2 0 2 3 | A n n u a l R e p o r t
TABLE OF CONTENTS
ABOUT GENTEX
OVERVIEW
FAST FACTS
LETTER FROM THE CEO
FINANCIAL PERFORMANCE
4
5
6
8
PRODUC T & STRATEGY
DIMMABLE DEVICES
DIGITAL VISION
CONNECTIVITY
SENSING
COMMUNITY IN ACTION
SUSTAINABILITY
FINANCIALS
10K
15 YEAR SUMMARY
10
12
14
16
18
20
22
96
CORPORATE & LEADERSHIP
CORPORATE DATA
BOARD OF DIRECTORS
98
99
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This Annual Report contains forward-looking statements within the meaning of the safe
value of any new or acquired technologies and businesses; changes in regulatory conditions;
harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements
warranty and recall claims and other litigation and customer reactions thereto; possible
contained in this communication that are not purely historical are forward-looking
adverse results of pending or future litigation or infringement claims; changes in tax laws;
statements. Forward-looking statements give the Company’s current expectations or
import and export duty and tariff rates in or with the countries with which we conduct
forecasts of future events. These forward-looking statements generally can be identified
business; negative impact of any governmental investigations and associated litigation
by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,”
including securities litigation relating to the conduct of our business; and the length and
“future,” “goal,” “guidance,” “hope,” “intend,” “may,” “opinion,” “optimistic,” “plan,” “poised,”
severity of the COVID-19 (coronavirus) pandemic, including its impact across our business
“predict,” “project,” “should,” “strategy,” “target,” “will,” “work to,” and variations of such
on demand, operations, and the global supply chain. Readers are cautioned not to place
words and similar expressions. Such statements are subject to risks and uncertainties
undue reliance on these forward-looking statements, which speak only as of the date they
that are often difficult to predict and beyond the Company’s control, and could cause the
are made.
Company’s results to differ materially from those described. These risks and uncertainties
include, without limitation: changes in general industry or regional market conditions,
The Company undertakes no obligation to publicly update or revise any forward-looking
including the impact of inflation; changes in consumer and customer preferences for our
statement, whether as a result of new information, future events or otherwise, except as
products (such as cameras replacing mirrors and/or autonomous driving); our ability to be
required by law or the rules of the NASDAQ Global Select Market. Accordingly, any
awarded new business; continued uncertainty in pricing negotiations with customers and
forward-looking statement should be read in conjunction with the additional information
suppliers; loss of business from increased competition; changes in strategic relationships;
about risks and uncertainties identified under the heading “Risk Factors” in the Company’s
customer bankruptcies or divestiture of customer brands; fluctuation in vehicle production
latest Form 10-K and Form 10-Q filed with the SEC, which risks and uncertainties now
schedules (including the impact of customer employee strikes); changes in product mix;
include the impacts of COVID-19 (coronavirus) pandemic and supply chain constraints
raw material and other supply shortages; labor shortages, supply chain constraints and
that have affected, are affecting, and will continue to affect, general economic and industry
disruptions; our dependence on information systems; higher raw material, fuel, energy and
conditions, customers, suppliers, and the regulatory environment in which the Company
other costs; unfavorable fluctuations in currencies or interest rates in the regions in which
operates. Includes content supplied by S&P Global Mobility Light Vehicle Production
we operate; costs or difficulties related to the integration and/or ability to maximize the
Forecast (http://www.gentex.com/forecast-disclaimer).
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G EN T EX CO R P O R AT I O N
2023 A N N UA L R EP O RT
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OVERVIEW
Gentex is a leading technology supplier of dimmable
devices, vision systems, sensors and advanced
electronic products for the global automotive,
aerospace, and fire protection industries.
6,245
Full-time Employees
50.6 M
Auto-Dimming Mirror Units
Through our core competencies, new partnerships, acquisitions, and
Gentex has over 50 years of experience in the commercial fire protection
ongoing research, Gentex is enabling new technologies and creating
industry, and is preparing to introduce a line of smart home devices
market-leading positions in new verticals.
called PLACE, an innovative suite of smart home safety products
Within the automotive market we continue to expand our global
presence with increasing adoption rates of our core mirror product lines
onto new vehicle platforms, while adding additional revenue with our
advanced electronic content. We continue to expand our dimmable device
with room-specific functionality. PLACE will be a holistic solution
that blends smart home safety, comfort, and security features into one
sophisticated system, all controlled from a single, user-friendly app
that leverages HomeLink® brand and connectivity to the car.
3
offerings, with interior and exterior mirrors, visors, sunroofs, and small
Our momentum in the medical industry has been underpinned by
surface solutions for camera and sensor concealment. Our electronic
partnerships with Mayo Clinic and Retispec, and with the recent
content, ranging from cameras and displays to infrared sensors and
acquisition of eSight, Gentex is moving forward as a technology provider
detection devices, provide automakers with profitable optional content
for their vehicle trim package upgrade paths.
1
in this space. eSight is a wearable designed to assist individuals with
severe vision impairments or centralized vision loss, and utilizes our
In the Aerospace industry, Gentex is the world’s leading supplier of
Electronically Dimmable Windows that give passengers and crew additional
skillsets within cameras, displays, engineering and proprietary algorithms
to dramatically improve the daily lives of users.
4
control over cabin lighting. From cabin partitions and airborne particulate
While our automotive performance drove the majority of our revenues
sensors to passenger smart lighting and biometric identification systems
in 2023, each of these segments represent long term opportunities for
for personalization and safety, Gentex continues to work to develop
additional technologies to improve the in-flight experience.
2
Gentex to continue to grow above the market.
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2
3
4
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G EN T EX CO R P O R AT I O N
36+
OEM Customers Shipped To
SALES & ENGINEERING OFFICES
United States (Headquarters), Canada, China, France, Germany, Israel, Japan, Korea,
Sweden, United Kingdom
660+
Nameplates our Content Appears On
89%
MARK ET SHARE
OF I NTERI OR AUTO
DI MMING M IRRORS
(IEC)
FAST FACTS
T RADEMARKS
399 Foreign Registered
449 50 US Registered
New 2023
INTELLECTUAL PROPERTY
PATENTS GRANTED
190 41 US Patents
149 Foreign Patents
NE W APPLICATIONS:
178 109 US Patents
69 Foreign Patents
ESIGHT ACQUISITION:
68 27 US Patents
41 Foreign Patents
APPL ICATIONS
IN PROCESS
461
169 Pending US Patents
257 Pending Foreign Patents
35 Trademark Applications
2023 A N N UA L R EP O RT
5
LETTER FROM THE CEO
Calendar year 2023
turned out to be
a remarkable year
for the company!
Net sales increased by $380.3 million (20%) compared to 2022, and marked the first time that Gentex exceeded $2 billion in annual revenue.
The majority of this growth in 2023 was driven by the adoption of our Full Display Mirror® (FDM®), driver- and passenger-side electrochromic
mirrors (OEC), and continued proliferation of our base and advanced feature mirrors. We experienced a 15% year-over-year increase in our
auto-dimming mirror shipments, growing from 44.2 million units in 2022 to 50.6 million units in 2023. This increase was a continuation
of the growth over market we’ve seen for the past few years. From 2018 through 2023, our revenue grew by over 26%, in spite of light vehicle
production environments in North America, Europe, Japan, and Korea that shrunk by more than 11% during the same period. We believe
this revenue outperformance compared to our underlying market is evidence that our product strategy is effective, and can continue to drive
growth in the coming years.
MARGIN RECOVERY
DEVELOPMENT & OPPORTUNITIES
In spite of persistent supply chain and component shortage
As we look ahead to the next 3, 5, and 10 year challenges and
issues, Gentex was able to avoid shutting down any of our customers.
opportunities, I truly believe that Gentex is in an ideal position
We took on the additional work required to transition away from
to continue growing both our share of the market and our product
unavailable components, redesigning and revalidating our products
portfolio and adoption rates with our customers. As we expand
quickly while striving to maintain our reputation for quality and
our capabilities, markets, facilities, and teams, it is an exciting
reliability. This often resulted in a more expensive billl of materials
time to be leading Gentex. Our teams are dedicated, focused, and
and lower margins, but protected our customers during this
capable. With our internal research and development, partnerships,
chaotic time. Our margin recovery process has not been easy, but
and acquisitions, Gentex will continue to fill our pipeline with
the sales, purchasing, manufacturing, and engineering teams
exciting new products and technologies. Our ongoing product
at Gentex have done an incredible job over the last few years. In
adoption at OEMs, improving margin profile, and dedication
2023, we had difficult conversations with our customers to isolate
to our capital allocation plan should enable us to continue
the additional costs we’d taken on, and renegotiated pricing with
to outperform our underlying markets and drive significant
suppliers and customers where necessary. Through this process,
shareholder value over the coming years.
we were able to rebuild our margins in 2023 from 31.7% in Q1 to
34.5% in Q4, and set the stage for continued margin improvement
in 2024.
As always, we appreciate your continued support,
Steve Downing
President and CEO
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G EN T EX CO R P O R AT I O N
G EN T EX CO R P O R AT I O N
G EN T EX CO R P O R AT I O N
2023 A N N UA L R EP O RT
2022 A N N UA L R EP O RT
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7
FINANCIAL PERFORMANCE
Our Best Year
So Far
Gentex continues to outpace our markets and our peers. Our product portfolio,
quality, patents, manufacturing, engineering capabilities, new features, and product
innovation help us defend our 89% market share of interior electrochromic mirrors.
2023
RETURN TO SHAREHOLDERS
PERFORMANCE
$112.2 M
Cash Dividends Paid
$.48/share
Dividend
$144.7 M
Share Repurchases
4.93 M
Shares Repurchased
$256 M
$1.84 (+.48)
Earnings per Share
$2.3 B (+20%)
Revenue
33.2% (+1.4%)
Gross Margin
$266.9 m
15.2%
Annual Tax Rate
$183.7 m
$93.6 m
Returned to Shareholders
Capital Expenditures
2024
GUIDANCE (As of January 27, 2024)
$2.45–$2.55 b
Revenue
34%–35%
Gross Margin
$295–$305 m
16%–18%
Estimated Annual Tax Rate
$225–$250 m
Capital Expenditures
$95–$105 m
Operating Expenses (E, R&D and S, G&A)
Operating Expenses (E, R&D and S, G&A)
Depreciation & Amortization
Depreciation & Amortization
2025 $2.65–2.75 B
REVENUE GUIDANCE
FUTURE GUIDANCE
LIGHT VEHICLE PRODUCTION
(per S&P Global Mobility light vehicle production forecast) — in millions
Our 2024 and 2025 guidance is based on the
S&P Global Mobility mid-January 2024 forecast
for light vehicle production in North America,
Region
North America
Europe, Japan/Korea, and China and is detailed
Europe
in the accompanying table.
Japan & Korea
China
Total Light
Vehicle Production
Actual
2021
Actual
2022
Actual
2023
Forecast
2024
Forecast
2025
Variance
‘24/‘23
Variance
‘25/‘24
13
15.9
10.9
24.8
14.3
15.7
11.1
26.3
15.6
15.8
16.2
1%
17.8
17.4
17.5
(2)%
3%
1%
12.7
12.2
11.8
(4)%
(3)%
28.9
28.9
30.1
– %
4%
64.6
67.4
75.0
74.3
75.6
(1)%
2%
Since 2014
Gentex has returned more than 3 billion dollars to shareholders
through our dividend and share repurchase plans. We have
repurchased more than 100 million shares.
D
S
U
S
N
O
L
L
M
I
I
$800
$700
$600
$500
$400
$300
$200
$100
$
Return of Capital
$708.2 M
$116.6
$447.8 M
$116.3
$439.9 M
$115.3
$405.7 M
$117.2
$340.2 M
$264.5 M
$108.8
$591.6
$208.2 M
$101.1
$117.6 M
$97.0
$163.4
$111.2
$87.6
$30.0
2014
2015
Share Repurchases
2016
DIVIDENDS
$227 M
$256.9 M
$112.2
$231.4
$331.5
$288.5
$324.6
$113.1
$113.9
$144.7
2017
2018
2019
2020
2021
2022
2023
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G EN T EX CO R P O R AT I O N
G EN T EX CO R P O R AT I O N
2023 A N N UA L R EP O RT
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DIMMABLE DEVICES
Leading the Market
Interior Mirrors (IEC)
31.8 M
Outside Mirrors (OEC)
18.8 M
+11% | 28.7 M in 2022
+21% | 15.1 M in 2022
TOTAL MIRRORS
50.6 M
+15% | 44.2 M in 2022
LARGE AREA DIMMABLE DEVICES
Our development of large area dimmable devices continues to progress
through critical milestones as we work to develop this product for
longevity and performance. With a market focused on panoramic
sunroofs, we have been developing a film-based application of
our electrochromic technology which we believe will be a critical
component in the car, and relevent in either a driver-based or
autonomous vehicle. With large area dimmable devices, drivers will
be able to completely control cabin lighting for privacy, in-vehicle
display contrast, HVAC optimization, and passenger preference.
We believe our technology provides superior clarity, darkening,
and longevity, while also improving potential aerodynamics of the
vehicle by removing the need for movable head liners.
AEROSPACE
With our 89% share of dimmable mirrors, Gentex continues to dominate
In 2023 we shipped nearly 31.8 million interior auto-dimming mirrors,
Within the aerospace market, our dimmable windows are an exceptional
the market with our high-quality electrochromic mirrors.
accounting for approximately 35% of light vehicles produced globally.
alternative to manual shades, and improve the aesthetics, performance,
We are best known for our advanced electrochromic (EC) technology.
This proprietary chemical compound and coating stack are some of the
key elements in our devices. Sandwiched between two panels of glass,
this EC fluid is clear in normal environments, but can darken when
exposed to an electrical charge. Over the years we have continued to
develop this technology, improving optical clarity, color, and transition
speed between clear and dark states.
While cameras and displays, led by our Full Display Mirror technology,
and reliability of the cabin windows. Our relationships and opportunities
continue to make headway into the market, our most common
with Boeing and Airbus continue to expand. We believe that our
competition continues to be non-dimming mirrors (or prismatic mirrors),
product portfolio and technological approach to solving problems will
which we continue to gain ground against each year.
help us add additional value for our aerospace customers. Our dimmable
windows are now available on the Boeing 787, 777x, and Airbus A350.
Mirror Volumes by Quarter
)
s
d
n
a
s
u
o
h
t
(
S
R
O
R
R
M
I
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2021
2022
2023
Interior Mirrors (IEC)
OUTSIDE MIRROrs (OEC)
10
G EN T EX CO R P O R AT I O N
MIRROR VOLUMES (thousands)
2022
2023 % Change
North American Interior Mirrors
8,384
9,213
North American Exterior Mirrors
5,986
6,781
10%
13%
TOTAL NORTH AMERICAN
MIRROR UNITS
14,369
15,993
11%
International Interior Mirrors
20,303
22,554
International Exterior Mirrors
9,516
12,048
11%
27%
TOTAL INTERNATIONAL
MIRROR UNITS
29,819
34,602
16%
Total Interior Mirrors
28,686
31,767
Total Exterior Mirrors
15,502
18,828
11%
21%
TOTAL AUTO-DIMMING
MIRROR UNITS
44,188
50,596
15%
2023 A N N UA L R EP O RT
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DIGITAL VISION
The combination of cameras,
displays, and mirrors continues
to provide a significant growth
path for Gentex technology.
In 2023, our Full Display Mirror continued to show significant growth into the
automotive market. Available on more than 100 nameplates at 15 different OEMs,
FDM accounted for 2.44M of the 31.8M interior auto-dimming mirrors we shipped
in 2023. Despite being less than less than 10% of our interior mirror volume, FDM
accounts for more than 20% of Gentex’s revenues.
FDM continues to be favorably received by drivers and manufacturers alike, and
continues to launch on additional nameplates and trim packages at nearly every
OEM where it is available. It drives significant revenue for Gentex, as well as for
our customers, while providing unrivaled rearward visibility for drivers.
HISTORICAL FDM LAUNCH TIMELINE
GM
SUBARU
ASTON MARTIN
RAM
FIAT
HYUNDAI / KIA
TOYOTA
MERCEDES
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
NISSAN
LAND ROVER
MITSUBISHI
MASERATI
FERRARI
MAZDA
FORD
GLOBAL FDM PLATFORMS
FDM SHIPMENTS
2019 | 739 K
2020 | 1.05 M
2021 | 1.123 M
2022 | 1.68 M
2023 | 2.44 M
ASTON MARTIN DBS GT Zagato, Valkyrie BUICK Enclave, Encore
GX, Envision, Envision Plus, Velite 7 CADILLAC CT5, Escalade,
Escalade ESV, GT4, LYRIQ, XT4, XT5, XT6 CHEVROLET Blazer,
Blazer EV, Bolt, Bolt EUV, Camaro, Corvette, Silverado 1500, Silverado
HD, Suburban, Tahoe, Traverse FIAT Ducato FERRARI 812, SF90
FORD Transit Custom GMC Acadia, Hummer EV, Sierra 1500, Sierra
HD, Yukon, Yukon XL HYUNDAI Palisade INFINITI QX60, QX80
JAGUAR E-PACE, I-PACE, XE, XF JEEP Grand Cherokee L, Grand
Wagoneer KIA EV9, Sorento, Telluride LAND ROVER Defender,
Discovery Sport, Evoque, Range Rover, Range Rover Sport LEXUS ES,
GX, LM, LS, LX, NX, RX, RZ, TX MASERATI MC20, GranTurismo
MAZDA CX-90 MERCEDES AMG One, Metris, Sprinter, Vito
MITSUBISHI eK Wagon, eK X NISSAN Armada, Roox RAM 1500,
1500 TRX, 2500/3500, ProMaster SUBARU Ascent, Forester, Levorg,
Outback, Solterra TOYOTA Alphard, bZ4X, Crown, Crown Kluger,
Grand Highlander, Granvia, Harrier, Hiace, Highlander, Mirai, Prius,
RAV4, Sequoia, Sienna, Tacoma, Tundra, Venza, Wildlander
1212
G EN T EX CO R P O R AT I O N
Scan to learn more about
our digital vision solutions
ReVuTM
DRIVE RECORDING SYSTEMS
Integrating multiple camera feeds into a digital video recording system
for our customers. Whether using on-board memory cards or through
(DVR) in the vehicle environment, especially in combination with our
our Bluetooth connected ReVu app, drivers can quickly and reliably
FDM product, continues to provide an easily added, profitable upgrade
access their recorded drive feeds.
2023 A N N UA L R EP O RT
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2022 ANNUAL REPORTGENTEX CORPORATION CONNECTIVITY
Staying
Connected
HomeLink® is the world’s leading car to home connectivity
The HomeLink app continues to build on HomeLink’s
platform. In North America, it is compatible with 99% of
accessibility by enabling wifi-connected device control from
installed garage doors, and continues to grow its presence
your vehicle. Rather than opening 6 different applications
globally. HomeLink is a reliable, easy-to-program device
on your way home, you can program multiple functions to
that can connect your car to multiple garage doors, gates,
a single in-vehicle button, and stay hands-free as you travel.
and radio frequency controlled devices. For garage doors
with a battery backup, HomeLink provides entry-critical
QR HL
access in the event of a power outage, while wifi-only
garage doors would not be accessible.
Scan to learn more
about HOmelink
Smart home Solutions
INTEGRATED TOLL MODULE® (ITM®)
As supply chain constraints eased in 2023, Gentex was able
to begin shipping normalized volumes of our Integrated Toll
Module (ITM) device for our two launch customers again.
ITM enables in-vehicle payment protocols for tolling in
equipped Audi and Mercedes vehicles, replacing windscreen
mounted toll transponders. Rather than having regional-
specific function, ITM can be utilized in nearly every toll
system, removing the need for multiple transponders and
accounts. While ITM is primarily used for tolling today,
we believe that vehicle-to-infrastructure payments for drive-
throughs, gas stations, and parking could all be handled
by your vehicle in the future.
IN A 2020 SURVEY
+ 86% of respondents who have HomeLink in their
vehicles use it
+
Overall satisfaction with HomeLink is high – 82%
+
80% of respondents feel having HomeLink
integrated into the vehicle is important and
most would be disappointed if their next vehicle
did not include HomeLink.
+
75% of respondents believe all new vehicles
should come integrated with HomeLink
+
Majority of respondents find it easy to locate,
use and program their HomeLink buttons
+
84% of respondents believe that having HomeLink
is an advantage
HomeLINK Solution Overview
SIMPLENIGHT®
HomeLink CLOUD
Smart Home
Devices
HomeLink
Mobile App
Wi-FI Connected
Garage Door
HomeLink Direct
Radio Frequency (RF)
Simplenight is a white-label ready application that provides
users with a fast and easy way to get access to discounted
hotels, restaurants, experiences, and other products in more
than 30 categories across 2,000 cities in 190 countries. As
OEMs seek to sign up additional users to their subscription
based services, Simplenight provides value-add, direct savings
for car owners.
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G EN T EX CO R P O R AT I O N
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SENSING
Enabling &
Protecting the
Next Generation
Gentex’s core sensing capability continues to grow and develop through
partnerships, acquisitions, research and development.
PLACE DEVELOPMENT
Within the fire protection industry, our commercial products have
an established, industry-leading rapport for their performance and
reliability. In 2023, we announced plans to expand our offering into the
consumer-facing fire protection industry by launching Place; a revitalized
take on fire protection products with a room-centric approach to sensing,
detection, warning, communication, safety and awareness. With a core
set of capabilities centered on enhanced detection of smoke or airborne
particulate, Place then provides additional room-specific functions that
add value for the entire home. From air quality monitoring and cameras
to speakers and white noise generators, Place provides peace of mind for
every space.
GUARDIAN ACQUISITION
DMS VS. ICMS
ADASKY PARTNERSHIP
ESIGHT ACQUISITION
Since acquiring Guardian Optical Technology (now Gentex Israel)
in 2021, Gentex has continued to improve on our algorithm, hardware,
DRIVER MONITORING
SYSTEMS (DMS)
IN-CABIN MONITORING
SYSTEMS (ICMS)
and system capabilities for driver monitoring (DMS) and in-cabin
Camera:
Camera:
monitoring systems (ICMS). With pending European regulation
that will require driver monitoring systems in new vehicles, we
believe our technology provides customers with an easily integrated,
Regulation-driven
Wholistic Cabin Approach
IR Camera
RGB-IR Camera
customizable, and scalable platform to achieve this target. We
Tight field of view
Wider field of view
expect to launch our first DMS platform in 2024, and are actively
engaged with our customers to help them meet their timelines and
functionality requirements seamlessly.
Driver-only focus
Detection:
Detection:
Drowsiness & Distraction
Drowsiness & Distraction
Whole cabin monitoring
Our partnership with Adasky® began as our growth within cameras and
In 2023 we completed the acquisition of eSight®, a long time developer
displays helped us discover the natural limitations of camera-only based
of vision enhancement technology designed to help people living with
systems. Adasky’s proprietary long wave infrared (LWIR) shutterless
visual impairments. Having previously partnered with eSight for the
camera and sensing algorithms dramatically enhance the function and
design and manufactuing of their eSight GO™ product, we transitioned
capability of camera systems in low-light, high-light, and all-weather
from a partnership to a full acquisition of the eSight technology and
scenarios. The inclusion of their system alongside traditional forward- and
team. eSight fits naturally within Gentex’s technological skill set, utilizing
rearward-facing camera systems could dramatically improve the vehicle’s
high definition cameras, near-to-eye displays, high-end engineering, and
driver assist functions, while also enhancing the driver’s ability to monitor
proprietary algorithms to provide functional vision for individuals living
their surroundings and quickly identify and avoid potential hazards.
with a variety of eye conditions. Longer term, we believe eSight provides
a natural next step for Gentex within the medical device space.
Passenger locations, body pose,
and behavior
Airbag functionality
Object left behind
Presence of life
Selfie-camera & Video Calling
Scan for more info on
our sensing technology
THERMAL IMAGING
LWIR
BLENDED
CMOS/LWIR
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G EN T EX CO R P O R AT I O N
2023 A N N UA L R EP O RT
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COMMUNITY IN ACTION
WOMEN@GENTEX BUSINESS RESOURCE GROUP
WOMEN@GENTEX BUSINESS RESOURCE GROUP
The Women@Gentex BRG continues to promote and develop beneficial relationships for Gentex
The Women@Gentex BRG continues to promote and develop beneficial relationships for Gentex
employees, both in the office and in our communities. This group is involved in everything from
employees, both in the office and in our communities. This group is involved in everything from
organizing internal networking meetings, building homes with Habitat for Humanity, volunteering
organizing internal networking meetings, building homes with Habitat for Humanity, volunteering
in local events, collecting household goods for members of our community, and numerous other
in local events, collecting household goods for members of our community, and numerous other
outreach and fundraising initiatives. In 2023, Gentex received a Pillar Award from the Women’s
outreach and fundraising initiatives. In 2023, Gentex received a Pillar Award from the Women’s
Resource Center in Grand Rapids for advancing women in the workplace.
Resource Center in Grand Rapids for advancing women in the workplace.
GENTEX V.E.T.S. BUSINESS RESOURCE GROUP
Gentex recently achieved silver-level Veteran-Friendly Employer Status from the Michigan
Veterans Affairs Agency. This certification acknowledges Gentex’s commitment to hire veterans
and provide them with a range of information and assistance in their civilian lives. More
information about the certification can be found at: michigan.gov/mvaa/employment-new/
panel-employers/become-friendly-emp.
DIVERSITY, EQUITY & INCLUSION AWARD FROM MEMA
DIVERSITY, EQUITY & INCLUSION AWARD FROM MEMA
Gentex was recognized by the MEMA Original Equipment Suppliers Association with the
Gentex was recognized by the MEMA Original Equipment Suppliers Association with the
2023 DEI Champion Corporation Award. The award recognizes the importance of diversity,
2023 DEI Champion Corporation Award. The award recognizes the importance of diversity,
equity, and inclusion in the automotive and commercial vehicle market and celebrates
equity, and inclusion in the automotive and commercial vehicle market and celebrates suppliers
who champion the spirit of DEI in their organizations and communities. Gentex
who champion the spirit of DEI in their organizations and communities. Gentex was one
of two recipients of the award for 2023.
of two recipients of the award for 2023.
EMPOWERING THE NEXT GENERATION
Within our community, Gentex strives to support a wide variety of local schools and educational
institutions. One way we do this is through scholarships and event sponsorships, but in 2023
we also donated 7,000 books and 10,000 rewards for local reading and learning initiatives.
We believe that giving the next generation of learners the right tools can create massive opportunity
and advancement, and we are proud of the work they’re doing!
CREATING OPPORTUNITY
CREATING OPPORTUNITY
As Gentex works to develop our supplier base to achieve our long term growth goals, we are
As Gentex works to develop our supplier base to achieve our long term growth goals, we are
actively identifying and engaging with our supply chain to grow our spend with minority-owned,
actively identifying and engaging with our supply chain to grow our spend with minority-owned,
women-owned, and veteran-owned suppliers. Our efforts in this realm have been acknowledged
women-owned, and veteran-owned suppliers. Our efforts in this realm have been acknowledged
and recognized by multiple customers, including but not limited to Honda, Nissan, and Toyota,
and recognized by multiple customers, including but not limited to Honda, Nissan, and Toyota,
who specifically recognized Gentex’s efforts over the last 10 years to increase supplier relationships
who specifically recognized Gentex’s efforts over the last 10 years to increase supplier relationships
with minority business enterprises.
with minority business enterprises.
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G EN T EX CO R P O R AT I O N
G EN T EX CO R P O R AT I O N
2023 A N N UA L R EP O RT
2022 A N N UA L R EP O RT
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SUSTAINABILITY
Gentex is focused on investing in environmental,
sustainability and diversity efforts that have long
term benefits.
In 2023, we furthered our work with EcoVadis, a global Corporate Social
Gentex has always been more interested in progress than in promotion,
Responsibility (CSR) rating company based on international standards.
but as more investors seek to align their portfolios toward social progress,
In 2023 we began reaching out to our supply chain, asking them to engage
we recognize the need to showcase our good work. To that end, we
in the EcoVadis platform so that we can identify their progress toward
continue to update our sustainability report each year, and we’ve also
sustainable targets. Over the coming years, we will add this information
begun adding clarifying documents to assist our shareholders in analyzing
to our own data to provide shareholders with increased visibility of our
our performance and stance on social issues.
performance and impact within our communities, and a more complete
picture of our scope 3 emissions. These metrics will focus on our impact
with regard to our environment, our labor and human rights initiatives,
the ethics which guide our decision making, and our procurement
processes. Among other things, this reporting will allow us to work with
our suppliers to identify and track our Scope 3 emissions, update our
Scott Ryan
internal and external guidelines and reporting for social progress, and
Vice President, General Counsel, Corporate Secretary,
more accurately compare our progress to that of our peer group.
