LOOKING BACK, FOCUSED FORWARD
20 2 4 | An nual Re po rt
3
2024 ANNUAL REPORT
2
GENTEX CORPORATION
3
2024 ANNUAL REPORT
TABLE OF CONTENTS
4
10
16
22
12
18
24
14
9
8
20
26
ABOUT GENTEX
GENTEX OVERVIEW
4
FAST FACTS
5
A LOOK BACK
6
PURPOSE STATEMENT
8
CORE VALUES
9
LETTER FROM THE CEO
10
FINANCIAL PERFORMANCE & GUIDANCE
12
PRODUCT PORTFOLIO
& STRATEGY
DIMMABLE DEVICES
14
DIGITAL VISION
16
CONNECTIVITY
18
SENSING
20
INNOVATION LAB
22
COMMUNITY IN ACTION
24
SUSTAINABILITY
26
FINANCIALS
10K
28
15 YEAR SUMMARY
100
CORPORATE
& LEADERSHIP
CORPORATE DATA
102
BOARD OF DIRECTORS
103
6
5
2
GENTEX CORPORATION
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This Annual Report 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,” “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 the length and
severity of the COVID-19 (coronavirus) pandemic, including its impact across our business
on demand, operations, and the global supply chain. 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 now
include the impacts of COVID-19 (coronavirus) pandemic and 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 (http://www.gentex.com/forecast-disclaimer).
S&P reports, data and information referenced herein (the “S&P Materials”) are the
copyrighted property of S&P Global Inc. and its subsidiaries (“S&P”). The S&P Materials
are from sources considered reliable; however, the accuracy and completeness thereof are not
warranted, nor are the opinions and analyses published by S&P representations of fact. The
S&P Materials speak as of the original publication date thereof and are subject to change
without notice. S&P and other trademarks appearing in the S&P Materials are the property
of S&P or their respective owners.
5
2024 ANNUAL REPORT
6,184
Full-time Employees
36+
OEM Customers Shipped To
47.7 M
Auto-Dimming Mirror Units
650+
Nameplates our Content Appears On
86%
Market Share of IEC
SALES & ENGINEERING OFFICES
United States (Headquarters), Canada, China, France, Germany, Israel, Japan,
Korea, Sweden, United Kingdom
GENTEX OVERVIEW
FAST FACTS
WHERE WE STARTED
Gentex was founded in 1974 as a manufacturer of commercial smoke
detectors and related signaling devices. We pioneered a detector that
used light to “see” smoke particles. We built on that capability, and
we honed this sensing capability to function as an input for a motorized
day/night mirror.
In 1982, we launched our first electromechanical automatic-dimming
mirror, which used a small motor to move the mirror from its ‘day’
to ‘night’ position.
In 1987, we launched the world’s first electrochromic mirror — our
signature product — and an entire industry was born.
WHO WE’VE BECOME
Today, Gentex is a global Tier 1 automotive supplier. We turned the
mirror into an electronic module by integrating advanced electronic
features that enhance driver safety and convenience.
Along the way, we’ve cultivated core competencies in microelectronics,
software development, displays, applied materials, glass processing,
automated assembly, advanced sensing, and more. These unique
skills have allowed us to begin expanding into new markets, including
aerospace, medical, and home automation.
WHERE WE’RE GOING
Gentex is evolving into a technology company. We continue to refine
our skills and core competencies so that, when used in combination,
they yield a unique fusion of technologies with utility in multiple sectors.
TO GROW THE BUSINESS, WE WILL…
+ Continue to augment and utilize our capabilities within
the automotive industry.
+ Put our core competencies to use in new ways and
in new markets.
+ Support and develop our team to provide world class
products for our markets
A fire protection company
A global automotive supplier
A technology company
2,742
PATENTS &
TRADEMARKS
815
US Patents
1,498 Foreign Patents
49
US Registered
380
Foreign Registered
549
NEW APPLICATIONS
18
U.S. Registered Trademarks
186
U.S. Patents
50
Foreign Registered Trademarks
295
Foreign Patents
4
GENTEX CORPORATION
10 M
0 M
$
$500 M
$1 B
$1.5 B
$2 B
$2.5 B
$3 B
20 M
30 M
40 M
50 M
60 M
70 M
80 M
90 M
100 M
REVENUE VS. LIGHT VEHICLE PRODUCTION
Light Vehicle Production
Revenue
’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ’23 ’24 ’25
A LOOK BACK
7
2024 ANNUAL REPORT
6
GENTEX CORPORATION
9
8
2024 ANNUAL REPORT
GENTEX CORPORATION
+ GRITTY
We work with optimistic
tenacity, being candid yet
respectful with one another,
tackling difficult tasks with
determination and resolve.
+ EXCEPTIONAL WORK ETHIC
We work with pride, performing
tasks to the best of our abilities,
dedicated, dependable, self-
motivated, and committed
to achieving corporate goals.
+ COLLABORATIVE
We work together with
cross-functional, cooperative
interaction, to develop
superior solutions and
a more vibrant workplace.
+ THE TEAM COMES FIRST
We work as a team, keeping the
big picture in mind, realizing
that our unique business model
requires extensive collaboration,
and that the success of Team
Gentex comes before individual
accolades.
+ CREATORS, NOT CRITICS
We work as creators and
engaged contributors who
take responsibility for tackling
opportunities, identifying and
fixing problems, and helping
make Gentex a better place
to work.
+ TAKE RISK
We push boundaries, manage
uncertainty, act decisively,
and course correct continually.
+ BEST IDEA WINS
We cultivate and value individual
creativity, but in the end, we
collectively move forward with
the best solution.
PERSONAL BEHAVIORS
+ OUR TEAM MEMBERS
to respect, invest in, and value
each individual.
+ OUR CUSTOMERS
to innovate on their behalf.
+ OUR SUPPLIERS
to help each other be the best
we can be.
+ OUR SHAREHOLDERS
to continually grow shareholder
value and reward investment.
+ OUR COMMUNITY
to be a positive force in
the communities in which
we operate.
+ SOCIAL RESPONSIBILITY
to operate sustainably, promote
diversity, and give generously.
DOING THINGS RIGHT
We strive to be world-class in all we do.
If it’s worth doing, it’s worth doing correctly.
DOING THE RIGHT THING
We do what’s right, even if it’s difficult,
holding ourselves, one another, and the
organization accountable to the highest
standards of honesty and integrity.
INNOVATION
We think, act, work, create, and execute
differently, with creativity and imagination.
QUALITY
We will be our customer’s benchmark
for quality.
PEOPLE
We value, respect, trust, and develop people,
creating an environment where everyone can
do their best work.
BUSINESS DISCIPLINE
We apply best practices in all areas of
the business in order to create value for
our employees and shareholders.
OUR COMMITMENTS
PURPOSE STATEMENT
CORE VALUES
THIS YEAR, TO HELP MARK OUR 50TH ANNIVERSARY, AND TO ALIGN OUR TEAMS TOWARD
OUR GROWTH GOALS, WE LAUNCHED THE FOLLOWING PURPOSE STATEMENT:
Our purpose is to be the world’s most innovative technology company in the
markets we serve, making a lasting impact in the lives of our customers, end users,
employees, and shareholders, as well as the communities in which we live and work.
We’ll accomplish this by leveraging our innovative culture to continuously create
unique products, empower and develop our employees, serve our communities,
maximize shareholder value, and operate in a sustainable manner.
10
GENTEX CORPORATION
Stability in Spite
of Unpredictability
Despite the industry’s optimism at the beginning of the year, calendar year 2024 brought
a challenging operating environment for much of the year. Gentex battled through vehicle
platform shutdowns, inventory adjustments, and overall lower-than-expected light vehicle
production in our primary markets, and still managed to outperform the underlying market
and create year-over-year growth. These headwinds significantly impacted our overall revenue
estimates, and made margin expansion very difficult. Despite this, the team’s work and focus
on margin improvement allowed us to make a modest year-over-year improvement in gross
margin as well.
Our technology continued to drive consumer demand, as many of
our OEM customers recognized the importance of optional features
in their vehicle lineups to drive profitability in a slowing vehicle
production environment. Our Full Display Mirror continued to gain
in popularity and performed well in the face of subdued markets,
growing 10% in 2024 to end the year with 2.94m units deployed.
Exterior mirrors, HomeLink, Driver Monitoring, and our other
advanced feature mirrors also helped underpin our margin and
revenue performance in spite of the lower vehicle volumes, and
our purchasing teams did a great job of negotiating pricing with
our suppliers to manage costs.
Looking ahead to 2025, our primary markets continue to struggle
as our OEM customers pivot away from their battery electric
vehicle launch strategies and timelines, and end consumers seem
poised to select lower-price vehicles as a cost-savings measure.
With limited exposure in the China market, and that market being
the only one showing signs of growth in 2025, our performance
will be supported by our technology portfolio and proliferation
in North America, Europe, Japan and Korea. Even in the face
of a smaller end market, we believe our technology portfolio
can provide revenue growth in 2025 that at midpoint of revenue
guidance suggests a 7% outgrowth versus our primary markets.
For the future, we continue investing heavily in our research and
development pipeline to position ourselves well for future growth
from products like Large Area Dimmable devices, Visors, Driver
and In-cabin Monitoring, and our PLACE product line. We
remain optimistic about our opportunities within the automotive,
aerospace, home automation, fire protection, and medical
industries. Whether developed internally or part of a partnership
or acquisition, I believe our future is bright, and these products
can provide support toward achieving our long term growth goals.
When I reflect back on my time at Gentex so far, and our company’s
performance over the last 50 years, I am truly grateful of the team’s
work and dedication. We have a great history, a great team, and with
our focus on technology, I truly believe that the best is yet to come.
As always, thank you for your continued support.
Steve Downing
President and CEO
11
2024 ANNUAL REPORT
LETTER FROM THE CEO
13
2024 ANNUAL REPORT
12
GENTEX CORPORATION
2024
RETURN TO SHAREHOLDERS
$110.4 M
Cash Dividends Paid
$.48/share
Dividend
$206.1 M
Share Repurchases
6.4 M
Shares Repurchased
$316.5 M
Returned to Shareholders
PERFORMANCE
$2.31 B
Revenue
33.3%
Gross Margin
$311.4 m
Operating Expenses (E, R&D and S, G&A)
14.3%
Annual Tax Rate
$144.7 m
Capital Expenditures
$94.7 m
Depreciation & Amortization
2025
GUIDANCE (As of January 31, 2025)
$2.4–$2.45 b
Revenue
33.5%–34.5%
Gross Margin
$310–$320 m
Operating Expenses (E, R&D and S, G&A)
15%–17%
Estimated Annual Tax Rate
$125–$150 m
Capital Expenditures
$85–$90 m
Depreciation & Amortization
$1.76
Earnings per Share
Outpacing
our Markets
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
$100
$
$200
$300
$400
$500
$600
$700
$800
$97.0
$208.2 M
$264.5 M
$340.2 M
$708.2 M
MILLIONS USD
Return of Capital
$447.8 M
$405.7 M
$439.9 M
$227 M
$256.9 M
$316.5 M
$144.7
$206.1
$112.2
$110.4
Share Repurchases
DIVIDENDS
2026 $2.55–2.65 B
REVENUE GUIDANCE
In 2024, Gentex was able to achieve
modest year-over-year revenue and margin
improvement. Our future growth will come
through the increased penetration of advanced
feature mirrors, new product launches, and
continued performance from our supply chain
and purchasing teams.
FUTURE GUIDANCE
Our 2025 and 2026 guidance is based on the
S&P Global Mobility mid-January 2025 forecast
for light vehicle production in North America,
Europe, Japan/Korea, and China and is detailed
in the accompanying table. With 2025 predicted
to be another difficult year for light vehicle
volume production, Gentex will continue to drive
penetration of our advanced feature mirrors to
offset the lower production environment, and
offset margin pressure with pricing from our
supply chain.
LIGHT VEHICLE PRODUCTION
(per S&P Global Mobility light vehicle
production forecast) — in millions
From the beginning of 2024 to its conclusion,
each of our primary markets underperformed by
around 2%. In spite of this, Gentex was able to
continue improving our margin profile and post
a modest revenue improvement.
Region
Calendar
Year
2024
Calendar
Year
2025
Calendar
Year
2026
Variance
‘25/‘24
Variance
‘26/‘25
North America
15.5
15.1
15.4
(3)%
2%
Europe
17.1
16.6
17.0
(3)%
2%
Japan & Korea
12.0
11.9
11.6
(1)%
(3)%
China
30.1
30.2
31.0
-%
3%
Total Light
Vehicle Production
74.7
73.8
75.0
(1)%
2%
FINANCIAL PERFORMANCE & GUIDANCE
Region
Calendar
Year
2023
1/16/24
Forecast
2024
1/16/25
Actual
2024
1/16/24
Expected Variance
‘24/‘23
1/16/25
Actual Variance
‘24/‘23
North America
15.7
15.8
15.5
1%
(1)%
Europe
18.0
17.4
17.1
(3)%
(5)%
Japan and Korea
12.8
12.2
12.0
(5)%
(6)%
China
29.0
28.9
30.1
-%
4%
Total Light
Vehicle Production
75.5
74.3
74.7
(1.5)%
(1)%
$111.2
$163.4
$101.1
$108.8
$231.4
$591.6
$116.6
$116.3
$331.5
$117.2
$288.5
$115.3
$324.6
$113.9
$113.1
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2024 ANNUAL REPORT
14
GENTEX CORPORATION
DIMMABLE DEVICES
TOTAL MIRRORS
47.7 M
50.6 M in 2023
Interior Mirrors (IEC)
29.9 M
31.8 M in 2023
Outside Mirrors (OEC)
17.8 M
18.8 M in 2023
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
MIRRORS (thousands)
Mirror Volumes by Quarter
2022
2023
2024
Interior Mirrors (IEC)
OUTSIDE MIRROrs (OEC)
MIRROR VOLUMES (thousands)
2023
2024 % Change
North American Interior Mirrors
9,213
8,903
(3)%
North American Exterior Mirrors
6,781
6,292
(7)%
TOTAL NORTH AMERICAN
MIRROR UNITS
15,993
15,195
(5)%
International Interior Mirrors
22,554
20,996
(7)%
International Exterior Mirrors
12,048
11,464
(5)%
TOTAL INTERNATIONAL
MIRROR UNITS
34,602
32,460
(6)%
Total Interior Mirrors
31,767
29,899
(6)%
Total Exterior Mirrors
18,828
17,755
(6)%
TOTAL AUTO-DIMMING
MIRROR UNITS
50,596
47,654
(6)%
DIMMABLE MIRRORS
Electrochromic (EC) mirrors reduce glare and improve the nighttime
driving experience. They mitigate the blinding effect from high-powered
headlamps of trailing vehicles for a driver. EC mirrors can exist as interior,
driver, and passenger side mirrors. While Gentex’s full display mirrors
continue to gain ground, camera technology is still more expensive than
an EC mirror, so the EC mirror’s most common competition is a manual
day/night mirror or non-dimming exterior mirrors.
WHAT WE ARE BUILDING TOWARD
Growth in EC mirrors globally has continued to develop, but in 2024,
most of the growth in light vehicle production came from China (+3%),
while our primary markets of North America (-1%), Europe (-5%), and
Japan/Korea (-6%) all declined. In 2024, in spite of the tariffs and duties
still in place, China accounted for approximately 10% of our revenues
and 13% of our mirror volumes. The China market continues to prove
competitive, but Gentex outpaces the competition globally by developing
new advanced feature mirrors, and improving our existing advanced
feature portfolio, functionality, and pricing.
LARGE AREA DIMMABLE
DEVICES
Traditional manual or motorized sunroofs
and sun shades take up valuable headroom,
limit vehicle design flexibility, and typically
function in a binary on-or-off setting. Variably
dimmable surfaces provide design flexibility
and potential weight savings, while enhancing
user customization and satisfaction.
DIMMABLE VISORS
Traditional sun visors prevent driver glare,
but have static functionality and lack design
and styling flexibility. With dimmable visors,
Gentex enables users to reduce the sun’s glare
while improving forward visibility and the
overall aesthetics of the vehicle. In recent years,
Gentex has shown dimmable visors that can
transition to a fully reflective vanity mirror,
as well as demonstrating display overlays
for critical driver information and passenger
information or entertainment.
AEROSPACE
Our dimmable aerospace windows continue to
gain traction at Boeing and Airbus, and are now
shipping on the Boeing 787 and 777x, as well
as the Airbus A350. We believe that our strong
relationship with each manufacturer will provide
opportunities to develop additional features and
functionality in the aircraft market.
Advancing Electrochromics
16
GENTEX CORPORATION
2024
FDM PLATFORMS LAUNCHES
CADILLAC Celestiq, GT4, Escalade IQ, Optiq
CHEVY Blazer EV, Equinox, Equinox EV, Silverado EV
CITROEN Berlingo, Jumpy/Dispatch FERRARI Purosangue
GENESIS GV70, GV80 GMC Hummer, Sierra EV,
Terrain HONDA Acura, Hongqi LS7 HYUNDAI Ionic 5,
Santa Fe KIA Carnival, EV6, EV9, Sorento LEXUS GX,
TX PEUGEOT Expert, Partner POLESTAR 4 RENAULT
Master TOYOTA 4Runner, C-HR, Camry, Century,
Grand Highlander, Land Cruiser / Prado, Tacoma
VOLKSWAGEN Transporter
FDM SHIPMENTS
MASERATI
MITSUBISHI
NISSAN
HYUNDAI / KIA
POLESTAR
RAM
ASTON MARTIN
SUBARU
GM
MAZDA
VOLKSWAGEN
FERRARI
FORD
CITROEN
HONDA
PEUGEOT
LAND ROVER
FIAT
MERCEDES
TOYOTA
RENAULT
HISTORICAL FDM LAUNCH TIMELINE
Form and Function
Gentex’s Full Display Mirror continues to gain ground
in the automotive market. By combining a mirror
and embedding a display behind the glass, FDM
gives drivers the ability to choose between a digital
or mirror-based view out of the back of their vehicle.
