product, complete existing orders and provide other services could be severely impacted for an undetermined period of time. We have purchased business interruption insurance to address some of these risks. Our inability to conduct normal business operations for a period of time may have an adverse impact on our business, financial condition, and/or results of operations.

Information Technology ("IT) Infrastructure and Cybersecurity. Any failure of our information technology ("IT") infrastructure adversely impacts our business, financial condition, and/or results of operations. We rely upon the capacity, reliability and security of our information technologyIT infrastructure and our ability to expand and continually update this infrastructure in response to the changing needs of our business. For example, we have implemented enterprise resource planning and other IT systems in certain aspects of our business over a period of several years and continue to update and further implement new systems going forward. Like many systems, these systems may not always perform as expected. We also face the challenge of supporting our older systems and implementing necessary upgrades. When we experience a problem with the functioning of an important IT system or a security breach of our IT systems, the resulting disruptions have an adverse effect on our business, financial condition, and/or results of operations.

We face certain security threats, including threats to the confidentiality, availability and integrity of our data and systems. We maintain an extensive network of technical security controls, policy enforcement mechanisms, monitoring systems and management, Board, and Board committee oversight in order to address these threats. While these measures are designed to prevent, detect and respond to unauthorized activity in, or otherwise compromise of, our systems, certain types of attacks, including cyber-attacks, could result in significant financial or information losses and/or reputational harm. We, and certain of our third-party vendors, receive and store personal information in connection with our human resources operations and other aspects of our business. Despite our implementation of security measures, our IT systems, like all IT systems, are vulnerable to damages from computer viruses, natural disasters, unauthorized access, cyber-attackcyber-attack, and other similar disruptions. AnySystem suchfailures, system failure, accidentaccidents or security breachbreaches resultsresult in disruptions to our operations. A material network breach in the security of our IT systems could include the theft of our intellectual property,IP, trade secrets or customer information. To the extent that any disruptions or security breachbreaches resultsresult in a loss or damage to our data, or an inappropriate disclosure of confidential or customer information, it could cause significant damage to our reputation, affect our relationships with our customers, lead to claims against the Company and ultimately harm our business, reputation, financial condition, and/or results of operations. In addition, we incur significant costs to protect against damage caused by these disruptions or security breaches.

Government Regulations. The Dodd-Frank Wall Street Reform and Consumer Protection Act contains provisions to improve transparency and accountability concerning the supply of certain minerals, known as conflict minerals, originating from the Democratic Republic of Congo ("DRC") and adjoining countries. As a result, in 2012 the SEC adopted annual disclosure and reporting requirements for those companies who use conflict minerals mined from the DRC and adjoining countries in their products. These requirements necessitate due diligence efforts, and the Company has disclosed its findings annually to the SEC on Form SD around May 30 of each year since 2012. As there are only a limited number of suppliers offering "conflict free" minerals necessary for our products, the Company cannot always be absolutely certain that we will be able to obtain necessary conflict minerals from such suppliers in sufficient quantities or at competitive prices. Also, the Company may face reputational challenges if we determine that certain of our products contain minerals not determined to be conflict free (not withstanding Company efforts to ensure they are) or if the Company is unable to sufficiently verify the origins for all conflict minerals used in the Company's products through the procedures the Company has implemented.

•Intellectual propertyIP litigation and infringement claims or other litigation;

Income Taxes. The Company is subject to income taxes in the U.S. and other foreign jurisdictions. Changes in tax rates, adoption of new tax laws or other additional tax policies, the expiration of existing tax benefits, and other proposals to reform United States and foreign tax laws couldcan adversely affect the Company's operating results, cash flows, and financial condition. The Company’s domestic and international tax liabilities are dependent upon the location of earnings among these different jurisdictions.

