Gentex Corporation

Good day and thank you for standing by. Welcome to the Gentex Report second quarter 2026 financial results conference call. 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 O'Berski, Vice President of Investor Relations. Thank you.

Good morning and thank you for joining us today for our second quarter 2026 earnings conference call. I'm Josh O'Berski, 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 CFO. Please note that a replay of this conference call webcast along with edited transcripts will be available following the call in the investor section of our website at ir.gentex.com. Many of the statements made today during the call are forward-looking and reflect our current expectations. These statements involve a number of risks and uncertainties, both known and unknown, including those described in our press release issued this morning and in our annual report on Form 10-K for the year ended December 31st, 2025, as well as general economic conditions. Actual results may differ materially from those expressed or implied in these forward-looking statements if risks or uncertainties materialize or if our assumptions prove to be incorrect. Ahead of our prepared remarks, I would like to remind the investment community that we will be hosting our invite-only Analyst and Investor Day on August 27th in Zeeland, Michigan. During the event, we will be doing facility tours showcasing some of our new products and prototype vehicles and showcasing the infrastructure that has been going into place to support the expected product line growth over the coming years. If you are interested in attending, please email me or apply to attend at joshoberski at gentex.com or sign up at ir.gentex.com. I will now hand the call over to Steve Downing for our prepared remarks.

Thank you, Josh. For the second quarter, Gentex reported net sales of $651.3 million, down 1% from $657.9 million in the second quarter of last year. Automotive revenue declined approximately 3% year over year, reflecting lower revenue in Europe, Japan, Korea, and China, which was largely offset by strength in North America. Our results continue to demonstrate the value of our strategy to grow through technology expansion, increasing content per vehicle, and diversification. While mere unit shipments and automotive revenue came in below our beginning of quarter forecast, performance benefited from strong North American demand, higher vehicle content in Europe, and continued growth from our non-automotive product lines. In Europe, new driver monitoring and in-cabin monitoring system launches continued gaining traction and helped offset the impact of a significant decline in base interior mirror shipments for the international market. In China, revenue remained under pressure as ongoing tariff-related market disruptions contributed to a 20% year-over-year decline. Outside of automotive, revenue from the company's other products category provided meaningful growth. premium audio revenue increased 16% year-over-year to $51.7 million, while aerospace biometrics, fire protection, and automotive aftermarket revenue collectively increased approximately 12%. Non-automotive revenue represented approximately 14% of total company revenue during the quarter, reinforcing the benefits of the company's diversification strategy and confidence in long-term opportunities to expand both our technology portfolio and Revenue Base. Gross margin for the second quarter was 37% compared to 34.2% in the second quarter of last year, representing an increase of 280 basis points. Gross margin benefited from approximately $18 million of IEPA tariff reimbursements received during the quarter that reduced cost of goods sold, as well as favorable product mix. These benefits were partially offset by higher commodity costs and lower overall sales levels compared to the prior year. In total, the company received approximately $38 million of IEPA tariff reimbursements during the quarter, of which roughly $18 million reduced cost of goods sold and favorably impacted gross margin. Excluding that benefit, gross margins still improved sequentially by approximately 50 basis points from the first quarter of 2026, despite lower automotive revenue and ongoing non-IEPA tariff costs and significantly higher precious metals costs. The sequential improvement was driven by favorable product mix, disciplined operational execution and improving profitability within the company's other products category. Consolidated operating expenses for the second quarter were $99.7 million compared to $106.8 million in the second quarter of last year. The decrease was primarily driven by severance costs recorded in the prior year period. On a non-GAAP basis, adjusted operating expenses were $99.3 million compared to $97.5 million in the prior year period. Income from operations for the second quarter was $141.3 million, up 19% from $118.5 million in the second quarter of last year. On a non-GAAP basis, adjusted income from operations was $141.7 million compared to $130.3 million in the prior year period. The effective tax rate for the quarter was 16.5% compared to 17.2% in the second quarter of last year. Net income attributable to Gentex was $114.7 million, up 19% from $96 million in the second quarter of last year. On a non-GAAP basis, net income attributable to Gentex was $122.9 million, compared to $110.9 million in the prior year period. Diluted earnings per share were 54 cents compared to 43 cents in the second quarter of last year. On a non-GAAP basis, adjusted diluted earnings per share were 58 cents compared to 50 cents in the prior year period. While revenue came in below our forecast, disciplined execution across the business enabled Gentex to deliver record second quarter earnings per share of 54 cents and increase of 26% over the second quarter of last year. The company's strategy remains focused on identifying new growth opportunities despite the challenging market conditions, expanding and stabilizing gross margins, tightly managing operating expenses and deploying capital in a disciplined manner. Management believes this approach will continue to support earnings growth, strong cash generation and long-term shareholder value creation while also funding investments in the broadest portfolio of new products, technologies, and market opportunities in the company's history. I will now hand the call over to Kevin for further financial details. Thank you, Steve.