The combination of cameras, displays and mirrors provides unmatched rearward
visibility. Crucially, it also gives OEMs design and pricing flexibility in a profitable
feature set that consumers have embraced and actively look for in new vehicles.
On approximately 40% of the vehicles we provide a full display mirror to, Gentex
is also providing the camera, wiring and supporting hardware. Serving as a single
source for this feature gives OEMs confidence in the quality and performance
of our product, and helps improve the profitability for Gentex.
DIGITAL VISION
DRIVE RECORDING
OEMs have been interested in providing drive recording functionality for years.
By pairing this functionality with the Full Display Mirror or our ReVu app, drivers
can review and manage footage easily and quickly. Depending on the vehicle and
camera setup, ReVu can allows users to view both front and rearward facing video
simultaneously. It can also be paired with GPS mapping for recorded media and
receive parked vehicle impact alerts when drivers return to their vehicle.
2019 | 739 K
2020 | 1.05 M
2021 | 1.123 M
2022 | 1.68 M
2023 | 2.44 M
2024 | 2.96 M
2015
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
17
2024 ANNUAL REPORT
Keep up to date on
our Full Display Mirror
Scan to visit our website
App Features
+ Organize, view, and download captured footage
+ GPS mapping for recorded media
+ View front and rearward facing footage
+ Parked vehicle impact alerts
+ Wi-Fi communication for added bandwidth
18
GENTEX CORPORATION
For 30 years, HomeLink® has been the industry’s
most trusted and widely used car-to-home
automation system, seamlessly connecting
vehicles with garage doors, gates, and now,
an expanding range of smart home devices.
At CES this year, we showed a complete in-vehicle demonstration of
the next-generation HomeLink, uniting the Connected Car and the
Smart Home. This vehicle showed a seamless integration of multiple
device activation methods, including Radio Frequency, long-range
Bluetooth, and cloud-based connection. It also showed the different
levels of in-vehicle integration, including hard buttons in the mirror,
visor or overhead, soft buttons in the infotainment system, or through
app use on either Apple Car Play or Android Auto.
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2024 ANNUAL REPORT
18
GENTEX CORPORATION
CONNECTIVITY
Apple and Apple CarPlay logos and word marks are the trademarks of Apple Inc. Amazon, Alexa, and all related logos and word marks are trademarks of Amazon.com, Inc. or its affiliates.
The Bluetooth logos and word marks are the trademarks of Bluetooth SIG and its affiliates. Google, Android, Android Auto, and Google Play are registered trademarks of Google LLC.
SmartThings is a trademark of Samsung Electronics Co., Ltd. Simplenight and all related logos and word marks are trademarks of Simplenight.
IN-VEHICLE PAYMENTS
AND BOOKING
With our integrated toll module (ITM), Audi and
Mercedes drivers can travel across North America
without needing separate toll transponders for each
region’s tolling authority. Seamlessly integrated into
the vehicle, our ITM system eliminates clumsy,
windscreen-mounted toll transponders, and gives
OEMs more control over their vehicle’s styling
and performance. Our continued partnership with
PayByCar expands on our in-vehicle payment
ecosystem by enabling contact-free payment
processing at select gas stations.
Alongside ITM and HomeLink , our partnership
with Simplenight can provide OEMs with a fast
and easy way to get access to more than 2 million
bookable experiences, hotels, restaurants, and other
products in 2,000 cities in 190 countries.
THE ALL-NEW HOMELINK APP
To support the next-gen HomeLink system, Gentex has developed
an intuitive HomeLink App that provides:
+ Step-by-step programming guidance for effortless setup
+ Field updates to modules to ensure seamless compatibility
+ Smart home control from your smartphone
+ Apple CarPlay® & Android Auto™ compatibility for in-vehicle use
+ Garage door activation from both the vehicle and the app.
Beyond the vehicle, Gentex has
introduced HomeLink Smart Home
Solutions™, a professionally installed,
monitored system designed for
homeowners, builders, and property
managers. These fully customizable
systems include:
+ Smart locks, lighting, and thermostats
+ Security cameras and intrusion sensors
+ Solar power and EV charging solutions
Improving
Accessibility
Apple Car Play
Android Auto
Learn more
SMARTER VISION IN ALL CONDITIONS
Our collaboration with Adasky continues to develop. Their proprietary long-wave infrared
(LWIR) shutterless camera and sensing algorithms dramatically enhance the function
and capability of camera systems in low-light, high-glare, and all-weather scenarios. The
combination of their system with traditional forward- and rearward-facing cameras on
a vehicle dramatically improves the vehicle’s driver assist functions by gathering a more
complete data set to make decisions from. It also can feed into in-vehicle displays, to help
drivers monitor, identify and avoid potential hazards.
Driver Monitoring Systems (DMS) and In-Cabin Monitoring Systems (ICMS)
continue to gain traction at OEMs ahead of the implementation of European New Car
Assessment Program (NCAP) protocols. These standards encourage new safer driving
standards focused on monitoring driver distraction and impairment. Future autonomous
driving capabilities have also led OEMs to focus on take over control requirements,
which ensure that a driver is ready and able to regain control of driving the vehicle after
having used the autonomous driving functionality.
Our DMS and ICMS systems quickly and effectively enable OEMs to obtain the vast
majority of available points toward the NCAP scoring, as well as help manage take
over control. This year, we showcased the 4 different DMS hardware and software
combinations we have been sourced as of January 2025. Gentex DMS and ICMS
platforms provide unique flexibility for OEMs, and can utilize OEM-specified cameras,
emitters, algorithms and processing, alongside Gentex-designed solutions.
Benefits of Gentex DMS and ICMS systems:
+ Mirror-integrated for cross car line application
+ Scalable and customizable component location
+ Works alongside automatic dimming or FDM mirrors
+ Cameras and emitters can be behind glass, in mirror’s chin or separate pod
+ Camera, emitter, processing and algorithm flexibility—Gentex designed
or OEM sourced
+ Designed to help automakers meet Euro NCAP and other new car
assessment/safety programs
+ 2D and 3D features with structured light
+ Integrated biometrics, including face and iris authentication
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SENSING
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Improving
Driver Safety
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INNOVATION LAB
While the majority of our technology at CES is dedicated to near term developments, our Innovation
Lab provides a glimpse at some of the ideas our team is working on behind the scenes. It is a look
at the research side of our research and development initiatives, and typically features first-takes
on ideas and capabilities. This year, our Innovation Lab focused on four key areas: Smart Home,
Medical, Dimmable Devices, and Power and Processing.
SMART HOME:
Place® | Gentex | Internal Development
Beginning production in 2025, our first version of consumer-facing
smoke and carbon monoxide detectors utilize an extensive suite
of technologies for room-specific functionality.
HavenGo™ | SAAM | Partner
The latest development with our partner SAAM, the HavenGo product
is an in-home, portable air quality, temperature, carbon monoxide,
carbon dioxide, and humidity monitoring device for real-time data
collection. It utilizes spectral technology originally developed by NASA
and the Department of Defense, and can provide alerts for unsafe
volatile organic compounds (VOCs).
Thermal Security Camera | Adasky® | Partner
Using Adasky’s unique imager and algorithms, this thermal imaging
security camera for Intelligent Transport Systems (ITS) provides
high-contrast imagery regardless of weather or lighting conditions.
MEDICAL:
eSight Go™ | eSight | Gentex Acquisition (Nov. 2023)
We demonstrated the capabilities of our eSght Go product, designed
to be lighter and more powerful than prior versions of the technology.
Using cameras and near-eye displays, it allows those with visual
impairments to perform daily living tasks.
OtoSight™ | PhotoniCare | Partner
Building on the investment in our partner, Photonicare, we demonstrated
their newest Otosight product, a middle-ear scope that can more quickly
and accurately diagnose ear infections.
Med lighting | Gentex | Internal Development
Our hands-free, camera-controlled smart lighting for operating and
surgical suites is now in clinical trials.
Health Mirror | Gentex | Internal Development
Leveraging our sensor, mirror, and display expertise, Gentex developed
a mirror that passively monitors key health indicators and vitals, and can
be used for medical and personal communication.
DIMMABLE DEVICES:
Segmented EC | Gentex | Internal Development
Continued development of our electrochromic film has enable new
capabilities for design and styling improvements. Segmented EC enables
windows and devices to darken in horizontal, vertical, or other patterns
to mimic traditional shade and sliders.
Memory EC | Gentex | Internal Development
This capability enables dimmable devices to remain dark or clear without
power, reducing energy requirements and consumption.
Small Area Devices | Gentex | Internal Development
Utilization of small EC devices for camera components and filters to assist
with flicker mitigation and aperture control
EC Glasses | Gentex | Internal Development
Lightweight dimmable functionality adds contrast and sun load control.
POWER AND PROCESSING
Wireless Power & Data Application | Solace™ | Partner
Solace has developed a wireless power and data transfer technology
that we believe can provide substantial benefit within the automotive
environment. It can reduce wiring complexity and enhance styling and
performance. We demonstrated this capability in our main booth area
on a door panel that showed a functioning dimmable side window and
an exterior mirror with a camara feed which output to a remote display.
All of this was achieved without the use of wiring to the door or side mirror.
We do not believe Solace’s capabilities are limited to automotive though,
and in the lab we showed its ability to transmit data and power through
wood, concrete and glass for applications in telecommunications, aerospace
& defense, smart home connectivity and industrial automation.
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COMMUNITY IN ACTION
EMERGING PROFESSIONALS
BUSINESS RESOURCE GROUP
Launching in 2025, the Emerging Professionals BRG is designed to
empower Gentex professionals to better navigate their career landscape
by providing outlets for connection, exposure to opportunities, and
professional development, all while enabling members to find their place
at Gentex. The group will focus on education, networking, mentorship,
and community.
GIVING BACK:
THE GENTEX FOUNDATION
The Gentex Foundation provides financial contributions to nonprofit
organizations in the communities where our employees live, work,
serve, and play. It also includes a hardship fund for Gentex employees
undergoing unique and severe situations.
Our purpose statement and core values
underpin our Diversity, Equity and Inclusion (DEI)
efforts at Gentex and in our communities.
Within our DEI initiatives, Gentex has developed three Business Resource Groups (BRGs) designed to
support our team members. These BRGs are highlighted below. Each BRG’s purpose is to foster an
inclusive environment where every Gentex team member belongs and has an opportunity to thrive.
The groups work to provide opportunities to appreciate the differences and shared values across
our company, and recognize each team member’s unique experiences and contributions at Gentex.
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GENTEX CORPORATION
WOMEN @ GENTEX
BUSINESS RESOURCE GROUP
The Women@Gentex BRG serves to unite team members around
learning experiences, social events, and volunteer opportunities. This
group is involved in putting together an impressive number of internal
and external events across our facilities and local communities every year.
In 2024, this group focused on leadership development and tailored
courses and events designed to help our employees build their board
of directors (a core group of trusted friends and colleagues), enhance
their emotional intelligence, and refine their prioritization and time
management skills.
GENTEX V.E.T.S.
BUSINESS RESOURCE GROUP
Building on their 2023 success in achieving silver-level Veteran-Friendly
Employer Status from the Michigan Veterans Affairs Agency, the Gentex
V.E.T.S. (Veterans, Empowerment, Teamwork, Service) group continued
to make a positive impact in our region by partnering with the Grand
Rapids Home for Veterans. This local partnership supports the home’s
goal of providing care for the local veteran community, with an extensive
staff of physicians, nurses, social workers, dietitians and recreational
therapy aides. More information about the Michigan Veteran Homes
can be found at: michigan.gov/en/mvh/locations/grand-rapids
learn more
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GENTEX CORPORATION
At Gentex, our sustainability initiatives focus on
improving our manufacturing process, expanding
our recycling capabilities, and reducing waste
in our system.
We target a combination of short and long-term initiatives, and remain
committed to our corporate targets for carbon reduction and neutrality
and landfill avoidance.
To help us track our environmental impact we began working with
EcoVadis in 2023. EcoVadis is a globally recognized assessment
platform that rates and tracks company performance around
environmental impact, labor and human rights standards, ethics,
and procurement practices. Each quarter, members from Gentex’s
sustainability and purchasing teams work with our supply chain to
complete surveys and gather data to help track this performance. To
date, we have approximately 70% of our supply chain spend accounted
for via EcoVadis assessments. We have made consistent improvements
on our own scoring within this platform, which is accessible to our
customers. We continue to work on tracking data for the remaining
30% of our supplier spend, but recognize that furthering this process
with our smaller-spend suppliers, each with their own limited resources
and teams, is a slow process.
Scott Ryan
Vice President, General Counsel, Corporate Secretary,
& Sustainability Officer
SUSTAINABILITY
PROGRESS UPDATES:
Glass Recycling: We continue to make progress in our glass coating,
cutting, and reclamation processes, and have worked to expand our
ability to recycle glass that has epoxy, chemistry, and/or hardware
associated with it, rather than sending it to a landfill. Because of
this enhanced process, Gentex was able to recycle an additional 7.59
million pounds of glass in 2024 vs 2023. In total, Gentex recycled
33.7 million pounds of glass in 2024.
Carbon Disclosure Program (CDP): The CDP is an international
non-profit organization that helps companies, cities, states, regions and
public authorities disclose their environmental impact. Throughout
2024, Gentex continued to improve out scoring with CDP, and holds
B- on water security and a B rating on climate. This information
helps our customers secure more accurate data for their overall
environmental impact.
Styrofoam Cup Recycling: This year, Gentex is focused on providing
styrofoam cup recycling options for our employees. This process will
be rolled out across our Michigan manufacturing facilities and offices
throughout 2025 and help further minimize waste sent to landfill.
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Keep up to date on
our ESG PeRFORMANCE
Scan to visit our website
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GENTEX CORPORATION
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
(“VOXX”) to become the exclusive aftermarket distributor of the Gentex Aftermarket Full Display Mirror® in North America. The Company
has also displayed a 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
integrating biometric authentication with many of its other electronic features, including HomeLink® and HomeLink Connect® or the
ITM®. The biometric system allows for added security and convenience for multiple drivers by adding an additional factor of authentication
for increased security, when a driver (or passenger) enters a vehicle. The Company announced in January 2018 that it entered into an exclusive
licensing agreement, in the ordinary course of business, with Fingerprint Cards AB to deploy its ActiveIRIS® iris-scanning biometric
technology in automotive applications.
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. The first production shipments of variably dimmable windows were made to Boeing for the 777X program that same year.
In 2020, the Company announced that Airbus will also be offering the Company’s dimmable aircraft windows on its aircraft, with production
having begun in 2021.
Also 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 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.
Further in 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 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 occurring. The HomeLink Connect® allows users to program their
HomeLink® buttons and control cloud-based devices from their vehicles.
Also in 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 provider of sustainable solutions for integration into properties. The Company intends for this relationship to promote the HomeLink
Connect® App, PLACE® and HomeLink Smart Home Solutions® with property developers and contractors.
In 2023, the Company announced a partnership, in the ordinary course of business, with Adasky Ltd. (“Adasky”), a developer and manufacturer
of intelligent, high-resolution thermal sensing systems for vehicle safety and perception applications and smart city roadway solutions.
In addition to the partnership, the Company has obtained an approximate 27% equity share in Adasky.
Also in 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
with more than 20 eye conditions including Macular Degeneration, Diabetic Retinopathy, and Stargardt disease. eSight wearables are inspected
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
with the FDA, registered with EUDAMED, and inspected by Health Canada. The Company has been developing, initially for contract
manufacture and now as the owner, the technology, referred to as eSightGo®. Deliveries of eSightGo to customers which began shipping
in calendar year 2024.
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In January 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
power systems for a wide variety of industries. In addition to the partnership, the Company obtained an approximate 13% equity share in Solace
Power. The Company believes Solace Power’s technology not only has immediate applications in the current Company product portfolio, but
can also play an important role in the Company’s continued expansion into new markets.
Also in 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.
In November 2024, the Company acquired GalvanEyes, LLC, which is the managing partner and 50% owner of the BioCenturion joint venture
with Eyelock, a subsidiary of VOXX. BioCenturion specializes in creating and deploying authentication solutions to help clients secure their
worlds, optimize their workload, and organize their data through customized biometric solutions. The company’s significant IP portfolio,
including more than 100 patents granted, patents pending, and proprietary technology enables a high-speed, convenient, touchless, contactless,
frictionless, and secure authentication of individuals across different business verticals.
On December 17, 2024, as previously disclosed, the Company entered into a definitive agreement and plan of merger for the Company to
acquire shares of VOXX in an all-cash transaction. Under the terms of the agreement, the Company will acquire all the issued and outstanding
shares of VOXX common stock not already owned by the Company for a purchase price of $7.50 per share. The transaction is subject to
approval of VOXX’s stockholders, certain regulatory approvals, and other customary closing conditions, and is expected to close in the end
of the first quarter or the first part of the second quarter of 2025.