Employees. Our business success depends on attracting and retaining qualified personnel. Throughout our Company, our ability to sustain and grow our business requires us to hire, retain and develop a highly skilled and diverse management team and workforce. Failure to ensure that we have the leadership capacity with the necessary skill sets and experience and a skilled workforce could impede our ability to deliver our growth objectives and execute our strategic plan. Organizational and reporting changes within management could result in, and relatively low unemployment (especially where our manufacturing operations are located) has contributed to, increased turnover. Turnover, inability to attract and retain key employees, including managers, or government mandated remote work have had, and may continue to have a negative effect on our business, financial condition and/or results of operations.

International Operations. We currently conduct operations in various countries and jurisdictions, including purchasing raw materials and other supplies from many different countries around the world, which subjects us to the legal, political, regulatory and social requirementsrequirements, as well as various economic conditions in these jurisdictions. Some of these countries are considered growth markets. International sales and operations, especially in growth markets, subject us to certain risks inherent in doing business abroad, including:

•Exposure to local economic, politicalpolitical, and labor conditions;

• Unexpected changes in laws, regulations, trade or monetary or fiscal policy, including interest rates, foreign currency exchange ratesrates, and changes in the rate of inflation in the U.S. and other foreign countries;

• Tariffs (as discussed herein), quotas, customscustoms, and other import or export restrictions and other trade barriers;

• Difficulty of enforcing agreements, collecting receivablesreceivables, and protecting assets through non-U.S. legal systems;

• Reduced intellectual propertyIP protection;

•General economic conditions continue to be of concern in many of the regions in which we do business, given that our primary industry is greatly impacted by overall general economic conditions. Any continued adverse worldwide economic conditions, currency exchange rates, trade war,wars (including tariffs and counter-tariff measures), war or significant terrorist acts, could each affect worldwide automotive sales and production levels, thereby impacting the Company;

•Climate change;

Net Sales.Sales In 2024, the Company's net sales increased by $14.1 million, or 1% compared to the prior year, representing the highest annual sales in Company history, despite light vehicle production in 2024 that decreased year-over-year by more than 4% in the Company's primary markets. The Company's revenue outperformance in 2024 versus the underlying market was driven primarily by growth in FDM unit shipments.

Cost of Goods Sold.Sold As a percentage of net sales, cost of goods sold decreased from 66.8% in 2023 to 66.7% in 2024. The year over year increase in the gross margin was primarily the result of supplier cost reductions and lower freight costs, though these benefits were largely offset by weaker than expected product mix, higher labor costs, and the inability to leverage fixed overhead costs due to the lower than forecasted revenue for the year. On a year over year basis, supplier cost reductions and lower freights costs had a positive impact of approximately 100 - 150 basis points and 50 - 100 basis points on gross margin, respectively. Product mix had a negative impact of approximately 100 - 150 basis points on gross margin on a year over year basis. Labor costs and inability to leverage fixed overhead costs, each had a negative impact of approximately 25 - 50 basis points on gross margin on a year over year basis.

Operating Expenses.Expenses Engineering, research and development expenses ("E, RR, & D") increased by $27.1 million or 18% from 2023 to 2024, which represents 8% of net sales in 2024, compared to 7% of net sales in 2023. E, R & D increased year over year primarily due to additional staffing and engineering related professional fees to assist with the execution of a high number of new product launches, product redesigns to optimize costs, and new product development.

Selling, general and administrative ("S, G & A") expenses increased by $8.5 million or 8% from 2023 to 2024, which remained at 5% of net sales. The primary reason for the year over year increase in S, G & A from 2023 to 2024 was increased staffing expenses.

The Company also recorded impairment charges of $8.9 million for Goodwill and in-process research and development ("IPR&D") related to the Vaporsens technology acquired in 2020, as previously disclosed.

Total Other Income (Loss). Investment income decreased $0.1 million to $13.4 million for 2024 compared to $13.5 million for 2023. Other income – net increased $3.3 million in 2024 versus 2023, primarily due to increased interest income from fixed income investments.

