Gentex Corporation

Good day and thank you for standing by. Welcome to Gentex Reports, fourth quarter and year-end 2025 financial results. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. To ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. I would now like to hand the conference over to your speaker today, Josh Oberski, Vice President of Investor Relations.

Thank you. Good morning and thank you for joining us today for our fourth quarter and year-end 2025 earnings conference call. I'm Josh Oberski, Gentex Vice President 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 CFL. Please note that a replay of this conference call webcast, along with edited transcripts, will be available following the call from 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 press release from this morning. and our annual report on Form 10-K for the year ended December 31st, 2024, as well as general economic conditions. If one or more of these risks or uncertainties materialize, or if our underlying assumptions or estimates proved to be incorrect, actual results could differ materially from these expressed or implied in our forward-looking statements. I will now hand the call over to Steve Downing for our prepared remarks.

Thank you, Josh. For the fourth quarter of 2025, the company reported consolidated net sales of $644.4 million, an increase of 19% compared to net sales of $541.6 million for the fourth quarter of last year. Vox contributed $103.4 million of revenue during the fourth quarter, and the core Gentex revenue was $541 million. While core Gentex revenue was essentially flat compared to the fourth quarter of last year, our performance within our primary markets was notably stronger. Revenue in these regions grew approximately 3% compared to a 2% decline in light vehicle production, representing a 5-point outperformance relative to the underlying market. Sales into China totaled $34.5 million for the quarter, down 33% from last year due to the impact of tariffs. The consolidated gross margin in the fourth quarter of 2025 was 34.8%, compared with a gross margin of 32.5% in the fourth quarter of last year, which did not include Vox. The core Gentex gross margin was 35.5%, representing a 300 basis point increase compared to last year, and is the highest gross margin since the first half of 2021. The increase in gross margin was the result of favorable product mix, operational efficiencies, and purchasing cost reductions, partially offset by tariff-related costs. The steady improvement in gross margin reflects the company's disciplined focus on cost control, productivity, and execution. Over the last two years, we established and announced the target of getting back to the 35% to 36% gross margin range, and the team has accomplished this goal through unbelievable grit and determination, despite the external headwinds. It is also interesting to note that the gross margin improvement was partially offset by incremental tariff-related costs, which reduced gross margin by approximately 150 basis points versus last year. Consolidated operating expenses during the fourth quarter were $104.4 million compared to operating expenses of $86.5 million in the fourth quarter of last year. The increase was primarily due to the box acquisition, which accounted for $24.6 million of the increase. The core Gentex operating expenses included $800,000 in Gentex-specific severance expenses. Over the last year and a half, the company has been focused on expanding the gross margin as well as improving our operating cost structure. This effort included early retirement programs aimed at decreasing headcount and reduced third-party spend to lower ongoing operating expenses while making sure our key technology and product initiatives continue to move forward. Consolidated income from operations for the fourth quarter was $120.1 million compared to income from operations of $89.8 million last year, which did not include Vox. Core GenTech's income from operations was $112.5 million, a 25.3% increase versus the fourth quarter of last year. Total other loss was $8.7 million during the fourth quarter compared to other income of $8 million last year. Last year's gain was from a fair value adjustment of our original investment in Box. During the fourth quarter, the company had an effective tax rate of 16.3% compared to an effective tax rate of 10.3% last year. The increase was driven by lower tax benefits related to stock-based compensation, as well as a reduced benefit from the foreign-derived intangible income deduction. Consolidated net income was $93 million compared to $87.7 million in the fourth quarter of last year. Earnings per diluted share in the fourth quarter were 43 cents compared with earnings per diluted share of 39 cents last year, which did not include Vox. For calendar year 2025, the company's consolidated net sales were 2.53 billion, an increase of 10% compared to net sales of 2.31 billion in calendar year 2024. The consolidated revenue includes nine months of Vox-related revenue. Core GenTech sales were $2.27 billion for the year, a 2% decline versus last year, primarily driven by lower demand for the company's exports into the China market due to tariffs. In the company's primary regions, revenue increased by approximately 1%, despite a 1% decline in light vehicle production. For calendar year 2025, the consolidated gross margin was 34.2%, compared to a gross margin of 33.3% last year, which did not include Vox. The core Gentex gross margin was 34.7%, 140 basis point increase compared to last year. Gross margin improvements were the result of purchasing cost reductions, operational efficiencies, and favorable product mix, which were partially offset by tariff costs that were not reimbursed during the quarter. Sorry, during the year. The gross margin expansion was exceptional, especially when considering that the 140 basis point gain was achieved despite lower sales and new tariff-related headwinds that were not fully offset during the year. For the year, consolidated operating expenses were $392.8 million. Core Gentex operating expenses were $318.5 million in comparison to $311.4 million last year. Core Gentex operating expenses this year also included $10.4 million in Gentex-specific severance expenses. Vox operating expenses were $74.3 million from April through year-end. Total other loss was $12.9 million for 2025 compared to other income of $12.5 million last year. For calendar year 2025, the company's effective tax rate was 16.6%, compared to an effective tax rate of 14.3% last year. The rate increase was driven by reduced tax benefits related to stock-based compensation, as well as a lower benefit from the FDII deduction. Consolidated net income for calendar year 2025 was $384.8 million, compared to income of $404.5 million last year. Earnings per diluted share this year was $1.74, compared to earnings per diluted share of $1.76 last year. I will now hand the call over to Kevin for further financial details.