The acquisition of VOXX is a strategic addition to the Gentex portfolio of products. The majority of the revenue of VOXX is comprised of
automotive OEM and aftermarket business, as well as the consumer electronics industry. Through the transaction, Gentex will gain full access
to the EyeLock® iris biometric technology, which represents a unique, extremely accurate and highly secure method of authentication, which
will provide further product applications into the Gentex automotive, aerospace and medical markets. The acquisition will also include the
Premium Audio Company, which is known as the most innovative and complete premium audio solution provider in the consumer technology
space and includes world renowned brands such as Klipsch®, Onkyo® and Integra®. Gentex believes its expertise in high volume manufacturing
will help the Premium Audio team to continue its expansion in the consumer technology and connected home space, through newly launched
Gentex products, such as Place™, and HomeLink Smart Home Solutions™. Additionally, the Gentex sales and business development teams
will further equip the Premium Audio team with additional automaker exposure to build on the early success of several OEM launches
of Klipsch® Reference Premiere audio systems.
The Company believes the acquisition of VOXX will contribute to its long-term growth and profitability strategies and create shareholder value
through increasing revenue in existing and new markets, potential growth stemming from acquired technologies, significant net asset values and
trapped tax losses, as well as the combined brand value and reputation of the VOXX family of brands.
Automotive revenues represent approximately 98% of the Company’s total revenue in 2024, 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, 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 as a part of HomeLink® applications in the vehicle including the rearview
mirror, interior visor, overhead console, or center console. Certain of the Company’s 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.
The Company produces rearview mirrors and electronics globally for automotive passenger cars, light trucks, pickup trucks, sport utility vehicles,
and vans for original equipment manufacturers (“OEMs”), automotive suppliers, and various aftermarket and accessory customers. Automotive
rearview mirrors and electronics accounted for 98% of the Company’s consolidated net sales in 2024.
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, Findream
Technology, Kingband, Acson, Nigbo Huichang, Panasonic, Aolian, Ultronix, Tokai Rika Company, SMR Automotive, Intertech, Adayo,
Sincode, Licon, Amblight, Mirrortech, Mike Shanghai, Guangdong Yangfeng Electronic Technology Co. Ltd., Guangdong E-Think Technology
Company, Hubei SL, Shanxi Coal, and Chongqing Yimei. The Company also supplies electrochromic automatic-dimming rearview mirrors
to certain of these rearview mirror competitors.
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 currently being offered by the Company include one or more of the following features: SmartBeam®, HomeLink®, HomeLink
Connect®, frameless mirror designs, compass displays, telematics, ITM® systems, hands free communication, Rear Camera Display (“RCD”)
interior mirrors, FDM® interior mirrors, digital video recording solutions, exterior turn signals, side blind zone indicators and various other
exterior mirror features that improve safety and field of view. Advanced features currently in development and/or being sold 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.
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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, Isuzu Motors, Kawasaki Heavy Industries,
KG Ssangyong Mobility, Lucid Motors, Mazda, Maruti Suzuki, Mahindra & Mahindra, McLaren, Polaris, Renault/Nissan/Mitsubishi Group,
Rivian Automotive, Stellantis, Subaru, Tata Motors, Tesla, TOGG Inc., Toyota Motor Company, Volkswagen Group, VOXX, and Yamaha,
as well as shipments to domestic China manufacturers (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 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. OEMs have historically used Company technologies only to differentiate from one another, but are now also using 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 86% market share
worldwide in 2024. 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 more
resources available to it. As such, Magna may present a formidable competitive threat. The Company also continues to sell automatic-dimming
exterior mirror sub-assemblies to Magna Mirrors. In addition, a Japanese manufacturer (Tokai Rika) is currently supplying a few 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.
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 were the first commercialized product of its kind for original equipment
installation in the aircraft industry. Other manufacturers are developing and/or selling competing products utilizing other technology in the
aircraft industry for aftermarket or original equipment installation.
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.
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. In January 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.
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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.
In November 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 eSightGo
began in 2024.
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.
Biometrics Products and Development
In November 2024, the Company acquired GalvanEyes, LLC, which is the managing partner and 50% owner of the BioCenturion joint venture
with Eyelock, a subsidiary of VOXX. BioCenturion specializes in creating and deploying authentication solutions to help clients secure their
worlds, optimize their workload, and organize their data through customized biometric solutions. BioCenturion’s significant IP portfolio,
including more than 100 patents granted, patents pending, and proprietary technology enables a high-speed, convenient, touchless, contactless,
frictionless, and secure authentication of individuals across different business verticals.
MARKETS AND MARKETING. The Company markets and sells identity authentication and access control products utilizing the biometrics
technology. The Company sells these products through its normal sales process and through authorized distributors.
Trademarks and Patents
As of January 31, 2025, the Company owned 49 U.S. Registered Trademarks, 815 U.S. Patents, 380 foreign Registered Trademarks, and 1,498
foreign patents. The vast majority of these Registered Trademarks and Patents relate to the Company’s core industries of automotive, aerospace,
fire protection, as well as medical devices. The Company believes these patents and trademarks provide and competitive advantage, though no
single patent or trademark is necessarily required for the success of the Company’s products. Many of these patents and registered trademarks
relate to electrochromic technology, automotive rearview mirrors, displays, cameras, sensor technology, smart lighting technology, HomeLink®,
variably dimmable windows, automotive visors, driver and cabin monitoring systems, fire protection technologies, and medical devices. These
patents expire at various times between 2025 and 2046.
The Company also has in process 186 U.S. Patent applications, 295 foreign patent applications, 18 U.S. Registered Trademark applications, and
50 foreign 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 January 31, 2025, the Company had 6,184 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 broken ground
on 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 genuine 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.
The Company’s DE&I initiatives are supported by its Vice President 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 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 also 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 ethos, 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, Gentex V.E.T.S., and Emerging Professionals. 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
awareness to global causes. In 2024, the Gentex Salt Lake City DEI council awarded the first recipient of its Material Science Scholarship in
partnership with the University of Utah. Scholarship recipients receive $2,000/year for two years from the Company and a matching $1,000/year
from the John and Marcia Price College of Engineering at the University of Utah.
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.
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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, benefits and work instructions in
the Spanish language. The Company’s Corporate Controller and Senior Director of Accounting was honored as one of the 25 Most Influential
Latinos in West Michigan for her work to establish 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”) and its committees have 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 and its committees work with management regarding the approach to, and investment in, human capital that includes
recruitment, talent development, retention, and diversity. The Board and its committees have access to all levels of employees in the Company
in its efforts to properly oversee human resources and DE&I issues.
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
qualified and diverse director candidates. Such candidates are contacted and interviewed in order to continue to build an even more diverse,
qualified, and capable Board. In the Company’s 2024 Proxy Statement, the Company disclosed Board diversity information in accordance with
NASDAQ rules.
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.
GENERAL. The Company makes intentional decisions that reflect the desire to be responsible with all resources and achieve the Company’s goal
of meaningful improvement.
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 2021 levels
◼ By 2031, 40% below 2021 levels
◼ By 2041, 70% below 2021 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:
◼ By 2026, 20% below 2021 levels
◼ By 2031, 60% below 2021 levels
◼ By 2041, 90% below 2021 levels
◼ By 2045, 100% zero landfill waste
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
lighting in all facilities; has air economizers and energy recovery units in HVAC systems; utilizes energy efficient fluorescent lighting; has
certain white material roofs to reflect sunlight; has insulated metal panel systems for exterior walls (for energy efficiency); captures excess heat
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.
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Available Information
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,
including those recently adopted and potential new tariffs; 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. Forward-looking information includes content supplied by S&P Global Mobility Light Vehicle
Production Forecast of January 16, 2025 (http://www.gentex.com/forecast-disclaimer).
The following risk factors, together with all other information provided in this Annual Report on Form 10-K should be carefully considered.
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 tariffs and 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, consumer vehicle preference shifts (where we have
a lower penetration rate and lower content per vehicle), and supply chain stresses. When automotive customers (including their Tier 1 suppliers)
and suppliers experience significant plant shutdowns, work stoppages, strikes, part shortages, etc., it disrupts our shipments to these customers,
which adversely affects our business, financial condition, and/or results of operations. Automakers continue to experience volatility and uncertainty
in executing planned new programs on time, due in part to continued vehicle complexity increases and supply chain constraints. This brings
increased risk of delays or cancellations of new vehicle platforms, package configurations, and inaccurate volume forecasts. This makes it
challenging for us to forecast future sales and manage costs, inventory, capital, engineering, research and development, 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 2024 (including direct sales to OEM customers and sales through their Tier 1 suppliers): Toyota Motor Company,
Volkswagen Group, 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) would 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 continue to adversely affect 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.
BUSINESS COMBINATIONS. Acquisitions of businesses, technologies, and assets are playing 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, successfully acquire identified targets, or manage timing of acquisitions with our businesses. Additionally, we are not always successful in
integrating acquired businesses into our existing operations, achieving projected synergies, and/or maximizing the value of acquired technologies
and businesses. Competition for acquisition opportunities in the various industries in which we operate already exists and may increase, thereby
increasing our costs of making acquisitions or causing us to refrain from making further acquisitions. We are also subject to applicable antitrust
laws and must avoid anticompetitive behavior. These and other acquisition-related factors negatively and adversely impact 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,
especially in light of recently imposed tariffs, tariffs threatened to be imposed, and those already existing. 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.
TECHNOLOGY INVESTMENTS. We have invested in certain companies and projects that we do not have full control over operations,
management, or decision-making, which are accounted for under the measurement alternative method of accounting or equity method of
accounting. For investments accounted for under the equity method of accounting, we rely on the investment partner for the reporting of the
financial results of the investment, and to the extent that the financial reporting of the investments is incorrect, our financial results reported
using that information may be incorrect. These investments are subject to risks related to the businesses in which we invest, which may be
different than the risks inherent in our own business. These investments could become impaired or have realized or unrealized losses in future
periods, which could have an adverse effect on our financial condition and results of operations.
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.
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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
systems to replace mirrors within Japan and European countries. Since January 2017, camera monitoring systems are also permitted as an
alternative to replace mirrors in the Korean market. In 2023, China released and made effective an updated version of its GB15084, which
allows for camera monitoring systems, frameless mirrors and aspheric (free-form) glass surfaces. Notwithstanding the foregoing, the Company
continues to believe rearview mirrors provide a robust, simple and cost effective means to view the surrounding areas of a vehicle and remain the
primary safety function for rear vision today. Cameras, when used as the primary rear vision delivery mechanism, have some inherent limitations
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 sixteen (16) OEM customers. The Company is currently shipping production FDM® to all sixteen
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 has been impacted by 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 are similarly affected to the extent that our customers reduce the volume of orders for our products or certain of our products. As a result
of such changes and circumstances impacting our customers, our sales mix shifts, which has either favorable or unfavorable impact on revenue
and would include shifts in regional growth, in OEM sales demand, as well as in consumer demand related to vehicle segment purchases, and
content penetration. A decrease in consumer demand for specific types of vehicles where we have traditionally provided higher value content
has a significant effect on our business, financial condition, and/or results of operations. Our forward guidance and estimates assume 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, our
business, financial condition, and/or results of operations are impacted.
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 technologies, 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.
When any such efforts ultimately prove to be less successful than anticipated, our business, financial condition, and/or results of operations are
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
or other changes 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.
Our allowance for doubtful accounts primarily relates to financially distressed automotive mirror and electronics customers. We continue
to work with these financially distressed customers in collecting past due balances. Refer to Note 1 of the Consolidated Financial Statements.
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
approximately three miles from our other primary manufacturing facilities in Zeeland, Michigan. Should a catastrophic event occur, our ability
to manufacture product, complete existing orders and provide other services could be severely impacted for an undetermined period of time.
We have purchased business interruption insurance to address some of these risks. Our inability to conduct normal business operations for
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
important IT system or a security breach of our IT systems, the resulting disruptions have an adverse effect on our business, financial condition,
and/or results of operations.
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, Board, and Board
committee oversight in order to address these threats. While these measures are designed to prevent, detect and respond to unauthorized activity
in, or otherwise compromise of, our systems, certain types of attacks, including cyber-attacks, could result in significant financial or information
losses and/or reputational harm. We, and certain of our third-party vendors, receive and store personal information in connection with our
human resources operations and other aspects of our business. Despite our implementation of security measures, our IT systems, like all IT
systems, are vulnerable to damages from computer viruses, natural disasters, unauthorized access, cyber-attack and other similar disruptions.
Any such 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 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
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2024 ANNUAL REPORT
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GENTEX CORPORATION
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.
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
provisions, however, could discourage potential acquisition proposals and could delay or prevent a change in control.
FLUCTUATIONS IN MARKET PRICE. The market price for our common stock has fluctuated, ranging from a low closing price of $28.30 to a
high closing price of $37.58 during calendar year 2024. 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, the expiration of existing tax benefits, 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 have the leadership capacity with the necessary skill sets and experience and a skilled workforce could impede our ability to deliver our growth
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
as well as various economic conditions in these jurisdictions. Some of these countries are considered growth markets. International sales and
operations, especially in growth markets, subject us to certain risks inherent in doing business abroad, 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;
◼ Tariffs (as discussed herein), quotas, customs and other import or export restrictions and other trade barriers;
◼ Natural disasters, political crises, and public health crises (e.g. pandemics), which have caused, are causing, and will likely continue
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.
OTHER. Other issues and uncertainties which could adversely impact our business, financial condition, and/or results of operations include:
◼ 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;
◼ Climate change
◼ 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.
Risk Management and Strategy
The Company has implemented and maintains 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 to 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
tools, regular cybersecurity-related tabletop and phishing exercises designed to simulate cybersecurity incidents, and frequent security awareness
and technical security trainings. We conduct periodic internal and third-party assessments to evaluate our cybersecurity posture and test and
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
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2024 ANNUAL REPORT
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GENTEX CORPORATION
program, disaster recovery and business continuity plans, risk assessment processes, security standards, network security controls, access controls,
systems monitoring, employee awareness training, and cybersecurity insurance. The Company has obtained Trusted Information Security
Assessment Exchange (TISAX) certification labels within the United States, Germany, and China. The Company is also continues working
on its ISO 27001 certification.
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, 2024, 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.”
Governance
Our Board addresses 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 Vice President 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, Chief Operating Officer and Chief Technology Officer and
Vice President 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 three years and has more than 25 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 IT, 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, 2024, 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, 2024 were as follows:
Owned Locations
Square Footage
Date of Acquisition/Build(1)
Use
Zeeland, MI
26,600
1970
Warehouse, Office
Zeeland, MI
197,200
1972
Manufacturing, Office
Zeeland, MI
70,000
1989
Manufacturing
Zeeland, MI
70,000
1989
Office
Zeeland, MI
419,100
1996
Manufacturing
Zeeland, MI
168,900
2000
Manufacturing
Zeeland, MI
334,000
2006
Manufacturing, Office
Zeeland, MI
100,000
2010
Manufacturing, Warehouse
Zeeland, MI
31,800
2011
Office
Zeeland, MI
349,600
2016
Manufacturing, Warehouse
Zeeland, MI
558,400
2018
Warehouse
Zeeland, MI
345,000
2023
Manufacturing, Warehouse
Holland, MI
242,300
2012
Manufacturing, Warehouse
Holland, MI
29,900
2021
Office
Erlenbach, Germany
90,000
2003
Office
Shanghai, China
25,000
2006
Office, Warehouse
Shanghai, China
85,000
2017
Office, Warehouse, Light Assembly
(1) Date of Acquisition/Build refers to first year of operations and does not refer to subsequent additions or expansions.
In 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.
In the fourth quarter of 2024, the Company completed construction on two building expansions. The Company expanded its current distribution
center by an additional 300,000 square feet, at a total cost of approximately $40 million. The Company also expanded another of its manufacturing
facilities by an additional 60,000 feet, with a total cost of approximately $20 million. Both of these expansion projects were funded with cash and
cash equivalents on hand.
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
began in the third quarter of 2024 as previously announced, with an expected completion date in 2025. The total cost of the building project
is expected to be $15 – $20 million, which will be funded with cash and cash equivalents on hand.
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2024 ANNUAL REPORT
46
GENTEX CORPORATION
The Company has also leased sales and engineering offices throughout North America, Europe, and Asia to support its sales and engineering
efforts, and, in addition, has leased a manufacturing facility in Grand Rapids, Michigan:
Country
Number of Leased Offices/Facilities
United States
4
Germany
3
Japan
3
Canada
2
Israel
2
United Kingdom
1
France
1
Sweden
1
Korea
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.
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 42 – 45 million interior automatic-dimming
mirror units annually, based on current product mix. The Company evaluates equipment capacity on an ongoing basis and adds equipment
as needed. In 2024, the Company shipped 29.9 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. The Company evaluates equipment capacity on an ongoing basis and adds equipment
as needed. In 2024, the Company shipped approximately 17.8 million exterior 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.
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 January 31, 2025, there were
3,931 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.
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 2019 and reinvestment of dividends in all cases.
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.
10-K PART II
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2024 ANNUAL REPORT
48
GENTEX CORPORATION
The following is a summary of share repurchase activity during 2024:
Issuer Purchase of Equity Securities
Period
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*
January 2024
90,006
$
33.81
90,006
15,761,173
February 2024
510,247
35.31
510,247
15,250,926
March 2024
600,650
36.59
600,650
14,650,276
April 2024
60,087
34.80
60,087
14,590,189
May 2024
661,221
34.72
661,221
13,928,968
June 2024
681,359
34.12
681,359
13,247,609
July 2024
150,258
31.51
150,258
13,097,351
August 2024
1,792,167
30.01
1,792,167
11,305,184
September 2024
1,252,390
30.20
1,252,390
10,052,794
October 2024
—
—
—
10,052,794
November 2024
477,641
30.59
477,641
9,575,153
December 2024
125,755
30.36
125,755
9,449,398
Total
6,401,781
6,401,781
* 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.