& Sustainability Officer
PROGRESS UPDATES:
Supporting the growth of EVs: Gentex has 30 charging stations on our
main campus for our employees with electric vehicles.
1
Energy Purchase: 2023 was our first full year utilizing renewable energy
at our James Street location. This energy, through a purchase agreement
Glass Recycling: with new updates to our manufacturing and
reclamation processes, we have worked to expand our ability to recycle
with our local energy company, comes from renewable sources rather
than mainstream electrical production.
3
glass that is further along in production. This will allow Gentex to
Safely Packaged: through a partnership with Goodwill Industries of
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
recycle more glass with some amount of epoxy, chemistry, and/or
22
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
2
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
hardware associated with it, rather than having to send it to the landfill.
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
West Michigan, a reseller of used clothes, home goods and other items,
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
Gentex is donating 12 gaylords of once-used bubble wrap and packaging
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
materials every other week. This recycled packaging is used by their
ecommerce team for outbound orders. Each gaylord is approximately
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4
48" x 40" x 36".
48" x 40" x 36".
4
48" x 40" x 36".
48" x 40" x 36".
48" x 40" x 36".
48" x 40" x 36".
48" x 40" x 36".
1
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Keep up to date on our
ESG documents and MORe
Scan to visit our website
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G EN T EX CO R P O R AT I O N
G EN T EX CO R P O R AT I O N
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2023 A N N UA L R EP O RT
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Item 1. Business.
GENERAL DEVELOPMENT OF BUSINESS
Gentex Corporation (the “Company”) was incorporated as a Michigan corporation in 1974. The Company designs, develops, manufactures,
markets, and supplies digital vision, connected car, dimmable glass, and fire protection technologies, including: automatic-dimming rearview
and non-dimming mirrors and electronics for the automotive industry; dimmable aircraft windows for the aviation industry; and commercial
smoke alarms and signaling devices for the fire protection industry. The Company’s largest business segment involves designing, developing,
manufacturing and marketing interior and exterior automatic-dimming automotive rearview mirrors that utilize proprietary electrochromic
technology to dim in proportion to the amount of headlight glare from trailing vehicle headlamps. Within this business segment, the Company
also designs, develops and manufactures various electronics that are value added features to the interior and exterior automotive rearview mirrors
as well as electronics for interior visors, overhead consoles, and other locations in the vehicle. The Company ships its products to all of the major
automotive producing regions worldwide, which it supports with numerous sales, engineering and distribution locations worldwide.
At its inception, the Company manufactured smoke detectors, a product line that has since evolved to include a variety of fire protection
technologies. In the early 1980’s, the Company introduced an interior electromechanical automatic-dimming rearview mirror as an alternative
to the manual day/night rearview mirrors for automotive applications. In the late 1980’s, the Company introduced an interior electrochromic
automatic-dimming rearview mirror for automotive applications. In the early 1990’s, the Company introduced an exterior electrochromic
automatic-dimming rearview mirror for automotive applications. In the late 1990’s, the Company began making volume shipments of three
new exterior mirror sub-assembly products: thin glass flat; convex; and aspheric. In 2005, the Company began making volume shipments of
its bezel-free exterior automatic dimming mirror. In 2010 the Company began delivering electrochromic dimmable aircraft windows for the
aviation industry. In 2013, the Company acquired HomeLink®, a wireless vehicle/home communications product that enables drivers to remotely
activate garage door openers, entry door locks, home lighting, security systems, entry gates and other radio frequency convenience products
for automotive applications, wherein the Company had previously been a licensee of HomeLink® and had been, since 2003, integrating
HomeLink® into its interior automatic-dimming rearview mirrors.
In 2015, the Company began making shipments of the Full Display Mirror® (“FDM®”), which is an on-demand, mirror-borne LCD display
that streams live, panoramic video of the vehicle’s rearward view in order to improve driver rear vision. Also in 2015, the Company introduced
the integration of toll module technology into the vehicle in a first-to-market application referred to as Integrated Toll Module® or “ITM®”. The
interior mirror is an optimal location for a vehicle-integrated toll transponder and it eliminates the need to affix multiple toll tags to the windshield.
In 2017, the Company announced an agreement entered into during the ordinary course of business with VOXX International Corporation
to become the exclusive aftermarket distributor of the Gentex Aftermarket Full Display Mirror® in North America. The Company has also
displayed a new three-camera rear vision system that streams rear video – in multiple composite views – to a rearview-mirror-integrated
display. Further, the Company has announced an embedded biometric solution for vehicles that leverages iris scanning technology to create
a secure environment in the vehicle. There are many use cases for authentication, which range from vehicle security to start functionality to
personalization of mirrors, music, seat location and temperature, to the ability to control transactions not only for the ITM® system, but also
the ride sharing car of the future. The Company believes iris recognition is among the most secure forms of biometric identification, with a
false acceptance rate as low as one in 10 million, far superior to facial, voice, and other biometric systems. The Company’s future plans include
In January 2020, the Company unveiled an innovative lighting technology for medical applications that was co-developed with Mayo Clinic.
This new lighting concept represents the collaboration of a global, high-technology electronics company with a world leader in health care.
The Company’s new intelligent lighting system combines ambient room lighting with camera-controlled, adaptive task lighting to optimize
illumination for surgical and patient-care environments. The system was developed over an 18-month period of collaboration between Company
engineers and Mayo Clinic surgeons, scientists, and operating room staff. The teams researched, designed, and rapidly iterated multiple
prototypes in order to develop unique features that address major gaps in current surgical lighting solutions. The Company will continue to work
on the intelligent medical lighting system in order to assess system performance and work toward obtaining any necessary approvals.
In April 2020, the Company, in the ordinary course of business, acquired Vaporsens, Inc. (“Vaporsens”), which specializes in nanofiber chemical
sensing research and development. This new nanofiber technology can detect a wide variety of chemicals, including explosives, drugs, volatile
organic compounds (“VOCs”), toxic industrial chemicals, amines, and more. The core of Vaporsens’ chemical sensor technology is a net of
nanofibers approximately one thousand times smaller in size than human hair. Their porous structure allows them to absorb targeted molecules
from sampled gas and identify them via changes in their electrical resistance. The technology allows for the rapid detection of target chemicals
with high sensitivity in the parts per billion and parts per trillion ranges. The Vaporsens technology has a wide variety of use cases in various
markets and industries, with potential applications for automotive, aerospace, agriculture, chemical manufacturing, military and first responders,
worker safety, food and beverage processing, and medical.
In January 2021, the Company announced a partnership, in the ordinary course of business, with Simplenight to provide drivers and vehicle
occupants with access to enhanced mobile capability for booking personalized entertainment and lifestyle experiences in addition to everyday
purchases. Simplenight delivers a customizable and robust platform that enables brands to globally offer real-time book-ability across multiple
categories such as dining, accommodations, attractions, events, gas, parking, shopping and more. The platform is unique in that it is designed
to seamlessly integrate into automaker infotainment and navigation systems, as well as mobile applications and voice assistants. Simplenight can
be integrated into the Company’s current and future connected vehicle technologies, including HomeLink®, the automotive industry’s leading
car-to-home automation system. HomeLink® consists of vehicle-integrated buttons that can be programmed to operate a myriad of home
automation devices. Integration of Simplenight into the Company’s HomeLink Connect® app is underway. The HomeLink Connect® allows
users to program their HomeLink® buttons and control cloud-based devices from their vehicles.
In September 2021, the Company announced the acquisition of Guardian Optical Technologies (“Guardian”), an Israeli startup that pioneered
a unique, multi-modal sensor technology designed to provide a comprehensive suite of driver- and cabin-monitoring solutions for the automotive
industry. The core of Guardian’s technology is an infrared-sensitive, high-resolution camera that combines machine vision, depth perception, and
micro-vibration detection. This proprietary sensor configuration allows the system to not only monitor the driver, but also the entire vehicle cabin,
including objects and other occupants, even assessing the occupant’s behaviors, gestures, and activities. The system continuously scans, tracks
and determines the physical location of every vehicle occupant and object, even without a direct line of sight, by combining two-dimensional video
image recognition with 3D depth mapping and optical motion analysis. It is able to detect even slight movements, including heartbeats.
In 2022, the Company obtained an approximate 20% equity share in GreenMarbles, in the ordinary course of business. GreenMarbles is a
leading provider of sustainable solutions for integration into properties. The Company intends for this relationship to promote the HomeLink
Connect® App with property developers and contractors.
integrating biometric authentication with many of its other electronic features, including HomeLink® and HomeLink Connect® or the
On May 1, 2023, the Company announced a partnership, in the ordinary course of business, with Adasky Ltd. (“Adasky”), a developer and
ITM®. The biometric system allows for added security and convenience for multiple drivers by adding an additional factor of authentication
manufacturer of intelligent, high-resolution thermal sensing systems for vehicle safety and perception applications and smart city roadway
for increased security, when a driver (or passenger) enters a vehicle. The Company announced in January 2018 that it entered into an exclusive
solutions. In addition to the partnership, the Company has obtained an approximate 27% equity share in Adasky.
licensing agreement, in the ordinary course of business, with Fingerprint Cards AB to deploy its ActiveIRIS® iris-scanning biometric
technology in automotive applications.
On November 2, 2023, the Company acquired certain technology assets from eSight Corporation (“eSight”), in the ordinary course of business.
The technology acquired from eSight provides advanced and versatile low-vision smart glasses for those with visual impairments and is compatible
In January 2019, the Company announced that it would be offering, as optional content, its latest generation of variable dimmable windows on
with more than 20 eye conditions including Macular Degeneration, Diabetic Retinopathy, and Stargardt disease. eSight wearables are inspected
the Boeing 777X aircraft. During the third quarter of 2019, the first production shipments of variably dimmable windows were made to Boeing
and registered by public health officials. Esight 4, which is the fourth generation of the product, is a Class 1 Medical Device that is registered
for the 777X program. In January 2020, the Company announced that Airbus will also be offering the Company’s dimmable aircraft windows
with the FDA, registered with EUDAMED, and inspected by Health Canada. The Company has been developing, initially for contract
on its aircraft, with production having begun in 2021.
manufacture and now as the owner, the technology, referred to as eSight Go™. Deliveries of eSight Go to customers are expected to begin
in calendar year 2024.
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On January 8, 2024, the Company announced a partnership, in the ordinary course of business, with Solace Power, an innovative wireless power
transfer technology company. This collaboration is intended to further develop, manufacture, and commercialize Solace Power’s unique wireless
AUTOMOTIVE REARVIEW MIRRORS AND ELECTRONICS PRODUCT DEVELOPMENT. The Company continually seeks to develop new products
and is currently working to introduce additional advanced-feature automatic-dimming mirrors. Advanced-feature automatic-dimming mirrors
power systems for a wide variety of industries. In addition to the partnership, the Company obtained an approximate 13% equity share in Solace
currently being offered by the Company include one or more of the following features: SmartBeam®, HomeLink®, HomeLink Connect®, frameless
Power. The Company believes Solace Power’s technology not only has immediate applications in the current Company product portfolio, but
mirror designs, compass displays, telematics, ITM® systems, hands free communication, Rear Camera Display (“RCD”) interior mirrors, FDM®
can also play an important role in the Company’s continued expansion into new markets.
interior mirrors, digital video recording solutions, exterior turn signals, side blind zone indicators and various other exterior mirror features that
On January 9, 2024, the Company announced the introduction of a suite of smart home safety products with room-specific functionality
called PLACE. PLACE offers a holistic solution that blends smart home safety, comfort, and security features into one sophisticated system,
all controlled from a single, user-friendly app. The PLACE portfolio of smart-home solutions is designed to address the nuanced safety
requirements of various home spaces. The base Any Space unit provides smart smoke and carbon monoxide detection and Wi-Fi connectivity
for space-specific alerts. The system’s versatility is further demonstrated through specialized units for the kitchen, nursery, and garage, each
equipped with additional safeguards like gas and VOC detection, room-monitoring cameras, intercoms, and temperature and humidity sensing,
as appropriate to the application.
Automotive revenues represent approximately 98% of the Company’s total revenue in 2023, mostly consisting of interior and exterior
electrochromic automatic-dimming rearview mirrors and automotive electronics.
DESCRIPTION OF BUSINESS
The Company designs, develops, manufactures, markets, and supplies digital vision, connected car, dimmable glass, and fire protection
technologies, including: automatic-dimming and non-automatic-dimming rearview mirrors and electronics for the automotive industry;
dimmable aircraft windows for the aviation industry; and commercial smoke alarms and signaling devices for the fire protection industry.
Automotive Products
AUTOMOTIVE REARVIEW MIRRORS AND ELECTRONICS. Automotive applications are the largest business segment for the Company,
consisting primarily of interior and exterior electrochromic automatic-dimming rearview mirrors and automotive electronics. The Company
manufactures interior electrochromic automatic-dimming rearview mirrors that darken to reduce glare and improve visibility for the driver.
These electronic interior mirrors can also include additional electronic features such as compass, microphones, HomeLink®, interior driver and cabin
monitoring systems, lighting assist and driver assist forward safety camera systems, various lighting systems, various telematics systems, ITM®
systems, and a wide variety of displays, including the FDM® product. The Company also ships interior non-automatic-dimming rearview
mirrors with and without features.
The Company’s interior electrochromic automatic-dimming rearview mirrors also power the application of the Company’s exterior electrochromic
automatic-dimming rearview mirrors that darken to reduce glare and improve visibility for the driver. These electronic exterior mirrors typically
range in size and shape per automaker specification, but can also include additional features such as turn signal indicators, side blind zone indicators,
and courtesy lighting. The Company also ships exterior non-automatic-dimming rearview mirrors with similar electronic features available in its
automatic-dimming applications.
The Company manufactures other automotive electronics products through HomeLink® applications in the vehicle including the rearview
mirror, interior visor, overhead console, or center console. Certain of the Company’s newer features can be located either in the rearview mirror
or other locations in the vehicle. Additionally, as the Company expands its FDM® product and the ITM® system, rearward facing video
cameras, digital video recording, and integrated toll transponders are being produced and sold.
improve safety and field of view. Advanced features currently in development include: biometric authentication systems, hybrid and fully digital
camera monitoring systems (“CMS”), driver and cabin monitoring systems, cabin sensing systems, touch screen displays for mirrors, and digital
enhancements to displays to improve driver safety, among other things. Other automotive products currently in development include large area
dimmable devices, which include sunroof and moon roof applications, driver and passenger windows, interior sun-visors and other window surfaces
in vehicles, among others. The Company is also in development of small-scale dimmable devices that darken to improve contrast and legibility for
transparent displays, concealment of sensors, and to dynamically adjust camera exposure.
AUTOMOTIVE REARVIEW MIRRORS AND ELECTRONICS MARKETS AND MARKETING. In North America, Europe and Asia, the Company
markets its products primarily through a direct sales force utilizing its sales and engineering offices located in Germany, UK, Sweden, France,
Japan, South Korea and China, as well as its headquarters in Michigan. The Company generally supplies automatic-dimming mirrors and
mirrors with advanced electronic features to its customers worldwide under annual blanket purchase orders with customers, as well as under
long-term agreements with certain customers, entered into in the ordinary course of the Company’s business.
The Company is currently supplying mirrors and electronic modules for Aston Martin, BMW Group, Daimler Group, Faraday Future, Ferrari,
Ford Motor Co., Geely/Volvo, General Motors, Harley Davidson, Honda Motor Co., Hyundai/Kia, Lucid Motors, Mazda, Maruti Suzuki,
Mahindra & Mahindra, McLaren, Polaris, Renault/Nissan/Mitsubishi Group, Rivian Automotive, Stellantis, Subaru, Suzuki, Tata Motors,
Tesla, TOGG Inc., Toyota Motor Company, Volkswagen Group, VOXX International, as well as shipments to domestic China manufacturers
(BYD, Chery, Dongfeng, FAW, Great Wall Motors, Human Horizon, King Long, Lixiang Auto, NIO, SAIC, and Xpeng EV).
Revenues by major geographic area are disclosed in Note 7 of the Consolidated Financial Statements.
Historically, new products and technologies have penetrated high-end vehicles and premium trim/option packages to begin. As consumer
demand increases for such advanced technologies, more OEMs shift to offer a variety of trim packages and option packages for each of their
vehicles, creating a range of available pricing and technologies across their lineups. In some instances, Company products such as the FDM®
appeal to consumers who are interested in new technology, while also resolving rearward vision limitations created by vehicle design changes
that increase aerodynamics. The Company has contributed to this differentiation strategy, allowing OEMs to maximize profitability and
optionality by providing profitable, mirror-based and in-vehicle technologies that consumers demand. As more consumers have become familiar
with interior and exterior dimming mirrors, HomeLink®, FDM®, ITM®, and other Company technologies, consumers have continued to select
these technologies in their subsequent vehicles, driving further market and nameplate penetration as OEMs launch new vehicles and expand
into new markets. Where OEMs had historically used Company technologies only to differentiate from one another, they now also use Company
technologies to differentiate trim lines across their own nameplates. In new markets, emerging OEMs have recognized the need to include
Company products in their vehicles to compete with global OEMs.
AUTOMOTIVE REARVIEW MIRRORS AND ELECTRONICS COMPETITION. The Company continues to be the leading producer of automatic-
dimming rearview mirrors in the world and currently is the largest supplier to the automotive industry with an approximate 89% market share
worldwide in 2023. While the Company believes it will retain a significant position in automatic-dimming rearview mirrors for some time,
another U.S. manufacturer, Magna Mirrors, a division of Magna, continues to compete for sales to domestic and foreign vehicle manufacturers
and is supplying a number of domestic and foreign vehicle models with its versions of auto-dimming mirrors and appears to have considerably
The Company produces rearview mirrors and electronics globally for automotive passenger cars, light trucks, pickup trucks, sport utility vehicles,
more resources available to it. As such, Magna may present a formidable competitive threat. The Company also continues to sell automatic-
and vans for original equipment manufacturers (“OEMs”), automotive suppliers, and various aftermarket and accessory customers. Automotive
dimming exterior mirror sub-assemblies to Magna Mirrors. In addition, a Japanese manufacturer (Tokai Rika) is currently supplying a few
rearview mirrors and electronics accounted for 98% of the Company’s consolidated net sales in 2023.
The Company is the leading manufacturer of electrochromic automatic-dimming rearview mirrors in the world, and is the largest supplier to the
automotive industry. Competitors for automotive rearview mirrors include Magna International (“Magna”), Fudi Technology, Aolian, Ultronix,
Tokai Rika Company, SMR Automotive, Intertech, Adayo, Sincode, Mike Shanghai, Guangdong Yangfeng Electronic Technology Co. Ltd.
Licon, MirrorTech, Amblilight, and Chongqing Yimei. The Company also supplies electrochromic automatic-dimming rearview mirrors to certain
of these rearview mirror competitors.
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vehicle models in Japan with solid-state electrochromic mirrors. There are also Chinese domestic mirror suppliers that are marketing and selling
automatic-dimming rearview mirrors, primarily within the domestic China automotive market. Moreover, other companies have products that
are competitive to the Company’s FDM® system, and Chinese domestic mirror suppliers have begun marketing and selling these products,
within the domestic China market. Further, two Japan manufacturers (Murakami and Panasonic) have begun selling and marketing competitive
FDM® type products in Japan. The Company acknowledges that dimming device (e.g., electrochromic) technology is the subject of research
and development efforts by numerous third parties.
2023 A N N UA L R EP O RT
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In January 2021, the Company announced a partnership, in the ordinary course of business, with Simplenight to provide drivers and vehicle
occupants with access to enhanced mobile capability for booking personalized entertainment and lifestyle experiences in addition to everyday
purchases. Simplenight delivers a customizable and robust platform that enables brands to globally offer real-time book-ability across multiple
categories such as dining, accommodations, attractions, events, gas, parking, shopping and more. The platform is unique in that it is designed
to seamlessly integrate into automaker infotainment and navigation systems, as well as mobile applications and voice assistants. Simplenight
can be integrated into the Company’s current and future connected vehicle technologies, including HomeLink®, the automotive industry’s
leading car-to-home automation system. HomeLink® consists of vehicle-integrated buttons that can be programmed to operate a myriad of
home automation devices. Integration of Simplenight into the Company’s HomeLink Connect® app is underway. The HomeLink Connect
app allows users to program their HomeLink® buttons and control cloud-based devices from their vehicles.
In 2022, the Company obtained an approximate 20% equity share in GreenMarbles, in the ordinary course of business. GreenMarbles is
a leading provider of sustainable solutions for integration into real properties. The Company intends for this relationship to promote the
HomeLink Connect® App with real property developers and contractors.
The Company believes its electrochromic automatic-dimming mirrors and mirrors with advanced electronic features offer significant
performance advantages over competing products and the Company makes significant research and development investments to continue
to increase and improve the performance advantages of its products and to potentially add new products.
There are numerous other companies in the world conducting research on various technologies, including electrochromics, for controlling light
transmission and reflection. The Company currently believes that the electrochromic materials and manufacturing process it uses for automotive
mirrors remains the most efficient and cost-effective way to produce these products. The Company has also continued to invest in new technologies
to improve manufacturing processes. In 2020, the Company, in the ordinary course of business, completed the acquisition of Argil, Inc.,
an electrochromic technology and research and development company, which the Company anticipates using to complement and expand
its product offerings and leverage for manufacturing efficiencies. While automatic-dimming mirrors using other technologies may eliminate
glare, the Company currently believes that each of these other technologies have inherent cost or performance limitations as compared to the
Company’s technologies.
As the Company continues to expand its automatic-dimming mirror products with additional advanced electronic features and expands the
capabilities of its: CMOS imager technology for additional features (i.e. SmartBeam®, FDM®, rear video camera, digital video recorder,
etc.), hybrid and fully digital CMS technology, and driver and cabin monitoring systems, the Company recognizes that it is competing with
considerably larger and more geographically diverse electronics companies that present a formidable competitive threat in the future as new
products/features and technologies are brought to market.
Dimmable Aircraft Windows
The Company continues to manufacture and sell variable dimmable windows for the passenger compartment on the Boeing 787 Dreamliner
series of aircraft. In 2019, the Company announced that it would be offering, as optional content, its latest generation of variable dimmable
windows on the Boeing 777X aircraft. Later in 2019, the first production shipments of variably dimmable windows were made to Boeing for the
777X program. As previously announced, Airbus is now offering, as optional content, the Company’s dimmable aircraft windows on its aircraft,
with production having begun in 2021.
MARKETS AND MARKETING. The Company markets its variable dimmable windows to aircraft manufacturers and airline operators globally.
COMPETITION. The Company’s variable dimmable aircraft windows are the first commercialized product of its kind for original equipment
installation in the aircraft industry. Other manufacturers are working to develop and sell competing products utilizing other technology in the
Fire Protection Technologies
The Company manufactures photoelectric smoke detectors and alarms, visual signaling alarms, photoelectric smoke alarms and electrochemical
carbon monoxide alarms, electrochemical carbon monoxide alarms and detectors, audible and visual signaling appliances, and bells and speakers for
use in fire detection systems in office buildings, hotels, and other commercial and residential establishments. On January 9, 2024, the Company
announced the introduction of a suite of smart home safety products with room-specific functionality called PLACE. PLACE offers a holistic
solution that blends smart home safety, comfort, and security features into one sophisticated system, all controlled from a single, user-friendly app.
The PLACE portfolio of smart-home solutions is being designed to address the nuanced safety requirements of various home spaces. The base Any
Space unit provides smart smoke and carbon monoxide detection and Wi-Fi connectivity for space-specific alerts. The system’s versatility is further
demonstrated through specialized units for the kitchen, nursery, and garage, each equipped with additional safeguards like gas and VOC detection,
room-monitoring cameras, intercoms, and temperature and humidity sensing, as appropriate to the application.
MARKETS AND MARKETING. The Company’s fire protection technologies are sold directly to fire protection and security product distributors
under the Company’s brand name, to electrical wholesale houses, and to OEMs of fire protection systems under both the Company’s brand
name and private labels. The Company markets its fire protection products primarily in North America, but also globally through regional sales
managers and manufacturer representative organizations. The Company’s PLACE products are being sold to retailers.
COMPETITION. The fire protection products industry is highly competitive in terms of both the smoke detectors and signaling appliance markets.
The Company estimates that it competes primarily with eight manufacturers of smoke detection products for commercial use and approximately
four manufacturers within the residential market, three of which produce photoelectric smoke detectors. In the signaling appliance markets, the
Company estimates it competes with approximately seven manufacturers. While the Company faces significant competition in the sale of smoke
detectors and signaling appliances, it believes that the introduction of new products, improvements to its existing products, its diversified product
line, and the availability of special features will permit the Company to maintain its competitive position.
Nanofiber Products and Development
The Company completed the acquisition of Vaporsens in 2020. Vaporsens specializes in nanofiber chemical sensing research and development.
MARKETS AND MARKETING. While no current commercialized product yet exists, this technology has the potential ability to sense explosives,
toxic industrial chemicals, chemical warfare agents, drugs, consumer goods, and VOC’s. This technology has a wide variety of use cases in
various markets and industries, with potential applications for automotive, aerospace, agriculture, chemical manufacturing, military and first
responders, worker safety, food and beverage processing, and medical applications.
Medical Products and Development
In 2020 the Company unveiled an innovative lighting technology for medical applications that was co-developed with Mayo Clinic. This new
lighting concept represents the collaboration of a global, high-technology electronics company with a world leader in health care. The Company’s
new intelligent lighting system combines ambient room lighting with camera-controlled, adaptive task lighting to optimize illumination for surgical
and patient-care environments. The Company continues to further develop and work on the intelligent medical lighting system in order to assess
system performance and work toward obtaining any necessary approvals.
On November 2, 2023, the Company acquired certain technology assets from eSight. The technology acquired from eSight provides advanced
and versatile low-vision smart glasses for those with visual impairments and is compatible with more than 20 eye conditions including Macular
Degeneration, Diabetic Retinopathy, and Stargardt disease. eSight wearables are inspected and registered by public health officials. eSight4 is
a Class 1 Medical Device that is registered with the FDA, registered with EUDAMED, and inspected by Health Canada. Deliveries of eSight Go
aircraft industry for aftermarket or original equipment installation.
are expected to begin in 2024.
The Company’s success with electrochromic technology provides potential opportunities and use cases for other commercial applications, which
the Company continues to explore, including, but not limited to passenger smart-lighting that automatically optimizes illumination for various
in-flight activities like reading, dining, or computer work; biometric systems for personalizing the in-flight experience; and in-cabin particulate
and chemical sensors for monitoring cabin air quality.
MARKETS AND MARKETING. The Company markets and sells the eSight smart glasses directly to consumers that have visual impairments
or eye conditions, The Company also sells the eSight product through authorized distributors.
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Trademarks and Patents
The Company owns 50 U.S. Registered Trademarks and 772 U.S. Patents, of which 40 Registered Trademarks and 641 patents relate to
electrochromic technology, automotive rearview mirrors, microphones, displays, cameras, sensor technology, smart lighting technology, and/
or HomeLink® products. These patents expire at various times between 2024 and 2044. The Company believes that these patents provide the
Company a competitive advantage in its markets, although no single patent is necessarily required for the success of the Company’s products.
The Company also owns 399 foreign Registered Trademarks and 1,458 foreign patents, of which 384 Registered Trademarks and 1,125 patents
relate to electrochromic technology, automotive rearview mirrors, microphones, displays, cameras, sensor technology, and/or HomeLink®
products. These patents expire at various times between 2024 and 2048. The Company believes that the competitive advantage derived in the
relevant foreign markets for these patents is comparable to that applicable in the U.S. market.
The Company owns 76 U.S. Patents and 99 foreign patents that relate specifically to the Company’s variable dimmable windows. The U.S.
Patents expire at various times between 2026 and 2044, while the foreign patents expire at various times between 2027 and 2040.
The Company’s DE&I initiatives are supported by its VP of Diversity, Equity, & Inclusion and DE&I Council, which helps implement specific
diversity programs, supports internal training, and creates opportunities to spread awareness throughout the organization. The Company’s
DE&I Council is led by Mr. Joe Matthews, VP of Diversity, Equity, & Inclusion and includes employees from a variety of departments.
The Company’s DE&I initiatives are further supported by the DE&I Advisory Board, which is led by Mr. Matthews, and includes various
executives, including the CEO, and two external members who are experts in the field of diversity, equity, and inclusion.
