Gentex Corporation

Good day, and thank you for standing by. Welcome to the Gen Tech's second quarter 2025 financial results conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today. Josh Oberski, Director of Investor Relations. Please go ahead.

Thank you. Good morning and thank you for joining us today for our second quarter 2025 earnings conference call. I'm Josh Oberski, Gentex Director of Investor Relations, and with me today are Steve Downing, President and CEO, Neil Boehm, COO and CTO, and Kevin Nash, Vice President of Finance and CFO. Please note that a replay of this conference call webcast, along with edited transcripts, will be available following the call in the Investors section of our website at ir.gentex.com. As a reminder, many of the statements made during today's call are forward-looking statements that reflect our current expectations. These statements are subject to a number of risks and uncertainties, both known and unknown, including those detailed in our second quarter 2025 earnings press release and our annual report on Form 10-K for the year ended December 31, 2024, as well as general economic conditions. If one or more of these risks or uncertainties materialize, or if our underlying assumptions or estimates prove to be incorrect, actual results could differ materially from those expressed or implied in our forward-looking statements. I'll now hand the call over to Steve Downing for our prepared remarks.

Steve? Thanks, Josh. Gentex completed its acquisition of Vox on April 1st of this year, and we did our best in the press release from this morning to provide information for both what we call core Gentex, meaning without Vox, and consolidated Gentex, which includes financial performance for both Gentex and Vox. Additionally, in an effort to not repeat this caveat throughout the call, it is important to remember that for any year-over-year or quarter-over-quarter comparisons, the second quarter of last year did not include Vox. In the second quarter of 2025, consolidated net sales were $657.9 million, which represents a 15% increase over the second quarter of last year. Core Gentex revenue for the quarter was $579 million, which represents a 1% growth rate versus last year on a decline of 2% in light vehicle production in our primary markets. Vox revenue for the second quarter was $78.8 million. Given the overall weak light vehicle production in our primary regions, we are very pleased with our sales levels this quarter. This is particularly notable given the impact that tariffs and counter tariffs have had on demand for our products, especially in the China market. Overall sales into China for Gentex during the quarter were approximately $33 million compared to our beginning of year forecast of $50 to $60 million for second quarter sales. Despite revenue headwinds related to tariffs and reduced sales into the China market, the company more than offset these challenges through strong growth in full display mirror and other advanced features, along with incremental revenue from the box acquisition. Our consolidated gross margin for the quarter was 34.2%, up from 32.9% in the second quarter of last year. Core GENTX gross margin was 35.3%, a 240 basis point improvement versus last year. Sequentially, we saw a 210 basis point improvement in core gross margin, reflecting the continued success of our margin improvement initiatives. The improvements were driven by purchasing cost reductions, favorable product mix, and operational efficiencies, although they were partially offset by tariffs that were not reimbursed during the quarter. Additionally, on an adjusted basis, consolidated gross margin was 34.6% when excluding $2.5 million purchase accounting adjustment related to the Vox acquisition. During an incredibly difficult operating environment, this quarter's gross margin performance is a testament to the hard work and discipline the entire team has put into our margin improvement effort. Operating expenses for the quarter were $106.8 million, up from $73.7 million last year, primarily due to the Vox acquisition. Vox accounted for $23.9 million of that increase, plus $1.5 million in acquisition-related costs on the Vox side, and $600,000 in costs relating to severance expenses for Vox. Core Gentex operating expenses were $80.7 million, up from $73.7 million, but this included expenses of $1 million in acquisition-related costs for Gentex and $6.2 million in early retirement incentives for Core Gentex. When we adjust for these one-time items, Core Gentex operating expenses were down slightly versus last year, which is in line with our expectation, strategy, and execution of the work we have been doing on our cost reduction program. Consolidated income from operations was $118.5 million compared to $114.9 million last year. However, core Gentex operating income was $123.8 million, up 8% year-over-year. Additionally, when adjusted for the one-time expenses mentioned previously, core Gentex operating income was $130.9 million, a 14% increase over last year. Our effective tax rate for the quarter was 17.2%, up from 15.1% last year, primarily due to lower stock-based compensation tax benefits and a reduced foreign-derived intangible income deduction. Consolidated net income for the quarter was $96 million, up 12% from $86 million last year. On an adjusted basis, net income was $105.8 million, a 23% increase versus last year. Consolidated earnings per share were 43 cents, up 16% versus last year. When we adjust earnings per share for the one-time expenses mentioned previously, EPS was 47 cents, a 27% increase over last year. I will now hand the call over to Kevin for some further financial details. Thank you, Steve.