Percentage of Net Sales
Year Ended December 31,
Percentage Change
2024
2023
2022
2024 Vs 2023
2023 Vs 2022
Net Sales
100%
100%
100%
0.6%
19.8%
Cost of Goods Sold
66.7
66.8
68.2
0.4
17.4
Gross Margin
33.3
33.2
31.8
1.1
25.1
Operating Expenses:
Engineering, Research and Development
7.8
6.7
6.9
17.6
15.8
Selling, General and Administrative
5.2
4.9
5.5
7.5
5.7
Impairment Charges
0.4
—
—
N/A
N/A
Total Operating Expenses:
13.5
11.6
12.5
16.7
11.3
Income From Operations
19.9
21.6
19.3
(7.3)
34.0
Other (Loss)/Income
0.5
0.4
(0.1)
35.0
3,368.0
Income Before Provision for Income Taxes
20.4
22.0
19.3
(6.5)
36.6
Provision for Income Taxes
2.9
3.3
2.7
(11.6)
50.3
Net Income
17.5%
18.6%
16.6
(5.6)%
34.4%
Results of Operations: 2024 to 2023
NET SALES. In 2024, the Company’s net sales increased by $14.1 million, or 1% compared to the prior year, representing the highest annual sales
in Company history, despite light vehicle production in 2024 that decreased year-over-year by more than 4% in the Company’s primary markets.
The Company’s revenue outperformance in 2024 versus the underlying market was driven primarily by growth in FDM unit shipments.
Other net sales for calendar year 2024 were $48.6 million, compared to Other net sales of $44.6 million in calendar year 2023. Fire protection
sales in 2024 increased 4% year over year, while dimmable aircraft windows increased by 9% in 2024, compared to calendar year 2023. Medical
product sales were $1.4 million for calendar 2024.
COST OF GOODS SOLD. As a percentage of net sales, cost of goods sold decreased from 66.8% in 2023 to 66.7% in 2024. The year over year
increase in the gross margin was primarily the result of supplier cost reductions and lower freight costs, though these benefits were largely offset
by weaker than expected product mix, higher labor costs, and the inability to leverage fixed overhead costs due to the lower than forecasted
revenue for the year. On a year over year basis, supplier cost reductions and lower freights costs had a positive impact of approximately 100 – 150
basis points and 50 - 100 basis points on gross margin, respectively. Product mix had a negative impact of approximately 100 – 150 basis points
on gross margin on a year over year basis. Labor costs and inability to leverage fixed overhead costs, each had a negative impact of approximately
25 – 50 basis points on gross margin on a year over year basis.
OPERATING EXPENSES. Engineering, research and development expenses (“E, R & D”) increased by $27.1 million or 18% from 2023 to 2024,
which represents 8% of net sales in 2024, compared to 7% of net sales in 2023. 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 $8.5 million or 8% from 2023 to 2024, which remained at 5% of net
sales. The primary reason for the year over year increase in S, G & A from 2023 to 2024 was increased staffing expenses.
The Company also recorded impairment charges of $8.9 million for Goodwill and in-process research and development (“IPR&D”) related
to the Vaporsens technology acquired in 2020, as previously disclosed.
TOTAL OTHER INCOME (LOSS). Investment income decreased $0.1 million to $13.4 million for 2024 compared to $13.5 million for 2023.
Other income – net increased $3.3 million in 2024 versus 2023, primarily due to increased interest income from fixed income investments.
TAXES. The effective tax rate was 14.3% for the year ended December 31, 2024, compared to 15.2% for the prior year. The effective tax rates
in 2024 and 2023 differed from the statutory federal income tax rate, primarily due to the Foreign Derived Intangible Income Deduction,
and R&D tax credits.
NET INCOME. Net income decreased by $23.9 million in 2024, or 6% compared to 2023, primarily due to the year over year changes
in operating profits.
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. 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
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2024 ANNUAL REPORT
50
GENTEX CORPORATION
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. 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 high number of new
product launches, product redesigns to optimize costs, and new product development.
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 INCOME (LOSS). 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
increase $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.
Liquidity and Capital Resources
The Company’s financial condition throughout the periods presented has remained strong.
The Company’s cash and cash equivalents were $233.3 million, $226.4 million, and $214.8 million as of December 31, 2024, 2023 and 2022,
respectively. The Company’s cash and cash equivalents include amounts held by foreign subsidiaries of $12.6 million, $14.8 million, and $12.5
million as of December 31, 2024, 2023 and 2022, respectively.
Cash flow from operating activities was $498.2 million, $537.2 million and $338.2 million for the years ended December 31, 2024, 2023 and
2022, respectively. Cash flow from operating activities decreased $39.0 million for the year ended December 31, 2024 compared to the prior
year, primarily due to decreases in net income and changes in working capital. Cash flow from operating activities increased $199.0 million
for the year ended December 31, 2023 compared to the same period in 2022, primarily due to due to increases in net income and changes in
working capital.
Cash flow used for investing activities for the year ended December 31, 2024 decreased by $97.3 million to $202.1 million, compared with cash
flow used for investing activities of $299.4 million for the year ended December 31, 2023, primarily due to decreased capital expenditures in
2024 compared to 2023, as well as decreased expenditures on business acquisitions year over year. Cash flow used for investing activities for the
year ended December 31, 2023 increased by $126.7 million to $299.4 million, compared to cash flow used for investment activities for the year
ended December 31, 2022, primarily due to increased technology investment purchases during the year, as well as increased capital expenditures
in 2023 compared to 2022.
Capital expenditures were $144.7 million, $183.7 million, and $146.4 million for the years ended December 31, 2024, 2023, and 2022,
respectively. Capital expenditures for the year ended December 31, 2024 decreased by $39.0 million compared with the year ended December
31, 2023, primarily due to decreased in expenditures related to building and facility construction projects. Capital expenditures for the year
ended December 31, 2023 increased by $37.2 million compared to the year ended December 31, 2022, primarily due to building and facility
construction projects previously discussed.
Cash flow used for financing activities for the year ended December 31, 2024, increased $59.1 million to $289.3 million, compared to $230.2
million for the year ended December 31, 2023, primarily due to an increase in the amount of shares of common stock repurchased, which
totaled $206.1 million during the calendar year 2024 as compared to $147.4 million during the calendar year 2023. Cash flow used for financing
activities for the year ended December 31, 2023, increased $21.1 million to $230.2 million compared to the year ended December 31, 2022,
primarily due to an increase in the amount of shares of common stock repurchased which totaled $147.4 million during the calendar year 2023
as compared to $112.5 million during the calendar year 2022.
Short-term investments as of December 31, 2024 were $22.3 million, up from $14.4 million as of December 31, 2023 and long-term
investments were $339.6 million as of December 31, 2024, up from $299.1 million as of December 31, 2023, due to changes in the Company’s
overall investment portfolio.
Accounts receivable as of December 31, 2024 decreased $26.5 million compared to December 31, 2023, primarily due to a decrease in sales in the
fourth quarter of 2024 compared to the fourth quarter of 2023.
Inventories as of December 31, 2024, increased $34.0 million compared to December 31, 2023, primarily due to increases in raw materials and
finished goods.
Intangible Assets, net as of December 31, 2024, decreased $18.8 million compared to December 31, 2023, due to the amortization of definite
lived intangible assets and patents, which is discussed further in Note 10 of the Consolidated Financial Statements, in addition to a $5.2 million
impairment charge on the Vaporsens IPR&D in the fourth quarter of 2024.
Accounts payable as of December 31, 2024, decreased $16.1 million compared to December 31, 2023, primarily due to decreases in capital
expenditure payments and timing of 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:
2024
2023
2022
Working Capital
$
784,635,494 $
726,129,177 $
698,099,624
Fixed Income Long Term Investments
141,961,474
155,863,252
140,341,898
Total
$
926,596,968 $
881,992,429 $
838,441,522
The increase in working capital as of December 31, 2024, compared to December 31, 2023, is primarily due to an increase in prepaid expenses,
increases in inventory, and a decrease in accounts payable. The increase in working capital as of December 31, 2023, compared to 2022, is primarily
due to increases in cash and accounts receivable, which were partially offset by increases in accounts payable.
Please refer to Part II, Item 5, with regard to the Company’s previously announced share repurchase plan.
Outlook
The Company utilizes the light vehicle production forecasting services of S&P Global Mobility. The S&P Global Mobility mid-January 2025
forecast for light vehicle production for calendar year 2025 are approximately 15.1 million units for North America, 16.6 million units for
Europe, 11.9 million units for Japan and Korea, and 30.2 million units for China.
Based on the foregoing, and excluding any impact of the Company’s pending acquisition of VOXX (which remains subject to certain regulatory
and VOXX stockholder approvals), the Company estimates that top line revenue for calendar year 2025 will be between $2.40 and $2.45
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; tariffs; 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, and potential tax law
changes; OEM strategies and cost pressures; customer inventory management and the impact of potential automotive customer (including their
Tier 1 suppliers) and supplier bankruptcies; work stoppages, strikes, etc.; could disrupt shipments to customers and make forecasting difficult.
53
2024 ANNUAL REPORT
52
GENTEX CORPORATION
The Company is estimating that the gross margin will be between 33.5% and 34.5% for calendar year 2025. 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 2025,
the Company hopes it may be able to offset certain annual customer price reductions with raw material cost decreases, improved operational
efficiencies, and leverage on the Company’s fixed costs, but there is no certainty of being able to do so.
The Company is also estimating that its operating expenses, which include E, R & D and S, G & A, are expected to be between $310 and $320
million for calendar year 2025, due in part to continued investments that support growth and launch of new business as well as development of
new products, which are primarily staffing related. The Company continues to invest heavily in technology directed at funding the development
of its current product portfolio and creating iterations of those products that help keep its products new and attractive to our customers, as well
as new products, though these expense estimates for 2025 represent a lower growth rate in operating expenses as the Company believes the new
baseline established for engineering spend is sufficient to support current initiatives.
The Company is a technology leader in the automotive industry, with a focus on developing uniquely designed solutions that are proprietary.
The Company continues to make investments intended to maintain a competitive advantage in its current markets, as well as to use its core
competencies to develop products that are applicable in other markets.
Based on current light vehicle production forecasts, and the Company’s resultant forecast its automatic-dimming mirrors and electronics, the
Company currently anticipates that 2025 capital expenditures will be between $125 and $150 million, a majority of which will be related to
production equipment purchases. Capital expenditures for calendar year 2025 are currently anticipated to be financed from current cash and cash
equivalents on hand and cash flows from operating activities.
The Company is also estimating that depreciation and amortization expense for calendar year 2025 will be between $85 and $90 million.
The Company is further estimating that its tax rate will be between 15% and 17% for calendar year 2025 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 2025 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 2026, taking into account anticipated increases in light vehicle
production in 2026 compared to 2025, but excluding any impact of the Company’s pending acquisition of VOXX. S&P Global Mobility
forecast (as of mid-January 2025) for light vehicle production for calendar year 2026 are approximately 15.4 million units for North America,
17.0 million units for Europe, 11.6 million units for Japan and Korea, and 31.0 million units for China. Based on these forecasts, as well as the
Company’s estimates for fire protection, aerospace, medical, and biometrics sales for calendar year 2026, the Company is estimating that revenue
for calendar year 2026 will be between $2.55 and $2.65 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.
The Company has some assets, liabilities and operations outside the United States, including multi-currency accounts, which currently are
not significant overall to the Company as a whole. Because the Company sells its automotive mirrors throughout the world and automobile
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.
Most of the Company’s non-U.S. sales are invoiced and paid in U.S. dollars. During calendar year 2024, approximately 7% of the Company’s
net sales were invoiced and paid in foreign currencies (compared to 8% for calendar year 2023 and 7% for calendar year 2022). The Company
currently expects that approximately 7-8% of the Company’s net sales in calendar year 2025 will be invoiced and paid in foreign currencies.
The Company does not currently engage in hedging activities of foreign currencies.
The Company does not have any significant off-balance sheet arrangements or commitments that have not been recorded in its Consolidated
Financial Statements.
Significant Accounting Policies and Critical Accounting Estimates
The preparation of the Company’s Consolidated Financial Statements, which have been prepared in accordance with accounting principles
generally accepted in the United States, requires management to make estimates, assumptions and apply judgments that affect its financial
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’s significant accounting policies are described in Note 1 of the Consolidated Financial Statements.
Certain of our accounting policies require management to make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the Consolidated Financial statements and the reported amounts of revenues and expenses during the reporting period.
These estimates and assumptions are based on our historical experience, the terms of existing contracts, our evaluation of trends in the industry,
information provided by our customers and suppliers and information available from other outside sources, as appropriate. However, 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
customers based on the related content, the cost of our products and other commercial factors. Such pricing accruals are adjusted as they are
settled with our customers.
See also Item 13 of Part III with respect to “Certain Transactions”, which is incorporated herein.
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2024 ANNUAL REPORT
54
GENTEX CORPORATION
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
See “Market Risk Disclosure” in Management’s Discussion and Analysis of Financial Condition and Results of Operations. See Item 7, Part II.
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
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID:42)
64
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
65
Consolidated Balance Sheets as of December 31, 2024 and 2023
66
Consolidated Statements of Income for the years ended December 31, 2024, 2023, and 2022
68
Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, 2023, and 2022
68
Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023, and 2022
69
Consolidated Statements of Shareholders’ Investment for the years ended December 31, 2024, 2023, and 2022
70
Notes to Consolidated Financial Statements
72
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, 2024.
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, 2024, 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, 2024.
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
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, 2024, 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, 2024.
Item 9B. Other Information.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
None.
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2024 ANNUAL REPORT
56
GENTEX CORPORATION
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
47
President and Chief Executive Officer
January 2018
Neil Boehm
53
Chief Operating Officer and Chief Technology Officer
January 2025
Kevin Nash
50
Vice President, Finance, Chief Financial Officer and Treasurer
February 2018
Matthew Chiodo
60
Chief Sales Officer and Senior Vice President, Sales
January 2022
Scott Ryan
44
Vice President, General Counsel and Corporate Secretary
August 2018
There are no family relationships among the officers listed in the preceding table.
STEVE DOWNING was appointed Chief Executive Officer effective as of January 1, 2018. Mr. Downing has been employed by the Company
since 2002. Prior to being appointed 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 Chief Operations Officer, effective as of January 1, 2025. He is also the Company’s Chief
Technology Officer, a role he has held since 2018 and he continues to be a named 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 2025 Annual
Meeting of Shareholders and filed with the Commission within 120 days after the Company’s fiscal year end, December 31, 2024 (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. Information related to insider
trading policies and procedures governing the purchase, sale, and/or other dispositions of the Company’s securities by directors, officers, and
employees to promote compliance with insider trading laws, rules, and regulations and any applicable listing standards appearing under the
caption “Insider Trading Policies” 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,” “Practices and Procedures Related to the Grant of Certain Equity Awards,” 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 an ongoing 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. Notwithstanding that goal, at the request
of Mr. Downing and the other named executive officers, the Compensation Committee and Board of Directors did not increase named executive
officer base salaries in 2025. The request and decision not to change executive officer base salaries was made based on overall market conditions.
The Board, on February 20, 2025, approved the following base salaries for the CEO and other named executive officers for 2025:
Executive Officer
Position
2025 Base Salary
2024 Base Salary
Steve Downing
President and CEO
$
850,000
$
850,000
Neil Boehm
COO and CTO
$
575,000
$
575,000
Kevin Nash
VP, Finance, CFO and Treasurer
$
555,000
$
555,000
Matt Chiodo
Senior VP, Sales and CSO
$
480,000
$
480,000
Scott Ryan
VP, General Counsel and Corporate Secretary
$
440,000
$
440,000
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 2025, 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.
10-K PART III
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2024 ANNUAL REPORT
58
GENTEX CORPORATION
For our executive officers, the 2025 Annual Plan payout opportunities as a percentage of base salary applicable to each performance metric are
shown in the table below:
Executive Officer
Annual Plan Threshold
Annual Plan Target
Annual Plan Maximum
Steve Downing
55.0%
110.0%
220.0%
Neil Boehm
37.5%
75.0%
150.0%
Kevin Nash
37.5%
75.0%
150.0%
Matt Chiodo
37.5%
75.0%
150.0%
Scott Ryan
37.5%
75.0%
150.0%
No changes were made to the Annual Plan target opportunities for executive officers in 2025, as it is believed those threshold, target, and
maximum opportunity levels remain appropriate. The foregoing payout opportunities are multiplied by the weighting factor of a particular
performance metric to determine the amounts of cash bonuses payable to officers based on actual performance compared to the threshold, target,
or maximum for a performance metric. When actual performance is compared to the established threshold, target, or 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 judgment, which can
include, but is not limited to, sustainable impact, people and growth factors when evaluating a participant’s performance and/or establishing
performance objectives, 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%), Operating
Income (weighted 33.33%) and Earnings per Diluted Share (33.33%) because such metrics are not only appropriate measures of performance, but
also align with the Company’s overall business strategy.
In determining whether annual cash bonuses are paid under the Annual Plan, actual performance for the year is measured against specified target
levels for each performance metric. Generally, the target for the three performance metrics reflects a level of performance, which at the time
set would be anticipated to be challenging but achievable. The threshold level is set to be reflective of performance at which the Compensation
Committee believed a portion of the award opportunity should be earned. The maximum level was set well above the target, requiring significant
achievements and reflecting performance at which the Compensation Committee believed an additional 100% of the target award was warranted.
For 2024, target performance and actual results for the performance metrics are as follows:
Performance Metric
Weight
Threshold*
Target*
Maximum*
Actual Performance*
Revenue
33.33%
$
2,000,000
$
2,500,000
$
3,000,000
$
2,313,314
Operating Income
33.33%
$
450,000
$
562,500
$
675,000
$
459,727
Earnings per Diluted Share
33.33%
$
1.62
$
2.02
$
2.42
$
1.76
* Amounts in thousands (000) except for per share amounts.