As a part of DE&I initiatives, the Company maintains a growing list of business resource groups (“BRGs”) comprised of individuals with
similar interests or backgrounds who work internally to support one another, develop leadership skills, and enhance cultural awareness. Among
current BRGs are Women@Gentex and Gentex V.E.T.S. In 2023, the Company received a Pillar Award from the Women’s Resource Center
in Grand Rapids for advancing women in the workplace. The Michigan Veterans Affairs agency awarded the Company a silver-level veteran-
friendly employer status in recognition of the support and access to resources that the Company provides for military veterans.
In 2022, the Company also established a separate DE&I council in Salt Lake City to serve the Company employees who work at the research
and development office located there. This separate council has supported students from diverse backgrounds and sponsored events to raise
The Company owns 10 U.S. Registered Trademarks, 20 U.S. Patents, 15 foreign Registered Trademarks, and 12 foreign patents that relate
awareness to global causes.
to the Company’s fire protection products. The U.S. Patents expire at various times between 2026 and 2043, while the foreign patents expire
at various times between 2026 and 2030. The Company believes that the competitive advantage provided by these patents is relatively small.
The Company also has in process 169 U.S. Patent applications, 257 foreign patent applications, and 35 Registered Trademark applications. The
Company continuously seeks to improve its core and acquired technologies and apply those technologies to new and existing products. As those
efforts produce patentable inventions, the Company expects to file appropriate patent applications.
In addition, the Company periodically obtains intellectual property rights, in the ordinary course of the Company’s business, to strengthen its
intellectual property portfolio and minimize potential risks of infringement.
Human Capital Resources
As of February 1, 2024, the Company had 6,245 full-time employees. None of the Company’s employees are represented by a labor union
or other collective bargaining representative. The Company believes that its relations with its employees are in good standing. See “Executive
Officers of the Registrant” in Part III, Item 10.
The Company fosters a collaborative culture founded on devotion to quality and innovation. An inclusive environment is nurtured so that team
members can perform, support each other, and continue to grow and learn, including on-the-job training.
This culture is supported by a competitive compensation system that goes beyond base salary and includes for virtually all employees: quarterly
profit-sharing bonuses; an extensive stock-based compensation program that extends to all eligible employees; an employee stock purchase
plan; 401(k) plan (or other retirement plan for non-US employees) with Company matching; and tuition reimbursement. In keeping with
the Company’s core principle of ownership mentality, compensation is structured throughout the organization so that employees win when
all of stakeholders win. The Company also provides a healthy and safe climate-controlled work environment that includes an on-site wellness
center and on-site health clinic at its headquarters. A number of health-related programs are available to employees, including: asthma/COPD
management services; diabetes management; “Smart Health,” which gives employees and spouses a way to earn wellness credits; Gentex Cares+
Employee Assistance Program; and crop share, which offers employees fresh fruits and vegetables weekly. The Company has also announced
the creation of the Gentex Discovery Preschool, an on-site daycare and preschool designed to provide employees with convenient, cost-effective
access to quality day care.
The Company is extremely proud of its workplace injury prevention programs, which have achieved workplace injury rates well below industry averages.
Evidence of the Company’s commitment to inclusion is its cultivation of a world-class diversity, equity & inclusion (“DE&I”) ethos that allows
team members to make a lasting impact in the communities in which the Company operates, all while attracting and retaining diverse talent that
can help propel the business forward. While the Company has an environment of equal employment opportunity related to recruitment, hiring,
promotion, discipline, and other terms of employment, the commitment to have a skilled and diverse world class workforce goes beyond that.
DE&I efforts at the Company extend to the supply base as well, where the Company has been recognized for ongoing efforts to increase
supplier relationships with certified minority, woman, veteran, and LGBTQ+-owned enterprises. In fact, the Company mentors certain such
suppliers to help them develop the business systems and technological improvements necessary to support future growth. The Company is
a member of, or otherwise involved in, the Michigan Minority Supplier Development Council, Original Equipment Supplier’s Association -
Diversity & Inclusion, Board of Governors, Consumer Technology Association - D&I Group, Michigan Diversity Connection, West Michigan
Hispanic Chamber of Commerce, and the Great Lakes Women’s Business Council.
Hiring rates, voluntary and involuntary turnover rates, internal rates of hiring and promotion, and safety records are measures of the Company’s
success in human capital management. While hiring and diversity policies are in place to remain on track in terms of appropriate human
resources management, the DE&I efforts have furthered the process of creating a welcoming environment so the Company can hire and
retain the best people. The Company produces a Sustainability Report, referenced below, providing more information regarding diversity
and corporate responsibility. To ensure an excellent and increasingly diverse employment base, the Company has added Spanish speaking
manufacturing lines, which involve translating materials for recruiting, orientation, on-boarding, training, and work in the Spanish language.
The Company’s Director of Talent Acquisition was honored as one of the 25 Most Influential Latinos in West Michigan for his work to
promote the Company’s Limited English Proficiency Program. The Company was also presented with a DE&I Champion Award from the
MEMA Original Equipment Suppliers Association for championing the spirit of DEI within the organization and in the communities where
its employees live.
Moreover, the Company’s DE&I efforts related to actively developing and using minority, women, and veteran-owned suppliers have been
acknowledged and recognized by multiple OEM customers. In fact, Toyota Motor Engineering & Manufacturing North America, Inc.
has specifically recognized the Company’s efforts over the last 10 years to increase supplier relationships with minority business enterprises.
The Company has also won supplier diversity awards from Honda, Nissan, and Toyota.
In 2022, the Company established the Gentex Foundation, which provides financial grants to organizations across the country in support
of economic development, children’s services, public health, housing assistance and diversity initiatives among other causes. The Gentex
Foundation is managed by a board of directors that reviews grant applications with a particular focus on communities where Company
employees live and work, consistent with the organization’s values of integrity, compassion, innovation and diversity. Employees are encouraged
to organize on-site fundraisers and to spend time volunteering at worthy charitable organizations in addition to giving financially. Support is
also provided to a number of minority organizations in keeping with the Company’s DE&I efforts and to continue to build an even more diverse
and skilled workforce.
The Company’s Board of Directors (the “Board”) has regular touchpoints with management regarding: employee engagement; workforce
planning (including capabilities and skills development); safety; understanding workforce demographics and DE&I strategies; and corporate
culture. The Board and management know that the right talent is required to implement the Company’s strategies. As such, the Board works
with management appropriately regarding the approach to, and investment in, human capital that includes recruitment, talent development,
retention, and diversity. The Board has access to all levels of employees in the Company in its efforts to properly oversee human resources and
DE&I issues.
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2023 A N N UA L R EP O RT
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The Company’s commitment to DE&I is very apparent by the inclusiveness of the Board. The Board and the Nominating and Corporate
Governance Committee have taken concrete actions to increase Board diversity, including use of various resources and environments to identify
INITIATIVES. With respect to sustainability initiatives, the Company has undertaken a number of actions related to energy, waste stewardship,
water management, and environmental protection. Regarding energy, the Company: utilizes software-managed and occupancy-sensor controlled
qualified and diverse director candidates. Such candidates are contacted and interviewed in order to continue to build an even more diverse,
lighting in all facilities; has air economizers and energy recovery units in HVAC systems; utilizes energy efficient fluorescent lighting; has
qualified, and capable Board. In the Company’s 2023 Proxy Statement, the Company disclosed Board diversity information as required
certain white material roofs to reflect sunlight; has insulated metal panel systems for exterior walls (for energy efficiency); captures excess heat
by NASDAQ, and will continue to do so in the future.
The Board has also implemented a Complaint Submission and Handling Policy for concerns to be raised as needed.
Sustainability
DISCLOSURE ON WEBSITE. The Company has a Sustainability section of its website (https://www.gentex.com/about/sustainability) to provide
insight into how the Company is committed to protecting the environment by complying with all environmental laws and related requirements,
while at the same time striving for continual improvement in sustainability and environmental performance. The Company’s Sustainability Report,
published each year and available on the Company’s website, provides significant details regarding the Company’s approach to sustainability.
from compressed air systems and uses it to preheat/temper water used in production; takes excess water from production processes to use in
boiler/snow melt water; and installed a centralized water chiller plant to lower energy use. Regarding waste stewardship, the Company improved
its cleaning method for certain products to reduce material usage preventing thousands of pounds of additional waste material and uses recycled
materials in facility carpets. In terms of waste management, the Company: put in place a water recovery system that significantly reduced
overall water usage; collects storm water to reduce discharge into municipal drain systems; implemented irrigation software to monitor weather
conditions thereby reducing water consumption; and diligently works to monitor and reduce potential pollutants in its facilities. In terms of
environmental protection, the Company has: integrated “green roofs”; adopted a highway to clean waste from public lands; constructed wetland
and wildlife habitat areas; and acquired property which includes natural wetlands. As regards transportation, the Company maintains: 30 electric
vehicle charging stations; a bicycle fleet for travel between facilities; a bus shelter to encourage bus ridership; and Sweed banding choppers
at certain facilities to reduce frequency of trips to recycling.
GENERAL. The Company makes intentional decisions that reflect the desire to be responsible with all resources and achieve the Company’s goal
of meaningful change.
Available Information
ENERGY AND CLIMATE CHANGE. The Company understands that energy use and manufacturing are large contributors of the Company’s
overall greenhouse gas emissions. As such, the Company remains committed to improving energy-efficiency. To that end, the Company has
announced to the following carbon reduction and neutrality goals:
◼
◼
◼
◼
By 2026, 15% below 2020 levels
By 2031, 40% below 2020 levels
By 2041, 70% below 2020 levels
By 2049, carbon neutrality
The Company implements efficient alternatives for capital equipment, uses automated building management systems to use less energy, and
has put in place extremely efficient lighting and HVAC equipment. The Company also participates in the local Energy Smart Program, which
promotes the implementation of progressive energy efficiency projects, including achieving the maximum goal possible for lighting and HVAC
improvements, compressed air leak audits, and building control systems. The Company also converted one of its manufacturing facilities to be
powered entirely by renewable energy in 2022.
GENTEX ENVIRONMENTAL MANAGEMENT SYSTEM (GEMS). The Company’s environmental management system is based on ISO 14001
(international environmental standard). This system governs environmental performance by addressing the impact of the Company’s activities,
products, and services on the environment. At each Company facility, environmental impact is measured and improved upon annually by
eliminating waste and emissions, maximizing efficiency of processes and resources, and increased recycling and reuse. The foregoing has allowed
the Company to establish long-term measures for minimizing the negative effects on the environment, while maximizing positive outputs
for the communities in which the Company operates. Various metrics are tracked to gauge the environmental performance of the Company’s
facilities, including: electricity use; process water use; natural gas use; VOC air emissions; and greenhouse gas emissions (both those directly
controlled and those from electricity usage).
WASTE AND RECYCLING. The Company also has robust waste and recycling strategies, tracking solid waste to landfill, solid waste recycled,
and regulated waste. As a part of its strategies, the Company has committed to the following landfill avoidance goals:
◼
◼
◼
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By 2026, 20% below 2020 levels
By 2031, 60% below 2020 levels
By 2041, 90% below 2020 levels
By 2045, 100% zero landfill waste
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The Company’s Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those
reports, will be made available, free of charge, through the Investor Information section of the Company’s website (http://ir.gentex.com) as
soon as practicable after such materials are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”). The SEC
maintains a website (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issues that
a company files electronically with the SEC.
Item 1A. Risk Factors.
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; 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; 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 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.
Includes content supplied by S&P Global Mobility Light Vehicle Production Forecast of January 16, 2024 (http://www.gentex.com/forecast-disclaimer).
2023 A N N UA L R EP O RT
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The following risk factors, together with all other information provided in this Annual Report on Form 10-K should be carefully considered.
with a view of objects that are to their side or to their side and rear. This ANPRM builds on NHTSA’s prior efforts to obtain supporting
AUTOMOTIVE INDUSTRY. Customers within the auto industry comprise approximately 98% of our net sales. The automotive industry has
always been cyclical and highly impacted by levels of economic activity. The current economic environment, including inflation, continues to be
uncertain, and continues to cause financial and production stresses evidenced by volatile automotive production levels, volatility with customer
orders, supplier part and material shortages (especially electronics components), automotive and Tier 1 supplier plant shutdowns, customer and
supplier financial issues, commodity raw material cost increases, supply constraints, tariffs, consumer vehicle preference shifts (where we have
technical information, data, and analysis on CMS so that the agency can determine whether these systems can provide the same level of safety
as the rearview mirrors currently required under FMVSS No. 111. The ANPRM states that one reason NHTSA is seeking additional
information is because research conducted by NHTSA and others between 2006 and 2017 has consistently shown that prototype and
preproduction camera-based rear visibility systems can exhibit safety-relevant performance issues. In November 2022, NHTSA conducted
a public meeting and discussed the on-going research of this technology.
a lower penetration rate and lower content per vehicle), and supply chain stresses. If automotive customers (including their Tier 1 suppliers)
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
and suppliers experience significant plant shutdowns, work stoppages, strikes, part shortages, etc., it will further disrupt our shipments to these
systems to replace mirrors within Japan and European countries. Since January 2017, camera monitoring systems are also permitted as an
customers, which could adversely affect our business, financial condition, and/or results of operations. Automakers continue to experience
alternative to replace mirrors in the Korean market. In 2023, China released and made effective an updated version of its GB15084, which
volatility and uncertainty in executing planned new programs on time, due in part to continued vehicle complexity increases and supply chain
allows for camera monitoring systems, frameless mirrors and aspheric (free-form) glass surfaces. Notwithstanding the foregoing, the Company
constraints. This brings increased risk of delays or cancellations of new vehicle platforms, package configurations, and inaccurate volume
continues to believe rearview mirrors provide a robust, simple and cost effective means to view the surrounding areas of a vehicle and remain the
forecasts. This makes it challenging for us to forecast future sales and manage costs, inventory, capital, engineering, research and development,
primary safety function for rear vision today. Cameras, when used as the primary rear vision delivery mechanism, have some inherent limitations
and human resource investments, in addition to the aforementioned factors.
KEY CUSTOMERS. We have a number of large customers, including three automotive customers which each account for 10% or more of our
annual net sales in 2023 (including direct sales to OEM customers and sales through their Tier 1 suppliers): Volkswagen Group, Toyota Motor
Company, 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) could 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 the pricing pressures with price adjustments,
engineering and purchasing cost reductions, productivity improvements, increases in unit shipments of mirrors and electronics with advanced
features, and/or new or advanced technologies, each of which pose ongoing challenges, which continue to adversely impact our business, financial
condition, and/or results of operations.
RAW MATERIALS AND OTHER PRODUCT COMPONENT COSTS. Increasing costs in raw materials, energy, commodities, labor, and other
product component costs adversely affects our business, financial condition and/or results of operations. These costs have generally increased
as a result of supply chain disruptions, constrained labor availability, global economic factors, as well as inflationary impacts. When these
prices rise and we are unable to recover such cost increases from our customers, those increases have an adverse effect on 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 on tariffs and trade. Previously enacted tariffs have increased the Company’s input costs and challenge the Company’s competitive
position in foreign markets. The continuance of these tariffs and/or escalation of disputes in the geopolitical environment interferes with
automotive supply chains and 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 one location. 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.
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. We
acknowledge that dimming device (e.g., electrochromic) technology is the subject of research and development efforts by numerous third parties.
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 fourteen (14) OEM customers. The Company is currently shipping production FDM® to all fourteen
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, and/or results of operations. As our customers’ forecasted demand changes, inventory becomes obsolete and write-offs
or write-downs of our inventory are 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.
WORKFORCE DISRUPTIONS. We have experienced, and may continue to experience in the future, disruptions to our workforce as a result
of a tight labor market, employee illness, quarantines, and absenteeism.. The impacts of continued disruptions to our workforce have affected,
are affecting, and are expected to continue to affect our business, financial condition, and/or results of operations.
PRODUCT MIX. We sell products that have varying profit margins. Our financial performance can be impacted depending on the mix of
products we sell and to which customers, during a given period. The automotive industry is 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 may be similarly affected to the extent that our customers reduce the volume of orders for our products. As a result of such
changes and circumstances impacting our customers, our sales mix can shift, which may have either favorable or unfavorable impact on revenue
On March 31, 2014 the Alliance of Automobile Manufacturers petitioned the National Highway Traffic Safety Administration (“NHTSA”) to
and would include shifts in regional growth, in OEM sales demand, as well as in consumer demand related to vehicle segment purchases, and
allow automakers to use CMS as an option to replace conventional rearview mirrors within North America, however, no final rule or legislation
content penetration. A decrease in consumer demand for specific types of vehicles where we have traditionally provided higher value content
was made in response to this petition. At the annual SAE Government-Industry Meeting in January 2017, NHTSA requested that SAE
would have a significant effect on our business, financial condition, and/or results of operations. Our forward guidance and estimates assume
develop Recommended Procedures for test protocols and performance criteria for CMS that would replace mirror systems on light vehicles in
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,
the U.S. market. SAE assigned the task to the Driver Vision Committee, and the SAE Driver Vision Committee created a CMS Task Force
our business, financial condition, and/or results of operations are impacted.
to draft the Recommended Procedures. NHTSA published a report dated October 2018 related to camera monitoring systems for outside
mirror replacements. On October 10, 2019, an Advanced Notice of Proposed Rulemaking (ANPRM) was published seeking public comment
on permitting camera-based rear visibility systems, as an alternative to inside and outside rearview mirrors required under Federal motor vehicle
safety standard (FMVSS) No. 111, “Rear Visibility,” which currently requires that vehicles be equipped with rearview mirrors to provide drivers
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BUSINESS COMBINATIONS. Acquisitions of businesses, technologies, and assets play a role in our future growth. We cannot be certain that
we will be able to identify attractive acquisition targets, have resources available for or obtain financing for acquisitions on satisfactory terms,
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 and Board oversight
successfully acquire identified targets or manage timing of acquisitions with capital obligations across our businesses. Additionally, we may
in order to address these threats. While these measures are designed to prevent, detect and respond to unauthorized activity in, or otherwise
not be successful in integrating acquired businesses into our existing operations, achieving projected synergies, and/or maximizing the value
compromise of, our systems, certain types of attacks, including cyber-attacks, could result in significant financial or information losses and/
of acquired technologies and businesses. Competition for acquisition opportunities in the various industries in which we operate already exists
or reputational harm. We, and certain of our third-party vendors, receive and store personal information in connection with our human
and may increase, thereby increasing our costs of making acquisitions or causing us to refrain from making further acquisitions. We are also
resources operations and other aspects of our business. Despite our implementation of security measures, our IT systems, like all IT systems,
subject to applicable antitrust laws and must avoid anticompetitive behavior. These and other acquisition-related factors may negatively and
are vulnerable to damages from computer viruses, natural disasters, unauthorized access, cyber-attack and other similar disruptions. Any such
adversely impact our business, financial condition, and/or results of operations.
INTELLECTUAL PROPERTY. We believe that our patents and trade secrets provide us with a competitive advantage in automotive rearview
mirrors, variable dimmable devices, certain electronics, and fire protection products, although 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 property protection in a number of countries, including China,
represents a current and ongoing risk for the Company.
NEW TECHNOLOGY AND PRODUCT DEVELOPMENT. We continue to invest significantly in engineering, research and development projects.
Should these efforts ultimately prove unsuccessful, our business, financial condition, and/or results of operations could be adversely affected.
INTELLECTUAL PROPERTY LITIGATION AND INFRINGEMENT CLAIMS. A successful claim of patent or other intellectual property infringement
and damages against us could affect business, financial condition, and/or results of operations. If a person or company claims that our products
infringed their intellectual property 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 property litigation significantly increases these risks and makes such risk part of our ongoing business. To that end, we periodically
obtain intellectual property rights, in the ordinary course of business, to strengthen our intellectual property portfolio and minimize potential
risks of infringement. The increasing tendency of patents granted to others on combinations of known technology is a potential threat to our
Company. Any of these adverse consequences could potentially have an effect on our business, financial condition and/or results of operations.
CREDIT RISK. Certain automakers and Tier 1 customers from time to time may consider the sale of certain business segments or bankruptcy
as a result of financial stress. Should one or more of our larger customers (including sales through their Tier 1 suppliers) declare bankruptcy
or sell their business, it could 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.
system failure, accident or security breach results in disruptions to our operations. A material network breach in the security of our IT systems
could include the theft of our intellectual property, trade secrets or customer information. To the extent that any disruptions or security breach
results 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 August 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 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 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.
On December 8, 2015, NHTSA proposed changes to the Administration’s 5-Star Safety Ratings for new vehicles (also known as the New Car
Assessment Program or NCAP) and initiated a comment period. The proposed changes will, for the first time, encompass assessment of crash-
avoidance technologies, which includes lower beam headlamp performance, semi-automatic headlamp switching, and blind spot detection.
NHTSA originally intended to implement the enhancements in NCAP in 2018 beginning with model year 2019 vehicles. The NCAP
implementation has been delayed. Under these proposed changes, the Company believes that its SmartBeam® technology will qualify with the
semi-automatic headlamp NCAP rating system, and that its SmartBeam® technology and exterior mirrors with blind spot alert lighting can be
included in a system that qualifies with the lower beam headlamp performance and blind spot detection NCAP rating system, respectively. On
Our allowance for doubtful accounts primarily relates to financially distressed automotive mirror and electronics customers. We continue to
October 16, 2019, NHTSA issued a press release comparing NCAP to other regions’ version of NCAP, identified new technologies that are
work with these financially distressed customers in collecting past due balances. Refer to Note 1 of the Consolidated Financial Statements.
not currently included in NCAP, and suggested Congress legislatively direct actions to improve NCAP. On January 14, 2021, NHTSA issued
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
a request for comment regarding NCAP with advanced driver assist features, including forward collision, lane keeping, blind spot detection and
forward pedestrian impact avoidance technologies.
approximately three miles from our other primary manufacturing facilities in Zeeland, Michigan. Should a catastrophic event occur, our ability
As noted, on October 10, 2019, an Advanced Notice of Proposed Rulemaking (“ANPRM”) was published seeking public comment on permitting
to manufacture product, complete existing orders and provide other services could be severely impacted for an undetermined period of time.
camera-based rear visibility systems, as an alternative to inside and outside rearview mirrors required under FMVSS No. 111, “Rear Visibility,”
We have purchased business interruption insurance to address some of these risks. Our inability to conduct normal business operations for
which currently requires that vehicles be equipped with rearview mirrors to provide drivers with a view of objects that are to their side or to their side
a period of time may have an adverse impact on our business, financial condition, and/or results of operations.
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 technology 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
and rear. This ANPRM builds on NHTSA’s prior efforts to obtain supporting technical information, data, and analysis on CMS so that the agency
can determine whether these systems can provide the same level of safety as the rearview mirrors currently required under FMVSS No. 111. The
ANPRM states that one reason NHTSA is seeking additional information is because research conducted by NHTSA and others between 2006 and
2017 has consistently shown that prototype and preproduction camera-based rear visibility systems can exhibit safety-relevant performance issues.
In November 2022, NHTSA conducted a public meeting and discussed the ongoing research of this technology.
ANTITAKEOVER PROVISIONS. Our articles of incorporation, bylaws, and the laws of the state of Michigan include provisions that may provide
our Board with adequate time to consider whether a hostile takeover offer is in our best interest and the best interests of our shareholders. These
important IT system or a security breach of our IT systems, the resulting disruptions have an adverse effect on our business, financial condition,
provisions, however, could discourage potential acquisition proposals and could delay or prevent a change in control.
and/or results of operations.
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FLUCTUATIONS IN MARKET PRICE. The market price for our common stock has fluctuated, ranging from a low closing price of $25.77 to a
high closing price of $34.33 during calendar year 2023. The overall market and the price of our common stock may continue to fluctuate. There
may be a significant impact on the market price for our common stock relating to the issues discussed above or due to any of the following:
◼ Variations in our anticipated or actual operating results or the results of our competitors;
◼ Changes in investors’ or analysts’ perceptions of the risks and conditions of our business and in particular our primary industry;
◼ Intellectual property litigation and infringement claims or other litigation;
◼ The size of the public float of our common stock;
◼ Market conditions, including the industry in which we operate; and
◼ General macroeconomic conditions.
General Risk Factors
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, and other proposals to reform United States and foreign tax laws could 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
OTHER. Other issues and uncertainties which could adversely impact our business, financial condition, and/or results of operations include:
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Rising commodity prices and inflation generally, where we are unable to recover such increases from customers;
Increasing interest rates impact our financial performance due to an increase in realized losses on the sale of fixed income investments and/
or recognized losses due to a corresponding impairment adjustment on investment securities and can impact customer demand as well;
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, war or significant terrorist acts, could each affect worldwide automotive sales and production levels, thereby impacting
the Company;
Public health crises (e.g. pandemics) that can result in part shortages, labor shortages, or other impacts to the supply chain or customers;
Manufacturing yield issues; and
Obligations and costs associated with addressing quality issues or warranty claims.
Item 1B. Unresolved Staff Comments.
None
Item 1C. Cybersecurity.
have the leadership capacity with the necessary skill sets and experience and a skilled workforce could impede our ability to deliver our growth
Risk Management and Strategy
objectives and execute our strategic plan. Organizational and reporting changes within management could result in, and low unemployment 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 requirements
The Company has implemented and maintain multiple layers of physical, administrative and technical security processes designed to protect
our manufacturing facilities from disruptions that may result from cybersecurity incidents, as well as safeguard the confidentiality of our
critical systems, and data residing on those systems, including employee data, customer data, and intellectual property. Our risk assessment
and management of material risks from cybersecurity threats is integrated into our overall enterprise risk management process, as well as our
information systems processes. Our strategy includes regular formal risk assessments, dynamic risk and threat analysis, utilization of security
as well as various economic conditions in these jurisdictions. Some of these countries are considered growth markets. International sales and
tools, regular cybersecurity-related tabletop and phishing exercises designed to simulate cybersecurity incidents, and frequent security awareness
operations, especially in growth markets, subject us to certain risks inherent in doing business abroad, including:
and technical security trainings. We conduct periodic internal and third-party assessments to evaluate our cybersecurity posture and test and
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Exposure to local economic, political and labor conditions;
Unexpected changes in laws, regulations, trade or monetary or fiscal policy, including interest rates, foreign currency exchange rates
and changes in the rate of inflation in the U.S. and other foreign countries;
Tariffs (as discussed herein), quotas, customs and other import or export restrictions and other trade barriers;
assess our incident response program, incident roles and responsibilities, material impact evaluation, and decision-making processes in the event
of a cybersecurity incident. We use our risk and security assessments to enhance our information security capabilities.
Depending on the environment, we implement and maintain various technical, physical and organizational measures, processes, standards and
policies designed to manage and mitigate material risks from cybersecurity threats to our information systems and data, including an incident
response policy, plan, procedures and scenario-based playbooks, an incident detection and response program, a vulnerability management
Natural disasters, political crises, and public health crises (e.g. pandemics), which have caused, are causing, and will likely continue
program, disaster recovery and business continuity plans, risk assessment processes, security standards, network security controls, access controls,
to cause downtime and closures at both supplier and customer facilities;
Expropriation and nationalization;
Difficulty of enforcing agreements, collecting receivables and protecting assets through non-U.S. legal systems;
Reduced intellectual property protection;
Withholding and other taxes on remittances and other payments by subsidiaries;
Investment restrictions or requirements;
Export and import restrictions;
Violence and civil unrest in local countries;
Compliance with the requirements of an increasing body of applicable anti-bribery laws, including the U.S. Foreign Corrupt Practices
Act, the U.K. Bribery Act and similar laws of various other countries; and Exposure related to buying, selling and financing in currencies
other than the local currencies of the countries in which we operate.
systems monitoring, employee awareness training and cybersecurity insurance. The Company has obtained Trusted Information Security
Assessment Exchange (TISAX) certification labels within the United States and Germany.
Our internal information security team oversees and works collaboratively with various information security service providers. Our cybersecurity
program incorporates external guidance and expertise through the use of third-party service providers to assist in the identification, assessment
and management of risks specific to cybersecurity threats, including vendors providing threat intelligence, risk mitigation, dark web monitoring,
external scanning and scoring, threat and reputation monitoring, forensics, cyber-insurance, advisory services and legal counsel.
We have an incident response plan that includes scenario-based playbooks for managing cybersecurity incidents and associated crisis
communication procedures designed to facilitate coordination across the Company and with our partners, customers, the public and others.
For the year ended December 31, 2023, there have been no risks from cybersecurity threats that have materially affected or are reasonably
likely to materially affect our business strategy, results of operations or financial condition. For a description of risks related to our information
technology systems, including cybersecurity threats, see Item 1A, “Risk Factors.”