Taxes.Taxes The effective tax rate was 14.3% for the year ended December 31, 2024, compared to 15.2% for the prior year. The effective tax rates in 2024 and 2023 differed from the statutory federal income tax rate, primarily due to the Foreign Derived Intangible Income Deduction,FDII, and R&D tax credits.

Net Income.Income Net income decreased by $23.9 million in 2024, or 6% compared to 2023, primarily due to the year over year changes in operating profits.

Cash flow from operating activities was $498.2$587.1 million, $537.2$498.2 million and $338.2$537.2 million for the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively. Cash flow from operating activities increased $88.9 million for the year ended December 31, 2025, compared to the prior year, primarily due to increases in accounts payable, accrued royalties, and accrued sales incentives incurred by VOXX. Cash flow from operating activities decreased $39.0 million for the year ended December 31, 2024 compared to the priorsame year,period in 2023, primarily due to decreases in net income and changes in working capital. Cash flow from operating activities increased $199.0 million for the year ended December 31, 2023 compared to the same period in 2022, primarily due to due to increases in net income and changes in working capital.

Capital expenditures were $144.7$129.1 million, $183.7$144.7 million, and $146.4$183.7 million for the years ended December 31, 2025, 2024, 2023, and 2022,2023, respectively. Capital expenditures for the year ended December 31, 20242025 decreased by $15.6 million compared with the year ended December 31, 2024, as a result of a reduction in expenditures related to building and facility construction projects primarily due to the timing of the initiation and completion of projects. Capital expenditures for the year ended December 31, 2024, decreased by $39.0 million compared withto the year ended December 31, 2023, primarily due to decreaseda decrease in expenditures related to building and facility construction projects. Capital expenditures for the year ended December 31, 2023 increased by $37.2 million compared to the year ended December 31, 2022, primarily due to building and facility construction projects previously discussed.

Short-term investments as of December 31, 20242025 were $22.3$5.4 million, updown from $14.4$22.3 million as of December 31, 20232024, and long-term investments were $273.0 million as of December 31, 2025, down from $339.6 million as of December 31, 2024, updue from $299.1 million as of December 31, 2023, dueprimarily to changes in the Company's overall investment portfolio.

Accounts payablereceivable as of December 31, 2024,2025 decreasedincreased $16.1$73.2 million compared to December 31, 2023,2024, primarily due to decreasesthe inaddition capitalof expenditureVOXX paymentssales, andas well as the timing of customer payments.

Management considers the Company’s current working capital and long-term investments, as well as its existing credit financing arrangement (notwithstanding covenants prohibiting additional indebtedness), discussed further in Note 2 of the Consolidated Financial Statements, in addition to internally generated cash flow,flows, to be sufficient to cover anticipated cash needs for the foreseeable future considering its contractual obligations and commitments.

Based on the foregoing, and excluding any impact of the Company's pending acquisition of VOXX (which remains subject to certain regulatory and VOXX stockholder approvals), the Company estimates that top line revenue for calendar year 20252026 will be between $2.40$2.60 and $2.45$2.70 billion. All estimatesEstimates are based on: light vehicle production forecasts in the primary regions to which the Company ships product,its asautomotive well as theproducts; estimated option rates for its mirrors and electronics on prospective vehicle models and; anticipated product mix.mix; market conditions in the Company's primary markets; the continuing impact on the China market from tariffs and counter-tariffs; and expected incremental sales contribution from the VOXX acquisition. Continuing uncertainties, such as: light vehicle production volumes; tariffs; the Ukraine-Russia war; the Israel-Hamas war; labor shortages; automotive plant shutdowns; sales rates in Europe, Asia, and North America; challenging macroeconomic and geopolitical environments, including inflation, and potential tax law changesinflation; OEM strategies and cost pressures; customer inventory management and the impact of potential automotive customer (including their Tier 1 suppliers) and supplier bankruptcies; work stoppages,stoppages; strikes,strikes; etc.; could disrupt shipments to customers and continue to make forecasting difficult.