Based on actual Revenue, Operating Income, and Earnings per Diluted Share results compared to the targets and performance of the named
executive officers, the payments for 2024 under the Annual Plan are shown in the table below:
Executive Officer
2024 Annual Plan Performance Bonus
2024 Annual Plan Discretionary Bonus
Steve Downing
$
634,211
$
0
Neil Boehm
$
292,517
$
0
Kevin Nash
$
282,342
$
0
Matt Chiodo
$
244,188
$
0
Scott Ryan
$
223,839
$
0
These Annual Plan results appropriately reflect management’s work in terms of a 5% revenue outperformance versus the Company’s primary
underlying markets, continued execution toward the previously announced gross margin recovery plan, and ongoing business development
efforts. For 2025, the Compensation Committee has established targets for Revenue, Operating Income, and Earnings per Diluted Share
for the Annual Plan performance metrics consistent with the past. In 2025, the Company used ± 20% of target for determining thresholds
and maximums under the Annual Plan due to a reduction in overall end market volatility.
2019 Omnibus Incentive Plan and Long-Term Incentive Program
The Company’s 2019 Omnibus Incentive Plan (“OIP”) has been approved by shareholders. Pursuant to the 2019 OIP, the Company
implemented the Long-Term Incentive Plan (the “Long-Term Plan”). The Long-Term Plan provides officers, including our named executive
officers, with incentive awards that serve an important role by balancing other applicable short-term goals with longer term shareholder value
creation, while minimizing risk-taking behaviors that could negatively affect long-term results.
The Long-Term Plan uses three-year performance periods and selected performance objectives to determine equity incentive awards so as to
balance short-term goals under the Annual Plan, with performance objectives associated with longer-term shareholder value creation under the
Long-Term Plan. Under the Long-Term Plan, the Board and/or the Compensation Committee determines the amount of the long-term incentive
awards. Each officer’s award opportunity is based on a target dollar value (determined toward the very beginning of the performance 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 and general
industry market data. The following target opportunities apply for the 2025-2027 performance period under the Long-Term Incentive Plan:
Executive Officer
Long-Term Plan Target Opportunity Percentage of Base Salary for 2025-2027
Steve Downing
385%
Neil Boehm
185%
Kevin Nash
185%
Matt Chiodo
165%
Scott Ryan
165%
These Long-Term Plan Target Opportunity Percentages of Base Salary for 2025 - 2027 for Mr. Chiodo and Mr. Ryan have changed from
those applicable for 2024 - 2026. The Compensation Committee recommended, and the Board approved, this increase to Mr. Chiodo and
Mr. Ryan’s Long-Term Plan target opportunity in 2025 as set forth, as a result of increases in overall job responsibilities of each. All Long-
Term Plan target opportunities remain within the market median for long-term incentives for the officers’ respective job responsibilities.
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).
61
2024 ANNUAL REPORT
60
GENTEX CORPORATION
Performance Shares for 2025-2027 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 (2025-2027) 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 2025-2027 were established by the Compensation Committee as it has
done in the past. For the 2025-2027 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 2025 for the named executive officers are shown in the table below:
Executive Officer
Number of PSAs Awarded in 2025 (Target) for 2025-2027
Steve Downing
88,023
Neil Boehm
28,613
Kevin Nash
27,618
Matt Chiodo
21,304
Scott Ryan
19,258
Restricted Stock Awards for 2025-2027 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 2025, based on the target
opportunities, for the named executive officers are shown in the table below:
Executive Officer
Number of RS Awarded in 2025 for 2025-2027
Steve Downing
37,725
Neil Boehm
12,263
Kevin Nash
11,836
Matt Chiodo
9,130
Scott Ryan
8,370
2022-2024 Long-Term Plan Performance (three-year performance period ending December 31, 2024)
December 31, 2024, marked the end of the three-year performance period for PSA and RS Long-Term Plan awards made in February 2022.
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 2022. 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 2022 through 2024. The table below summarizes the
results of the 2022-2024 performance period relative to target and the achievement level of the 2022-2024 PSAs:.
Performance Metric
Weight
Threshold*
Target*
Maximum*
Actual
Performance*
Performance
to Target
Weighted
Performance
EBITDA
50% $
1,310,720 $
1,747,627 $
2,184,534 $
1,610,066
84.26%
42.13%
ROIC
50%
33.08%
44.10%
55.13%
37.02%
67.90%
33.95%
* amounts in thousands (000) except percentages.
The PSAs awarded in February 2022, based on target opportunity, along with the actual payout of PSAs to the executive officers, for the 2022-
2024 performance period are reflected in the table below and include additional shares awarded for dividend equivalents assuming reinvestment
of dividends.
Executive Officer
Number of PSAs Awarded in 2022 (Target)
for 2022-2024
2022-2024 PSAs Payout
Steve Downing
65,013
51,879
Neil Boehm
16,393
13,086
Kevin Nash
19,566
15,618
Matt Chiodo
14,322
11,434
Scott Ryan
12,942
10,331
Restricted Stock
The RS awarded in February 2022, based on target opportunities, along with the actual payment of RS to executive officers, awarded for the
2022-2024 period are reflected in the table below:
Executive Officer
Number of RS Awarded in 2022 (Target)
for 2022-2024
2022-2024 RS Payout/Vesting
Steve Downing
27,863
27,863
Neil Boehm
7,026
7,026
Kevin Nash
8,386
8,386
Matt Chiodo
6,138
6,138
Scott Ryan
5,547
5,547
Since each executive officer awarded restricted stock in 2022 remained employed by the Company for three years from the grant date, each
restricted stock awarded vested with such executive officers.
63
2024 ANNUAL REPORT
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.
62
GENTEX CORPORATION
this page Intentionally left mostly blank
65
2024 ANNUAL REPORT
64
GENTEX CORPORATION
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Gentex Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Gentex Corporation and subsidiaries (the Company) as of December 31, 2024 and 2023,
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, 2024, 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, 2024 and 2023, and the results of its operations and
its cash flows for each of the three years in the period ended December 31, 2024, 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, 2024, 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 25, 2025 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.
Critical Audit Matter
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.
Accounting for Technology Investments
DESCRIPTION OF THE MATTER As discussed in Note 1 of the Company’s consolidated financial statements, the Company periodically makes strategic
investments in the non-marketable debt or equity securities of non-consolidated third parties (“technology investments”). 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 Ventures. The application of the accounting model under ASC Topic
323 requires an enhanced amount of professional judgment by management, including the determination of the appropriate accounting guidance to utilize and
periodic reassessment of the ability to exert significant influence over the investee, evaluation of changes in the value of the Company’s investments due to equity
transactions by the investees, and the required financial statement disclosures. As of December 31, 2024, the Company has approximately $149.9 million and
$6.0 million of technology investments recorded in long-term investments and short-term investments, respectively.
HOW WE ADDRESSED THE MATTER IN OUR AUDIT We obtained an understanding, evaluated the design and tested the operating effectiveness of controls
over technology investments. This included testing controls over the Company’s process to identify and evaluate agreements and determine the appropriate
accounting guidance to apply, including management’s periodic reassessment of the ability to exert significant influence over the investee, evaluation of changes
in the value of the Company’s investments due to equity transactions by the investees and testing controls related to the Company’s valuation of the technology
investments.
Our audit procedures included, among others, testing the completeness of material technology investments through inquiries with management, review of board
and committee meeting minutes and inspection of rollforward investment schedules. We assessed the determination of accounting guidance through review
of agreements and other supporting evidence. Furthermore, we performed valuation testing of the material technology investments based on the Company’s
valuation approach and evaluated the adequacy of the disclosures in the financial statements in relation to technology investments.
We have served as the Company’s auditor since 1999.
Grand Rapids, Michigan
February 25, 2025
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Gentex Corporation
Opinion on Internal Control Over Financial Reporting
We have audited Gentex Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2024, 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, 2024, 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, 2024 and 2023, 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, 2024, and the related notes and our report dated February 25, 2025
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.
Definition and Limitations of Internal Control Over Financial Reporting
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 25, 2025
67
2024 ANNUAL REPORT
66
GENTEX CORPORATION
GENTEX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2024 AND 2023
The accompanying notes are an integral part of these consolidated financial statements.
ASSETS
2024
2023
CURRENT ASSETS:
Cash and cash equivalents
$
233,318,766 $
226,435,019
Short-term investments
22,304,829
14,356,476
Accounts receivable, net
295,344,353
321,809,868
Inventories, net
436,497,445
402,473,028
Prepaid expenses and other
49,862,777
32,663,762
Total current assets
1,037,328,170
997,738,153
PLANT AND EQUIPMENT:
Land, buildings and improvements
531,261,137
472,112,320
Machinery and equipment
1,065,109,667
1,011,930,699
Construction-in-process
177,907,293
158,327,247
Total Plant and Equipment
1,774,278,097
1,642,370,266
Less- Accumulated depreciation
(1,045,796,630)
(989,492,594)
Net Plant and Equipment
728,481,467
652,877,672
OTHER ASSETS:
Goodwill
340,668,927
340,105,631
Long-term investments
339,604,044
299,080,876
Intangible assets, net
195,157,160
214,005,910
Deferred tax asset
53,154,832
41,113,759
Patents and other assets, net
66,426,375
66,515,551
Total Other Assets
995,011,338
960,821,727
TOTAL ASSETS
$
2,760,820,975 $
2,611,437,552
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
2024
2023
CURRENT LIABILITIES:
Accounts payable
$
168,314,912 $
184,398,820
Accrued liabilities:
Salaries, wages and vacation
19,526,367
22,725,631
Income taxes
439,545
693,391
Royalties
21,087,480
20,898,949
Dividends payable
27,264,897
27,774,653
Other
16,059,475
15,117,532
Total current liabilities
252,692,676
271,608,976
OTHER NON-CURRENT LIABILITIES
36,028,644
27,311,507
TOTAL LIABILITIES
288,721,320
298,920,483
SHAREHOLDERS’ INVESTMENT:
Common stock, par value 0.06 per share; 400,000,000 shares authorized; 227,207,472
and 231,455,443 shares issued and outstanding in 2024 and 2023 respectively.
13,632,448
13,887,326
Additional paid-in capital
1,010,440,420
968,245,875
Retained earnings
1,450,287,128
1,336,940,990
Accumulated other comprehensive (loss) income:
Unrealized loss on investments, net
(591,605)
(2,022,403)
Cumulative translation adjustment
(5,817,736)
(4,534,719)
TOTAL GENTEX CORPORATION SHAREHOLDERS’ INVESTMENT
2,467,950,655
2,312,517,069
Non-controlling Interest
4,149,000
—
TOTAL LIABILITIES AND SHAREHOLDERS’ INVESTMENT
$
2,760,820,975 $
2,611,437,552
69
2024 ANNUAL REPORT
68
GENTEX CORPORATION
GENTEX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022
The accompanying notes are an integral part of these consolidated financial statements.
2024
2023
2022
NET SALES
$
2,313,314,333 $
2,299,215,044 $
1,918,958,043
COST OF GOODS SOLD
1,542,224,143
1,536,585,036
1,309,143,858
Gross profit
771,090,190
762,630,008
609,814,185
OPERATING EXPENSES:
Engineering, research and development
181,475,221
154,359,700
133,308,804
Selling, general and administrative
121,023,692
112,539,255
106,499,255
Impairment Charges
8,864,704
—
—
Total operating expenses
311,363,617
266,898,955
239,808,059
Income from operations
459,726,573
495,731,053
370,006,126
OTHER INCOME:
Investment income, net
13,402,841
13,498,351
4,795,823
Other loss, net
(915,731)
(4,248,230)
(5,078,873)
Total other income (loss)
12,487,110
9,250,121
(283,050)
Income before provision for income taxes
472,213,683
504,981,174
369,723,076
PROVISION FOR INCOME TAXES
67,725,940
76,577,902
50,965,724
NET INCOME
$
404,487,743 $
428,403,272 $
318,757,352
EARNINGS PER SHARE(1):
Basic
$
1.77 $
1.84 $
1.36
Diluted
$
1.76 $
1.84 $
1.36
Cash Dividends Declared per Share
$
0.48
$
0.48 $
0.48
(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
GENTEX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022
The accompanying notes are an integral part of these consolidated financial statements.
2024
2023
2022
Net income
$
404,487,743 $
428,403,272 $
318,757,352
Other comprehensive income (loss) before tax:
Foreign currency translation adjustments
(1,283,017)
(502,480)
(4,952,828)
Unrealized gains (losses) on available-for-sale securities, net
1,811,137
10,238,344
(14,072,595)
Other comprehensive income (loss), before tax
528,120
9,735,864
(19,025,423)
Expense (benefit) for income taxes related to components of
other comprehensive income (loss)
380,339
2,150,052
(2,955,245)
Other comprehensive income (loss), net of tax
147,781
7,585,812
(16,070,178)
Comprehensive income
$
404,635,524 $
435,989,084 $
302,687,174
GENTEX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022
The accompanying notes are an integral part of these consolidated financial statements.
2024
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
404,487,743 $
428,403,272 $
318,757,352
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization
94,714,662
93,321,192
96,568,443
Gain on disposal of assets
(1,294,798)
(355,544)
(70,736)
Loss on disposal of assets
90,145
443,373
28,424
Gain on sale of investments and equity method
investment income
(5,365,966)
(5,492,269)
(392,040)
Loss on sale of investments and equity method
investment losses
9,991,670
11,476,947
2,104,907
Deferred income taxes
(12,421,412)
(17,735,110)
(17,777,777)
Stock based compensation expense related to employee stock
options, employee stock purchases and restricted stock
39,539,362
39,197,422
30,228,606
Impairment Charges
8,864,704
—
—
Change in operating assets and liabilities:
Accounts receivable
27,106,680
(45,251,116)
(26,698,846)
Inventories
(32,624,417)
2,127,242
(88,092,828)
Prepaid expenses and other
(9,873,572)
(4,101,866)
(28,788,331)
Accounts payable
(26,021,165)
40,951,490
37,423,488
Accrued liabilities
1,019,584
(5,735,441)
14,909,867
Net cash flows from operating activities
498,213,220
537,249,592
338,200,529
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Activity in available-for-sale securities:
Sales proceeds
42,675,048
58,847,341
37,429,595
Maturities and calls
16,235,000
17,445,000
3,500,000
Purchases
(51,086,506)
(80,908,455)
(17,810,350)
VOXX share purchases
(31,450,000)
(16,941,043)
(383,843)
Purchase of technology investments
(27,659,631)
(71,083,511)
(45,743,460)
Plant and equipment additions
(144,669,002)
(183,678,460)
(146,433,123)
Proceeds from sale of plant and equipment
3,310,600
292,723
313,917
Acquisition of businesses, net of cash acquired
(2,870,769)
(18,936,539)
—
Increase in other assets
(6,563,157)
(4,453,376)
(3,611,244)
Net cash used for investing activities
(202,078,417)
(299,416,320)
(172,738,508)
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Issuance of common stock from stock plan transactions
27,295,127
29,398,272
16,602,274
Cash dividends paid
(110,438,045)
(112,150,060)
(113,091,921)
Repurchases of common stock
(206,108,138)
(147,401,103)
(112,529,406)
Net cash used for financing activities
(289,251,056)
(230,152,891)
(209,019,053)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS,
AND RESTRICTED CASH
6,883,747
7,680,381
(43,557,032)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH,
BEGINNING OF YEAR
226,435,019
218,754,638
262,311,670
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH,
END OF YEAR
$
233,318,766 $
226,435,019 $
218,754,638
Twelve Months Ended December 31,
SUPPLEMENTAL CASH FLOW DATA
2024
2023
2022
Non-cash investing and financing activities:
Change in Property and equipment in accounts payable
and accrued expenses and other current liabilities
$
(9,802,961)
$
6,927,750 $
14,608,665
71
2024 ANNUAL REPORT
70
GENTEX CORPORATION
GENTEX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ INVESTMENT
FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022
The accompanying notes are an integral part of these consolidated financial statements.