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Governance
Our Board addresses our cybersecurity risk management as part of its general oversight function. The Audit Committee of the Board (the
“Audit Committee”) is responsible for overseeing our cybersecurity risk management processes, including our assessment and mitigation of
material risks from cybersecurity threats. The Audit Committee receives regular reports, summaries or presentations related to cybersecurity
threats, risk, mitigation and related processes from our information technology and cybersecurity experts. In addition, on at least an annual
basis, the Board receives reports, summaries or presentations related to cybersecurity threats, risk, mitigation and related processes.
Our cybersecurity risk assessment and management processes are implemented and maintained by our VP of Information Technology and
Information Security Officer (“VP of IT”), who is supported by other members of management, as necessary. Our VP of IT is responsible for
approving budgets, cybersecurity incident preparedness, approving cybersecurity processes, reviewing security assessments and other security-
related reports, and providing the Chief Financial Officer (“CFO”) with regular updates on cybersecurity-related matters. The Company also
has an IT Executive Steering Committee comprised of the VP of IT, CFO, General Counsel, CTO and VP of Operations. The VP of IT
provides regular cybersecurity updates to the audit committee. The Company’s VP of IT has served in this role for two years and has more than
24 years of relevant experience. In addition, we have an information security team comprised of dozens of employees dedicated to cybersecurity
with extensive experience and relevant certifications. The VP of IT is responsible for hiring appropriate personnel, assisting with the integration
of cybersecurity risk considerations into our overall risk management strategy, communicating key priorities to relevant personnel, and
mitigating and remediating in the event of a cybersecurity incident.
Our cybersecurity incident response and vulnerability management programs are designed to escalate certain cybersecurity incidents to various
levels of management depending on the circumstances, including our VP of Information Technology and Information Security Officer,
General Counsel, CFO and/or Chief Executive Officer. Management works with our incident response team to help mitigate and remediate
certain escalated cybersecurity incidents. In addition, our incident response and vulnerability management programs include reporting certain
cybersecurity incidents to the Audit Committee and, in certain circumstances, to the Board.
Item 2. Properties.
As of December 31, 2023, the Company operates primarily out of facilities in Zeeland and Holland, Michigan, which consist of manufacturing,
warehouse, and office space. The Company also operates a chemistry lab facility in Zeeland, Michigan to support production. In addition, the
Company operates overseas offices in Europe and Asia as further discussed below. The location, square footage and use of the most significant
facilities as of December 31, 2023 were as follows:
Owned Locations
Square Footage
Date of Acquisition/Build(1)
Use
Zeeland, MI
Zeeland, MI
Zeeland, MI
Zeeland, MI
Zeeland, MI
Zeeland, MI
Zeeland, MI
Zeeland, MI
Zeeland, MI
Zeeland, MI
Zeeland, MI
Zeeland, MI
Holland, MI
Holland, MI
26,600
197,200
70,000
70,000
359,100
168,900
334,000
100,000
31,800
349,600
258,400
345,000
242,300
29,900
1970
1972
1989
1989
1996
2000
2006
2010
2011
2016
2018
2023
2012
2021
Warehouse, Office
Manufacturing, Office
Manufacturing
Office
Manufacturing
Manufacturing
Manufacturing, Office
Manufacturing, Warehouse
Office
Manufacturing, Warehouse
Warehouse
Manufacturing, Warehouse
Manufacturing, Warehouse
Office
Erlenbach, Germany
Shanghai, China
Shanghai, China
90,000
25,000
85,000
2003
2006
2017
(1) Date of Acquisition/Build refers to first year of operations and does not refer to subsequent additions or expansions.
Office
Office, Warehouse
Office, Warehouse,
Light Assembly
In 2021, the Company completed construction of a 36,000 square-foot addition to its main corporate office and manufacturing facility to
expand its chemistry lab facilities, with a total cost of approximately $10 million, which was funded from cash and cash equivalents on hand.
Additionally, in the fourth quarter of 2023, the Company completed construction on a 345,000 square-foot manufacturing facility located
at a 140 acre site in Zeeland, Michigan, where the Company previously performed master planning and completed land infrastructure
improvements. The total cost of the building project was approximately $85 million, which was funded with cash and cash equivalents on hand.
The Company began construction on two building expansions during the second quarter of 2022. The Company is expanding its current
distribution center by an additional 300,000 square feet, with a total cost still expected to be approximately $40 - $45 million. The Company is
also expanding another of its manufacturing facilities by an additional 60,000 feet, with a total cost still expected to be $20 - $30 million. Both
of these expansion projects will be funded with cash and cash equivalents on hand. Both facilities are expected to operational sometime in 2024.
During 2023, the Company began the design and initial build phase of the previously announced Gentex Discovery Preschool, an on-site daycare
and preschool designed to provide Company employees with convenient, cost-effective access to quality childcare. Construction is expected to begin
in 2024, subject to regulatory approval as a result of wetlands mitigation, with an expected completion date in 2025. The total cost of the building
project is expected to be $12 - $15 million, which will be funded with cash and cash equivalents on hand.
The Company also has leased sales and engineering offices throughout North America, Europe, and Asia to support its sales and engineering
efforts, as well as a leased manufacturing facility in Grand Rapids, Michigan:
Country
United States
Germany
Japan
Canada
Israel
United Kingdom
France
Sweden
Korea
Number of Leased Offices/Facilities
4
3
3
2
1
1
1
1
1
The Company’s Automotive Products segment operates in virtually all of the foregoing facilities. The Company’s Other segment operates in
certain Zeeland, Michigan facilities, as well as a research and development offices in Salt Lake City, Utah; Santa Clara, CA; Canada; and Israel.
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Capacity.
The Company believes its existing and planned facilities are currently suitable, adequate, and have the capacity required for current and near-
term planned business. Nevertheless, the Company continues to evaluate longer term facilities needs.
The Company estimates that it currently has building capacity to manufacture approximately 34 - 37 million interior automatic-dimming mirror
units annually, based on current product mix (excluding the impact of the above referenced construction). The Company evaluates equipment
capacity on an ongoing basis and adds equipment as needed. In 2023, the Company shipped 31.8 million interior automatic-dimming mirrors.
The Company’s automotive exterior mirror manufacturing facility has an estimated building capacity to manufacture approximately 19 - 22
million units annually, based on the current product mix (excluding the impact of the above referenced construction). The Company evaluates
equipment capacity on an ongoing basis and adds equipment as needed. In 2023, the Company shipped approximately 18.8 million exterior
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
(A) The Company’s common stock trades on The NASDAQ Global Select Market® under the symbol GNTX. As of February 1, 2024, there
were 5,005 record-holders of the Company’s common stock and restricted common stock.
See Item 12 of Part III with respect to “Equity Compensation Plan Information”, which is incorporated herein by reference.
I
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0
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Stock Performance Graph: The following graph depicts the cumulative total return on the Company’s common stock compared to the cumulative
total return on the NASDAQ Composite Index (all U.S. companies) and the Dow Jones U.S. Auto Parts Index (excluding tire and rubber makers).
The graph assumes an investment of $100 on the last trading day of 2018 and reinvestment of dividends in all cases.
automatic-dimming mirrors.
Item 3. Legal Proceedings.
The Company is periodically involved in legal proceedings, legal actions and claims arising in the normal course of business, including
proceedings relating to product liability, intellectual property, safety and health, employment and other matters. Such matters are subject to
many uncertainties and outcomes are not predictable. The Company does not believe however, that at the current time, there are any matters
that constitute material pending legal proceedings that will have a material adverse effect on the financial position, future results of operations,
or cash flows of the Company.
Item 4. Mine Safety Disclosures.
Not applicable.
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NASDAQ Composite
Dow Jones US Auto Parts
Gentex Corporation
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Period Ending
In February 2022, the Board approved a continuing resolution to pay a quarterly dividend at a rate of $0.120 per share until the Board takes
other action with respect to the payment of dividends. The Company intends to continue to pay a quarterly cash dividend and will consider
future dividend rate adjustments based on the Company’s financial condition, profitability, cash flow, liquidity and other relevant business
factors.
(B) Not applicable.
(C) The Company has in place and has announced a share repurchase plan. As previously disclosed, the Company may purchase authorized
shares of its common stock under the plan based on a number of factors, including: market, economic, and industry conditions; the market price
of the Company’s common stock; anti-dilutive effect on earnings; available cash; and other factors that the Company deems appropriate. The
plan does not have an expiration date, but the Board of Directors reviews such plan periodically.
The following is a summary of share repurchase activity during 2023:
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Period
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sept-23
Oct-23
Nov-23
Dec-23
Total
Issuer Purchase of Equity Securities
Total Number of
Shares Purchased
Average Price Paid
Per Share
Total Number of Shares
Purchased As Part of a
Publicly Announced Plan*
Maximum Number of Shares
That May Yet Be Purchased
Under the Plan*
— $
46,835
1,000,091
—
400,062
520,312
—
210,525
565,963
150,127
1,296,575
741,496
4,931,986
—
28.58
27.12
—
26.78
27.64
—
32.51
32.38
28.76
30.45
31.7
—
46,835
1,000,091
—
400,062
520,312
—
210,525
565,963
150,127
1,296,575
741,496
4,931,986
20,783,165
20,736,330
19,736,239
19,736,239
19,336,177
18,815,865
18,815,865
18,605,340
18,039,377
17,889,250
16,592,675
15,851,179
* See above paragraph with respect to the publicly announced share repurchase plan
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Results of Operations
The following table sets forth for the periods indicated certain items from the Company’s Consolidated Statements of Income expressed as a percentage
of net sales and the percentage change in the dollar amount of each such item from that in the indicated previous year.
Net Sales
Cost of Goods Sold
Gross Margin
Operating Expenses:
Engineering, Research and Development
Selling, General and Administrative
Total Operating Expenses:
Income From Operations
Other (Loss)/Income
Income Before Provision for Income Taxes
Provision for Income Taxes
Net Income
42
G EN T EX CO R P O R AT I O N
Percentage of Net Sales
Year Ended December 31,
2023
100%
66.8
33.2
6.7
4.9
11.6
21.6
0.4
22
3.3
2022
100%
68.2
31.8
6.9
5.5
12.5
19.3
—
19.3
2.7
2021
100%
64.2
35.8
6.8
5.3
12.1
23.7
0.4
24.1
3.2
18.6%
16.6%
20.80%
Percentage Change
2023 Vs 2022
2022 Vs 2021
19.8%
10.8%
17.4
25.1
15.8
5.7
11.3
34
3,368
36.6
50.3
34.4%
17.8
-1.6
13.2
15.6
14.2
-9.7
-104.3
-11.2
-8.3
-11.7%
Results of Operations: 2023 to 2022
NET SALES. In 2023, the Company’s net sales increased by $380.3 million, or 20% compared to the prior year, representing the highest annual
sales in Company history. Overall light vehicle production in 2023 increased by 12%, when compared to 2022 in the Company’s primary
markets, meaning net sales in 2023 outperformed the underlying market by 8%. The outperformance versus the underlying market was driven
by growth from the continued adoption of FDM, exterior auto-dimming mirrors, and continued penetration of the Company’s base interior
mirrors and electronic features. The Company’s sales growth was driven by a 15% year over year increase in automatic-dimming mirror
shipments, from 44.2 million units in 2022 to 50.6 million units in 2023, together with product mix.
Other net sales for calendar year 2023 were $44.6 million, compared to Other net sales of $44.2 million in calendar year 2022. Fire protection
sales in 2023 decreased by 32% year over year, while dimmable aircraft windows increased by 211% in 2023 compared to calendar year 2022.
COST OF GOODS SOLD. As a percentage of net sales, cost of goods sold decreased from 68.2% in 2022 to 66.8% in 2023. The year over year
increase in the gross margin was primarily the result of improved overhead leverage created by growth in revenue, lower freight costs, pricing
increases and cost recoveries, and product mix. These positive impacts were partially offset by increased raw materials costs and annual customer
price reductions. On a year over year basis, fixed overhead leverage and lower freights costs each had a positive impact of approximately 100 -
150 basis points on gross margin on a year over year basis. Price increases and cost recoveries, and product mix, each had a positive impact of
approximately 50 - 100 basis points on gross margin on a year over year basis. Increased raw material costs and annual customer price reductions
each had a negative impact of approximately 50 - 100 basis points on gross margin on a year over year basis.
OPERATING EXPENSES. Engineering, research and development expenses (“E, R & D”) increased by $21.1 million or 16% from 2022 to 2023,
but remained at 7% of net sales. 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 $6.0 million or 6% from 2022 to 2023, which represents 5% of net sales
in 2023 compared to 6% of net sales in 2022. The primary reason for the year over year increase in S, G & A from 2022 to 2023 was increased
staffing expenses, which were partially offset by lower freight expenses.
TOTAL OTHER (LOSS)/INCOME. Investment income increased $8.7 million to $13.5 million for 2023 compared to $4.8 million for 2022,
primarily due to increases in interest income from fixed income investments and interest rates on other cash holdings. Other income – net
increased $0.8 million in 2023 versus 2022, primarily due to increases in interest income from fixed income investments.
TAXES. The effective tax rate was 15.2% for the year ended December 31, 2023, compared to 13.8% for the prior year. The effective tax rates
in 2023 and 2022 differed from the statutory federal income tax rate, primarily due to the Foreign Derived Intangible Income Deduction,
as well as additional equity compensation deductions and various tax credits.
NET INCOME. Net income increased by $109.6 million in 2023, or 34% compared to 2022, primarily due to the year over year changes in gross
margin and operating profits.
Results of Operations: 2022 to 2021
NET SALES. In 2022, the Company’s net sales increased by $187.8 million, or 11% compared to the prior year. Light vehicle production in 2022
increased by 3% when compared to 2021 in the Company’s primary markets, but total revenue for the year outperformed the underlying market by
8% despite the many supply chain challenges and customer order volatility encountered during the year. The increase in the Company’s sales was
primarily driven by a 6% year over year increase in automatic-dimming mirror shipments, from 41.8 million units in 2021 to 44.2 million units
in 2022.
Other net sales for calendar year 2022 were $44.2 million, compared to Other net sales of $34.0 million in calendar year 2021. Fire protection
sales in 2022 increased by 53% year over year, while dimmable aircraft windows were down 33% in 2022 compared to calendar year 2021.
The Company expects that dimmable aircraft window sales will continue to be impacted until there is a meaningful recovery of the aerospace
industry and the Boeing 787 production levels improve.
2023 A N N UA L R EP O RT
43
COST OF GOODS SOLD. As a percentage of net sales, cost of goods sold increased from 64.2% in 2021 to 68.2% in 2022. The year over year decrease
in the gross margin was primarily the result of increased raw material costs, increased manufacturing costs, higher freight and logistics costs, and certain
Cash flow used for financing activities for the year ended December 31, 2023, increased $21.1 million to $230.2 million, compared to $209.0
million for the year ended December 31, 2022, primarily due to an increase in the amount of shares of common stock repurchased which
previously agreed to annual customer price reductions. On a year over year basis, increased raw material costs had a negative impact of approximately
totaled $147.4 million during the calendar year 2023 as compared to $112.5 million during the calendar year 2022. Cash flow used for financing
250 - 300 basis points on gross margin. Manufacturing cost increases, freight and logistics cost increases, and annual customer price reductions each
activities for the year ended December 31, 2022, decreased $201.1 million to $209.0 million compared to the year ended December 31, 2021,
independently had a negative impact of approximately 50 - 100 basis points on gross margin on a year over year basis.
primarily due to a decrease in the amount of shares of common stock repurchased which totaled $112.5 million during the calendar year 2022
OPERATING EXPENSES. E, R & D increased by $15.5 million or 13% from 2021 to 2022, but remained at 7% of net sales. E, R & D decreased
primarily due to additional staffing, professional fees, new product development, and the ongoing product re-designs necessary to mitigate
electronics part shortages.
S, G & A expenses increased by $14.3 million or 16% from 2021 to 2022, which represents 6% of net sales in 2022 compared to 5% in 2021.
as compared to $324.6 million during the calendar year 2021.
Short-term investments as of December 31, 2023 were $14.4 million, down from $23.0 million as of December 31, 2022 and long-term
investments were $299.1 million as of December 31, 2023, up from $202.3 million as of December 31, 2022, due to changes in the Company’s
overall investment portfolio and increased investment in technology investments.
The primary reason for the increase in S, G & A from 2021 to 2022 was primarily due to staffing, increases in outbound freight expenses, and
Accounts receivable as of December 31, 2023 increased $45.3 million compared to December 31, 2022, primarily due to an increase in sales year
the return of in-person customer meetings and trade show related expenses. S, G & A expenses were also impacted on a year over year basis by
over year.
the $4.0 million settlement with the SEC that was accrued for in the second and third quarters of 2022, and the related legal and professional
fees.
TOTAL OTHER (LOSS)/INCOME. Investment income increased $1.2 million to $4.8 million for 2022 compared to $3.6 million for 2021
primarily due to increases in interest income from fixed income investments. Other income – net decreased $8.1 million in 2022 versus 2021,
primarily due to additional losses on sales of debt investments on a year over year basis.
TAXES. The effective tax rate was 13.8% for the year ended December 31, 2022 compared to 13.3% for the prior year. The effective tax rates in
2022 and 2021 differed from the statutory federal income tax rate, primarily due to the Foreign Derived Intangible Income Deduction, as well
as additional equity compensation deductions and various tax credits.
NET INCOME. Net income decreased by $42.0 million in 2022, or 12% compared to 2021, primarily due to the year over year changes in gross
margin and operating profits.
Liquidity and Capital Resources
The Company’s financial condition throughout the periods presented has remained very strong.
Inventories as of December 31, 2023, decreased $1.9 million compared to December 31, 2022, primarily due to decreases in raw materials,
which were partially offset by increases in finished goods to meet customer order demand.
Intangible Assets, net as of December 31, 2023 decreased $5.4 million compared to December 31, 2022, due to the amortization of definite
lived intangible assets and patents, which is discussed further in Note 10 of the Consolidated Financial Statements.
Accounts payable as of December 31, 2023, increased $32.7 million compared to December 31, 2022, primarily due to increases in, and/or
timing of capital expenditure 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, to be sufficient to cover anticipated cash needs for the foreseeable future considering its contractual
obligations and commitments.
The following is a summary of working capital and fixed income long-term investments:
The Company’s cash and cash equivalents were $226.4 million, $214.8 million, and $262.3 million as of December 31, 2023, 2022 and 2021,
Working Capital
respectively. The Company’s cash and cash equivalents include amounts held by foreign subsidiaries of $14.8 million, $12.5 million, and $10.7
Fixed Income Long Term Investments
million as of December 31, 2023, 2022 and 2021, respectively.
Total
$
$
$
2023
2022
726,129,177 $
698,099,624 $
155,863,252
$
881,992,429 $
140,341,898
$
838,441,522 $
2021
801,593,707
190,875,668
992,469,375
Cash flow from operating activities was $537.2 million, $338.2 million and $362.2 million for the years ended December 31, 2023, 2022 and
2021, respectively. Cash flow from operating activities increased $199.0 million for the year ended December 31, 2023 compared to the prior
year, primarily due to increases in net income and changes in working capital. Cash flow from operating activities decreased $24.0 million for
the year ended December 31, 2022 compared to the same period in 2021, primarily due to changes in working capital and a decrease in net
income, which were partially offset by changes in deferred taxes.
The increase in working capital as of December 31, 2023 compared to December 31, 2022 is primarily due to increases in cash and accounts
receivable, which was partially offset by increases in accounts payable. The decrease in working capital as of December 31, 2022 compared to 2021
is primarily due to increases in inventory and accounts receivable, which were partially offset by decreases in cash and prepaid expenses and other.
Please refer to Part II, Item 5, with regard to the Company’s previously announced share repurchase plan.
Cash flow used for investing activities for the year ended December 31, 2023 increased by $126.7 million to $299.4 million, compared with cash
flow used for investing activities of $172.7 million for the year ended December 31, 2022, primarily due to increased technology investment
Outlook
purchases during the year, as well as increased capital expenditures in 2023 compared to 2022. Cash flow used for investing activities for the year
ended December 31, 2022 increased by $59.6 million to $172.7 million, compared to cash flow used for investment activities for the year ended
December 31, 2021, primarily due to increased investment purchases of equity method investments in 2022 compared to 2021.
Capital expenditures were $183.7 million, $146.4 million, and $68.8 million for the years ended December 31, 2023, 2022, and 2021, respectively.
Capital expenditures for the year ended December 31, 2023 increased by $37.2 million compared with the year ended December 31, 2022,
primarily due to increased in expenditures related to building and facility construction projects previously discussed. Capital expenditures for the
year ended December 31, 2022 increased by $77.6 million compared to the year ended December 31, 2020, also due to the same building and
facility construction projects previously discussed.
The Company utilizes the light vehicle production forecasting services of S&P Global Mobility. The S&P Global Mobility mid-January 2024
forecast for light vehicle production for calendar year 2024 are approximately 15.8 million units for North America, 17.4 million units for
Europe, 12.2 million units for Japan and Korea, and 28.9 million units for China.
Based on the foregoing, the Company estimates that top line revenue for calendar year 2024 will be between $2.45 and $2.55 billion. All
estimates are based on light vehicle production forecasts in the primary regions to which the Company ships product, as well as the estimated
option rates for its mirrors and electronics on prospective vehicle models and anticipated product mix. Continuing uncertainties, such as: light
vehicle production volumes; 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, tariffs and potential tax law changes;
44
G EN T EX CO R P O R AT I O N
2023 A N N UA L R EP O RT
45
OEM strategies and cost pressures; customer inventory management and the impact of potential automotive customer (including their Tier 1
Most of the Company’s non-U.S. sales are invoiced and paid in U.S. dollars. During calendar year 2023, approximately 8% of the Company’s
suppliers) and supplier bankruptcies; work stoppages, strikes, etc.; could disrupt shipments to customers and make forecasting difficult.
net sales were invoiced and paid in foreign currencies (compared to 7% for calendar year 2022 and 8% for calendar year 2021). The Company
The Company is estimating that the gross margin will be between 34% and 35% for calendar year 2024. 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 2024,
currently expects that approximately 8-9% of the Company’s net sales in calendar year 2024 will be invoiced and paid in foreign currencies.
The Company does not currently engage in hedging activities of foreign currencies.
the Company hopes it may be able to offset certain annual customer price reductions with raw material cost decreases, improved operational
The Company does not have any significant off-balance sheet arrangements or commitments that have not been recorded in its Consolidated
efficiencies, and leverage on the Company’s fixed costs, but there is no certainty of being able to do so.
Financial Statements.
The Company is also estimating that its operating expenses, which include E, R & D and S, G & A, are expected to be between $295 and $305
million for calendar year 2024, due in part to continued investments that support growth and launch of new business as well as development of
Significant Accounting Policies and Critical Accounting Estimates
new products, which are primarily staffing related. The Company continues to invest heavily in technology directed at funding the development
The preparation of the Company’s Consolidated Financial Statements, which have been prepared in accordance with accounting principles
of its current product portfolio and creating iterations of those products that help keep its products new and attractive to our customers, as well
generally accepted in the United States, requires management to make estimates, assumptions and apply judgments that affect its financial
as new products.
The Company is a technology leader in the automotive industry, with a focus on developing uniquely designed solutions that are proprietary.
position and results of operations. On an ongoing basis, management evaluates these estimates and assumptions. Management also continually
reviews its accounting policies and financial information disclosures.
The Company continues to make investments intended to maintain a competitive advantage in its current markets, as well as to use its core
The Company’s significant accounting policies are described in Note 1 of the Consolidated Financial Statements.
competencies to develop products that are applicable in other markets.
Based on current light vehicle production forecasts, and the resultant forecast our automatic-dimming mirrors and electronics, the Company
liabilities as of the date of the Consolidated Financial statements and the reported amounts of revenues and expenses during the reporting
currently anticipates that 2024 capital expenditures will be between $225 and $250 million, a majority of which will be related to production
period. These estimates and assumptions are based on our historical experience, the terms of existing contracts, our evaluation of trends in the
equipment purchases. Capital expenditures for calendar year 2024 are currently anticipated to be financed from current cash and cash equivalents
industry, information provided by our customers and suppliers and information available from other outside sources, as appropriate. However,
Certain of our accounting policies require management to make estimates and assumptions that affect the reported amounts of assets and
on hand and cash flows from operating activities.
The Company is also estimating that depreciation and amortization expense for calendar year 2024 will be between $95 and $105 million.
The Company is further estimating that its tax rate will be between 16% and 18% for calendar year 2024 based on the current statutory rates.
In accordance with its previously announced share repurchase plan and capital allocation strategy, the Company intends to continue to
repurchase additional shares of its common stock in 2024 and into the future depending on a number of factors, including: market, economic,
and industry conditions; the market price of the Company’s common stock; anti-dilutive effect on earnings; available cash; and other factors that
the Company deems appropriate.
The Company is also providing top line revenue guidance for calendar year 2025, taking into account anticipated increases in light vehicle
production in 2025 compared to 2024. S&P Global Mobility forecast (as of mid-January 2024) for light vehicle production for calendar year
2025 are approximately 16.2 million units for North America, 17.5 million units for Europe, 11.8 million units for Japan and Korea, and
30.1 million units for China. Based on these forecasts, as well as the Company’s estimates for aerospace, medical, and fire protection sales for
calendar year 2025, the Company is estimating that revenue for calendar year 2025 will be between $2.65 and $2.75 billion. As noted above,
continuing uncertainties make forecasting difficult.
Market Risk Disclosure
The Company is subject to market risk exposures of varying correlations and volatilities, including foreign exchange rate risk, and interest rate
risk. Fluctuating interest rates and securities prices could negatively impact the Company’s financial performance due to realized losses on the
sale of fixed income investments and/or realized losses due to an impairment adjustment on investment securities. The Company does not
currently believe such risks are necessarily material.
these estimates and assumptions are inherently subject to a degree of uncertainty. As a result, actual results in these areas may differ significantly
from our estimates, as is the case in any application of generally accepted accounting principles.
The Company considers an accounting estimate to be critical if:
◼
◼
It requires management to make assumptions about matters that were uncertain at the time of the estimate, and
Changes in the estimate or different estimates that could have been selected would have had a material impact on our financial condition
or results of operations.
REVENUE RECOGNITION. The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue
from Contracts with Customers. Accordingly, revenue is recognized in an amount that reflects the consideration to which the Company expects
to be entitled in exchange for promised goods or services when it transfers those goods or services to customers. Sales are shown net of returns,
which have not historically been significant. The Company does not generate sales from arrangements with multiple deliverables. The Company
generally receives purchase orders from customers on an annual basis in the ordinary course of business. Typically, such purchase orders provide
the annual terms, including pricing, related to a particular vehicle model. Purchase orders generally do not specify quantities. The Company
recognizes revenue based on the pricing terms included in such annual purchase orders.
As part of certain agreements, entered into in the ordinary course of business, the Company is asked to provide customers with annual price
reductions. Such amounts are estimated and accrued as a reduction of revenue as products are shipped to those customers. For any shipments
of product that may be subject to retroactive price adjustments that are then being negotiated, the Company records revenue based on the
Company’s best estimate of the amount of consideration to which the entity will be entitled in exchange for transferring the promised goods
to the customer. The Company’s best estimate requires significant judgment based on historical results and expected outcomes of ongoing
negotiations with customers. The Company’s approach is to consider these adjustments to the contract price as variable consideration which
is estimated based on the then most likely price amount. In addition, the Company has ongoing adjustments to our pricing arrangements with
The Company has some assets, liabilities and operations outside the United States, including multi-currency accounts, which currently are
customers based on the related content, the cost of our products and other commercial factors. Such pricing accruals are adjusted as they are
not significant overall to the Company as a whole. Because the Company sells its automotive mirrors throughout the world and automobile
settled with our customers.
manufacturing is highly dependent on general economic conditions, it could be significantly affected by weak economic conditions in foreign
markets that could reduce demand for its products.
See also Item 13 of Part III with respect to “Certain Transactions”, which is incorporated herein.
46
G EN T EX CO R P O R AT I O N
2023 A N N UA L R EP O RT
47
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the
See “Market Risk Disclosure” in Management’s Discussion and Analysis of Financial Condition and Results of Operations. See Item 7, Part II.
degree of compliance with the policies or procedures may deteriorate.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, has been audited by Ernst & Young LLP,
an independent registered public accounting firm, as stated in their report which is included in Part IV of this Form 10K.
During the period covered by this annual report, there have been no changes in the Company’s internal controls over financial reporting that
have materially affected or are reasonably likely to materially affect the Company’s internal controls over financial reporting. In addition,
there have been no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls
subsequent to December 31, 2023.
Item 9B. Other Information.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
None.
Item 8. Financial Statements and Supplementary Data.