The Company is estimatingestimates that the gross margin will be between 33.5%34.0% and 34.5%35.0% for calendar year 2025.2026. Historically, annual customer price reductions have placed pressure on gross margin on an annual basis. Given the current revenue forecast and projected product mix for 2025,2026, as well as external headwinds in the form of tariff-related costs, the Company hopes it may be able to offset certain annual customer price reductions with raw material cost decreases, improveda continued focus on driving greater operational efficiencies, and leverage onleveraging the Company's fixed costs, butwhile therealso isattempting to negotiate reimbursements to offset incremental tariff-related costs. There is, however, no certainty of being able to do so.

The Company is also estimatingestimates that its operating expenses, which include E, R & D and S, G & A, are expected to be between $310$410 and $320$420 million for calendar year 2025,2026, due in part to continued investments that support growth andinitiatives, launch of new businessbusiness, asand well as development ofdevelop new products, which are primarily staffing related.related, as well as a full year of VOXX operating expenses. The Company continues to invest heavily in technology directed at funding the development of its current product portfolio and creating iterationsadvancements of those products thatso helpas keepto itsbe products newfresh and attractive to our customers, as well as new products, though these expense estimates for 2025 represent a lower growth rate in operating expenses as the Company believes the new baseline established for engineering spend is sufficient to support current initiatives.products.

The Company is a technology leader in the automotive industry, with a focus on developing uniquely designed solutions that are generally proprietary. With the acquisition of VOXX in 2025, the Company is now a leading manufacturer and distributor of premium audio electronics and solutions, aftermarket electronics, and consumer technologies. The Company continues to make investments intended to maintain a competitive advantage in its currentexisting markets, as well as to use its core competencies to develop products that are applicable in other markets.

Based on current light vehicle production forecasts, and the Company's resultant forecast for sales of its automatic-dimming mirrors and electronics, and the Company's estimates for its other products, including premium audio, aerospace, medical, fire protection, and consumer electronic products, the Company currently anticipates that 20252026 capital expenditures will be between $125 and $150$140 million, a majority of which will be related to production equipment purchases. Capital expenditures for calendar year 20252026 are currently anticipated to be financed from current cash and cash equivalents on hand and cash flows from operating activities.

The Company is also providing top line revenue guidance for calendar year 2026,2027, taking into account anticipatedthe increasessame considerations used in 2026 guidance, including light vehicle production inoutlook 2026 compared to 2025, but excluding any impact ofand the Company's pendingestimates acquisitionfor ofpremium VOXX.audio, aerospace, medical, fire protection, and aftermarket and consumer electronic products. S&P Global Mobility forecast (as of mid-January 20252026) for light vehicle production for calendar year 20262027 are approximately 15.415.5 million units for North America, 17.017.2 million units for Europe, 11.6 million units for Japan and Korea, and 31.032.8 million units for China. Based on these forecasts, as well as the Company's estimates for fire protection, aerospace, medical,forecasts and biometrics salesestimates for calendar year 2026,2027, the Company is estimating that revenue for calendar year 20262027 will be between $2.55$2.75 and $2.65$2.85 billion. As noted above, continuing uncertainties make forecasting difficult.

FIRSTSECOND QUARTER 2026 VERSUS FIRSTSECOND QUARTER 2025

Engineering,Net researchSales. andConsolidated developmentnet expensessales for the firstsecond quarter of 2026 increaseddecreased by $5.7$6.6 million,million or 1%, when compared with the firstsecond quarter of 2025, primarily due to the VOXX acquisition, as well as staffing and engineering related professional fees.2025.