Equity Attributable to Gentex Corporation
Common Stock Shares
Common Stock Amount
Additional
Paid-In Capital
Retained Earnings
Accumulated Other
Comprehensive
Income (Loss)
Total
Equity Attributable to
Noncontrolling Interests
Total Shareholders’
Investment
BALANCE AS OF JANUARY 1, 2022
$
236,440,840
$14,186,450 $
879,413,385
$
1,042,461,388 $
1,927,244 $
1,937,988,467 $
— $
1,937,988,467
Issuance of common stock from stock plan transactions
1,606,965
96,418
16,505,856
—
—
16,602,274
—
16,602,274
Issuance of common stock related to acquisitions
162,433
9,746
4,990,266
—
—
5,000,012
—
5,000,012
Repurchases of common stock
(4,040,903)
(242,454)
(13,638,790)
(100,013,126)
—
(113,894,370)
—
(113,894,370)
Stock-based compensation expense related to stock
options, employee stock purchases, restricted stock, and
performance share awards
—
—
30,228,606
—
—
30,228,606
—
30,228,606
Dividends declared ($0.48 per share)
—
—
—
(112,819,342)
—
(112,819,342)
—
(112,819,342)
Net income
—
—
—
318,757,352
—
318,757,352
—
318,757,352
Other comprehensive income
—
—
—
—
(16,070,178)
(16,070,178)
—
(16,070,178)
BALANCE AS OF DECEMBER 31, 2022
$
234,169,335
$14,050,160 $
917,499,323
$
1,148,386,272 $
(14,142,934)
$
2,065,792,821 $
— $
2,065,792,821
Issuance of common stock from stock plan transactions
2,218,094
133,086
29,265,186
—
—
29,398,272
—
29,398,272
Repurchases of common stock
(4,931,986)
(295,920)
(17,716,056)
(128,024,161)
—
(146,036,137)
—
(146,036,137)
Stock-based compensation expense related to stock
options, employee stock purchases, restricted stock, and
performance share awards
—
—
39,197,422
—
—
39,197,422
—
39,197,422
Dividends declared ($0.48 per share)
—
—
—
(111,824,393)
—
(111,824,393)
—
(111,824,393)
Net income
—
—
—
428,403,272
—
428,403,272
—
428,403,272
Other comprehensive loss
—
—
—
—
7,585,812
7,585,812
—
7,585,812
BALANCE AS OF DECEMBER 31, 2023
$
231,455,443
$
13,887,326 $
968,245,875
$
1,336,940,990 $
(6,557,122)
$
2,312,517,069 $
— $
2,312,517,069
Issuance of common stock from stock plan transactions
2,153,810
129,229
27,165,898
—
—
27,295,127
—
27,295,127
Noncontrolling Interest as part of acquisition
—
—
—
—
—
—
4,149,000
4,149,000
Repurchases of common stock
(6,401,781)
(384,107)
(24,510,715)
(181,213,316)
—
(206,108,138)
—
(206,108,138)
Stock-based compensation expense related to stock
options, employee stock purchases, restricted stock, and
performance share awards
—
—
39,539,362
—
—
39,539,362
—
39,539,362
Dividends declared ($0.48 per share)
—
—
—
(109,928,289)
—
(109,928,289)
—
(109,928,289)
Net income
—
—
—
404,487,743
—
404,487,743
—
404,487,743
Other comprehensive loss
—
—
—
—
147,781
147,781
—
147,781
BALANCE AS OF DECEMBER 31, 2024
$
227,207,472
$
13,632,448 $
1,010,440,420
$
1,450,287,128 $
(6,409,341)
$
2,467,950,655 $
4,149,000 $
2,472,099,655
There may be some differences due to rounding.
73
2024 ANNUAL REPORT
72
GENTEX CORPORATION
( 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
Gentex Corporation, including its wholly-owned subsidiaries (the “Company”), is a leading supplier of digital vision, connected car, dimmable
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.
A substantial portion of the Company’s net sales and accounts receivable result from transactions with domestic and foreign automotive
manufacturers and Tier 1 suppliers. The Company also designs, develops, manufactures, markets, and supplies dimmable aircraft windows 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.
Significant accounting policies of the Company not described elsewhere are as follows:
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 reviews a monthly aging report of all accounts receivable balances starting with invoices outstanding over sixty days. In addition,
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/Deductions
and Other Adjustments
Ending Balance
YEAR ENDED DECEMBER 31, 2024:
Allowance for Doubtful Accounts
$
2,665,203 $
(628,306)
$
2,036,897
YEAR ENDED DECEMBER 31, 2023:
Allowance for Doubtful Accounts
$
2,967,095 $
(301,892)
$
2,665,203
YEAR ENDED DECEMBER 31, 2022:
Allowance for Doubtful Accounts
$
3,176,205 $
(209,110)
$
2,967,095
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.
Investments
AVAILABLE FOR SALE SECURITIES
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 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 identification method.
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
in the market and also refers to third party sources to validate valuations, and as such are classified as Level 2 assets.
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. On August 23, 2024, the Company entered into another
Stock Purchase Agreement and acquired an additional 3,152,500 shares of Class A Common Stock on that date at $5 per share for investment
purposes. The Company has the intention and current ability to hold the VOXX investment, and therefore has recorded the investment
within Long-term Investments in the consolidated balance sheet.
As of December 31, 2024, the Company holds a total of 6,463,308 shares of VOXX. The VOXX shares held by the Company are publicly
traded and have a readily determinable fair market value and are considered Level 1 assets. Prior to the August 2024 purchases, the investment
was 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. As a result of the August 2024 purchase, the Company began accounting for the VOXX investment in
accordance with ASC 323 – Investments – Equity Method and Joint Venture, with the election to use the Fair Value Option under ASC 825 -
Fair Value. As a result of this election, changes in fair value of the shares are recorded in Investment income, net in the consolidated statements
of income. The Company recorded $2.4 million of loss during the year ended December 31, 2024 relating to mark to market adjustments
in Investment Income, net related to VOXX.
On December 17, 2024, as previously disclosed, the Company entered into a definitive agreement and plan of merger for the Company to acquire
shares of VOXX in an all-cash transaction. Under the terms of the agreement, the Company will acquire all the issued and outstanding shares of
VOXX common stock not already owned by the Company for a purchase price of $7.50 per share. The transaction is subject to approval of VOXX’s
stockholders, certain regulatory approvals and other customary closing conditions, and is expected to close in the first half of 2025.
TECHNOLOGY INVESTMENTS
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 $155.9 million at December 31, 2024, of which $149.9 million
and $6.0 million are recorded in long-term investments and short-term investments on the consolidated balance sheet, and $128.0 million as
of 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.
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 does 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, net in the Company’s consolidated statement of income. All other technology investments that the
75
2024 ANNUAL REPORT
74
GENTEX CORPORATION
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 LTD. - 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, 2024 and 2023, the carrying value of the Company’s investments in Adasky was $44.0 million
and $45.8 million, respectively.
GREEN MARBLES - GreenMarbles is a 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 the Company’s common stock. The Company accounts for its investment in GreenMarbles using the equity method. As of
December 31, 2024 and 2023, the carrying value of the investment in GreenMarbles was $20.8 million and $22.6 million, respectively.
SAAM - SAAM is the maker of HavenGO and a leader in indoor air quality and chemical detection technology, with its development efforts
focusing on the design and manufacturing of an advanced mobile indoor air quality monitor. During the years ended December 31, 2024 and
2023, the Company made investments of $2.4 million and $5.0 million in SAAM, respectively. As of December 31, 2024, the Company has
an approximately 34% ownership interest in SAAM. The Company accounts for its investment in SAAM using the measurement alternative.
As of December 31, 2024 and 2023, the carrying value of the investment in SAAM was $10.3 million and $7.7 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, 2024 and 2023, the Company
made investments of $7.5 million and $7.5 million in Simplenight, respectively, and as of December 31, 2024, the Company has an approximately
31% ownership interest in Simplenight primarily accounted for using the measurement alternative. As of December 31, 2024 and 2023, the carrying
value of the Company’s investments in Simplenight was $29.2 million and $20.9 million, respectively.
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. As of both December 31, 2024 and
2023, the carrying value of the Company’s investment in Solace Power was $7.1 million.
RETISPEC - RetiSpec is an artificial intelligence medical imaging company developing a tool for the early detection of disease biomarkers in the
eye. During the year ended December 31, 2024, the Company made an additional investment of $2.0 million for an additional 3% equity share
in RetiSpec, for a total of 14% ownership interest. The Company also recognized a $3.7 million revaluation gain as part of this additional round
of investment, which included new investors in the entity. The Company accounts for RetiSpec using the measurement alternative. As of
December 31, 2024 and 2023, the carrying value of the Company’s investments in RetiSpec was $10.0 million and $4.2 million, respectively.
Assets or liabilities that have recurring fair value measurements are shown below as of December 31, 2024 and December 31, 2023:
Fair Value Measurements at Reporting Date Using
Total as of
Quoted Prices in
Active Markets for
Identical Assets
Significant Other
Observable Inputs
Significant Unob-
servable Inputs
Description
December 31, 2024
(Level I)
(Level 2)
(Level 3)
Cash & Cash Equivalents
$
233,318,766 $
233,318,766 $
— $
—
Short-Term Investments:
Asset-backed Securities
2,851,933
—
2,851,933
—
Certificate of Deposit
751,728
751,728
—
—
Corporate Bonds
3,971,200
—
3,971,200
—
Government Securities
3,982,275
—
3,982,275
—
Municipal Bonds
3,386,500
—
3,386,500
—
Other
1,400,176
1,400,176
—
—
Long-Term Investments:
Asset-backed Securities
41,766,104
—
41,766,104
—
Corporate Bonds
54,537,517
—
54,537,517
—
Government Securities
6,199,535
—
6,199,535
—
Municipal Bonds
39,458,318
—
39,458,318
VOXX Common Stock
47,702,903
47,702,903
—
—
Total
$
439,326,955 $
283,173,573 $
156,153,382 $
—
Fair Value Measurements at Reporting Date Using
Total as of
Quoted Prices in
Active Markets for
Identical Assets
Significant Other
Observable Inputs
Significant Unob-
servable 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
994,013
$994,013
—
—
Corporate Bonds
1,943,886
—
1,943,886
—
Government Securities
4,759,507
—
4,759,507
—
Municipal Bonds
1,726,658
—
1,726,658
—
Other
1,465,388
1,465,388
—
—
Long-Term Investments:
Asset-backed Securities
27,146,504
—
27,146,504
—
Certificate of Deposit
748,358
748,358
—
—
Corporate Bonds
65,404,340
—
65,404,340
—
Government Securities
6,227,129
—
6,227,129
—
Municipal Bonds
56,336,921
56,336,921
—
VOXX Common Stock
18,610,519
18,610,519
—
—
Total
$
411,798,242 $
248,253,297 $
163,544,945 $
—
77
2024 ANNUAL REPORT
76
GENTEX CORPORATION
The amortized cost, unrealized gains and losses, and market value of investment securities are shown as of December 31, 2024 and 2023:
Unrealized
2024
Cost
Gains
Losses
Market Value
Short-Term Investments:
Asset-backed Securities
$
2,834,713 $
17,220 $
— $
2,851,933
Certificate of Deposit
750,000
1,728
—
751,728
Corporate Bonds
4,013,735
—
(42,535)
3,971,200
Government Securities
3,981,161
1,114
—
3,982,275
Municipal Bonds
3,400,019
472
(13,991)
3,386,500
Other
1,400,176
—
—
1,400,176
Long-Term Investments:
Asset-backed Securities
41,372,112
620,756
(226,764)
41,766,104
Corporate Bonds
54,552,964
355,627
(371,074)
54,537,517
Government Securities
6,206,437
13,124
(20,026)
6,199,535
Municipal Bonds
40,542,837
209,564
(1,294,083)
39,458,318
VOXX Common Stock
48,774,886
7,502,949
(8,574,932)
47,702,903
Total
$
207,829,040 $
8,722,554 $
(10,543,405)
$
$206,008,189
Unrealized
2023
Cost
Gains
Losses
Market Value
Short-Term Investments:
Certificate of Deposit
$
1,000,000 $
— $
(5,987)
$
994,013
Corporate Bonds
1,976,195
—
(32,309)
1,943,886
Government Securities
4,754,495
21,141
(16,129)
4,759,507
Municipal Bonds
1,749,038
—
(22,380)
1,726,658
Other
1,465,388
—
—
1,465,388
Long-Term Investments:
Asset-backed Securities
26,923,803
331,847
(109,146)
27,146,504
Certificate of Deposit
750,000
—
(1,642)
748,358
Corporate Bonds
66,214,398
748,471
(1,558,529)
65,404,340
Government Securities
6,217,774
10,675
(1,320)
6,227,129
Municipal Bonds
58,261,615
811,128
(2,735,822)
56,336,921
VOXX Common Stock
17,324,886
1,328,446
(42,813)
18,610,519
Total
$
186,637,592 $
3,251,708 $
(4,526,077)
$
185,363,223
Unrealized losses on investments as of December 31, 2024 are as follows:
Aggregate Unrealized Losses
Aggregate Fair Value
Less than one year
$
587,357 $
46,365,022
Greater than one year
1,381,116
32,602,844
Total
$
1,968,473 $
78,967,866
Unrealized losses on investments as of December 31, 2023 are as follows:
Aggregate Unrealized Losses
Aggregate Fair Value
Less than one year
$
126,074
$
13,449,592
Greater than one year
4,400,003
76,966,258
Total
$
4,526,077
$
90,415,850
The Company utilizes 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 2024 and 2023.
Fixed income securities as of December 31, 2024, have contractual maturities as follows:
Due within one year
$
14,943,636
Due between one and five years
78,885,415
Due over five years
63,076,059
$
156,905,110
Fair Value of Financial Instruments
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,
2024 and 2023.
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, 2024
and 2023:
2024
2023
Raw materials
$307,098,829
$283,126,566
Work-in-process
48,098,732
46,343,955
Finished goods
81,299,884
73,002,507
Total Inventory
$436,497,445
$402,473,028
79
2024 ANNUAL REPORT
78
GENTEX CORPORATION
Estimated inventory allowances for slow-moving and obsolete inventories are based on current assessments of future demands, market
conditions, evaluation of longer lead times for certain electronic components and related management initiatives. If market conditions or
customer requirements change and are less favorable than those projected by management, inventory allowances are adjusted accordingly.
Allowances for slow-moving and obsolete inventories (which are included, net, in the above inventory values) were $9.9 million and $10.3
million at December 31, 2024 and 2023, respectively.
Plant and Equipment
Plant and equipment is stated at cost. Depreciation and amortization are computed for financial reporting purposes using the straight-
line method, with estimated useful lives of 7 to 30 years for buildings and improvements, and 3 to 10 years for machinery and equipment.
Depreciation expense was approximately $76.8 million, $73.6 million and $74.9 million in 2024, 2023 and 2022, respectively.
Impairment or Disposal of Long-Lived Assets
The Company reviews long-lived assets, including property, plant and equipment and other intangible assets with definite lives, for impairment
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
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’s policy is to capitalize costs incurred to obtain patents. The cost of patents is amortized over their useful lives. The cost of 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
Goodwill reflects the cost of an acquisition in excess of the fair values assigned to identifiable net assets acquired. The Company reviews goodwill
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 performs an impairment review for each of its reporting units with goodwill, which are Automotive, Dimmable Aircraft
Windows, Nanofiber, Medical, and Biometrics, using either a qualitative approach or quantitative approach which utilizes a fair value method that
incorporates certain assumptions and judgments. The fair value of a reporting unit refers to the price that would be received to 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. During the year ended December 31, 2024, the Company recorded $3.7 million of impairment charges related
to the Nanofiber reporting unit as a result of the annual impairment review. No impairment charges were recorded during the year ended
December 31, 2023.
Indefinite lived intangible assets are also subject to annual impairment testing or more frequently if indicators of impairment are identified.
Management’s judgment and assumptions are required in determining the underlying fair value of the indefinite lived intangible assets. While
the Company believes the judgments and assumptions used in determining fair value are reasonable, different assumptions could change the
estimated fair values and, therefore, impairment charges could be required, which could be material to the consolidated financial statements.
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.
As part of recent acquisitions, the Company acquired Indefinite lived in-process research and development (“IPR&D”) intangible assets. These
IPR&D assets are not amortized, but are tested for impairment annually, or more frequently when indicators of potential impairment exist, until
the completion or abandonment of the associated research and development efforts. Upon completion of the projects, the assets will be amortized
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.
During the year ended December 31, 2024, the Company recorded $5.2 million in impairment charges within its Nanofiber reporting unit
related to the Vaporsens Inc. (“Vaporsens”) IPR&D asset as a result of the annual impairment review. No impairment charges were recorded
during the year ended December 31, 2023.
Refer to Note 10, “Goodwill and Intangible Assets” for information regarding the impairment testing performed in calendar year 2024.
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 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
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 pricing arrangements with customers based on the related content, the cost of Company products and other commercial
factors. Such pricing accruals are adjusted as they are settled with customers. Refer to Note 11, “Revenue”, for further information.
Advertising and Promotional Materials
All advertising and promotional costs are expensed as incurred and amounted to approximately $4.5 million, $3.4 million and $3.3 million,
in 2024, 2023 and 2022, 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 $35.3 million, $31.0 million and
$27.9 million, in 2024, 2023 and 2022, respectively.
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GENTEX CORPORATION
Self-Insurance
The Company is self-insured for a portion of its risk on workers’ compensation and employee medical costs. The arrangements provide for
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
(“IBNR”) claims. IBNR claims are estimated using historical lag information and other data provided by claims administrators. This estimation
process is subjective, and to the extent that future results differ from original estimates, adjustments to recorded accruals may be necessary.
Product Warranty
The Company periodically incurs product warranty costs. Any liabilities associated with product warranty are estimated based on known facts and
circumstances and are not significant at December 31, 2024, 2023 and 2022. 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, 2024 was 3 years, with a weighted average discount rate of 5.5%. Future minimum
lease payments for operating leases are as follows:
Year ending December 31,
2025
$
1,902,522
2026
1,351,590
2027
948,995
2028
681,303
2029
81,569
Total future minimum lease payments
$
4,965,979
Less imputed interest
(283,178)
Total
$
4,682,801
Earnings Per Share
The Company has unvested share-based payment awards with a right to receive non-forfeitable dividends, which are considered participating
securities under ASC 260, Earnings Per Share. The Company allocates earnings to participating securities and computes earnings per share
using the two-class method. Under the two-class method, net income per share is computed by dividing net income allocated to common
shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, net income
is allocated to both 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
last three years:
2024
2023
2022
BASIC EARNINGS PER SHARE
Net Income
$
404,487,743 $
428,403,272 $
318,757,352
Less: Allocated to participating securities
5,613,957
6,352,424
4,875,057
Net Income available to common shareholders
$
398,873,786 $
422,050,848 $
313,882,295
Basic weighted average shares outstanding
225,710,698
229,405,479
230,825,293
Net Income per share — Basic
$
1.84 $
1.36 $
1.51
DILUTED EARNINGS PER SHARE
Allocation of Net Income used in basic computation
$
398,873,786 $
422,050,848 $
313,882,295
Reallocation of undistributed earnings
5,594
6,341
5,299
Net Income available to common shareholders
— Diluted
$
398,879,380 $
422,057,189 $
313,887,594
Number of shares used in basic computation
225,710,698
229,405,479
230,825,293
Additional weighted average dilutive common
stock equivalents
312,784
314,719
394,196
Diluted weighted average shares outstanding
226,023,482
229,720,198
231,219,489
Net income per share — Diluted
$
1.84 $
1.36 $
1.50
For the years ended December 31, 2024, 2023 and 2022, 1,579,559 shares, 1,441,812 shares, and 1,842,602 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.
