Gentex Corporation

Good day and thank you for standing by. Welcome to the Gen Tech Report's third quarter 2026 financial results. At this time, all participants are now in only mode. After the speaker's presentation, we'll open up for questions. To ask a question during a session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's call is being recorded and I like to hand out Over to our first speaker, Josh O'Berski, Vice President of Investor Relations. Please go ahead.

Thank you. Good morning and thank you for joining us today for our third 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.gentax.com. Many of the statements made during today's 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 31, 2025, as well as general economic conditions. Actual results may differ materially from these 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'd like to remind the investment community that we will be participating in both the SEMA show from November 3rd through 6th and the 2027 Consumer Electronics Show from January 6th through 9th, both in Las Vegas, before our next call. At both of these events, there will be booth tours, product demonstrations, and an opportunity to see the future of our technology on display. If you're interested in joining us at these events, please reach out to me after this call or talk to your favorite analyst to join their scheduled booth tour. I will now hand the call over to Steve Downing for our prepared remarks.

Thank you, Josh. For the third quarter, net sales were $647.7 million compared with $655.2 million in the third quarter of last year. Automotive unit performance was generally in line with our expectations, but revenue came in approximately $35 million below our beginning of quarter forecast due to certain customer issues and delayed launches. In North America, automotive revenue increased approximately 3% despite a 5% decline in regional light vehicle production. In Europe, revenue, excluding the Volkswagen program loss, increased approximately 13%. However, the Volkswagen headwind more than offset that underlying growth. Globally, automotive revenue, excluding the previously discussed headwinds in China and at Volkswagen, increased approximately 2%, despite global light vehicle production declining by more than 2%. That performance reflects the continued content growth we have been seeing across our primary automotive markets. Outside of automotive, premium audio revenue increased approximately 27%, to $54.7 million, while aerospace, biometrics, fire protection, and automotive aftermarket revenue collectively increased about 5%. Overall, our third quarter results demonstrate the resilience of the business and the continued benefits of our strategy to grow through technology, product mix, and diversification. So despite the challenges in China and Europe, sales were relatively flat year over year. Strong performance in North America driven by continued adoption of advanced feature content and growth across our non-automotive product lines helped offset those headwinds. In Europe, the continued rollout of DMS and ICMS products helped mitigate lower vehicle production and mirror unit shipments, reinforcing the value of increasing content per vehicle. China remained a headwind with the industry conditions we have discussed continuing to pressure unit shipments and revenue. On the positive side, our diversification strategy continued to gain momentum. Non-automotive revenue increased approximately 17% and represented 15% of total company revenue in the quarter, compared with 12% in the third quarter of last year. Gross margin for the third quarter was 33.4%, compared with 34.4% in the third quarter of 2025. The year-over-year decline was primarily driven by higher precious metals costs Unfavorable product mix and reduced operating leverage from lower than anticipated sales While gross margin was below our expectations the underlying drivers were relatively concentrated to just a couple of areas Precious metal inflation has increased our bill of material costs over the last several quarters and the sales shortfall relative to our forecast reduced our expected operating leverage Our operations teams continue to perform well and we remain focused on engineering solutions and other cost reduction opportunities to help offset inflation across several commodity areas. Consolidated operating expenses were $101.3 million in the third quarter compared with $102.8 million last year. On an adjusted basis, operating expenses were $97.5 million compared with $101.8 million last year excluding impairment, acquisition-related, and severance costs. The reduction in operating expenses on both a GAAP and adjusted basis reflects our continued focus on managing spending as sales growth has moderated during 2026. While we continue to focus on operating expenses, we are also supporting a significant number of launches and core R&D initiatives that are important to our long-term growth. As we shared at our Analyst and Investor Day in August, we are making meaningful progress on the dimmable visor program, which is scheduled to launch late next year. And we continue to move our large area device project closer to a qualified product with a scalable manufacturing footprint. Income from operations was $115.1 million for the third quarter, compared with $122.3 million last year. Adjusted income from operations was $118.8 million compared with $123.4 million in the third quarter of last year. Our effective tax rate for the quarter was 15.5% compared with 16.3% in the third quarter of last year. Net income attributable to Gentex was $90.6 million compared with $101 million last year. Adjusted net income attributable to Gentex was $97.8 million compared with $103.7 million in the third quarter of 2025. Diluted earnings per share attributable to Gentex were 43 cents compared with 46 cents in the third quarter of last year. On an adjusted basis, diluted earnings per share were 47 cents in both periods. I will now hand the call over to Kevin for some further financial details.