The following financial statements and reports of independent registered public accounting firm are filed with this report following the signature page:
Index to Consolidated Financial Statements
Document
Report of Independent Registered Public Accounting Firm (PCAOB ID:42)
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Income for the years ended December 31, 2023, 2022, and 2021
Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022, and 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021
Consolidated Statements of Shareholders’ Investment for the years ended December 31, 2023, 2022, and 2021
Notes to Consolidated Financial Statements
Page
42
44
45
46
47
48
49
51
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
As defined in Item 304 of Regulation S-K, there have been no changes in, or disagreements with, accountants during the 24-month period
ended December 31, 2023.
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures
Under the supervision of and with the participation of the Company’s management, the Company’s principal executive officer and principal
financial officer have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures ([as defined
in Exchange Act Rules 13a – 15(e) and 15d – 15(e)]) as of December 31, 2023, and have concluded that the Company’s disclosure controls and
procedures are adequate and effective.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in
Exchange Act Rules 13a – 15(f) and 15d – 15(f). Under the supervision and with the participation of our management, including our principal
executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting
based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 Framework)(the COSO criteria). Based on this assessment, management asserts that the Company has maintained effective
internal control over financial reporting as of December 31, 2023.
48
G EN T EX CO R P O R AT I O N
2023 A N N UA L R EP O RT
49
I
I
I
T
R
A
P
K
-
0
1
Item 10. Directors, Executive Officers and Corporate Governance.
Information about Our Executive Officers
The following table lists the names, ages, and positions of all of the Company’s executive officers at the time of this report. Officers are generally
elected at the meeting of the Board following the annual meeting of shareholders.
Name
Age
Position
Current Position Held Since
Steve Downing
Neil Boehm
Kevin Nash
Matthew Chiodo
Scott Ryan
46
52
49
59
43
President and Chief Executive Officer
Chief Technology Officer and Vice President, Engineering
Vice President, Finance, Chief Financial Officer and Treasurer
Chief Sales Officer and Senior Vice President, Sales
Vice President, General Counsel and Corporate Secretary
There are no family relationships among the officers listed in the preceding table.
Jan-18
Feb-18
Feb-18
Jan-22
Aug-18
STEVE DOWNING was elected Chief Executive Officer effective as of January 1, 2018. Mr. Downing has been employed by the Company since
2002. Prior to being elected Chief Executive Officer, he served as President and Chief Operating Officer from August 2017 to December
2017, as Senior Vice President and Chief Financial Officer from June 2015 to August 2017, and as Vice President of Finance and Chief
Financial Officer from May 2013 to June 2015. He served in a variety of roles before that time. Certain terms of Mr. Downing’s employment
arrangement are contained herein in Part III, Item 11 to this Form 10-K.
NEIL BOEHM was appointed as the Company’s Vice President, Engineering and Chief Technology Officer as of February 15, 2018 and was
also appointed an executive officer. Mr. Boehm has been employed by the Company since 2001. Prior to his current position, he served as
the Company’s Vice President of Engineering, beginning in 2015 and before that served as Senior Director of Engineering. Certain terms
of Mr. Boehm’s employment arrangement are contained herein in Part III, Item 11 to this Form 10-K.
KEVIN NASH was appointed as the Company’s Vice President, Finance, Chief Financial Officer, and Treasurer, effective as of February 15,
2018. He is also the Company’s Chief Accounting Officer. Mr. Nash has been employed by the Company since 1999. Prior to his current
position, he served as the Company’s Vice President of Accounting and Chief Accounting Officer, beginning in 2014 and before that served as
Director of Accounting and Chief Accounting Officer. Certain terms of Mr. Nash’s employment arrangement are contained herein in Part III,
Item 11 to this Form 10-K.
MATTHEW CHIODO’S title changed to Chief Sales Officer and Senior Vice President of Sales on January 17, 2022, though he was already
and continues to be a named executive officer. Mr. Chiodo has been employed by the Company since 2001. Prior to his current title, his title
was the Company’s Vice President of Sales, beginning in 2017 and before that served as Director of Sales for several years. Certain terms
of Mr. Chiodo’s employment arrangement are contained herein in Part III, Item 11 to this Form 10-K.
SCOTT RYAN was appointed as the Company’s Vice President, General Counsel and Corporate Secretary on August 16, 2018. Mr. Ryan has
been employed by the Company since 2010. Prior to his current position, he served as Assistant General Counsel and Corporate Secretary
from June 2015 to August 2018. Prior to that he served as Patent Counsel from November 2013 to June 2015. Certain terms of Mr. Ryan’s
employment arrangement are contained herein in Part III, Item 11 to this Form 10-K.
Information relating to directors appearing under the caption “Election of Directors” in the definitive Proxy Statement for 2024 Annual
Meeting of Shareholders and filed with the Commission within 120 days after the Company’s fiscal year end, December 31, 2023 (the “Proxy
Statement”), is hereby incorporated herein by reference. No changes were made to the procedures by which shareholders may recommend
nominees for the Board. Any information concerning compliance with Section 16(a) of the Securities and Exchange Act of 1934 that may
appear under the caption “Delinquent Section 16 Reports” in the definitive Proxy Statement is hereby incorporated herein by reference.
Information relating to the Company’s Audit Committee and concerning whether at least one member of the Audit Committee is an
“audit committee financial expert” as that term is defined under Item 407(d)(5) of Regulation S-K appearing under the caption “Corporate
Governance – Audit Committee” in the definitive Proxy Statement is hereby incorporated herein by reference.
The Company has adopted a Code of Ethics for Certain Senior Officers that applies to its principal executive officer, principal financial officer,
and principal accounting officer. A copy of the Code of Ethics for Certain Senior Officers is available without charge, upon written request,
from the Corporate Secretary of the Company, 600 N. Centennial Street, Zeeland, Michigan 49464 and on the Company’s website. The
Company intends to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision
of this Code of Ethics by posting such information on its website. Information contained in the Company’s website, whether currently posted
or posted in the future, is not part of this document or the documents incorporated by reference in this document.
Item 11. Executive Compensation.
The information contained under the caption “Compensation Committee Report,” “Compensation Discussion and Analysis,” “Executive
Compensation,” “Director Compensation,” and “Compensation Committee Interlocks and Insider Participation” contained in the definitive
Proxy Statement is hereby incorporated herein by reference. The “Compensation Committee Report” shall not be deemed to be soliciting
material or to be filed with the commission.
As previously disclosed, the Compensation Committee has a goal that base salaries for officers, including named executive officers, are at or near
the market median for base salaries when compared to the Company’s established peer group.
In light of that, the Compensation Committee has periodically reviewed base salaries for officers, including where officers rank compared to the
Company’s established peer group. It was determined by the Compensation Committee that certain officer base salaries trail the announced goal of
base salaries at market median. As such, in light of the positive financial outlook for the Company the ever-increasing competition for talent, the
need to attract and retain management to fulfill the Company’s strategic goals, desire for base salaries to approach market median, and the high
level individual performances of officers, the Compensation Committee recommended to the Board and the Board approved certain changes in
base salaries for 2024, though such changes did not include the Company’s President and CEO. Mr. Downing requested no increase to his base
salary in 2024. In light of Mr. Downing’s continued excellent performance, and base salary, the Board approved increases to Mr. Downing’s
annual and long term incentives, as disclosed herein. The Board, on February 15, 2024, approved the following base salaries for the CEO and
other named executive officers for 2024:
Executive Officer
Position
Steve Downing
President and CEO
Neil Boehm
Kevin Nash
VP, Engineering and CTO
VP, Finance, CFO and Treasurer
Matt Chiodo
Senior VP, Sales and CSO
Scott Ryan
VP, General Counsel and Corporate Secretary
2024 Base Salary
2023 Base Salary
850,000
575,000
555,000
480,000
440,000
$
$
$
$
$
850,000
515,000
515,000
455,000
415,000
$
$
$
$
$
Amended and Restated Annual Incentive Performance-Based Bonus Plan
The Board previously approved the Amended and Restated Annual Incentive Performance-Based Bonus Plan (the “Annual Plan”) to further
emphasize performance-based compensation. In lieu of participating in the profit-sharing bonus paid to all employees, the Annual Plan provides
potential cash-based bonuses for officers based on the achievement of three key performance metrics: Revenue (33.33% weighting); Operating
Income (33.33% weighting); and Earnings per Diluted Share (33.33% weighting). The Annual Plan covers certain officers, including named
executive officers.
At the beginning of each year, the Compensation Committee reviews and approves a cash bonus target under the Annual Plan for each officer,
as a percentage of base salary for the year. Under the Annual Plan in 2024, the CEO may earn up to 220% of base salary. The non-CEO named
executive officers may earn up to 0% to 150% of their respective base salaries. All performance-related targets under the Annual Plan are set by,
and achievement of targets are approved by, the Compensation Committee and/or the Board of Directors.
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For our executive officers, the 2024 Annual Plan payout opportunities as a percentage of base salary applicable to each performance metric are
Based on actual Revenue, Operating Income, and Earnings per Diluted Share results compared to the targets and performance of the named
shown in the table below:
Executive Officer
Steve Downing
Neil Boehm
Kevin Nash
Matt Chiodo
Scott Ryan
Annual Plan Threshold
Annual Plan Target
Annual Plan Maximum
55.0%
37.5%
37.5%
37.5%
37.5%
110.0%
75.0%
75.0%
75.0%
75.0%
220.0%
150.0%
150.0%
150.0%
150.0%
Executive Officer
Steve Downing
Neil Boehm
Kevin Nash
Matt Chiodo
Scott Ryan
$
$
$
$
$
2023 Annual Plan Performance Bonus
2023 Annual Plan Discretionary Bonus
1,576,495
716,378
716,378
632,916
577,275
$0
$0
$0
$0
$0
executive officers, the payments for 2023 under the Annual Plan are shown in the table below:
For 2024, Mr. Downing’s Annual Plan target opportunity increased from 100% to 110% in part due to their being no increase to his base
These Annual Plan results appropriately reflect management’s work in terms of a 13% revenue outperformance versus the Company’s primary
salary, despite that base salary being below market median among the Company’s defined peer group. In lieu of a base salary increase, the
underlying markets, execution of the previously announced gross margin recovery plan, and ongoing business development efforts. For 2024,
Compensation Committee recommended to the Board, and the Board approved an increase to Mr. Downing’s Annual Plan target opportunity
the Compensation Committee has established targets for Revenue, Operating Income, and Earnings per Diluted Share for the Annual Plan
in 2024. Mr. Downing’s target opportunity remains within the market median for short-term incentives for executives with similar job
performance metrics as it has done in the past, and has made a minor change in 2024, to be consistent with periods prior to 2022. During 2022
responsibilities. No other changes were made to the Annual Plan target opportunities for executive officers in 2024, as it is believed those
and 2023, the Compensation Committee and Board widened the range of threshold and maximum performance under the Annual Plan to
threshold, target, and maximum opportunity levels remain appropriate. The foregoing payout opportunities are multiplied by the weighting
±25% to account for increased volatility in potential financial performance, as a result of the ongoing supply chain crisis. In 2024, the Company
factor of a particular performance metric to determine the amounts of cash bonuses payable to officers based on actual performance compared
is again using ± 20% of target in 2024 for determining thresholds and maximums under the Annual Plan due to a reduction in overall end
to the threshold, target, or maximum for a performance metric. When actual performance is compared to the established threshold, target, or
market volatility.
maximum, as applicable, for any performance metric, linear interpolation is used to determine any pro rata portion of the performance bonus.
The Compensation Committee and/or the Board also have discretion to increase (or decrease) such performance-based bonuses using their
2019 Omnibus Incentive Plan and Long-Term Incentive Program
judgment, provided that bonuses are not in any event to exceed 250% of the applicable base salary.
Since its inception in 2019, the Annual Plan uses the same three key performance metrics and weighting: Revenue (weighted 33.33%),
implemented the Long-Term Incentive Plan (the “Long-Term Plan”). The Long-Term Plan provides officers, including our named executive
Operating Income (weighted 33.33%) and Earnings per Diluted Share (33.33%) because such metrics are not only appropriate measures
officers, with incentive awards that serve an important role by balancing other applicable short-term goals with longer term shareholder value
of performance, but also align with the Company’s overall business strategy.
creation, while minimizing risk-taking behaviors that could negatively affect long-term results.
The Company’s 2019 Omnibus Incentive Plan (“OIP”) has been approved by shareholders. Pursuant to the 2019 OIP, the Company
In determining whether annual cash bonuses are paid under the Annual Plan, actual performance for the year is measured against specified
The Long-Term Plan uses three-year performance periods and selected performance objectives to determine equity incentive awards so as to
target levels for each performance metric. Generally, the target for the three performance metrics reflects a level of performance, which at
balance short-term goals under the Annual Plan, with performance objectives associated with longer-term shareholder value creation under
the time set would be anticipated to be challenging but achievable. The threshold level is set to be reflective of performance at which the
the Long-Term Plan. Under the Long-Term Plan, the Board and/or the Compensation Committee determines the amount of the long-term
Compensation Committee believed a portion of the award opportunity should be earned. The maximum level was set well above the target,
incentive awards. Each officer’s award opportunity is based on a target dollar value (determined toward the very beginning of the performance
requiring significant achievements and reflecting performance at which the Compensation Committee believed an additional 100% of the target
period) as a percentage of base salary assigned to his or her position based on market comparisons for similar positions, using both a peer group
award was warranted.
and general industry market data. The following target opportunities apply for the 2024-2026 performance period under the Long-Term
For 2023, target performance and actual results for the performance metrics are as follows:
Performance Metric
Weight
Threshold*
Target*
Maximum* Actual Performance*
Revenue
33.33% $
1,511,180 $
2,014,906 $
2,518,633 $
2,299,215
Operating Income
33.33% $
287,104 $
382,805 $
478,506 $
Earnings per Diluted Share
33.33% $
1.04 $
1.39 $
1.74 $
495,731
1.84
* Amounts in thousands (000) except for per share amounts.
Incentive Plan:
Executive Officer
Steve Downing
Neil Boehm
Kevin Nash
Matt Chiodo
Scott Ryan
Long-Term Plan Target Opportunity Percentage of Base Salary for 2024-2026
385%
185%
185%
155%
155%
These Long-Term Plan Target Opportunity Percentages of Base Salary for 2024 - 2026 for Mr. Downing and Mr. Boehm have changed from
those applicable for 2023 - 2025. Mr. Downing’s target opportunity increased from 365% to 385% due in part to there being no increase in
his base salary, despite a base salary that is below market median among the Company’s defined peer group. The Compensation Committee
recommended, and the Board approved, this increase to Mr. Downing’s Long-Term Plan target opportunity in 2024 as set forth. Mr. Boehm’s
target opportunity increased from 155% to 185%, as a result of Mr. Boehm’s increase in overall job responsibilities. The Compensation
Committee also recommended, and the Board approved, this increase to Mr. Boehm’s Long-Term Plan target opportunity in 2024. All Long-
Term Plan target opportunities remain within the market median for long-term incentives for the officers’ respective job responsibilities.
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Achievement at threshold performance yields 50% of the target award and achievement of the maximum performance yields another 100% of
the target award. Actual performance is compared to the established threshold, target, or maximum, as applicable, for an applicable performance
objective, and linear interpolation is used to determine any pro rata portion of such award.
Seventy percent (70%) of the total value of the target long-term incentive opportunity is delivered through performance share awards (“PSAs”)
and the other thirty percent (30%) through restricted stock (“RS”). Both PSAs and RS are forms of performance-based incentive compensation
because PSAs involve performance objectives that provide direct alignment with shareholder interests and the value of RS fluctuates based on
stock price performance.
In addition to requiring achievement of performance objectives in respect of PSAs, PSAs and RS require the executive officers to remain
employed with the Company for three years from the grant date (unless the executive officer attains retirement age, departs for good reason,
dies, or becomes disabled or a change in control occurs whereby an award may be paid or partially paid).
Performance Shares for 2024-2026 Performance Period
The Long-Term Plan is designed to provide PSAs for officers, including our named executive officers. PSAs are tied to the achievement of two
performance objectives, each weighted equally: earnings before interest, taxes, depreciation and amortization (EBITDA) and return on invested capital
(ROIC), in each case adjusted and calculated as determined by the Compensation Committee. Each performance objective is based on a three-year
performance period (2024-2026) with a performance range that can result in PSAs of 50% of target for achieving threshold and 200% of the target
opportunity for achieving maximum. The targets for EBITDA and ROIC for 2024-2026 were established by the Compensation Committee as it has
done in the past. For the 2024-2026 performance period, ± 20% of target is being used for determining thresholds and maximums, which is consistent
with performance periods that began in 2021 and prior, for similar reasons as noted with respect to the Annual Plan.
EBITDA drives the ability to commit resources to continued growth, but is also a measure of ability to provide shareholder return. It also drives
profitable sales growth and optimizes the Company’s cost structure. ROIC ensures management uses the Company’s capital in an effective
manner that drives shareholder value. Since the value of PSAs is tied to the Company’s actual performance in financial objectives, it aligns
the officers’ interests with those of shareholders. The target opportunities of PSAs awarded in 2024 for the named executive officers are shown
in the table below:
Executive Officer
Steve Downing
Neil Boehm
Kevin Nash
Matt Chiodo
Scott Ryan
Number of PSAs Awarded in 2024 (Target) for 2024–2026
68,016
22,109
21,340
15,464
14,175
Restricted Stock Awards for 2024-2026 Performance Period
The other 30% of the total value of the long-term incentive opportunity consists of RS awards. RS incentivizes and rewards executives for
improving long-term stock value and serves as a retention tool. Under the Long-Term Plan, RS will generally be granted in February to officers,
including our named executive officers, and cliff vest on the third anniversary of the grant. The RS awarded in 2024, based on the target
opportunities, for the named executive officers are shown in the table below:
Executive Officer
Steve Downing
Neil Boehm
Kevin Nash
Matt Chiodo
Scott Ryan
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G EN T EX CO R P O R AT I O N
Number of RS Awarded in 2024 for 2024-2026
29,150
9,476
9,146
6,628
6,075
2021-2023 Long-Term Plan Performance (three-year performance period ending December 31, 2023)
December 31, 2023, marked the end of the three-year performance period for PSA and RS Long-Term Plan awards made in February 2021.
Performance Share Awards
The performance metrics, targets and performance payout ranges for these awards were set and approved by the Compensation Committee and
the Board in February 2021. Consistent with the Long-Term Plan, incentive could be earned by the officers based on performance associated
with two equally weighted metrics, EBITDA and ROIC, in each case adjusted as determined by the Compensation Committee, both measured
cumulatively over the three-year performance period. The target levels of achievement for the EBITDA and the ROIC were established to align
with financial goals set at the beginning of the three-year performance period for the years 2021 through 2023. The table below summarizes the
results of the 2021-2023 performance period relative to target and the achievement level of the 2021-2023 PSAs:.
Performance Metric
Weight
Threshold*
Target*
Maximum*
Actual
Performance*
Performance
to Target
Weighted
Performance
EBITDA
ROIC
50% $
1,620,110 $
2,025,137 $
2,430,164 $
1,535,931
50.4%
25.2%
50%
36.8%
46.0%
55.2%
37.12%
62.48%
31.24%
*
Amounts in thousands (000) except percentages. Threshold, Target, and Maximum for EBITDA and ROIC were adjusted to address the estimated impact of tariffs and the Actual
Performance was similarly adjusted with respect to the actual impact of tariffs.
The PSAs awarded in February 2021, based on target opportunity, along with the actual payout of PSAs to the executive officers, for the
2021-2023 performance period are reflected in the table below and include additional shares awarded for dividend equivalents assuming
reinvestment of dividends.
Executive Officer
Steve Downing
Neil Boehm
Kevin Nash
Matt Chiodo
Scott Ryan
Restricted Stock
Number of PSAs Awarded in 2021
(Target) for 2021-2023
2021-2023 PSAs Payout
42,762
14,081
12,916
11,394
10,091
25,203
8,879
8,726
8,291
7,636
The RS awarded in February 2021, based on target opportunities, along with the actual payment of RS to executive officers, awarded for the
2021-2023 period are reflected in the table below:
Executive Officer
Steve Downing
Neil Boehm
Kevin Nash
Matt Chiodo
Scott Ryan
Number of RS Awarded in 2020
(Target) for 2021-2023
2021-2023 RS Payout/Vesting
18,327
6,456
6,345
6,027
5,552
18,327
6,456
6,345
6,027
5,552
Since each executive officer awarded restricted stock in 2021 remained employed by the Company for three years from the grant date, each
restricted stock awarded vested with such executive officers.
The Board also approved an increase in the annual retainer paid to all directors who are not an employee of the Company in the amount
of $10,000 (going from $80,000 to $90,000), though all other Board compensation remained the same.
2023 A N N UA L R EP O RT
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
The information contained under the captions “Common Stock Ownership of Management,” “Common Stock Ownership of Certain Beneficial
Owners,” and “Equity Compensation Plan Information” contained in the definitive Proxy Statement is hereby incorporated herein by reference.
There are no arrangements known to the registrant, the operation of which may at a subsequent date result in a change in control.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information contained under the caption “Certain Transactions” contained in the definitive Proxy Statement is hereby incorporated
herein by reference. The information contained under the caption “Election of Directors” contained in the definitive Proxy Statement is hereby
incorporated herein by reference.
Item 14. Principal Accounting Fee and Services.
Information regarding principal accounting fees and services set forth under the caption “Ratification of Appointment of Independent Auditors
– Principal Accounting Fees and Services” in the definitive Proxy Statement is hereby incorporated herein by reference. Information concerning
the policy adopted by the Audit Committee regarding the pre-approval of audit and non-audit services provided by the Company’s independent
auditors set forth under the caption “Corporate Governance – Audit Committee” in the definitive Proxy Statement is hereby incorporated
herein by reference.
this page Intentionally left mostly blank
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Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Gentex Corporation
To the Shareholders and the Board of Directors of Gentex Corporation
Opinion on the Financial Statements
Opinion on Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Gentex Corporation and subsidiaries (the Company) as of December 31, 2023 and 2022,
the related consolidated statements of income, comprehensive income, shareholders’ investment and cash flows for each of the three years in the period
ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations
and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s
internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 22, 2024 expressed an unqualified
opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial
statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
We have audited Gentex Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2023, based on criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).
In our opinion, Gentex Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated
balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, shareholders’
investment and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February 22, 2024
expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility
is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding
of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Critical Audit Matter
Definition and Limitations of Internal Control Over Financial Reporting
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required
to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved
our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on
the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion
on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue - Estimate of Variable Consideration
DESCRIPTION OF THE MATTER As discussed in Notes 1 and 11 to the Company’s consolidated financial statements, the Company occasionally enters into
sales contracts with its customers that provide for annual price reductions over the production life of a particular part. Prices may also be adjusted on an ongoing
basis to reflect changes in product content, product cost and other commercial factors.
Auditing the accounting for and the completeness of the amount of revenue that the Company expects to be entitled to in exchange for its products
(for arrangements containing annual price reductions) is judgmental due to the unique facts and circumstances involved with each revenue arrangement, as well
as on-going commercial negotiations with customers.
HOW WE ADDRESSED THE MATTER IN OUR AUDIT We obtained an understanding, evaluated the design and tested the operating effectiveness of controls
over annual price reductions. This included testing controls over the Company’s process to identify and evaluate customer contracts that contain matters that
impact revenue recognition, as well as testing controls relating to the completeness and measurement of revenue related to those sales contracts.
Our audit procedures included, among others, testing the completeness and valuation of the Company’s price reductions, including interviews of executive and
commercial management personnel responsible for negotiations with customers, inspecting communications between the Company and its customers related
to the price reductions, and testing manual price reduction entries recorded using lower materiality thresholds for our testing purposes.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures
of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material
effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
Grand Rapids, Michigan
February 22, 2024
We have served as the Company’s auditor since 1999.
Grand Rapids, Michigan
February 22, 2024
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GENTEX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2023 AND 2022
The accompanying notes are an integral part of these consolidated financial statements.
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Restricted cash
Short-term investments
Accounts receivable, net
Inventories, net
Prepaid expenses and other
Total current assets
PLANT AND EQUIPMENT:
Land, buildings and improvements
Machinery and equipment
Construction-in-process
Total Plant and Equipment
Less- Accumulated depreciation
Net Plant and Equipment
OTHER ASSETS:
Goodwill
Long-term investments
Intangible assets, net
Deferred tax asset
Patents and other assets, net
Total Other Assets
TOTAL ASSETS
2023
2022
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
2023
2022
$
226,435,019
$
214,754,638
—
14,356,476
321,809,868
402,473,028
32,663,762
997,738,153
472,112,320
1,011,930,699
158,327,247
4,000,000
23,007,385
276,493,752
404,360,270
26,036,331
948,652,376
376,934,354
935,848,288
165,574,867
1,642,370,266
1,478,357,509
(989,492,594)
(928,324,473)
652,877,672
550,033,036
340,105,631
299,080,876
214,005,910
41,113,759
66,515,551
313,807,494
202,331,983
219,360,910
25,528,700
67,515,425
960,821,727
828,544,512
$ 2,611,437,552
$ 2,327,229,924
CURRENT LIABILITIES:
Accounts payable
Accrued liabilities:
Salaries, wages and vacation
Income taxes
Royalties
Dividends payable
Other
Total current liabilities
OTHER NON-CURRENT LIABILITIES
TOTAL LIABILITIES
SHAREHOLDERS’ INVESTMENT:
Common stock, par value 0.06 per share; 400,000,000 shares authorized; 231,455,443
and 234,169,335 shares issued and outstanding in 2023 and 2022 respectively.
Additional paid-in capital
Retained earnings
Accumulated other comprehensive (loss) income:
Unrealized loss on investments, net
Cumulative translation adjustment
Total shareholders’ investment
TOTAL LIABILITIES AND SHAREHOLDERS’ INVESTMENT
$
184,398,820
$
151,740,046
22,725,631
693,391
20,898,949
27,774,653
15,117,532
271,608,976
27,311,507
298,920,483
17,517,580
18,726,857
19,208,411
28,100,320
15,259,538
250,552,752
10,884,351
261,437,103
13,887,326
14,050,160
968,245,875
917,499,323
1,336,940,990
1,148,386,272
(2,022,403)
(4,534,719)
(10,110,695)
(4,032,239)
2,312,517,069
2,065,792,821
$ 2,611,437,552
$ 2,327,229,924
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GENTEX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
GENTEX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021
The accompanying notes are an integral part of these consolidated financial statements.
NET SALES
COST OF GOODS SOLD
Gross profit
OPERATING EXPENSES:
Engineering, research and development
Selling, general and administrative
Total operating expenses
Income from operations
OTHER INCOME:
Investment income, net
Other (loss) income, net
Total other (loss) income
Income before provision for income taxes
PROVISION FOR INCOME TAXES
NET INCOME
EARNINGS PER SHARE(1):
Basic
Diluted
2023
2022
2021
$
2,299,215,044
$
1,918,958,043
$
1,731,169,929
1,536,585,036
1,309,143,858
1,111,462,082
762,630,008
609,814,185
619,707,847
154,359,700
112,539,255
266,898,955
495,731,053
13,498,351
(4,248,230)
9,250,121
504,981,174
76,577,902
133,308,804
106,499,255
239,808,059
370,006,126
4,795,823
(5,078,873)
(283,050)
369,723,076
50,965,724
117,763,676
92,162,193
209,925,869
409,781,978
3,589,798
2,979,960
6,569,758
416,351,736
55,554,504
428,403,272
$
318,757,352
$
360,797,232
1.84
1.84
$
$
1.36
1.36
$
$
1.51
1.50
0.48
$
$
$
Cash Dividends Declared per Share
$
(1) Earnings Per Share has been adjusted to exclude the portion of net income allocated to participating securities as a result of share-based payment awards
0.48
0.48
$
$
GENTEX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021
The accompanying notes are an integral part of these consolidated financial statements.
Net income
$
428,403,272
$
318,757,352
$
360,797,232
2023
2022
2021
Other comprehensive (loss) income before tax:
Foreign currency translation adjustments
Unrealized gains (losses) on available-for-sale securities, net
Other comprehensive income (loss), before tax
(Benefit) expense for income taxes related to components
of other comprehensive (loss) income
(502,480)
10,238,344
9,735,864
(4,952,828)
(14,072,595)
(19,025,423)
151,544
(6,424,496)
(6,272,952)
2,150,052
(2,955,245)
(1,349,144)
Other comprehensive income (loss), net of tax
7,585,812
(16,070,178)
(4,923,808)
Comprehensive income
$
435,989,084
$
302,687,174
$
355,873,424
62
G EN T EX CO R P O R AT I O N
FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021
The accompanying notes are an integral part of these consolidated financial statements.