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
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.
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GENTEX CORPORATION
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
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
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 Company adopted ASU No. 2023-07 during the year ended December 31, 2024. See Note 7, “Segment
Reporting” in the accompanying notes to the consolidated financial statements for further detail.
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.
In March 2024, the Securities and Exchange Commission (“SEC”) issued final climate disclosure rules. The rules require disclosure of climate-
related information outside of the audited financial statements and disclosure in the footnotes addressing specified financial statement effects
of severe weather events and other natural conditions above certain financial thresholds, certain carbon offsets and renewable energy credits or
certificates, if material. Such disclosure requirements were scheduled to begin phasing in for fiscal years beginning on or after January 1, 2025.
On April 4, 2024, the SEC exercised its discretion to voluntarily stay the effective date of the final rules pending completion of certain judicial
review. The SEC recently signaled that it may not move forward with these rules. The Company continues to evaluate the impact of adopting
these rules and to monitor the status of the related legal challenges and position of the SEC with respect to the foregoing.
In November 2024, the FASB issued ASU No. 2024-03, “Disaggregation of Income Statement Expenses (Subtopic 220-40).” The ASU
requires public entities to disaggregate, in a tabular presentation, certain income statement expenses into different categories, such as purchases
of inventory, employee compensation, depreciation, and intangible asset amortization. The guidance is effective for fiscal years beginning
after December 15, 2026, with early adoption permitted, and may be applied retrospectively. The Company is currently evaluating the impact
of adopting the new ASU on our consolidated financial statements and related disclosures.
( 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
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, 2024,
there was no outstanding balances on the Revolver and as of December 31, 2023 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, 2024, the Company was in compliance with its covenants under the Credit Agreement.
( 3 ) I N C O M E T A X E S
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, 2024, 2023, and
2022. The components of the provision for income taxes are as follows:
Currently payable:
2024
2023
2022
Federal
$
73,538,314 $
85,978,954 $
62,670,986
State
4,678,030
6,242,525
4,310,783
Foreign
1,931,008
2,091,533
1,761,732
Total
80,147,352
94,313,012
68,743,501
Deferred income tax benefit:
Primarily federal
(12,421,412)
(17,735,110)
(17,777,777)
Provision for income taxes
$
67,725,940 $
76,577,902 $
50,965,724
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2024 ANNUAL REPORT
84
GENTEX CORPORATION
The effective income tax rates are different from the statutory federal income tax rates for the following reasons:
2024
2023
2022
Statutory federal income tax rate
21.0 %
21.0 %
21.0 %
State income taxes, net of federal income tax benefit
0.8
0.8
0.9
Research tax credit
(1.8)
(1.3)
(1.8)
(Decrease) Increase in reserve for uncertain tax provisions
0.2
—
(0.2)
Non-deductible executive compensation
0.3
0.1
0.3
Non-deductible expenses
0.1
0.1
0.3
Foreign tax credit
(0.3)
(0.5)
(0.3)
Foreign derived intangible income deduction
(5.9)
(5.1)
(6.2)
Stock compensation
(0.4)
(0.4)
(0.6)
Other
0.3
0.5
0.4
Effective income tax rate
14.3 %
15.2 %
13.8 %
The tax effect of temporary differences which give rise to deferred income tax assets and liabilities at December 31, 2024 and 2023, are as follows:
Assets:
December 31, 2024
December 31, 2023
Accruals not currently deductible
$
11,491,033 $
10,989,677
Research and development costs
80,310,573
70,252,363
Stock based compensation
14,266,075
15,536,416
Excess tax over book depreciation
14,747,529
7,060,777
Other
5,212,157
4,025,082
Total deferred income tax assets
$
126,027,367 $
107,864,315
Liabilities:
Goodwill
$
(51,613,808)
$
(47,185,855)
Intangible assets
(16,566,494)
(15,235,639)
Other
(4,692,233)
(4,329,062)
Total deferred income tax liabilities
$
(72,872,535)
$
(66,750,556)
Net deferred income taxes
$
53,154,832 $
41,113,759
Net operating loss carryforwards with no expiration totaling $5.5 million are available to reduce future taxable earnings of certain domestic and
foreign subsidiaries.
Income taxes paid in cash were approximately $86.2 million, $110.3 million, and $35.2 million in 2024, 2023 and 2022, respectively.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
2024
2023
2022
Beginning of year
$
4,778,000 $
4,630,000 $
5,275,000
Additions based on tax positions related to the current year
1,350,000
1,046,000
951,000
Additions for tax positions in prior years
869,000
671,000
353,000
Reductions for tax positions in prior years
—
(31,000)
(26,000)
Reductions as a result of a lapse of the applicable statute of
limitations
(1,199,000)
(1,538,000)
(1,923,000)
End of year
$
5,798,000 $
4,778,000 $
4,630,000
If recognized, unrecognized tax benefits would affect the effective tax rate.
The Company recognizes interest and penalties related to unrecognized tax benefits through the provision for income taxes. The Company has
accrued approximately $444,000, $365,000, and $379,000 for interest as of December 31, 2024, 2023, and 2022, respectively. Interest expensed
during 2024, 2023 and 2022 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
and the closing of statute of limitations. It is not expected that any change will be material to the Company’s consolidated financial statements.
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 2024, 2023
and 2022 the Company’s contributions were approximately $14.9 million, $13.8 million, and $12.9 million, respectively. The increases in the
Company’s matching contributions in 2024 and 2023 was due to increased wages and increased employee participation in the plan.
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.
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 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 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 thereafter.
The deferrals are held in a separate irrevocable rabbi trust (“the Rabbi Trust”), which has been established pursuant to the Deferred
Compensation 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 of the Company’s creditors in the event that the Company becomes insolvent. Consequently, the Rabbi Trust qualifies as a grantor
trust for income 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, 2024, total assets held by the trustee were $13.7 million, which
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2024 ANNUAL REPORT
86
GENTEX CORPORATION
are recorded in Patents and other assets, net, with an associated liability of $13.9 million recorded in Other Non-Current Liabilities in the
Company’s consolidated balance sheets. The $13.7 million of assets held by the trustee is invested in Company-owned life insurance policies,
whose cash surrender value is equal to the fair value measured using Level 2 inputs, based on the underlying assets of the COLI 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, 2024, 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
Restated Non-Employee Director Stock Option Plan (the “Prior Plans”), which were also approved by shareholders. Any existing awards
previously granted under the Prior Plans remain outstanding in accordance with their terms and are governed by the Prior Plans as applicable.
2019 Omnibus Incentive Plan
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,
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, 2024, 30,663,754 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.
Shares Granted
Conversion Rate
Total Shares Under
2019 Omnibus Plan
Non-Qualified Stock Options
5,044,379
1.00
5,044,379
Restricted Stock
5,290,546
4.06
21,479,617
Performance Shares
1,019,645
4.06
4,139,758
Total
11,354,570
30,663,754
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.
The Company has granted options on 5,044,379 shares (net of shares from canceled/expired options) under the 2019 Omnibus Plan and
12,674,639 shares (net of shares from canceled/expired options) under the prior plan (prior to its replacement) through December 31, 2024.
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,
and expire after five to ten years.
The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions for the indicated periods:
2024
2023
2022
Total Shares Under
2019 Omnibus Plan
Dividend yield (1)
1.6 %
1.7 %
1.8 %
5,044,379
Expected volatility (2)
28.0 %
28.8 %
28.8 %
21,479,617
Risk-free interest rate (3)
4.1 %
4.0 %
3.4 %
4,139,758
Expected term of options (in years) (4)
4.1
4.2
4.2
30,663,754
Weighted-average grant-date fair value
$
7.98 $
7.66 $
6.42
(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.
As of December 31, 2024, there was $5,022,501 of unrecognized compensation cost related to stock option awards which is expected to
be recognized over the remaining vesting periods, with a weighted-average period of 1.32 years. Stock option expense for the years ended
December 31, 2024, 2023 and 2022 was $5,070,620, $6,095,854, and $6,302,581 respectively.
A summary of the status of the Company’s stock option plans at December 31, 2024, 2023 and 2022, and changes during the same periods
are presented in the tables below.
2024
Shares (000)
Wtd. Avg. Ex. Price
Wtd. Avg. Remaining
Contract Life
Aggregate Intrinsic
Value (000)
Outstanding at Beginning of Year
4,387
$
29
Granted
292
32
Exercised
(784)
27
$
5,714
Forfeited
(157)
29
Outstanding at End of Year
3,738
30
2.4 years
$
4,784
Exercisable at End of Year
2,104
$
29
1.8 years
$
3,625
2023
Shares (000)
Wtd. Avg. Ex. Price
Wtd. Avg. Remaining
Contract Life
Aggregate Intrinsic
Value (000)
Outstanding at Beginning of Year
4,872
$
28
Granted
768
30
Exercised
(1,023)
31
$
7,847
Forfeited
(230)
29
Outstanding at End of Year
4,387
29
2.9 years
$
17,491
Exercisable at End of Year
1,942
$
29
2.3 years
$
8,916
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2024 ANNUAL REPORT
88
GENTEX CORPORATION
2022
Shares (000)
Wtd. Avg. Ex. Price
Wtd. Avg. Remaining
Contract Life
Aggregate Intrinsic
Value (000)
Outstanding at Beginning of Year
4,535
$
27
Granted
1,219
27
Exercised
(530)
21
$
4,065
Forfeited
(352)
28
Outstanding at End of Year
4,872
28
3.1 years
$
8,928
Exercisable at End of Year
1,960
$
26
2.4 years
$
5,864
A summary of the status of the Company’s non-vested employee stock option activity for the years ended December 31, 2024, 2023, and 2022,
are presented in the table below:
2024
2023
2022
Shares (000)
Wtd. Avg
Grant Date
Fair Value
Shares (000)
Wtd. Avg
Grant Date
Fair Value
Shares (000)
Wtd. Avg
Grant Date
Fair Value
Nonvested Stock Options
at Beginning of Year
2,445
$
7
2,913
$
6
3,156
$
5
Granted
293
8
768
8
1,219
6
Vested
(1,013)
6
(1,056)
6
(1,153)
4
Forfeited
(91)
7
(180)
6
(309)
6
Nonvested Stock Options
at End of Year
1,634
$
7
2,445
$
7
2,913
$
6
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 5,290,546
shares under the 2019 Omnibus Plan and 5,630,019 shares under the prior plan (prior to its replacement) as of December 31, 2024, and has
3,174,624 shares outstanding under such plans.
2024
2023
2022
Vesting Period(1)
Shares Granted
Market Price at
Grant Date
Shares Granted
Market Price at
Grant Date
Shares Granted
Market Price at
Grant Date
1 Year
154,023
28.73 - 36.12
142,314
28.03 - 32.66
119,849
23.84 - 29.89
2 Year
127,778
28.73 - 36.12
104,562
28.03 - 32.66
82,538
23.84 - 29.17
3 Years
360,782
28.73 - 36.12
302,569
28.03 - 32.66
261,493
23.84 - 30.85
4 Years
303,563
28.73 - 36.12
265,719
28.03 - 32.66
260,149
23.84 - 29.17
5 Years
213,720
28.73 - 36.12
184,900
28.03 - 32.66
225,060
23.84 - 29.17
1,159,866
$
28.73 - 36.12
1,000,064
$
28.03 - 32.66
949,089
$
23.84 - 30.85
(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, 2024, 2023, and
2022, are presented in the table below:
2024
2023
2022
Shares (000)
Shares (000)
Shares (000)
Nonvested, Beginning of Year
3,378
3,553
3,760
Granted
1,189
1,027
949
Vested
(1,263)
(1,058)
(935)
Forfeited
(130)
(144)
(221)
Nonvested, End of Year
3,174
3,378
3,553
As of December 31, 2024, there was unearned stock-based compensation of $53,315,524 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, 2024, 2023, and 2022 was $25,819,690, $24,809,834, and
$21,773,179 respectively.
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, 2024, the Company had unearned stock-based compensation of $11,767,729 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, 2024, 2023, and 2022 was $5,884,030,
$5,882,458, and $1,246,369, 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 years ended December 31,
2024 and 2023 was $1,800,429 and $1,526,983, respectively.
91
2024 ANNUAL REPORT
90
GENTEX CORPORATION
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, 2024, 2023, and 2022 was $964,594,
$882,294, and $906,478, respectively. The following table summarizes shares sold to employees under the 2022 and prior plan in the years
ended December 31, 2024, 2023, and 2022:
Plan
2024
2023
2022
Cumulative Shares
Issued
Weighted Average
Fair Value 2024
2022 Employee Stock Purchase Plan
201,032
194,241
94,111
489,384
$
31.98
Prior Employee Stock Purchase Plan
—
—
126,101
1,624,122
—
( 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
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-maker (“CODM”)
in deciding how to allocate resources and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company
discloses segment information under two reportable segments, which are Automotive Products and Other.
AUTOMOTIVE PRODUCTS: Automotive applications are the largest business segment for the Company, consisting of interior and exterior
electrochromic automatic-dimming rearview mirrors and automotive electronics. Automotive rearview mirrors and electronics accounted for
approximately 98% of the Company’s consolidated net sales in 2024.
OTHER: The Other reportable segment includes the operating segments of Fire Protection, Dimmable Aircraft Windows, Nanofiber, Medical,
and Biometrics. These operating segments accounted for approximately 2% of the Company’s consolidated net sales in 2024.
The table below presents net sales and the significant expense categories that are included in reportable segment operating profit and regularly
provided to our CODM:
2024
2023
2022
NET SALES:
Automotive Products
$
2,264,724,564 $
2,254,660,291 $
1,874,742,458
Other
48,589,769
44,554,753
44,215,585
Total
$
2,313,314,333 $
2,299,215,044 $
1,918,958,043
COST OF GOODS SOLD:
Automotive Products
$
1,507,698,600 $
1,506,237,606 $
1,275,111,908
Other
34,525,543
30,347,430
34,031,950
Total
$
1,542,224,143 $
1,536,585,036 $
1,309,143,858
Operating Expenses:
Automotive Products
$
280,803,585 $
252,771,985 $
227,139,802
Other
30,560,032
14,126,970
12,668,257
Total
$
311,363,617 $
266,898,955 $
239,808,059
INCOME (LOSS) FROM OPERATIONS:
Automotive Products
$
476,222,379 $
495,650,700 $
372,490,748
Other
(16,495,806)
80,353
(2,484,622)
Total
$
459,726,573 $
495,731,053 $
370,006,126
ASSETS:
Automotive Products
$
1,819,179,258 $
1,782,342,705 $
1,670,634,277
Other
90,067,303
85,610,250
43,025,905
Corporate
851,574,414
743,484,597
613,569,742
Total
$
2,760,820,975 $
2,611,437,552 $
2,327,229,924
DEPRECIATION & AMORTIZATION:
Automotive Products
$
87,207,822 $
87,123,055 $
90,030,087
Other
2,724,978
1,231,061
1,056,510
Corporate
4,781,862
4,967,076
5,481,846
Total
$
94,714,662 $
93,321,192 $
96,568,443
CAPITAL EXPENDITURES:
Automotive Products
$
127,601,204 $
163,070,404 $
141,166,506
Other
2,691,303
3,827,880
2,356,910
Corporate
14,376,495
16,780,176
2,909,707
Total
$
144,669,002 $
183,678,460 $
146,433,123
93
2024 ANNUAL REPORT
92
GENTEX CORPORATION
Other includes Dimmable Aircraft Windows, Fire Protection Products, Nanofiber, Medical, and Biometrics. Major product line revenues
included within the Automotive Products segment are as follows:
2024
2023
2022
AUTOMOTIVE PRODUCTS
Automotive Mirrors
$
2,145,847,699
$
2,128,473,563
$
1,742,196,401
HomeLink® Modules*
118,876,865
126,186,728
132,546,057
Total Automotive Products
$
2,264,724,564
$
2,254,660,291
$
1,874,742,458
OTHER PRODUCTS REVENUE
$48,589,769
$44,554,753
$44,215,585
Total Revenue
$
2,313,314,333
$
2,299,215,044
$
1,918,958,043
* Excludes HomeLink® revenue integrated into automotive mirrors.
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, 2024, 2023 and 2022, approximately 7%, 8% and 7% of the Company’s net sales
were invoiced and paid in foreign currencies, respectively.
In 2024, the Company had three automotive customers (including direct sales to original equipment manufacturer (“OEM”) customers and sales
through their Tier 1 suppliers), which individually accounted for 10% or more of net sales as follows:
Toyota Motor Company
Volkswagen Group
General Motors
2024
19%
13%
11%
2023
18%
14%
10%
2022
16%
13%
10%
( 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, 2024 and 2023
(in thousands, except per share data):
First
Second
Third
Fourth
2024
2023
2024
2023
2024
2023
2024
2023
Net Sales
$
590,225 $
550,761 $
572,926 $
583,473 $
608,526 $
575,848 $
541,638 $
589,132
Gross Profit
202,238
174,737
188,563
193,083
204,064
191,441
176,226
203,369
Operating Income
129,346
113,251
114,884
127,289
125,728
122,417
89,768
132,774
Net Income
108,231
97,578
86,040
109,155
122,549
104,725
87,668
116,944
Earnings Per Share
(Basic)(1)
$
0.47 $
0.42 $
0.37 $
0.47 $
0.54 $
0.45 $
0.39 $
0.50
Earnings Per Share
(Diluted)(1)
$
0.47 $
0.42 $
0.37 $
0.47 $
0.53 $
0.45 $
0.39 $
0.50
(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 basic and diluted earnings per share.