NetOperating Income Attributable to Gentex Corporation.Expenses. Consolidated netoperating incomeexpenses attributablewere to Gentex for the first quarter of 2026 was $98.5 million, an increase of 4% compared to net income attributable to Gentex of $94.9$99.7 million in the first quarter of 2025, which did not include VOXX. The quarter over quarter increase in net income for the first quarter of 2026 was due to higher sales and income from operations compared to the same quarter last year. Non-GAAP consolidated net income attributable to Gentex was $103.7 million in the firstsecond quarter of 2026, compared to $98.0$106.8 million in the firstsecond quarter of 20252025. (whichThe didquarter notover includequarter VOXX),decrease was primarily due to prior year severance costs. On a non-GAAP basis, adjusted operating expenses were $99.3 million in the second quarter of 2026, compared to $97.5 million in the second quarter of 2025, when adjusting forexcluding the impact of impairment charges, acquisition related costs, severance costs, and severancepurchase costsprice step-up charges in each of the quarters, for comparability.

EarningsNet Per ShareIncome Attributable to Gentex Corporation. TheNet Company had consolidated earnings per diluted shareincome attributable to Gentex for the firstsecond quarter of 2026 was $114.7 million, an increase of $0.46, which19% compared to earningsnet per diluted share of $0.42 for the first quarter of 2025, which did not include VOXX. Earnings per diluted share were also positively impacted by the increase in sales and improved profitability of the Company, partially offset by other losses incurred in the first quarter of 2026. On a non-GAAP basis, consolidated adjusted earnings per diluted shareincome attributable to Gentex wereof $0.48$96.0 formillion in the firstsecond quarter of 2025. Non-GAAP consolidated net income attributable to Gentex was $122.9 million in the second quarter of 2026, compared to $0.43$110.9 formillion in the firstsecond quarter of 20252025, (whichwhen didadjusting not include VOXX), excludingfor the impact of impairment charges, acquisition related costs, severance costs, and severanceinventory costspurchase price step-up charges in each of the quarters, for comparability.

The Company has not recognized any potential refundCost of IEEPAGoods tariffsSold. As a percentage of net sales, cost of goods sold decreased to 64.6% for the six months ended June 30, 2026, versus 66.2% in itsthe firstsame quarterperiod financiallast results.year. The improvement in the gross margin for the six months ended June 30, 2026 was driven by tariff refunds, purchasing cost reductions, improved product mix, and operational efficiencies. The Company remainsrecognized inrefunds of tariffs imposed under the processInternational Emergency Economic Powers Act ("IEEPA") during the second quarter of assessing the impact of the invalidation of IEEPA tariffs by the U.S. Supreme Court.2026. As of MarchJune 31,30, 2026, the Company estimateshad thatreceived approximately $15$38 million of IEEPA tariff costsreimbursements, have been capitalized in inventory,of which haveapproximately not$18 yetmillion beenwas expensedrecorded as a reduction of thatcost date.of goods sold. Since the inception of the IEEPA tariffs, the Company (including VOXX) has directly paid a cumulative total of approximately $42 million (of such tariffs, excluding amounts paidincurred indirectly through suppliers),suppliers, which was partially offset by approximately $5 million of costs recoveredrecoveries from customers. While theThe Company iscontinues pursuingto refundsevaluate asand itpursue determinestariff appropriate,refund opportunities where appropriate; however, the availability, amount, and timing of any potentialadditional refunds remains highlyremain uncertain and are subject to furtherongoing legal, regulatory, and administrative developments. As such, the Company is unable to conclude any recovery is probable and reasonably estimable as of March 26, 2026.

Financial information for the three and six months ended MarchJune 31,30, 2026 is provided in accordance with Generally Accepted Accounting Principles ("GAAP").GAAP. In addition, the Company believes that it is useful for the three and six months ended MarchJune 31,30, 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" table below. This non-GAAP financial information allows investors to evaluate current performance in the Company's core business in relation to historical performance by excluding the impact of certain inventory purchase price step-up adjustment, impairment charges, acquisition related costs, and severance costs set forth in the table below.