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization
Gain on disposal of assets
Loss on disposal of assets
Gain on sale of investments and equity method
investment income
Loss on sale of investments and equity method
investment losses
Deferred income taxes
Stock based compensation expense related to employee stock
options, employee stock purchases and restricted stock
Change in operating assets and liabilities:
2023
2022
2021
$
428,403,272
$
318,757,352
$
360,797,232
93,321,192
(355,544)
443,373
(5,492,269)
96,568,443
(70,736)
28,424
(392,040)
99,112,019
(488,750)
230,933
(1,379,538)
11,476,947
2,104,907
307,490
(17,735,110)
(17,777,777)
(41,694,751)
39,197,422
30,228,606
27,421,645
Accounts receivable
Inventories
Prepaid expenses and other
Accounts payable
Accrued liabilities
Net cash flows from operating activities
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Activity in available-for-sale securities:
Sales proceeds
Maturities and calls
Purchases
Purchase of technology investments
Plant and equipment additions
Proceeds from sale of plant and equipment
Acquisition of businesses, net of cash acquired
Increase in other assets
Net cash used for investing activities
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Issuance of common stock from stock plan transactions
Cash dividends paid
Repurchases of common stock
Net cash used for financing activities
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND
RESTRICTED CASH
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH,
BEGINNING OF YEAR
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH,
END OF YEAR
SUPPLEMENTAL CASH FLOW DATA
Non-cash investing and financing activities:
Change in Property and equipment in accounts payable
and accrued expenses and other current liabilities
$
$
(45,251,116)
2,127,242
(4,101,866)
40,951,490
(5,735,441)
537,249,592
58,847,341
17,445,000
(97,849,498)
(71,083,511)
(183,678,460)
292,723
(18,936,539)
(4,453,376)
(299,416,320)
29,398,272
(112,150,060)
(147,401,103)
(230,152,891)
(26,698,846)
(88,092,828)
(28,788,331)
37,423,488
14,909,867
338,200,529
37,429,595
3,500,000
(18,194,193)
(45,743,460)
(146,433,123)
313,917
—
(3,611,244)
(172,738,508)
16,602,274
(113,091,921)
(112,529,406)
(209,019,053)
35,135,429
(89,975,599)
(20,241,994)
7,266,309
(14,322,863)
362,167,562
56,237,427
27,690,000
(100,301,699)
(12,902,500)
(68,835,047)
2,577,855
(12,071,546)
(5,501,445)
(113,106,955)
29,808,787
(115,285,625)
(324,643,135)
(410,119,973)
7,680,381
(43,557,032)
(161,059,366)
218,754,638
262,311,670
423,371,036
226,435,019
$
218,754,638
$
262,311,670
Twelve Months Ended December 31,
2023
2022
2021
6,927,750
$
14,608,665
$
6,292,196
2023 A N N UA L R EP O RT
63
GENTEX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ INVESTMENT
FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021
The accompanying notes are an integral part of these consolidated financial statements.
BALANCE AS OF JANUARY 1, 2021
Issuance of common stock from stock plan transactions
Repurchases of common stock
Stock-based compensation expense related to stock options, employee stock purchases, restricted stock, and
performance share awards
Dividends declared ($0.48 per share)
Net income
Other comprehensive income
BALANCE AS OF DECEMBER 31, 2021
Issuance of common stock from stock plan transactions
Issuance of common stock related to acquisitions
Repurchases of common stock
Stock-based compensation expense related to stock options, employee stock purchases, restricted stock, and
performance share awards
Dividends declared ($0.48 per share)
Net income
Other comprehensive loss
BALANCE AS OF DECEMBER 31, 2022
Issuance of common stock from stock plan transactions
Repurchases of common stock
Stock-based compensation expense related to stock options, employee stock purchases, restricted stock, and
performance share awards
Dividends declared ($0.48 per share)
Net income
Other comprehensive loss
BALANCE AS OF DECEMBER 31, 2023
The accompanying notes are an integral part of these consolidated financial statements. There may be some differences due to rounding.
Common Stock Shares
243,692,869
2,343,169
(9,595,198)
—
—
—
—
236,440,840
1,606,965
162,433
(4,040,903)
—
—
—
—
234,169,335
2,218,094
(4,931,986)
—
—
—
—
Common
Stock Amount
Additional
Paid-In Capital
Retained Earnings
Accumulated Other
Comprehensive Income (Loss)
Total Shareholders’
Investment
$
14,621,572
$
852,771,508
$
1,089,698,996
$
6,851,052
$
1,963,943,128
140,590
(575,712)
29,668,197
—
(30,447,965)
(293,619,458)
—
—
—
—
27,421,645
—
—
—
—
(114,415,382)
360,797,232
—
—
—
—
—
—
(4,923,808)
29,808,787
(324,643,135)
27,421,645
(114,415,382)
360,797,232
(4,923,808)
$
14,186,450
$
879,413,385
$
1,042,461,388
$
1,927,244
$
1,937,988,467
96,418
9,746
16,505,856
4,990,266
—
—
(242,454)
(13,638,790)
(100,013,126)
—
—
—
—
30,228,606
—
—
—
—
(112,819,342)
318,757,352
—
—
—
—
—
—
16,602,274
5,000,012
(113,894,370)
30,228,606
(112,819,342)
318,757,352
(16,070,178)
—
(16,070,178)
$
14,050,160
$
917,499,323
$
1,148,386,272
$
(14,142,934)
$
2,065,792,821
133,086
(295,920)
29,265,186
—
(17,716,056)
(128,024,161)
—
—
—
—
39,197,422
—
—
—
—
(111,824,393)
428,403,272
—
—
—
—
—
—
7,585,812
29,398,272
(146,036,137)
39,197,422
(111,824,393)
428,403,272
7,585,812
231,455,443
$
13,887,326
$
968,245,875
$
1,336,940,990
$
(6,557,122)
$
2,312,517,069
64
G EN T EX CO R P O R AT I O N
2023 A N N UA L R EP O RT
65
( 1 ) S U M M A R Y O F S I G N I F I C A N T A C C O U N T I N G A N D R E P O R T I N G P O L I C I E S
The Company
Investments
Gentex Corporation, including its wholly-owned subsidiaries (the “Company”), is a leading supplier of digital vision, connected car, dimmable
AVAILABLE FOR SALE SECURITIES
glass, and fire protection technologies. The Company’s largest business segment involves designing, developing, manufacturing, marketing,
and supplying automatic-dimming rearview and non-dimming mirrors and various electronic modules for the automotive industry. The
Company ships its product to all of the major automotive producing regions worldwide, which it supports with numerous sales, engineering
and distribution locations worldwide.
The Company follows the provisions of ASC 820, Fair Value Measurements and Disclosures, for its financial assets and liabilities, and for its non-
financial assets and liabilities subject to fair value measurements. ASC 820 provides a framework for measuring the fair value of assets and liabilities.
This framework is intended to provide increased consistency in how fair value determinations are made under various existing accounting standards that
permit, or in some cases, require estimates of fair-market value. This standard also expanded financial statement disclosure requirements about a
A substantial portion of the Company’s net sales and accounts receivable result from transactions with domestic and foreign automotive
company’s use of fair-value measurements, including the effect of such measurement on earnings. The cost of securities sold is based on the specific
manufacturers and Tier 1 suppliers. The Company also designs, develops, manufactures, markets, and supplies dimmable aircraft windows
identification method.
for the aviation industry and commercial smoke alarms and signaling devices for the fire protection products industry. The Company does
not require collateral or other security for trade accounts receivable.
The Company determines the fair value of its government securities, asset-backed securities, corporate bonds, and certain municipal bonds by
utilizing monthly valuation statements that are provided by its broker. The broker determines the investment valuation by utilizing the bid price
Significant accounting policies of the Company not described elsewhere are as follows:
in the market and also refers to third party sources to validate valuations, and as such are classified as Level 2 assets.
Consolidation
The consolidated financial statements include the accounts of Gentex Corporation and all of its wholly-owned subsidiaries. All intercompany
accounts and transactions have been eliminated.
Cash Equivalents
Cash equivalents consist of funds invested in bank accounts and money market funds that have daily liquidity.
Allowance For Doubtful Accounts
The Company’s certificates of deposit are classified as available for sale, and are considered as Level 1 assets. These investments are carried
at amortized cost, which approximates fair value.
On October 4, 2023, the Company entered into a Stock Purchase Agreement to acquire up to 3,137,500 shares of VOXX International
Corporation (“VOXX”) Class A Common Stock. The Company agreed to purchase the shares in two tranches: (1) on October 6, 2023, the
Company purchased 1,568,750 shares of Class A Common Stock at a price of $10 per share, and (2) on January 5, 2024, the Company purchased
1,568,750 shares of Class A Common Stock at a price of $10 per share. The VOXX shares held by the Company are publicly traded and have a
readily determinable fair market value and are considered Level 1 assets. The investment is accounted for in accordance with ASC 321, Investments
- Equity Securities, with changes in fair value recorded in Investment income, net in consolidated statements of income. No significant changes
in fair value related to the commitment to purchase the second tranche occurred between October 4, 2023 and December 31, 2023.
The Company reviews a monthly aging report of all accounts receivable balances starting with invoices outstanding over sixty days. In addition,
TECHNOLOGY INVESTMENTS
the Company monitors information about its customers through a variety of sources including the media, and information obtained through
ongoing interaction between Company personnel and the customer. Based on the evaluation of the above information, the Company estimates
its allowances related to customer receivables on historical credit and collections experience, customers current financial condition and the
specific identification of other potential problems, including the economic climate and impact the supply chain constraints has had on specific
customers. Actual collections can differ, requiring adjustments to the allowances, but historically such adjustments have not been material.
The following table presents the activity in the Company’s allowance for doubtful accounts:
Beginning Balance
Net Additions/
(Reductions) to
Costs and Expenses
Net Additions/ De-
ductions and Other
Adjustments
Ending
Balance
YEAR ENDED DECEMBER 31, 2023:
Allowance for Doubtful Accounts
YEAR ENDED DECEMBER 31, 2022:
Allowance for Doubtful Accounts
YEAR ENDED DECEMBER 31, 2021:
Allowance for Doubtful Accounts
$
$
$
2,967,095
$
— $
(301,892)
$
2,665,203
3,176,205
$
— $
(209,110)
$
2,967,095
3,464,747
$
— $
(288,542)
$
3,176,205
The Company’s allowance for doubtful accounts primarily relates to financially distressed automotive customers. The Company continues to work
with these financially distressed customers in collecting past due balances.
The Company also periodically makes strategic investments in the non-marketable debt or equity securities of non-consolidated third parties
(“technology investments”). Such technology investments totaled approximately $128.0 million at December 31, 2023, of which $124.6 million
and $3.4 million are recorded in long-term investments and short-term investments on the consolidated balance sheet, and $65.5 million as
of December 31, 2022, of which $61.7 million and $3.8 million are recorded in long-term investments and short-term investments on the
consolidated balance sheet.
Depending on the form of investment, and the degree of influence the Company has over the investee, the Company primarily accounts for the
technology investments in accordance with ASC 321, Investments- Equity Securities or ASC 323 – Investments – Equity Method and Joint
Venture. The Company accounts for equity securities in non-controlled affiliates through which the Company exercises significant influence
but do not have control over the investee under the equity method, with the Company’s share of the earnings or losses of non-controlled
affiliates recognized within Other (loss) income, net in the Company’s consolidated statement of income. All other technology investments
that the Company holds are primarily accounted for under the measurement alternative of ASC 321. Under the measurement alternative, the
carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions
for identical or similar investments of the same issuer.
A summary of the Company’s most significant technology investments is below:
ADASKY - Adasky is an Israeli based leading developer and manufacturer of intelligent, high-resolution thermal sensing systems for vehicle
safety and perception applications and smart city roadway solutions. During 2023, the Company invested approximately $46.5 million in
Adasky, which resulted in an approximately 27% ownership stake in Adasky. These investments included approximately $25 million related
to preferred shares of Adasky accounted for using the measurement alternative and $21.5 million for common shares of Adasky accounted
for using the equity method. As of December 31, 2023, the carrying value of the Company’s investments in Adasky was $45.8 million.
66
G EN T EX CO R P O R AT I O N
2023 A N N UA L R EP O RT
67
GREEN MARBLES - GreenMarbles is a leading provider of sustainable solutions for integration into properties. On June 3, 2022, the Company
obtained an approximate 20% equity share in GreenMarbles for $25.0 million, consisting of $20.0 million of cash investment and the issuance
of $5.0 million worth of Gentex common stock. The Company accounts for its investment in GreenMarbles using the equity method.
As of December 31, 2023 and 2022, the carrying value of the investment in GreenMarbles was $22.6 million and $24.4 million, respectively.
SIMPLENIGHT - Simplenight provides drivers and vehicle occupants with access to enhanced mobile capability for booking personalized
entertainment and lifestyle experiences in addition to everyday purchases. During the years ended December 31, 2023 and 2022, the Company
made investments of $7.5 million and $7.5 million in Simplenight, respectively, and as of December 31, 2023, the Company has an approximately
30% ownership interest in Simplenight primarily accounted for using the measurement alternative. As of December 31, 2023 and 2022, the carrying
value of the Company’s investments in Simplenight was $20.9 million and $12.9 million.
SOLACE POWER - Solace Power is a Canada-based company specializing in wireless power solutions. On December 12, 2023, the Company
purchased a 13% equity interest in Solace Power, which is accounted for using the measurement alternative.
Assets or liabilities that have recurring fair value measurements are shown below as of December 31, 2023 and December 31, 2022:
Fair Value Measurements at Reporting Date Using
Quoted Prices in
Active Markets for
Identical Assets
Total as of
Significant Other
Observable Inputs
Significant
Unobservable Inputs
Description
December 31, 2023
(Level I)
(Level 2)
(Level 3)
Cash & Cash Equivalents
$
226,435,019 $
226,435,019 $
— $
Short-Term Investments:
Certificate of Deposit
Corporate Bonds
Government Securities
Municipal Bonds
Other
Long-Term Investments:
Asset-backed Securities
Certificate of Deposit
Corporate Bonds
Government Securities
Municipal Bonds
Common Stock
994,013
1,943,886
4,759,507
1,726,658
1,465,388
27,146,504
748,358
65,404,340
6,227,129
56,336,921
18,610,519
994,013
—
—
—
1,465,388
—
1,943,886
4,759,507
1,726,658
—
—
27,146,504
748,358
—
—
—
—
65,404,340
6,227,129
56,336,921
18,610,519
—
Total
$
411,798,242 $
248,253,297 $
163,544,945 $
—
—
—
—
—
—
—
—
—
—
—
—
—
Fair Value Measurements at Reporting Date Using
Total as of
Quoted Prices in
Active Markets for
Identical Assets
Significant Other
Observable Inputs
Significant
Unobservable Inputs
Description
December 31, 22
(Level I)
(Level 2)
(Level 3)
Cash & Cash Equivalents
$214,754,638
$214,754,638
4,000,000
$4,000,000
Restricted Cash
Short-Term Investments:
Certificate of Deposit
Corporate Bonds
Government Securities
Municipal Bonds
Other
Long-Term Investments:
Asset-backed Securities
Certificate of Deposit
Corporate Bonds
Government Securities
Municipal Bonds
Common Stock
$ —
—
—
5,473,341
4,423,041
5,174,773
1,254,000
$1,736,163
—
—
—
1,093,602
—
18,829,696
238,925
—
—
—
36,310,477
36,532,634
48,430,166
293,300
—
1,736,163
5,473,341
4,423,041
5,174,773
2,347,602
18,829,696
238,925
36,310,477
36,532,634
48,430,166
293,300
$ —
—
—
—
—
—
—
—
—
—
—
—
—
Total
$378,544,756
$222,116,628
$156,428,128
$ —
68
G EN T EX CO R P O R AT I O N
2023 A N N UA L R EP O RT
69
The amortized cost, unrealized gains and losses, and market value of investment securities are shown as of December 31, 2023 and 2022:
Unrealized losses on investments as of December 31, 2023 are as follows:
2023
Short-Term Investments:
Cost
Gains
Losses
Market Value
Unrealized
Certificate of Deposit
$
1,000,000 $
1,976,195
4,754,495
1,749,038
1,465,388
26,923,803
750,000
66,214,398
6,217,774
58,261,615
17,324,886
— $
—
21,141
—
—
331,847
—
748,471
10,675
811,128
1,328,446
(5,987)
$
994,013
(32,309)
(16,129)
(22,380)
—
(109,146)
(1,642)
(1,558,529)
(1,320)
(2,735,822)
(42,813)
1,943,886
4,759,507
1,726,658
1,465,388
27,146,504
748,358
65,404,340
6,227,129
56,336,921
18,610,519
$
186,637,592 $
3,251,708 $
(4,526,077) $
185,363,223
Corporate Bonds
Government Securities
Municipal Bonds
Other
Long-Term Investments:
Asset-backed Securities
Certificate of Deposit
Corporate Bonds
Government Securities
Municipal Bonds
Common Stock
Total
2022
Short-Term Investments:
Certificate of Deposit
$
1,750,256 $
— $
(14,093) $
1,736,163
Corporate Bonds
Government Securities
Municipal Bonds
Other
Long-Term Investments:
Asset-backed Securities
Certificate of Deposit
Corporate Bonds
Government Securities
Municipal Bonds
Common Stock
5,571,417
4,476,613
5,223,500
2,347,602
19,151,229
250,000
40,410,206
39,637,461
53,476,883
292,638
—
—
—
—
—
—
—
—
235,713
662
(98,076)
(53,572)
(48,727)
—
(321,533)
(11,075)
(4,099,729)
(3,104,827)
(5,282,430)
—
5,473,341
4,423,041
5,174,773
2,347,602
18,829,696
238,925
36,310,477
36,532,634
48,430,166
293,300
Total
$
172,587,805 $
236,375 $
(13,034,062) $
159,790,118
Less than one year
Greater than one year
Total
Aggregate Unrealized Losses
Aggregate Fair Value
$
$
126,074 $
4,400,003
4,526,077 $
13,449,592
76,966,258
90,415,850
Unrealized losses on investments as of December 31, 2022 are as follows:
Less than one year
Greater than one year
Total
Aggregate Unrealized Losses
Aggregate Fair Value
$
$
4,816,103 $
8,217,959
13,034,062 $
77,701,146
76,643,586
154,344,732
Effective January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses
(Topic 326), Measurement of Credit Losses on Financial Instruments. The guidance modifies the impairment model for available-for-sale
debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. The
Company utilized the guidance provided by ASC 326 to determine whether any of the available-for-sale debt securities held by the Company
were impaired. No investments were considered to be impaired during the years presented. The Company has the intention and current ability
to hold its debt investments until the amortized cost basis has been recovered. If market, industry, and/or investee conditions deteriorate, the
Company may incur future impairments. No investments were considered to be other-than-temporarily impaired in 2023 and 2022.
Due within one year
Due between one and five years
Due over five years
Fair Value of Financial Instruments
$
$
9,953,308
94,519,794
60,814,214
165,287,316
The Company’s financial instruments consist of cash and cash equivalents, investments, accounts receivable, accounts payable, and short
and long-term debt. The Company’s estimate of the fair values of these financial instruments approximates their carrying amounts
at December 31, 2023 and 2022.
Inventories
Inventories include material, direct labor and manufacturing overhead and are valued at the lower of cost or net realizable value. Cost
is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Inventories consisted of the following
as of December 31, 2023 and 2022:
Raw materials
Work-in-process
Finished goods
Total Inventory
$
$
2023
283,126,566 $
46,343,955
73,002,507
402,473,028 $
2022
304,184,004
45,512,275
54,663,991
404,360,270
Cost
Gains
Losses
Market Value
Unrealized
Fixed income securities as of December 31, 2023, have contractual maturities as follows:
70
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Estimated inventory allowances for slow-moving and obsolete inventories are based on current assessments of future demands, market
Indefinite lived intangible assets are also subject to annual impairment testing or more frequently if indicators of impairment are identified.
conditions, evaluation of longer lead times for certain electronic components and related management initiatives. If market conditions or
Management’s judgment and assumptions are required in determining the underlying fair value of the indefinite lived intangible assets. While
customer requirements change and are less favorable than those projected by management, inventory allowances are adjusted accordingly.
the Company believes the judgments and assumptions used in determining fair value are reasonable, different assumptions could change the
Allowances for slow-moving and obsolete inventories (which are included, net, in the above inventory values) were $10.3 million and $10.0
estimated fair values and, therefore, impairment charges could be required, which could be material to the consolidated financial statements.
million at December 31, 2023 and 2022, respectively.
Plant and Equipment
The Company performs a qualitative assessment (step 0) to determine whether it is more likely than not that an intangible asset’s fair value is
less than its carrying amount. If not, no further impairment testing over the indefinite lived intangible assets is performed. The indefinite lived
intangible assets were not impaired as a result of the annual test prepared by management for either period presented.
Plant and equipment is stated at cost. Depreciation and amortization are computed for financial reporting purposes using the straight-
As part of recent acquisitions, the Company acquired Indefinite lived in-process research and development (“IPR&D”) intangible assets. These
line method, with estimated useful lives of 7 to 30 years for buildings and improvements, and 3 to 10 years for machinery and equipment.
IPR&D assets are not amortized, but are tested for impairment annually, or more frequently when indicators of potential impairment exist, until
Depreciation expense was approximately $73.6 million, $74.9 million and $76.8 million in 2023, 2022 and 2021, respectively.
the completion or abandonment of the associated research and development efforts. Upon completion of the projects, the assets will be amortized
Impairment or Disposal of Long-Lived Assets
over the expected economic life of the asset, which will be determined on that date. Should the project be determined to be abandoned, and if the
asset developed has no alternative use, the full value of the asset will be charged to expense.
The Company reviews long-lived assets, including property, plant and equipment and other intangible assets with definite lives, for impairment
Refer to Note 10, “Goodwill and Intangible Assets” for information regarding the impairment testing performed in calendar year 2023.
whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. The Company conducts its long-
lived asset impairment analysis in accordance with ASC 360-10-15, Impairment or Disposal of Long-Lived Assets. ASC 360-10-15 requires
Revenue Recognition
the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other
assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not
indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the
asset group exceeds its fair value based on discounted cash flow analysis or appraisals.
Patents
The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers.
Accordingly, revenue is recognized in an amount that reflects the consideration to which the Company expects to be entitled in exchange for
promised goods or services when it transfers those goods or services to customers. Sales are shown net of returns, which have not historically
been significant. The Company does not generate sales from arrangements with multiple deliverables. The Company generally receives purchase
orders from customers on an annual basis in the ordinary course of business. Typically, such purchase orders provide the annual terms, including
pricing, related to a particular vehicle model. Purchase orders generally do not specify quantities. The Company recognizes revenue based on the
The Company’s policy is to capitalize costs incurred to obtain patents. The cost of patents is amortized over their useful lives. The cost of
pricing terms included in such annual purchase orders.
patents in process is not amortized until issuance. The Company periodically obtains intellectual property rights, in the ordinary course of
business, and the cost of the rights are amortized over their useful lives.
Goodwill and Intangible Assets
As part of certain agreements, entered into in the ordinary course of business, the Company is asked to provide customers with annual price
reductions. Such amounts are subject to estimate and are accrued as a reduction of revenue as control of the products is transferred to the
customer under standard commercial terms. For any shipments of product that may be subject to retroactive price adjustments that are then
being negotiated, the Company records revenue based on the Company’s best estimate of the amount of consideration to which the entity will
Goodwill reflects the cost of an acquisition in excess of the fair values assigned to identifiable net assets acquired. The Company reviews
be entitled in exchange for transferring the promised goods to the customer. The Company’s best estimate requires significant judgment based
goodwill for impairment during the fourth quarter on an annual basis or more frequently if events or changes in circumstances indicate that
on historical results and expected outcomes of ongoing negotiations with customers. The Company’s approach is to consider these adjustments
goodwill might be impaired. The Company performs an impairment review for its Automotive and Other reporting units, which have been
to the contract price as variable consideration which is estimated based on the then most likely price amount. In addition, the Company has
determined to be the Company’s reportable segments, using either a qualitative approach or quantitative approach which utilizes a fair value
ongoing adjustments to pricing arrangements with customers based on the related content, the cost of Company products and other commercial
method that incorporates certain assumptions and judgments. The fair value of a reporting unit refers to the price that would be received to
factors. Such pricing accruals are adjusted as they are settled with customers. Refer to Note 11, “Revenue”, for further information.
sell the unit as a whole in an orderly transaction between market participants at the measurement date. The Company performs a qualitative
assessment (step 0) to determine whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. If not,
no further goodwill impairment testing is performed. If so, the Company performs a step 1 test to determine the fair value of the reporting
unit using an income approach to estimate the fair value of each of its reporting units and a market valuation approach to further support this
analysis. If the fair value of the reporting unit is greater than its carrying amount, goodwill is not considered to be impaired. However, if the fair
value of the reporting unit is less than its carrying amount, an impairment change is recorded as the excess of the reporting unit’s carrying value
over its fair value.
The assumptions included in the impairment tests require judgment and changes to these inputs could impact the results of the calculations
which could result in an impairment charge in future periods if the carrying amount of the reporting unit exceeds its calculated fair value. For
the qualitative assessment performed, management considers factors such as macro-economic conditions, industry and market considerations,
overall financial performance, and other Company-specific events, amongst other factors, in making the determination as to whether it is more
likely than not that a reporting unit’s fair value is less than its carrying amount. Other than management’s internal projections of future cash
flows, the primary assumptions used in the step 1 impairment test is the weighted-average cost of capital and long-term growth rates. Although
the Company’s cash flow forecasts are based on assumptions that are considered reasonable by management and consistent with the plans and
estimates management is using to operate the underlying business, there are significant judgments in determining the expected future cash flows
attributable to a reporting unit. There have been no impairment charges recorded currently or in prior periods in which goodwill existed.
Advertising and Promotional Materials
All advertising and promotional costs are expensed as incurred and amounted to approximately $3.4 million, $3.3 million and $1.8 million,
in 2023, 2022 and 2021, respectively.
Repairs and Maintenance
Major renewals and improvements of property and equipment are capitalized, and repairs and maintenance are expensed as incurred. The
Company incurred expenses relating to the repair and maintenance of plant and equipment of approximately $31.0 million, $27.9 million and
$24.2 million, in 2023, 2022 and 2021, respectively.
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Self-Insurance
Earnings Per Share
The Company is self-insured for a portion of its risk on workers’ compensation and employee medical costs. The arrangements provide for
The Company has unvested share-based payment awards with a right to receive non-forfeitable dividends, which are considered participating
stop loss insurance to manage the Company’s risk. Such costs are accrued based on known claims and an estimate of incurred, but not reported
securities under ASC 260, Earnings Per Share. The Company allocates earnings to participating securities and computes earnings per share using
(“IBNR”) claims. IBNR claims are estimated using historical lag information and other data provided by claims administrators. This estimation
the two-class method. Under the two-class method, net income per share is computed by dividing net income allocated to common shareholders
process is subjective, and to the extent that future results differ from original estimates, adjustments to recorded accruals may be necessary.
by the weighted average number of common shares outstanding for the period. In applying the two-class method, net income is allocated to both
Product Warranty
common shares and participating securities based on their respective weighted average shares outstanding for the period.
The following table sets forth the computation of basic and diluted net income per common share under the two-class method for each of the
The Company periodically incurs product warranty costs. Any liabilities associated with product warranty are estimated based on known facts and
last three years:
circumstances and are not significant at December 31, 2023, 2022 and 2021. The Company does not offer extended warranties on its products.
Income Taxes
The provision for income taxes is based on the earnings reported in the consolidated financial statements. Deferred income tax assets and
liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in deductible or
taxable amounts in the future. Such deferred income tax asset and liability computations are based on enacted tax laws and rates. The Company
applies the provisions of ASC 740, Income Taxes, as it relates to uncertainty in income taxes recognized in the Company’s consolidated financial
statements. A threshold of more likely than not to be sustained upon examination is applied to uncertain tax positions. The Company deems
the estimates related to this provision to be reasonable, however, no assurance can be given that the final outcome of these matters will not vary
from what is reflected in the historical income tax provisions and accruals.