( 9 ) C O M P R E H E N S I V E I N C O M E
Comprehensive income 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.
For the Years ended December 31,
2024
2023
2022
Foreign currency translation adjustments:
Balance at beginning of period
$
(4,534,719)
$
(4,032,239)
$
920,589
Other comprehensive loss before reclassifications
(1,283,017)
(502,480)
(4,952,828)
Net current-period change
(1,283,017)
(502,480)
(4,952,828)
Balance at end of period
(5,817,736)
(4,534,719)
(4,032,239)
Unrealized (losses) gains on available-for-sale securities:
Balance at beginning of period
(2,022,403)
(10,110,695)
1,006,655
Other comprehensive (loss) income before reclassifications
(360,991)
3,360,396
(12,470,515)
Amounts reclassified from accumulated other comprehensive
(loss) income
1,791,789
4,727,896
1,353,165
Net current-period change
1,430,798
8,088,292
(11,117,350)
Balance at end of period
(591,605)
(2,022,403)
(10,110,695)
Accumulated other comprehensive loss, end of period
$
(6,409,341)
$
(6,557,122)
$
(14,142,934)
All amounts are shown net of tax. Amounts in parentheses indicate debits.
The following table presents details of reclassifications from accumulated other comprehensive (loss) income for the years ended December 31,
2024, 2023, and 2022:
Details about Accumulated Other
Comprehensive (Loss) Income
Components
Affected Line item in the
Statement of Consolidated
Income
For the Years ended December 31,
2024
2023
2022
Unrealized (losses) gains on available-for-sale
securities
Realized loss on sale of securities
$
(2,268,087)
$
(5,984,678)
$
(1,712,867)
Other loss, net
Provision for income taxes
476,298
1,256,782
359,702
Provision for Income Taxes
Total reclassifications for the period
$
(1,791,789)
$
(4,727,896)
$
(1,353,165)
Net of tax
95
2024 ANNUAL REPORT
94
GENTEX CORPORATION
( 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 in 2020, which was determined to be fully impaired as part of the annual impairment analysis performed in 2024 (refer to Note 1,
“Summary of Significant Accounting and Reporting Policies”; $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; $26.7 million as part of the acquisition of eSight in 2023; and $4.2 million as part of the acquisition
of Galvaneyes, LLC (“Galvaneyes”) in the fourth quarter of 2024. Refer to Note 12, “Acquisitions”, for further information on the eSight and
Galvaneyes acquisitions. The carrying value of Goodwill as of December 31, 2024 and December 31, 2023 was $340.7 million and $340.1
million, respectively, as set forth in the table below.
Carrying Amount
Balance as of December 31, 2023
$
340,105,631
Acquisitions
4,228,000
Divestitures
—
Impairments
(3,664,704)
Other
—
Balance as of December 31, 2024
340,668,927
As of December 31, 2024, $31.2 million of goodwill was recorded within the Other segment as a result of the Air-Craftglass, eSight, and
Galvaneyes 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 that additional impairment testing was needed for the Nanofiber reporting unit, which is included within the Other
segment, as a result of the timing to commercialization and costs to develop exceeding the original estimates at the acquisition date. As a result
of this testing, the Company recognized $3.7 million goodwill impairment and $5.2 million of IPR&D impairment during the year ended
December 31, 2024, related to the acquisition of Vaporsens. No impairment has been recognized on goodwill or IPR&D in prior periods.
The Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair
value thus resulting in the need for interim testing, including long-term revenue growth 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. Other than as set forth above, no such events or circumstances that might negatively impact the key
assumptions were observed in 2024 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, 2024 and December 31, 2023.
As of December 31, 2024:
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
(168,750,000)
11,250,000
12 years
Existing Customer Platforms
43,000,000
(43,000,000)
—
10 years
Exclusive Licensing Agreement
96,000,000
—
96,000,000
Indefinite
BioCenturion Trade Names and Trademarks
640,000
—
640,000
10 years
BioCenturion Technology
2,300,000
—
2,300,000
12 years
eSight Technology
12,000,000
(1,166,667)
10,833,333
12 years
eSight Trade Names and Trademarks
870,000
(84,583)
785,417
12 years
Vaporsens In-Process R&D
5,800,000
—
5,800,000
Indefinite
Argil In-Process R&D
6,278,132
—
6,278,132
Indefinite
Air-Craftglass In-Process R&D
1,507,778
—
1,507,778
Indefinite
Guardian Trade Names
1,300,000
(54,167)
1,245,833
12 years
Guardian In-Process R&D
6,800,000
(283,333)
6,516,667
12 years
Total other identifiable intangible assets
$
408,495,910 $
(213,338,750)
$
195,157,160
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
(168,750,000)
11,250,000
12 years
Existing Customer Platforms
43,000,000
(43,000,000)
—
10 years
Exclusive Licensing Agreement
96,000,000
—
96,000,000
Indefinite
BioCenturion Trade Names and Trademarks
640,000
—
640,000
10 years
BioCenturion Technology
2,300,000
—
2,300,000
12 years
eSight Technology
12,000,000
(1,166,667)
10,833,333
12 years
eSight Trade Names and Trademarks
870,000
(84,583)
785,417
12 years
Vaporsens In-Process R&D
5,800,000
—
5,800,000
Indefinite
Argil In-Process R&D
6,278,132
—
6,278,132
Indefinite
Air-Craftglass In-Process R&D
1,507,778
—
1,507,778
Indefinite
Guardian Trade Names
1,300,000
(54,167)
1,245,833
12 years
Guardian In-Process R&D
6,800,000
(283,333)
6,516,667
12 years
Total other identifiable intangible assets
$
408,495,910 $
(213,338,750)
$
195,157,160
Accumulated amortization on patents and intangible assets was approximately $241.4 million and $224.7 million at December 31, 2024 and
2023, respectively. Amortization expense on patents and other intangible assets was approximately $17.9 million, $19.7 million, and $21.7
million in calendar years 2024, 2023 and 2022, respectively. At December 31, 2024, patents had a weighted average amortized life of 9 years.
97
2024 ANNUAL REPORT
96
GENTEX CORPORATION
Excluding the impact of any future acquisitions, the Company anticipates amortization expense including patents and other intangible assets to
be approximately: $14 million for the year ended December 31, 2025; and $3 million for each of the years ended December 31, 2026, December
31, 2027, December 31, 2028, and December 31, 2029.
( 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, 2024, 2023, and 2022:
For the Years ended December 31,
Revenue
2024
2023
2022
Automotive Products
U.S.
$
643,769,161 $
688,164,335 $
579,531,611
China
207,451,036
239,292,351
229,574,913
Germany
271,593,165
294,529,611
266,498,398
Japan
370,079,317
323,872,022
234,888,653
Mexico
187,291,325
142,082,011
121,553,711
Republic of Korea
163,788,347
149,554,788
95,395,479
Other
420,752,213
417,165,173
347,299,693
Total Automotive Products
$
2,264,724,564 $
2,254,660,291 $
1,874,742,458
Other Products (U.S.)
48,589,769
44,554,753
44,215,585
Total Revenue
$
2,313,314,333 $
2,299,215,044 $
1,918,958,043
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, 2024, 2023,
and 2022:
For the Years Ended December 31,
Revenue
2024
2023
2022
Automotive Segment
Automotive Mirrors & Electronics
$
2,145,847,699 $
2,128,473,563 $
1,742,196,401
HomeLink Modules*
118,876,865
126,186,728
132,546,057
Total Automotive Products
$
2,264,724,564 $
2,254,660,291 $
1,874,742,458
Other Segment
Fire Protection Products
$
26,845,936 $
25,927,018 $
38,238,092
Windows Products
20,207,691
18,582,949
5,977,493
Nanofiber Products
—
—
—
Medical
1,379,651
44,786
—
Biometrics
156,491
—
—
Total Other
$
48,589,769 $
44,554,753 $
44,215,585
* HomeLink revenue related to HomeLink technology/functionality integrated into automotive mirrors, is included within the Automotive mirrors & electronics segment
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
the driver. These electronic interior mirrors can also include additional electronic features such as compass, microphones, HomeLink®, lighting
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 manufactures 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.
HOMELINK® MODULES
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.
99
2024 ANNUAL REPORT
98
GENTEX CORPORATION
Other Segment
DIMMABLE AIRCRAFT WINDOWS
The Company supplies variable dimmable windows for the passenger compartment on the Boeing 787 Dreamliner Series of Aircraft and certain
other 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 TECHNOLOGIES
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 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.
In November 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, 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.
BIOMETRICS
In November 2024, the Company acquired GalvanEyes, LLC, which is the managing partner and 50% owner of the BioCenturion joint venture
with Eyelock, a subsidiary of VOXX. BioCenturion specializes in creating and deploying authentication solutions to help clients secure their
worlds, optimize their workload, and organize their data through customized biometric solutions.
Refer to Note 12, “Acquisitions”, for further information.
( 1 2 ) A C Q U I S I T I O N S
In November 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, 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 accounted for the acquisition under the provisions of FASB ASC Topic 805, Business Combinations. The valuation process
was completed during the third quarter of 2024. Approximately $1.4 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, 2024.
The following table summarizes the fair values of the assets acquired, and the liabilities assumed, as of the acquisition date of November 2, 2023:
Fair Value
Current Assets
$
441,228
Personal Property
75,000
Right of Use Asset (Lease)
116,562
eSight Technology
12,000,000
Trade Names and Trademarks
870,000
Goodwill
26,696,012
Total Assets
$
40,198,802
Lease Liability
$
116,562
Contingent Earn Out Liability
12,000,000
Total Liabilities
$
12,116,562
In November 2024, the Company acquired GalvanEyes, LLC, (“GalvanEyes”) which is the managing partner and 50% owner of the BioCenturion
joint venture with Eyelock, a subsidiary of VOXX. The Company paid $2.9 million in cash, as well as an earnout over the next fifteen calendar
years, not to exceed $15 million in the aggregate, for which the acquisition date fair value is estimated at $1.5 million. The earnout is based on
adjusted earnings before interest and taxes. The Company is accounting 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, noncontrolling interest, 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 2025. The Company has consolidated GalvanEyes and the joint venture BioCenturion within the Company’s Consolidated Balance
Sheets as of December 31, 2024 in accordance with ASC 810, Consolidation, and has recognized $4.1 million in noncontrolling interest related
to this transaction. Less than $0.2 million of revenue and less than $0.4 million net loss of the business of GalvanEyes and BioCenturion was
included in the Company’s consolidated statement of income and comprehensive income for the year ended December 31, 2024.
On December 17, 2024, as previously disclosed, the Company entered into a definitive agreement and plan of merger for the Company to
acquire VOXX in an all-cash transaction. Under the terms of the agreement, the Company will acquire all the issued and outstanding shares
of VOXX common stock not already owned by the Company for a purchase price of $7.50 per share. The transaction is subject to approval of
VOXX’s stockholders, certain regulatory approvals and other customary closing conditions, and is expected to close in the first quarter of 2025.
In 2024, the Company incurred $1.9 million in acquisition costs related to the GalvanEyes and VOXX acquisitions, which has been expensed
s incurred in the “Selling, general & administrative” section of its Consolidated Statements of Income.
101
2024 ANNUAL REPORT
100
GENTEX CORPORATION
15-Year Summary of Financial Data
SUMMARY OF OPERATIONS FOR THE YEAR
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
Net Sales
2,313,314
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
Cost of goods sold
1,542,224
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
Gross profit
771,090
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
Gross profit margin
33.3%
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%
Research and development expenses
181,475
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
Selling, general & administrative expenses
121,024
112,539
106,4992
92,162
89,952
85,083
75,206
71,443
62,471
56,617
55,880
49,496
53,3601
48,578
40,618
Impairment charges
8,865
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Operating income
311,364
495,731
370,0062
409,782
399,556
488,538
508,126
523,358
511,743
458,766
398,834
304,742
234,4551
231,368
190,972
Percent of net sales
13.5%
21.6%
19.3%
23.7%
23.7%
26.3%
27.7%
29.2%
30.5%
29.7%
29.0%
26.0%
21.3%
22.6%
23.4%
Interest expense
436
369
174
181
641
296
927
4,371
5,684
4,439
3,501
937 -
-
-
Other income (expense)
12,923
9,619
(109)
6,750
12,898
12,174
14,849
12,809
4,501
9,264
19,993
24,259
15,170
13,064
12,468
Income before taxes
472,214
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
Percent of net sales
20.4%
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%
Income taxes
67,726
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
Tax rate
14.3%
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%
Net income
404,488
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
Percent of net sales
17.5%
18.6%
16.6%
20.8%
20.6%
22.8%
23.9%
22.7%
20.7%
20.6%
21.0%
19.0%
15.3%
16.1%
16.9%
Return on average equity
16.9%
19.6%
15.9%
18.5%
17.8%
22.4%
22.4%
20.5%
19.1%
19.3%
19.9%
18.2%
15.7%
17.1%
16.9%
Earnings per share - diluted
1.76
1.84
1.36
1.50
1.41
1.66
1.62
1.41
1.19
1.08
0.98
0.77
0.59
0.57
0.49
Price/earnings ratio range
21-16
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
Weighted average common shares outstanding
- diluted
226,023
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
Capital expenditures
144,669
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
FINANCIAL POSITION AT YEAR-END
Cash and short-term investments
255,624
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
Long-term and Equity Method investments
339,604
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
Total current assets
1,037,328
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
Total current liabilities
252,693
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
Working capital
784,635
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
Plant and equipment - net
728,481
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
Total assets
2,760,821
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
Long-term debt, including current maturities
-
-
-
-
-
-
-
78,000
185,625
225,625
258,125
265,625
-
-
-
Shareholders’ investment
2,467,951
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
Noncontrolling Interest
4,149,000
Debt/equity ratio (including current maturities)
-
-
-
-
-
-
-
0.04
0.10
0.15
0.20
0.23 -
-
-
Common shares outstanding
227,207
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
Book value per share
10.9
10.0
8.8
8.2
8.1
7.7
7.2
7.3
6.6
5.9
5.3
4.6
3.9
3.6
3.1
Cash Dividend declared per share
0.48
0.48
0.48
0.48
0.48
0.46
0.44
0.39
0.36
0.34
0.31
0.28
0.26
0.24
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.
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.
102
GENTEX CORPORATION
CORPORATE HEADQUARTERS
GENTEX CORPORATION
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
616.931.3505
ir.gentex.com
OFFICERS & EXECUTIVE MANAGEMENT
Steve Downing
President & Chief Executive Officer
Neil Boehm
Chief Technology Officer, Chief Operations Officer
Kevin Nash
Chief Financial Officer, Chief Accounting Officer, Vice
President of Finance, & Treasurer
Matt Chiodo
Chief Sales Officer & Senior Vice President of Sales
Scott Ryan
Vice President, General Counsel, Corporate Secretary,
& Sustainability Officer
Paul Flynn
Vice President of Operations
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
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 & Program Management
Craig Piersma
Vice President of Marketing &
Corporate Communications
Robert Steel
Vice President of Sales — Europe
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, MAY 15, 2025 @ 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
CORPORATE DATA
BOARD OF DIRECTORS
Director Since
Compensation
Committee*
Executive
Committee*
Nominating
& Corporate
Governance
Committee*
Audit
Committee*
Age**
Mr. Richard Schaum
(Chair)
2011
Chair
Chair
78
Mr. Joseph Anderson, Jr.
2022
Member
82
Ms. Leslie Brown
2016
Chair
71
Mr. Garth Deur
2023
Member
Member
Chair
68
Mr. Steve Downing
2020
Member
47
Mr. Dr. Bill Pink
2024
58
Ms. Kathy Starkoff
2018
Member
67
Mr. Brian Walker
2018
Member
Member
Member
63
Mr. Dr. Ling Zang
2021
Member
56
* Identity, Demographics, and Committee memberships as of Aug 15, 2024.
** Ages as of Feb 16, 2025
Total Number of Directors
9
Female
Male
Non-Binary
Did not Disclose Gender
Part 1: Gender Identity
Directors
2
7
0
0
Part 2: Demographic Background
African American or Black
0
2
0
0
Alaskan Native
or Native American
0
0
0
0
Asian
0
1
0
0
Hispanic or Latinx
0
0
0
0
Native Hawaiian
or Pacific Islander
0
0
0
0
White or Caucasian
2
4
0
0
Two or More Races
or Ethnicities
0
0
0
0
LGBTQ+
0
Did Not Disclose
Demographic Background
0
103
2024 ANNUAL REPORT
600 N. Centennial Street,
Zeeland, Michigan 49464
gentex.com | ir.gentex.com
616.772.1800
© 2025 Gentex Corporation
Gentex®, A Smarter Vision®, eSight®, eSight Go™, Full Display Mirror®, FDM®, ITM®, Integrated Toll Module®, ITM (design)®, HomeLink®, HomeLink (house design)®,
HomeLink Connect®, SmartBeam®, and Vaporsens® are all trademarks of Gentex Corporation. The products referenced in this report may not 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. “Simplenight” is a registered trademark of Simplenight Inc.