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.

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 firstsecond quarter of 2026 and 2025.2025, as applicable. Adjusted Earnings per Share is defined as Adjusted Net Income divided by weighted average diluted shares outstanding.

The Company's cash and cash equivalents as of MarchJune 31,30, 2026 were $164.8$233.4 million, an increase of $19.1$87.8 million, compared to $145.6 million as of December 31, 2025. The increase was primarily due to cash flows from operations, including increases in accounts payable and accrued liabilities, partially offset by cash outflows related to share repurchases, dividend payments, capital expenditures, and investment purchases during the threesix months ended MarchJune 31,30, 2026.

Short-term investments as of MarchJune 31,30, 2026 were $10.3$9.4 million, an increase from $5.4 million as of December 31, 2025, and long-term investments were $270.1$238.5 million as of MarchJune 31,30, 2026, down from $273.0 million as of December 31, 2025.

Accounts receivable as of MarchJune 31,30, 2026 increased approximately $51.0$17.8 million compared to December 31, 2025, primarily due to the timing of customer payments during the threesix months ended MarchJune 31,30, 2026.

Inventories as of MarchJune 31,30, 2026 were $523.5$519.0 million, compared to $516.3 million as of December 31, 2025, primarily due to an increase in work-in-process inventory at MarchJune 31,30, 2026.

Accounts payable as of MarchJune 31,30, 2026 increaseddecreased approximately $27.7$0.7 million to $276.6$248.3 million, compared to December 31, 2025, primarily driven by timing of payments within the period.

Accrued liabilities as of MarchJune 31,30, 2026 increased approximately $29.3$18.4 million compared to December 31, 2025, primarily due to an increase in income taxes payable.

Cash flow from operating activities for the threesix months ended MarchJune 31,30, 2026 decreasedincreased $11.4$7.0 million to $137.1$321.7 million, compared with $148.5$314.6 million during the same period last year, primarily due to changes in working capital. Operating cash flow for the first six months of 2026 was the highest first-half operating cash flow in the Company's history. The Company continues to benefit from strong profitability, disciplined working capital management, and cash generation, which supported ongoing investments in growth initiatives, share repurchases, and dividend payments during the period.

Capital expenditures for the threesix months ended MarchJune 31,30, 2026 were approximately $17.0$36.2 million, compared with approximately $36.7$67.8 million for the same period last year. The decrease was primarilyin part due to the timing of completion and commencement of projects, including the completion of the Gentex Discovery Preschool in 2025, as further described below.projects.

The Company believes its existing and planned facilities are currently suitable, adequate, and have thesufficient capacity requiredto forsupport current operations and anticipated near-term plannedbusiness business.needs. Nevertheless, theThe Company continues to evaluate longerits termlonger-term facility needs.requirements as part of its ongoing strategic planning process.

TheBased on current product mix, the Company estimates that it currently has buildingannual manufacturing capacity to manufactureof approximately 42 -million to 45 million interior automatic-dimming mirror units annually, and approximately 19 -million to 22 million exterior mirror units annually, based on current product mix.units. The Company alsocontinually evaluates equipment capacity on an ongoing basis and addsinvests in additional equipment as needed.needed to support customer demand and future growth.

Management considersbelieves thethat current working capital andcapital, long-term investments, in addition to internally generated cash flow, available borrowing capacity under its Credit Agreement, and creditoverall worthiness,creditworthiness towill be sufficient to coverfund anticipated cashoperating, investing, and financing needs for the foreseeable futurefuture, consideringincluding itsexisting contractual obligations and commitments.

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 six months ended MarchJune 31,30, 2026, the Company repurchased 3,252,6962,696,740 shares.and 5,949,436 shares respectively. The Company hadhas 32,747,03229,912,872 shares remaining available for repurchase under the plan as of MarchJune 31,30, 2026, as is further detailed in Part II, Item 2 of this Form 10-Q.