Leases
The Company has operating leases for corporate offices, warehouses, vehicles, and other equipment, which are included within “Patents and
other assets” section of the Consolidated Balance Sheets. The leases have remaining lease terms of 1 year to 5 years. The weighted average
remaining lease term for operating leases as of December 31, 2023 was 3 years, with a weighted average discount rate of 6.4%. Future minimum
lease payments for operating leases are as follows:
Year ending December 31,
2024
2025
2026
2027
Thereafter
Total future minimum lease payments
Less imputed interest
Total
$
$
$
1,857,325
1,091,917
545,291
242,712
3,846
3,741,091
(170,876)
3,570,215
BASIC EARNINGS PER SHARE
Net Income
Less: Allocated to participating securities
Net Income available to common shareholders
Basic weighted average shares outstanding
Net Income per share - Basic
DILUTED EARNINGS PER SHARE
Allocation of Net Income used in basic computation
$
$
$
$
2023
2022
2021
428,403,272 $
318,757,352 $
360,797,232
6,352,424
4,875,057
5,591,992
422,050,848 $
313,882,295 $
355,205,240
229,405,479
230,825,293
235,526,911
1.84 $
1.36 $
1.51
422,050,848 $
313,882,295 $
355,205,240
Reallocation of undistributed earnings
6,341
5,299
17,014
Net Income available to common shareholders — Diluted $
422,057,189 $
313,887,594 $
355,222,254
Number of shares used in basic computation
229,405,479
230,825,293
235,526,911
Additional weighted average dilutive common
stock equivalents
314,719
394,196
1,077,103
Diluted weighted average shares outstanding
229,720,198
231,219,489
236,604,014
Net income per share — Diluted
$
1.84 $
1.36 $
1.50
For the years ended December 31, 2023, 2022 and 2021, 1,441,812 shares, 1,842,602 shares, and 200,037 shares, respectively, related to stock
option plans were not included in diluted average common shares outstanding because they were anti-dilutive.
Comprehensive Income (Loss)
Comprehensive income (loss) reflects the change in equity of a business enterprise during a period from transactions and other events and
circumstances from non-owner sources. For the Company, comprehensive income represents net income adjusted for unrealized gains and losses
on available for sale investments and foreign currency translation adjustments that are further detailed in Note 9, “Comprehensive Income”, for
more information.
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Foreign Currency Translation
The financial position and results of operations of the Company’s foreign subsidiaries are measured using the local currency as the functional
( 2 ) D E B T A N D F I N A N C I N G A R R A N G E M E N T S
currency. Assets and liabilities are translated at the exchange rate in effect at year-end. Income statement accounts are translated at the average rate
of exchange in effect during the year. The resulting translation adjustment is recorded as a separate component of shareholders’ investment. Gains
and losses arising from re-measuring foreign currency transactions into the appropriate currency are included in the determination of net income.
Stock-Based Compensation Plans
The Company accounts for stock-based compensation using the fair value recognition provisions of ASC 718, Compensation - Stock
Compensation. As described more fully in Note 5, “Stock-Based Compensation Plans”, the Company provides, or has provided, compensation
benefits under an omnibus incentive plan, two other stock option plans, another restricted stock plan, and two employee stock purchase plans.
The Company utilizes the Black-Scholes model to estimate the value of the stock options, which requires the input of assumptions. These
assumptions include estimating (a) the length of time employees will retain their vested stock options before exercising them (“expected term”),
(b) the volatility of the Company’s common stock price over the expected term, (c) the number of options that will ultimately not complete
their vesting requirements (“forfeitures”) and (d) expected dividends. Changes in the assumptions can materially affect the estimate of fair value
of stock-based compensation and consequently, the related amounts recognized on the consolidated statements of operations.
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
On October 15, 2018, the Company entered into a credit agreement with PNC as the administrative agent and sole lender, which has now been
amended and restated as discussed below.
On February 21, 2023, as previously disclosed, the Company entered into an amended and restated credit agreement (“Credit Agreement”) that
provides for, among other things, a three-year unsecured revolving credit facility with a borrowing capacity of up to $250 million (“Revolver”)
that matures on February 21, 2026, replacing in its entirety the Company’s above referenced prior $150.0 million revolving credit facility, which
would have otherwise matured on October 15, 2023. Included in the Revolver is a $20.0 million sublimit for standby letters of credit and a
$35.0 million sublimit for swingline loans, each subject to certain conditions. Funds are available under the Revolver for working capital, capital
expenditures, and other lawful corporate purposes, including, but not limited to, acquisitions and common stock repurchases, subject in each
case to compliance with certain financial covenants, as defined in the Credit Agreement.
The obligations of the Company under the Credit Agreement are not secured, but are subject to certain covenants. As of December 31, 2023,
there was no outstanding balances on the Revolver and as of December 31, 2022 there was no outstanding balance under the prior revolving
credit facility.
The Credit Agreement contains customary representations and warranties and certain covenants that place certain limitations on the Company.
As of December 31, 2023, the Company was in compliance with its covenants under the Credit Agreement.
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
( 3 ) I N C O M E T A X E S
the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Reclassifications
Certain prior year amounts have been reclassified to conform to current year presentation.
Recent Accounting Standards
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07,
Improvements to Reportable Segment Disclosures. This ASU updates reportable segment disclosure requirements by requiring disclosures of
significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within
each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the
CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and
deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within
fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the
financial statements. Early adoption is also permitted. The Company will likely include additional disclosures when this ASU is adopted.
The Company is currently evaluating the provisions of this ASU and expects to adopt the ASU for the year ending December 31, 2024.
Total
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. Under this ASU, public benefit entities must
annually “(1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a
quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax
income (or loss) by the applicable statutory income tax rate).” This ASU is effective on a prospective basis for the Company in the fiscal year
ending December 31, 2025. This ASU will result in additional disclosures being included in the consolidated financial statements once adopted.
Deferred income tax benefit:
Primarily federal
Provision for income taxes
The provision for income taxes is based on the earnings reported in the accompanying consolidated financial statements. The Company
recognizes deferred income tax liabilities and assets for the expected future tax consequences of events that have been included in the
consolidated financial statements or tax returns. Under this method, deferred income tax liabilities and assets are determined based on the
cumulative temporary differences between the financial statement and tax basis of assets and liabilities using enacted tax rates expected to
be applied to taxable income in years which those temporary differences are expected to be recovered or settled. Deferred income tax expense
is measured by the net change in deferred income tax assets and liabilities during the year.
The foreign components of income before the provision for income taxes were not material for the years ended December 31, 2023, 2022 and
2021. The components of the provision for income taxes are as follows:
Currently payable:
2023
2022
2021
Federal
State
Foreign
$
85,978,954 $
62,670,986 $
89,507,896
6,242,525
2,091,533
94,313,012
4,310,783
1,761,732
68,743,501
5,642,926
2,098,433
97,249,255
(17,735,110)
(17,777,777)
(41,694,751)
$
76,577,902 $
50,965,724 $
55,554,504
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The effective income tax rates are different from the statutory federal income tax rates for the following reasons:
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Statutory federal income tax rate
State income taxes, net of federal income tax benefit
Research tax credit
(Decrease) Increase in reserve for uncertain tax provisions
Non-deductible executive compensation
Non-deductible expenses
Foreign tax credit
Foreign derived intangible income deduction
Stock compensation
Other
Effective income tax rate
2023
21.0 %
0.8
(1.3)
—
0.1
0.1
(0.5)
(5.1)
(0.4)
0.5
2022
21.0 %
0.9
(1.8)
(0.2)
0.3
0.3
(0.3)
(6.2)
(0.6)
0.4
2021
21.0 %
0.7
(1)
0.1
0.1
—
(0.2)
(6.3)
(1.3)
0.2
Beginning of year
Additions based on tax positions related to the current year
Additions for tax positions in prior years
Reductions for tax positions in prior years
Reductions as a result of a lapse of the applicable statute
of limitations
End of year
$
$
If recognized, unrecognized tax benefits would affect the effective tax rate.
2023
2022
4,630,000 $
5,275,000 $
1,046,000
671,000
(31,000)
951,000
353,000
(26,000)
(1,538,000)
(1,923,000)
2021
4,864,000
1,023,000
364,000
(51,000)
(925,000)
4,778,000 $
4,630,000 $
5,275,000
The Company recognizes interest and penalties related to unrecognized tax benefits through the provision for income taxes. The Company has
accrued approximately $365,000, $379,000, and $605,000 for interest as of December 31, 2023, 2022, and 2021, respectively. Interest expensed
15.2 %
13.8 %
13.3 %
during 2023, 2022 and 2021 was not considered significant.
The Company is also subject to periodic and routine audits in both domestic and foreign tax jurisdictions. It is reasonably possible that the
amounts of unrecognized tax benefits could change as a result of an audit, new positions taken on income tax returns, settlement of tax positions
The tax effect of temporary differences which give rise to deferred income tax assets and liabilities at December 31, 2023 and 2022, are as follows:
and the closing of statute of limitations. It is not expected that any change will be material to the Company’s consolidated financial statements.
Assets:
December 31, 2023
December 31, 2022
Accruals not currently deductible
Research and development costs
Stock based compensation
Excess tax over book depreciation
Other
Total deferred income tax assets
Liabilities:
Excess tax over book depreciation
Goodwill
Intangible assets
Other
Total deferred income tax liabilities
Net deferred income taxes
$
$
$
$
$
10,989,677 $
70,252,363
15,536,416
7,060,777
4,025,082
107,864,315 $
— $
(47,185,855)
(15,235,639)
(4,329,062)
(66,750,556) $
41,113,759 $
9,778,184
58,501,232
14,670,250
—
4,722,513
87,672,179
(3,460,485)
(42,580,026)
(13,268,772)
(2,834,196)
(62,143,479)
25,528,700
Net operating loss carryforwards with no expiration totaling $6.0 million are available to reduce future taxable earnings of certain domestic and
foreign subsidiaries.
Income taxes paid in cash were approximately $110.3 million, $35.2 million and $105.8 million in 2023, 2022 and 2021, respectively.
For the majority of tax jurisdictions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations
by tax authorities for years before 2018.
( 4 ) E M P L O Y E E B E N E F I T P L A N S
The Company has a 401(k) retirement savings plan in which substantially all of its employees may participate. The plan includes a provision
for the Company to match a percentage of the employee’s contributions at a rate determined by the Company’s Board of Directors. In 2023,
2022 and 2021 the Company’s contributions were approximately $13.8 million, $12.9 million and $9.0 million, respectively. The increase in the
Company’s matching contributions in 2023 was due to increased employee participation in the plan. The increase in 2022 was due to changes,
approved by the Company’s Board of Directors, to the rate of Company match, as well as increased participation in the plan.
The Company does not provide health care benefits to retired employees.
The Gentex Corporation Non-Qualified Deferred Compensation Plan (the “Deferred Compensation Plan”) is intended to enhance retirement
savings among a select group of management or highly compensated employees who contribute significantly to the success of the Company.
It is also intended to constitute an unfunded non-qualified deferred compensation plan described in Sections 201(2), 301(a)(3), and 401(a)(1)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Only select management and highly compensated
employees, including executive officers, are eligible to participate. The Deferred Compensation Plan is administered by a committee who shall
approve designation of any participants and may also remove participants.
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Participants may elect, on a pre-tax basis, to defer receipt of compensation by making an election in accordance with the terms of the Deferred
Compensation Plan. Participants are immediately vested in their own deferrals and related earnings. The Company may, but is not required,
to match participant deferrals. Participants are generally vested in any such matching contributions 50% after two years, but before three years,
of service and 100% after three years of service. A participant’s vested credit balance under the Deferred Compensation Plan will generally be
EMPLOYEE STOCK OPTIONS
The Employee Stock Option Plan allowed the Company to grant up to 24,000,000 shares of common stock under the plan, prior to its
replacement by the 2019 Omnibus Plan.
paid on the earliest to occur of: a separation from service; a fixed date or event; a change of control; or a plan termination. Subject to applicable
The Company has granted options on 4,908,950 shares (net of shares from canceled/expired options) under the 2019 Omnibus Plan and
rules, a participant can elect whether to receive his or her vested credit balance in a lump sum on the relevant payment date or in installments
12,674,639 shares (net of shares from canceled/expired options) under the prior plan (prior to its replacement) through December 31, 2023.
thereafter.
Under each of such plans, the option exercise price equals the stock’s market price on date of grant. The options vest after one to five years,
The deferrals are held in a separate irrevocable rabbi trust (“the Rabbi Trust”), which has been established pursuant to the Deferred Compensation
and expire after five to ten years.
Plan. The Rabbi Trust is intended to be used to hold funds, including matching contributions. The assets of the trust are subject to the claims
The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following
of the Company’s creditors in the event that the Company becomes insolvent. Consequently, the Rabbi Trust qualifies as a grantor trust for income
weighted-average assumptions for the indicated periods:
tax purposes. The Company also makes periodic payments into Company-owned life insurance policies held in this Rabbi Trust to fund the
expected obligations arising under this plan. At December 31, 2023, total assets held by the trustee were $8.9 million, which are recorded in Other
Assets, with an associated liability of $9.0 million recorded in Other Non-Current Liabilities in the Company’s consolidated balance sheets. The
$8.9 million of assets held by the trustee is invested in Company-owned life insurance policies.
( 5 ) S T O C K - B A S E D C O M P E N S A T I O N P L A N S
At December 31, 2023, the Company had two equity incentive plans under which awards are made, which include the Gentex Corporation
2019 Omnibus Incentive Plan (“2019 Omnibus Plan”), and an employee stock purchase plan. Those plans and any material amendments thereto
have previously been approved by shareholders.
The 2019 Omnibus Plan provides for the potential awards to: i) employees; and ii) non-employee directors of the Company or its subsidiaries,
which potential awards may be stock options, both incentive stock options and non-qualified stock options, appreciation rights, restricted stock,
restricted stock units, performance share awards and performance units, and other awards that are stock-based, cash-based or a combination
of both. The 2019 Omnibus Plan replaced the Company’s Employee Stock Option Plan, Second Restricted Stock Plan, and Amended and
Dividend yield (1)
Expected volatility (2)
Risk-free interest rate (3)
Expected term of options (in years) (4)
2023
1.7 %
28.8 %
4.0 %
4.2
2022
1.8 %
28.8 %
3.4 %
4.2
Weighted-average grant-date fair value
$
7.66 $
6.42 $
2021
1.8 %
27.6 %
1.3 %
4.1
6.59
(1) Represents the Company’s estimated cash dividend yield over the expected term of option grant.
(2) Amount is determined based on analysis of historical price volatility of the Company’s common stock. The expected volatility is based on the daily percentage change in the price
of the stock over a period equal to the expected term of the option grant.
(3) Represents the U.S. Treasury yield over the expected term of the option grant.
(4) Represents the period of time that options granted are expected to be outstanding. Based on analysis of historical option exercise activity, the Company has determined that all
employee groups exhibit similar exercise and post-vesting termination behavior.
Restated Non-Employee Director Stock Option Plan (the “Prior Plans”), which were also approved by shareholders. Any existing awards
As of December 31, 2023, there was $7,993,783 of unrecognized compensation cost related to stock option awards which is expected to
previously granted under the Prior Plans remain outstanding in accordance with their terms and are governed by the Prior Plans as applicable.
be recognized over the remaining vesting periods, with a weighted-average period of 2.09 years. Stock option expense for the years ended
2019 Omnibus Incentive Plan
December 31, 2023, 2022 and 2021 was $6,095,854, $6,302,581, and $5,780,959 respectively.
A summary of the status of the Company’s stock option plans at December 31, 2023, 2022 and 2021, and changes during the same periods
The 2019 Omnibus Plan covers 45,000,000 shares of common stock. The purpose of the 2019 Omnibus Plan is to attract and retain employees,
are presented in the tables below.
officers, and directors of the Company and its subsidiaries and to motivate and provide such persons incentives and rewards for performance.
As of December 31, 2023, 25,611,657 shares (net of shares from canceled/expired options) have been issued under the 2019 Omnibus Plan,
which includes stock options (at a set conversion rate), restricted shares, and performance share awards.
Non-Qualified Stock Options
Restricted Stock
Performance Shares
Total
Shares Granted
Conversion Rate
Total Shares Under
2019 Omnibus Plan
4,908,950
4,231,194
867,995
10,008,139
1
4.06
4.06
4,908,950
17,178,648
3,524,059
25,611,657
Shares (000) Wtd. Avg. Ex. Price
Wtd. Avg. Remaining
Contract Life
Aggregate Intrinsic
Value (000)
2023
Outstanding at Beginning of Year
4,872
$
Granted
Exercised
Forfeited
Outstanding at End of Year
Exercisable at End of Year
768
(1,023)
(230)
4,387
1,942
$
28
30
31
29
29
29
$
$
$
2.9 years
2.3 years
7,847
17,491
8,916
80
G EN T EX CO R P O R AT I O N
2023 A N N UA L R EP O RT
81
Shares (000) Wtd. Avg. Ex. Price
Wtd. Avg. Remaining
Contract Life
Aggregate Intrinsic
Value (000)
2022
Outstanding at Beginning of Year
4,535
$
Granted
Exercised
Forfeited
Outstanding at End of Year
Exercisable at End of Year
1,219
(530)
(352)
4,872
1,960
$
27
27
21
28
28
26
2021
$
4,065
3.1 years
$
2.4 years $
8,928
5,864
Shares (000) Wtd. Avg. Ex. Price
Wtd. Avg. Remaining
Contract Life
Aggregate Intrinsic
Value (000)
Outstanding at Beginning of Year
4,533
$
Granted
Exercised
Forfeited
Outstanding at End of Year
Exercisable at End of Year
1,434
(1,184)
(248)
4,535
1,380
$
23
34
20
27
27
23
$
17,289
3.4 years
$
2.5 years $
35,283
16,433
Restricted Shares
The Company’s Second Restricted Stock Plan provided for a maximum number of shares that may be subject to awards of 9,000,000 shares,
prior to its replacement by the 2019 Omnibus Plan.
Restricted shares awarded under either that plan or the 2019 Omnibus Plan entitle the shareholder to all rights of common stock ownership,
except that the shares may not be sold, transferred, pledged, exchanged or otherwise disposed of during the restriction period. The restriction
period is determined by a committee, appointed by the Board of Directors, but may not exceed ten years. The Company has issued 4,231,194
shares under the 2019 Omnibus Plan and 5,630,019 shares under the prior plan (prior to its replacement) as of December 31, 2023, and has
3,377,863 shares outstanding under such plans.
Vesting Period(1)
Shares Granted
Market Price
at Grant Date
Shares Granted
Market Price
at Grant Date
Shares Granted
Market Price
at Grant Date
2023
2022
2021
1 Year
2 Year
3 Years
4 Years
5 Years
142,314
28.03 – 32.66
119,849
23.84 – 29.89
24,634
32.98 – 34.37
104,562
28.03 – 32.66
82,538
23.84 – 29.17
—
—
302,569
28.03 – 32.66
261,493
23.84 – 30.85
606,853
32.98 – 35.67
265,719
28.03 – 32.66
260,149
23.84 – 29.17
309,955
32.98 – 35.67
184,900
28.03 – 32.66
225,060
23.84 – 29.17
157,169
32.98 – 35.67
1,000,064
$ 28.03 – 32.66
949,089
$ 23.84 – 30.85
1,098,611
$ 32.98 – 35.67
(1) Each of these awards cliff vest after the restriction period with no additional restrictions.
A summary of restricted share award activity, including award grants, vesting, and forfeitures for the years ended December 31, 2023, 2022,
A summary of the status of the Company’s non-vested employee stock option activity for the years ended December 31, 2023, 2022, and 2021,
and 2021, are presented in the table below:
are presented in the table below:
2023
2022
2021
Shares (000)
Wtd. Avg
Grant Date
Fair Value
Shares (000)
Wtd. Avg
Grant Date
Fair Value
Shares (000)
Wtd. Avg
Grant Date
Fair Value
2,913
$
768
(1,056)
(180)
2,445
$
6
8
6
6
7
3,156
$
1,219
(1,153)
(309)
2,913
$
5
6
4
6
6
3,175 $
1,434
(1,212)
(241)
3,156 $
5
7
4
5
5
Nonvested Stock Options
at Beginning of Year
Granted
Vested
Forfeited
Nonvested Stock Options
at End of Year
Nonvested, Beginning of Year
Granted
Vested
Forfeited
Nonvested, End of Year
2023
Shares (000)
3,553
1,027
(1,058)
(144)
3,378
2022
Shares
3,760
949
(935)
(221)
3,553
2021
Shares
3,599
1,099
(759)
(179)
3,760
As of December 31, 2023, there was unearned stock-based compensation of $45,797,227 associated with these restricted stock grants. The
unearned stock-based compensation related to these grants is being amortized to compensation expense over the applicable restriction periods.
Compensation expense related to restricted stock for the years ended December 31, 2023, 2022 and 2021 was $24,809,834, $21,773,179, and
$19,304,013 respectively.
82
G EN T EX CO R P O R AT I O N
2023 A N N UA L R EP O RT
83
Performance Shares
Performance shares awarded under the 2019 Omnibus Plan are considered performance condition awards as attainment is based on the
Company’s performance relative to pre-established metrics. The fair value of such performance share awards was determined using the
Company’s closing stock price on the date of grant. The expected attainment of the metrics for these awards is then analyzed each reporting
period, and the related expense is adjusted based on expected attainment, if the then expected attainment differs from previous expectations.
The cumulative effect on current and prior periods of a change in expected attainment is recognized in the period of change. As of December
31, 2023, the Company had unearned stock-based compensation of $16,118,617 associated with these performance share grants. The
unearned stock-based compensation related to these grants is being amortized to compensation expense over the applicable performance
periods. Compensation expense related to performance share grants for the years ended December 31, 2023, 2022, and 2021 was $5,882,458,
$1,246,369, and $1,573,831, respectively.
As part of its objective of attracting and retaining management to fulfill the Company’s strategic goals, the Compensation Committee
recommended and the Board approved on February 16, 2023, a retention grant of performance share awards (“PSAs”). In addition to the
retention of management, the PSAs have been granted to further align management goals with those of the Company’s shareholders. For that
reason, the PSAs have been granted with performance criteria and will be based upon achievement of the Company’s relative total shareholder
return (“TSR”) over a four year period (2023-2026), against a predetermined peer group. The grant date fair value of PSAs with TSR targets
was determined using a Monte Carlo simulation. Compensation expense related to these retention grants for the year ended December 31, 2023
was $1,526,983.
Employee Stock Purchase Plan
Prior to July 1, 2022, the Company had in place an employee stock purchase plan covering 2,000,000 shares of common stock, which was
approved by shareholders including amendments thereto. In May 2022, the 2022 Gentex Corporation Employee Stock Purchase Plan covering
2,000,000 shares of common stock was approved by shareholders, replacing the above referenced prior plan effective July 1, 2022. Under such
plans, the Company sold or sells shares at 85% of the stock’s market price at the date of purchase. In accordance with ASC 718, the 15%
discounted value is recognized as compensation expense.
Compensation expense related to the employee stock purchase plans for the years ended December 31, 2023, 2022, and 2021 was $882,294,
$906,478, and $713,912, respectively. The following table summarizes shares sold to employees under the 2022 and prior plan in the years
ended December 31, 2023, 2022 and 2021:
Plan
2023
2022
2021
Cumulative Shares
Issued
Weighted Average
Fair Value 2023
2022 Employee Stock Purchase Plan
194,241
94,111
—
Prior Employee Stock Purchase Plan
—
126,101
143,892
288,352
1,624,122
$
$
30.29
—
( 6 ) C O M M I T M E N T S A N D C O N T I N G E N C I E S
On October 4, 2023, the Company entered into a Stock Purchase Agreement to acquire up to 3,137,500 shares of VOXX Class A Common
Stock. As part of this agreement, the Company agreed to purchase 1,568,750 shares of Class A Common Stock at a price of $10 per share
on January 5, 2024.
The Company is periodically involved in legal proceedings, legal actions and claims arising in the normal course of business, including
proceedings relating to product liability, intellectual property, safety and health, employment and other matters. Such matters are subject to
many uncertainties and outcomes are not predictable. The Company does not believe, however, that at the current time there are matters that
constitute material pending legal proceedings that will have a material adverse effect on the financial position, future results of operations,
or cash flows of the Company.
( 7 ) S E G M E N T R E P O R T I N G
ASC 280, Segment Reporting, requires that a public enterprise report financial and descriptive information about its reportable operating
segments subject to certain aggregation criteria and quantitative thresholds. Operating segments are defined by ASC 280 as components of an
enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-makers in deciding
how to allocate resources and in assessing performance.
2023
2022
2021
REVENUE:
Automotive Products
United States
Germany
Japan
Mexico
Republic of Korea
Other Countries
Other
Total
INCOME (LOSS) FROM OPERATIONS:
Automotive Products
Other
Total
ASSETS:
Automotive Products
Other
Corporate
Total
DEPRECIATION & AMORTIZATION:
Automotive Products
Other
Corporate
Total
CAPITAL EXPENDITURES:
Automotive Products
Other
Corporate
Total
$
688,164,335 $
579,531,611 $
542,690,346
294,529,611
323,872,022
142,082,011
149,554,788
656,457,524
44,554,753
266,498,398
234,888,653
121,553,711
95,395,479
576,874,606
44,215,585
234,994,551
211,417,475
111,761,245
67,219,836
529,104,581
33,981,895
2,299,215,044 $
1,918,958,043 $
1,731,169,929
495,650,700 $
372,490,748 $
414,185,075
80,353
(2,484,622)
(4,403,097)
495,731,053 $
370,006,126 $
409,781,978
1,782,342,705 $
1,670,634,277 $
1,495,298,453
85,610,250
743,484,597
43,025,905
613,569,742
34,760,744
601,331,969
2,611,437,552 $
2,327,229,924 $
2,131,391,166
87,123,055 $
90,030,087 $
92,516,347
1,231,061
4,967,076
1,056,510
5,481,846
913,451
5,682,221
93,321,192 $
96,568,443 $
99,112,019
163,070,404 $
141,166,506 $
58,415,887
3,827,880
16,780,176
2,356,910
2,909,707
1,467,962
8,951,198
183,678,460 $
146,433,123 $
68,835,047
$
$
$
$
$
$
$
$
$
84
G EN T EX CO R P O R AT I O N
2023 A N N UA L R EP O RT
85
Other includes Dimmable Aircraft Windows, Fire Protection Products, Nanofiber, and Medical. Major product line revenues included within
( 9 ) C O M P R E H E N S I V E I N C O M E
the Automotive Products segment are as follows:
AUTOMOTIVE PRODUCTS
Automotive Mirrors
HomeLink® Modules*
TOTAL AUTOMOTIVE PRODUCTS
OTHER PRODUCTS REVENUE
Total Revenue
* Excludes HomeLink® revenue integrated into automotive mirrors.
$
$
$
$
2023
2022
2021
from non-owner sources. For the Company, comprehensive income represents net income adjusted for unrealized gains and losses on available for
Comprehensive income reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances
sale investments and foreign currency translation adjustments.
2,128,473,563 $
1,742,196,401 $
1,563,424,443
126,186,728
132,546,057
133,763,591
For the Years ended December 31,
2023
2022
2021
2,254,660,291 $
1,874,742,458 $
1,697,188,034
Foreign currency translation adjustments:
44,554,753 $
44,215,585 $
33,981,895
Balance at beginning of period
$
(4,032,239)
$
920,589 $
2,299,215,044 $
1,918,958,043 $
1,731,169,929
Other comprehensive (loss) income before reclassifications
Net current-period change
Balance at end of period
Unrealized gains (losses) on available-for-sale securities:
(502,480)
(502,480)
(4,534,719)
(4,952,828)
(4,952,828)
(4,032,239)
Balance at beginning of period
(10,110,695)
1,006,655
Other comprehensive income (loss) before reclassifications
3,360,396
(12,470,515)
Amounts reclassified from accumulated other comprehensive
income (loss)
4,727,896
1,353,165
(846,918)
Net current-period change
Balance at end of period
8,088,292
(2,022,403)
(11,117,350)
(10,110,695)
769,045
151,544
151,544
920,589
6,082,007
(4,228,434)
(5,075,352)
1,006,655
1,927,244
The following table presents details of reclassifications from accumulated other comprehensive (loss) income for the years ended December 31,
2023, 2022 and 2021:
Details about Accumulated Other
Comprehensive (Loss) Income Components
Unrealized (losses) gains on available-for-sale
securities
Realized (loss) gain on sale of securities
Provision for income taxes
For the Years ended December 31,
Affected Line item in the Statement
of Consolidated Income
2023
2022
2021
$
$
(5,984,678) $
(1,712,867)
$
1,072,048 Other (loss) income, net
1,256,782
359,702
(225,130) Provision for Income Taxes
(4,727,896) $
(1,353,165)
$
846,918 Net of tax
Corporate assets are principally cash and cash equivalents, investments, deferred income taxes and corporate fixed assets. Depreciation &
Amortization on corporate fixed assets are allocated as appropriate to the Automotive and Other segments when reviewing operating results.
Substantially all long-lived assets are located in the U.S.
Automotive Products revenues in the “Other countries” category are sales to customer automotive manufacturing plants in Korea, Canada,
Hungary, China, and the United Kingdom, as well as other foreign automotive customers. Most of the Company’s non-U.S. sales are invoiced
and paid in U.S. dollars. During the years ended December 31, 2023, 2022 and 2021, approximately 8%, 7% and 8% of the Company’s net sales
were invoiced and paid in foreign currencies, respectively.
In 2023, the Company had three automotive customers (including direct sales to original equipment manufacturer (“OEM”) customers and sales
2023
2022
2021
18%
16%
15%
14%
13%
13%
10%
10%
11%
( 8 ) Q U A R T E R L Y F I N A N C I A L I N F O R M A T I O N ( U N A U D I T E D )
The following table sets forth selected financial information for all of the quarters during the years ended December 31, 2023 and 2022
(in thousands, except per share data):
First
Second
Third
Fourth
Total reclassifications for the period
2023
2022
2023
2022
2023
2022
2023
2022
Net Sales
Gross Profit
$
550,761 $
468,251 $
583,473 $
463,423 $
575,848 $
493,637 $
589,132 $
493,648
174,737
160,412
193,083
148,367
191,441
147,201
203,369
153,834
Operating Income
113,251
103,306
127,289
Net Income
97,578
87,529
109,155
85,791
72,404
122,417
104,725
86,792
72,656
132,774
116,944
94,118
86,168
Earnings Per Share
(Basic)(1)
Earnings Per Share
(Diluted)(1)
$
$
0.42 $
0.37 $
0.47 $
0.31 $
0.45 $
0.31 $
0.50 $
0.37
0.42 $
0.37 $
0.47 $
0.31 $
0.45 $
0.31 $
0.50 $
0.37
(1)
Basic and diluted earnings per share are computed independently for each quarter presented. Therefore the sum of quarterly basic and diluted per share information may not equal
annual basis and diluted earnings per share.
through their Tier 1 suppliers), which individually accounted for 10% or more of net sales as follows:
Accumulated other comprehensive (loss) income, end of period $
(6,557,122)
$
(14,142,934)
$
Toyota Motor Company
Volkswagen Group
General Motors
All amounts are shown net of tax. Amounts in parentheses indicate debits.
86
G EN T EX CO R P O R AT I O N
2023 A N N UA L R EP O RT
87
( 1 0 ) G O O D W I L L A N D I N T A N G I B L E A S S E T S
The Company recorded Goodwill of: $307.4 million related to the HomeLink® acquisition in 2013; $3.7 million as part of the acquisition
of Vaporsens, Inc. (“Vaporsens”) in 2020; $0.2 million as part of the acquisition of Air-Craftglass Production BV (“Air-Craftglass”) in 2020;
$1.0 million as part of the acquisition of Argil, Inc. (“Argil”) in 2020; $2.0 million as part of the acquisition of Guardian Optical Technologies
(“Guardian”) in 2021; and $26.7 million as part of the acquisition of eSight in the fourth quarter of 2023. Refer to Note 12, “Acquisitions”,
Existing Customer Platforms
for further information on the eSight acquisition. The carrying value of Goodwill as of December 31, 2023 and December 31, 2022 was $340.1
million and $313.8 million, respectively, as set forth in the table below.
Exclusive Licensing Agreement
eSight Technology
Carrying Amount
eSight Trade Names and Trademarks
Balance as of December 31, 2022
$
Acquisitions
Divestitures
Impairments
Other
Balance as of December 31, 2023
313,807,494
26,696,012
—
—
(397,875)
340,105,631
Vaporsens In-Process R&D
Argil In-Process R&D
Air-Craftglass In-Process R&D
Guardian Trade Names
Guardian In-Process R&D
As of December 31, 2023, $30.6 million of goodwill was recorded within the Other segment as a result of the Vaporsens, Air-Craftglass, and
As of December 31, 2022:
the eSight acquisitions, and $309.5 million of goodwill was recorded within the Automotive segment.
The Company reviews goodwill and IPR&D for impairment during the fourth quarter on an annual basis or more frequently if events or
changes in circumstances indicate that goodwill might be impaired. The Company performed a qualitative assessment (step 0) to determine
whether it is more likely than not that a reporting unit or intangible asset’s fair value is less than its carrying amount. Based on this test, the
Company determined they were not and that no additional impairment testing was needed. The Company has not recognized any impairment
of goodwill or IPR&D in the current or prior periods. The Company continuously monitors for events and circumstances that could negatively
HomeLink® Technology
Existing Customer Platforms
impact the key assumptions in determining fair value thus resulting in the need for interim testing, including long-term revenue growth
Exclusive Licensing Agreement
projections, profitability, discount rates, recent market valuations from transactions by comparable companies, volatility in the Company’s
market capitalization, and certain general industry, market and macro-economic conditions. No such events or circumstances that might
negatively impact the key assumptions were observed in 2023 and, as such, nothing indicated the need for interim impairment testing.
The Intangible Assets and related change in carrying values are set forth in the table below as of December 31, 2023 and December 31, 2022.
Vaporsens In-Process R&D
Argil In-Process R&D
Air-Craftglass In-Process R&D
Guardian Trade Names
Guardian In-Process R&D
As of December 31, 2023:
Other Intangible Assets
Gross
Accumulated
Amortization
Net
Assumed
Useful Life
HomeLink® Trade Names and Trademarks
$
52,000,000 $
— $
52,000,000
Indefinite
HomeLink® Technology
180,000,000
(153,750,000)
26,250,000
43,000,000
96,000,000
12,000,000
870,000
11,000,000
6,278,132
1,507,778
1,300,000
6,800,000
(43,000,000)
—
—
—
—
—
—
—
—
—
96,000,000
12,000,000
870,000
11,000,000
6,278,132
1,507,778
1,300,000
6,800,000
12 years
10 years
Indefinite
12 years
12 years
Indefinite
Indefinite
Indefinite
Indefinite
Indefinite
Total other identifiable intangible assets
$
410,755,910 $
(196,750,000)
$
214,005,910
Other Intangible Assets
Gross
Accumulated
Amortization
Net
Assumed Useful
Life
HomeLink® Trade Names and Trademarks
$
52,000,000 $
— $
52,000,000
Indefinite
180,000,000
(138,750,000)
43,000,000
96,000,000
11,000,000
6,278,132
1,507,778
1,300,000
6,800,000
(39,775,000)
—
—
—
—
—
—
41,250,000
3,225,000
96,000,000
11,000,000
6,278,132
1,507,778
1,300,000
6,800,000
12 years
10 years
Indefinite
Indefinite
Indefinite
Indefinite
Indefinite
Indefinite
Total other identifiable intangible assets
$
397,885,910 $
(178,525,000) $
219,360,910
Accumulated amortization on patents and intangible assets was approximately $224.7 million and $206.3 million at December 31, 2023 and
2022, respectively. Amortization expense on patents and other intangible assets was approximately $19.7 million, $21.7 million, and $22.2
million in calendar years 2023, 2022 and 2021, respectively. At December 31, 2023, patents had a weighted average amortized life of 11 years.
Excluding the impact of any future acquisitions, the Company anticipates amortization expense including patents and other intangible assets
to be approximately: $17 million for the year ended December 31, 2024; $14 million for the year ended December 31, 2025; $3 million for each
of the years ended December 31, 2026, December 2027, and December 31, 2028.
88
G EN T EX CO R P O R AT I O N
2023 A N N UA L R EP O RT
89
2,254,660,291 $
1,874,742,458 $
1,697,188,034
the driver. These electronic interior mirrors can also include additional electronic features such as compass, microphones, HomeLink®, lighting
( 1 1 ) R E V E N U E
The following table shows the Company’s Automotive and Other Products revenue disaggregated by geographical location for Automotive
Products for the years ended December 31, 2023, 2022, and 2021:
Revenue
Automotive Products
U.S.
Germany
Japan
Mexico
Republic of Korea
Other
Total Automotive Products
Other Products (U.S.)
Total Revenue
For the Years ended December 31,
2023
2022
2021
$
688,164,335 $
579,531,611 $
542,690,346
294,529,611
323,872,022
142,082,011
149,554,788
656,457,524
266,498,398
234,888,653
121,553,711
95,395,479
576,874,606
234,994,551
211,417,475
111,761,245
67,219,836
529,104,581
$
$
44,554,753
44,215,585
33,981,895
2,299,215,044 $
1,918,958,043 $
1,731,169,929
Revenue by geographic area may fluctuate based on many factors, including: exposure to local economic, political and labor conditions;
unexpected changes in laws, regulations, trade or monetary or fiscal policy, including interest rates, foreign currency exchange rates and changes
in the rate of inflation in the U.S. and other foreign countries; and tariffs, quotas, customs and other import or export restrictions and other
trade barriers.
The following table disaggregates the Company’s Automotive and Other revenue by major source for the years ended December 31, 2023, 2022,
For the Years Ended December 31,
2023
2022
2021
2,128,473,563 $
1,742,196,401 $
1,563,424,443
126,186,728
132,546,057
133,763,591
and 2021:
Revenue
Automotive Segment
Automotive Mirrors & Electronics
HomeLink Modules*
Total Automotive Products
Other Segment
Fire Protection Products
Windows Products
Nanofiber Products
Medical
Total Other
$
$
$
$
Revenue is recognized when obligations under the terms of a contract with the customer are satisfied. Such recognition generally occurs with
the transfer of control of the products at a point in time. The Company’s automotive OEM contracts generally include Long Term Supply
Agreements (“LTSA”) entered into in the ordinary course of business and Purchase Orders (“PO”) whereby the LTSA sometimes stipulates the
pricing and delivery terms and is evaluated together with a PO, which identifies the quantity, timing, and the type of product to be transferred.
Certain customer contracts do not always have an LTSA, in which case, the contracts are governed by the PO from the customer in conjunction
with other mutually agreed upon terms and conditions.
The Company does not generate revenue from arrangements with multiple deliverables. Revenue is measured as the amount of consideration
the Company expects to receive in exchange for transferring goods excluding revenue amounts that are transferred to third parties, such as sales,
value add, and other taxes the Company collects concurrently with revenue-producing activities. Costs are incurred to fulfill contracts with the
OEM. However, such costs are accounted for under ASC 340-10, and are not treated as fulfillment costs under ASC 340-40.
Automotive Products Segment
AUTOMOTIVE REARVIEW MIRRORS AND ELECTRONICS
The Company manufactures interior electrochromic automatic-dimming rearview mirrors that darken to reduce glare and improve visibility for
assist and driver assist forward safety camera systems, various lighting systems, various telematics systems, Integrated Toll Module® systems, and
a wide variety of displays. The Company also ships interior non-automatic-dimming rearview mirrors with features. The Company’s interior
electrochromic automatic-dimming rearview mirrors also power the application of the Company’s exterior electrochromic automatic-dimming
rearview mirrors that darken to reduce glare and improve visibility for the driver. These electronic exterior mirrors typically range in size and
shape per automaker specification, but also include additional features such as turn signal indicators, side blind zone indicators, and courtesy
lighting. The Company also ships exterior non-automatic-dimming rearview mirrors with similar electronic features as what is available in its
automatic-dimming applications. The Company manufactures other automotive electronics products both inside and outside of the rearview
mirror through HomeLink® applications in the vehicle including the rearview mirror, interior visor, overhead console, or center console.
For the majority of automotive products, transfer of control and revenue recognition occurs when the Company ships the product from the
manufacturing facility to the customer. The Company generally receives payment equal to the price that applies at the time of invoice for most
automotive product sales. For any shipments of product that may be subject to retroactive price adjustments that are then being negotiated, the
Company records revenue based on the Company’s best estimate of the amount of consideration to which the entity will be entitled in exchange
for transferring the promised goods to the customer. The Company’s best estimate requires significant judgment based on historical results
and expected outcomes of ongoing negotiations with customers. The Company’s approach is to consider these adjustments to the contract price
as variable consideration, which is estimated based on the then most likely price amount. Payment terms on automotive part sales to customers
range from 15 days to 90 days. Estimated revenue is adjusted at the earlier of when the most likely amount of consideration expected to be
received changes or when the consideration becomes fixed.
2,254,660,291 $
1,874,742,458 $
1,697,188,034
HOMELINK® MODULES
25,927,018 $
38,238,092 $
25,048,697
18,582,949
5,977,493
8,914,798
—
44,786
—
—
18,400
—
44,554,753 $
44,215,585 $
33,981,895
The Company manufactures and sells HomeLink® Modules individually, as well as in combination with the automotive mirrors and other
advanced features, as described above. For the majority of automotive products, transfer of control and revenue recognition occurs when the
Company ships the product from the manufacturing facility to the customer.
* Excludes HomeLink revenue related to HomeLink modules integrated into automotive mirrors.
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Other Segment
DIMMABLE AIRCRAFT WINDOWS
The Company supplies variable dimmable windows for the passenger compartment on the Boeing 787 Dreamliner Series of Aircraft. For
dimmable aircraft windows, transfer of control and revenue recognition occurs when the Company ships the product from the manufacturing
facility to the customer. Payment terms on dimmable aircraft window sales range from 30 days to 45 days.
FIRE PROTECTION PRODUCTS
The Company manufactures photoelectric smoke detectors and alarms, visual signaling alarms, electrochemical carbon monoxide detectors and
alarms, audible and visual signaling alarms, and bells and speakers for use in fire detection systems in office buildings, hotels, and other commercial
and residential buildings. For fire protection parts, transfer of control and revenue recognition occurs when the Company ships the product from
the manufacturing facility to the customer. Payment terms on fire protection part sales to customers range from 30 days to 75 days.
NANOFIBER
The Company acquired Vaporsens in early 2020, which specializes in nanofiber chemical sensing research and development. Vaporsens
is primarily involved with research and development of technology related to nanofibers sensing a variety of chemicals and/or compounds.
MEDICAL
In January 2020 the Company unveiled an innovative lighting technology for medical applications that was co-developed with Mayo Clinic.
This new lighting concept represents the collaboration of a global, high-technology electronics company with a world leader in health care.
The Company’s new intelligent lighting system combines ambient room lighting with camera-controlled, adaptive task lighting to optimize
illumination for surgical and patient-care environments. The system was developed over an 18 month period of collaboration between Company
engineers and Mayo Clinic surgeons, scientists, and operating room staff. The teams researched, designed, and rapidly iterated multiple
prototypes in order to develop unique features intended to address major gaps in current surgical lighting solutions. The Company continues
to further develop and work on the intelligent medical lighting system in order to assess system performance and work toward obtaining any
necessary approvals.
On November 2, 2023, the Company acquired certain technology assets from eSight for approximately $18.9 million in cash, in addition to the
20% equity the Company previously held in the assets, as well as an earn out provision. The technology acquired from eSight provides advanced
and versatile low-vision smart glasses for those with visual impairments and is compatible with more than 20 eye conditions including Macular
Degeneration, Diabetic Retinopathy, and Stargardt disease.
Refer to Note 12, “Acquisitions”, for further information.
( 1 2 ) A C Q U I S I T I O N S
On November 2, 2023, the Company acquired certain technology assets from eSight for approximately $18.9 million in cash, the assumption of
a $9.4 million promissory note given in exchange for the 20% equity the Company previously held in the assets, as well as an earn out provision
over a ten year period. The earn out provision consists of multiple potential payments based on the revenue over the next ten calendar years,
with the total earn out not to exceed $70 million. The Company funded the acquisition with cash on hand. The technology acquired from
eSight provides advanced and versatile low-vision smart glasses for those with visual impairments and is compatible with more than 20 eye
conditions including Macular Degeneration, Diabetic Retinopathy, and Stargardt disease. These assets will be classified within the Company’s
Other segment.
The Company will account for the acquisition under the provisions of FASB ASC Topic 805, Business Combinations. The Company is still
in the process of verifying data and finalizing information related to the valuation and recording of identifiable intangible assets, net working
capital, contingent liabilities, and the resulting effects on the amount of recorded goodwill. The Company expects to finalize these matters
within the measurement period, which is currently expected to remain open through the third quarter of 2023. Less than $0.1 million of revenue
of the business of eSight was included in the Company’s consolidated statement of income and comprehensive income for the year ended
December 31, 2023.
The following table summarizes the fair values of the assets acquired, and the liabilities assumed, as of the acquisition date of November 2, 2023:
Current Assets
Personal Property
Right of Use Asset (Lease)
ESight Technology
Trade Names and Trademarks
Goodwill
Total Assets
Lease Liability
Contingent Earn Out Liability
Total Liabilities
$
$
$
$
Fair Value
441,228
75,000
116,562
12,000,000
870,000
26,696,012
40,198,802
116,562
12,000,000
12,116,562
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15-Year Summary of Financial Data
SUMMARY OF OPERATIONS FOR THE YEAR
Net Sales
Cost of goods sold
Gross profit
Gross profit margin
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2,299,215
1,918,958
1,731,170
1,688,189
1,858,897
1,834,064
1,794,873
1,678,925
1,543,618
1,375,501
1,171,864
1,099,560
1,023,762
816,263
544,523
1,536,585
1,309,144
1,111,462
1,082,746
1,170,589
1,143,597
1,100,344
1,010,473
939,842
836,611
741,131
726,741
662,182
520,573
366,968
762,630
609,814
619,708
605,444
688,308
690,467
694,528
668,452
603,776
538,890
430,733
372,819
361,580
295,690
177,555
33.2%
31.8%
35.8%
35.9%
37.0%
37.6%
38.7%
39.8%
39.1%
39.2%
36.8%
33.9%
35.3%
36.2%
32.6%
Research and development expenses
154,360
133,309
117,764
115,935
114,687
107,135
99,726
94,238
88,393
84,176
76,495
85,004
81,634
64,100
47,128
Selling, general & administrative expenses
Operating income
Percent of net sales
Interest expense
Other income (expense)
Income before taxes
Percent of net sales
Income taxes
Tax rate
Net income
112,539
495,731
21.6%
369
9,619
106,4992
370,0062
19.3%
174
(109)
92,162
89,952
85,083
75,206
71,443
62,471
56,617
55,880
49,496
409,782
399,556
488,538
508,126
523,358
511,743
458,766
398,834
304,742
53,36041
234,45541
48,578
40,618
35,808
231,368
190,972
94,619
23.7%
181
23.7%
641
26.3%
296
27.7%
927
6,750
12,898
12,174
14,849
29.2%
4,371
12,809
30.5%
5,684
4,501
29.7%
4,439
9,264
29.0%
3,501
26.0%
21.3%
22.6%
23.4%
17.4%
937 -
-
-
-
19,993
24,259
15,170
13,064
12,468
1,733
504,981
369,723
416,352
411,813
500,415
522,047
531,797
510,561
463,591
415,326
328,064
249,626
244,432
203,440
96,352
22.0%
19.3%
24.1%
24.4%
26.9%
28.5%
29.6%
30.4%
30.0%
30.2%
28.0%
22.7%
23.9%
24.9%
17.7%
76,578
50,965
55,555
64,249
75,731
84,164
125,005
162,969
145,122
126,722
105,134
81,039
79,764
65,706
31,715
15.2%
13.8%
13.3%
15.6%
15.1%
16.1%
23.5%
31.9%
31.3%
30.5%
32.0%
32.5%
32.6%
32.3%
32.9%
428,403
318,757
360,797
347,564
424,684
437,883
406,792
347,591
318,470
288,605
222,930
168,587
164,668
137,734
64,637
Percent of net sales
Return on average equity
Earnings per share - diluted
18.6%
19.6%
1.84
16.6%
15.9%
1.36
20.8%
18.5%
1.50
20.6%
17.8%
1.41
22.8%
22.4%
1.66
23.9%
22.4%
1.62
22.7%
20.5%
1.41
20.7%
19.1%
1.19
20.6%
19.3%
1.08
21.0%
19.9%
0.98
19.0%
18.2%
0.77
15.3%
15.7%
0.59
16.1%
17.1%
0.57
16.9%
16.9%
0.49
11.9%
9.0%
0.24
Price/earnings ratio range
19-14
27-18
25-20
24-14
18-12
15-11
16-12
17-11
18-12
19-14
22-12
27-12
31-19
31-17
39-15
Weighted average common shares outstanding
- diluted
229,720
231,219
236,604
243,682
253,273
269,877
288,226
291,072
296,238
294,300
288,548
287,936
288,554
281,472
275,291
Capital expenditures
183,678
146,433
68,835
51,707
84,580
85,991
104,041
120,956
97,942
72,519
55,380
117,474
120,178
46,862
21,131
FINANCIAL POSITION AT YEAR-END
Cash and short-term investments
240,791
241,762
267,735
450,535
436,706
386,438
722,273
723,498
556,105
497,431
309,592
450,482
418,795
434,797
353,232
Long-term and Equity Method investments
299,081
202,332
207,693
162,028
139,909
137,979
57,782
49,894
95,157
114,643
107,006
141,834
128,168
129,091
109,155
Total current assets
Total current liabilities
Working capital
997,738
948,652
872,976
979,331
950,377
850,930
1,184,564
1,154,989
984,009
856,638
601,186
744,663
752,293
655,269
505,414
271,609
250,553
181,656
177,737
171,847
169,161
243,647
149,858
131,007
133,431
119,980
87,957
100,695
72,089
58,638
726,129
698,100
691,320
801,594
778,530
681,769
940,917
1,005,131
853,002
723,207
481,206
656,706
651,598
583,181
446,776
Plant and equipment - net
652,878
550,033
464,122
468,135
498,316
498,474
492,479
465,822
412,720
373,391
357,021
349,938
282,542
205,108
197,530
Total assets
2,611,438
2,327,230
2,131,391
2,197,941
2,168,803
2,085,434
2,352,054
2,309,620
2,148,673
2,022,540
1,764,088
1,265,691
1,163,772
1,002,691
822,603
Long-term debt, including current maturities
-
-
-
-
-
-
78,000
185,625
225,625
258,125
265,625
-
-
-
-
Shareholders’ investment
2,312,517
2,065,793
1,937,988
1,963,943
1,938,088
1,861,752
2,049,518
1,910,424
1,722,517
1,571,412
1,327,604
1,120,961
1,027,119
893,531
735,929
Debt/equity ratio (including current maturities)
-
-
-
-
-
-
0.04
0.10
0.15
0.20
0.23
-
-
-
-
Common shares outstanding
231,455
234,169
236,441
243,693
251,278
259,329
280,281
287,738
291,338
295,248
291,156
286,152
288,140
284,584
276,678
Book value per share
Cash Dividend declared per share
10.0
0.48
8.8
0.48
8.2
0.48
8.1
0.48
7.7
0.46
7.2
0.44
7.3
0.39
6.6
0.36
5.9
0.34
5.3
0.31
4.6
0.28
3.9
0.26
3.6
0.24
3.1
0.22
2.7
0.22
1. Includes litigation settlement of $5,000,000 (pre tax) in 2012.
2. Includes SEC settlement of $4,000,000 (pre tax) in 2022.
96
G EN T EX CO R P O R AT I O N
In thousands, except Gross profit margin, Percent of net sales on Income and Net Income, Tax rate, Return on average equity, Per share data, Price/earnings ratio and Debt/Equity ratio.
All per share data has been adjusted to reflect the two-for-one stock splits effected in the form of 100 percent common stock dividends issued to shareholders in June 1993, June 1996,
June 1998, May 2005 and December 2014.
2023 A N N UA L R EP O RT
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CORPORATE DATA
BOARD OF DIRECTORS
Director
Since
Compensation
Committee*
Nominating
and Corporate
Governance
Committee*
Audit
Committee* Age**
Gender Identity*
Female Male
Did not
Disclose
Gender
Non-
Binary
Mr. Richard Schaum
(Chair)
2011
Chair
Mr. Joseph Anderson
2022
Ms. Leslie Brown
Mr. Garth Deur
2016
2023
Mr. Steve Downing
2020
Member
Chair
Member
Member
Mr. Gary Goode***
2003
Member
Member
Chair
Dr. Bill Pink
(Nominee)
Ms. Kathy Starkoff
Mr. Brian Walker
Mr. Dr. Ling Zang
2024
2018
2018
2021
Member
Member
Member
Member
*
Identity, Demographics, and Committee memberships as of Aug 21, 2023.
** Ages as of Feb 16, 2024
*** Not standing for re-election.
77
81
70
67
46
78
57
66
62
55
2
Demographic Background*
African American
or Black
Alaskan Native or
Native American
Asian
Hispanic
or Latinx
Native Hawaiian or
Pacific Islander
White or
Caucasian
Two or
More Races
or Ethnicities
LGBTQ+
Did Not Disclose
Demographic
Background
0
0
0
0
0
2
0
0
0
7
1
0
1
0
0
5
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
CORPORATE HEADQUARTERS
OFFICERS
GENTEX CORPORATION
Steve Downing, President & Chief Executive Officer
Neil Boehm, Chief Technology Officer
Matt Chiodo, Chief Sales Officer & Senior Vice President of Sales
Kevin Nash, Chief Financial Officer, Chief Accounting Officer,
Vice President of Finance, & Treasurer
Scott Ryan, Vice President, General Counsel, Corporate Secretary,
& Sustainability Officer
Paul Flynn, Vice President of Operations
Ken Horner, Vice President of Quality
Brian Lorence, Vice President of Sales
Joe Matthews, Vice President of Diversity, Equity, & Inclusion
Angela Nadeau, Vice President of Commercial Management
Randy Pappal, Vice President of Purchasing & Supply Chain
Robert Vance, Vice President of New Markets
EXECUTIVE MANAGEMENT
Brad Bosma, Vice President of Products
Cliff Burgess, Vice President of Information Technology
& Information Security Officer
Matt Fox, Vice President of Materials, Research & Development
Sue Franz, Vice President of Chemical Technologies
Dave Hiemstra, Vice President of Engineering
Craig Piersma, Vice President of Marketing & Corporate Communications
Robert Steel, Vice President of Sales - Europe
600 N. Centennial Street
Zeeland, Michigan 49464
gentex.com
TRANSFER AGENT
BROADRIDGE SHAREHOLDER SERVICES
c/o Broadridge Corporate Issuer Solutions
Attn: IWS
1155 Long Island Avenue
Edgewood, NY 11717-8309
shareholder.broadridge.com
Dedicated Toll Free Line - 844-943-0718
International Support - 303-558-4039
GENTEX COMMON STOCK
The Company’s stock trades on The NASDAQ Global Select Market
under the symbol GNTX. The Company does not have a direct stock
purchase plan or dividend reinvestment policy. Shares of the Company’s
stock may be purchased through a stock broker or other registered
securities representative.
IR AND MEDIA CONTACT
Josh O’Berski, Director of Investor Relations
616.772.1590 x5814
ir.gentex.com
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, MAY 16, 2024 @ 4:30 PM
The Pinnacle Center
3330 Highland Drive, Hudsonville, Michigan
Please refer to the Gentex IR site for updated event
information at ir.gentex.com.
Vote Your Shares
Online @ proxyvote.com
or Scan this COde
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© 2024 Gentex Corporation
© 2024 Gentex Corporation
600 N. Centennial Street,
600 N. Centennial Street,
Zeeland, Michigan 49464
Zeeland, Michigan 49464
gentex.com | ir.gentex.com
gentex.com | ir.gentex.com
616.772.1800
616.772.1800
Gentex®, A Smarter Vision®, eSight®, eSight Go™, Full Display Mirror®, FDM®, ITM®, Integrated Toll
Gentex®, A Smarter Vision®, eSight®, eSight Go™, Full Display Mirror®, FDM®, ITM®, Integrated Toll
Module®, ITM (design)®, HomeLink®, HomeLink (house design)®, HomeLink Connect®, SmartBeam®,
Module®, ITM (design)®, HomeLink®, HomeLink (house design)®, HomeLink Connect®, SmartBeam®,
and Vaporsens® are all trademarks of Gentex Corporation. Th e products referenced in this report may not
and Vaporsens® are all trademarks of Gentex Corporation. Th e products referenced in this report may not
be approved in all jurisdictions. “Mayo,” “Mayo Clinic,” “MayoClinic.org,” “Mayo Clinic Healthy Living,”
be approved in all jurisdictions. “Mayo,” “Mayo Clinic,” “MayoClinic.org,” “Mayo Clinic Healthy Living,”
and the triple-shield Mayo Clinic logo are trademarks of Mayo Foundation for Medical Education and Research.
and the triple-shield Mayo Clinic logo are trademarks of Mayo Foundation for Medical Education and Research.
“Simplenight” is a registered trademark of Simplenight Inc.
“Simplenight” is a registered trademark of Simplenight Inc.