Gentex Corporation

05/06/2026 | Press release | Distributed by Public on 05/06/2026 09:55

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
RESULTS OF OPERATIONS:
FIRST QUARTER 2026 VERSUS FIRST QUARTER 2025
Net Sales. Consolidated net sales for the first quarter of 2026 increased by $98.7 million or 17%, when compared with the first quarter of 2025, which did not include VOXX. VOXX, one hundred percent of which was acquired on April 1, 2025, contributed $88.6 million of revenue for the first quarter of 2026. Core Gentex revenue (excluding VOXX) was $586.8 million in the first quarter of 2026, representing a 2% quarter over quarter increase, despite global light vehicle production that was down approximately 3% compared to the first quarter of 2025.
Core Gentex Automotive net sales (excluding VOXX) for the first quarter of 2026 were $566.2 million, an increase compared with automotive net sales of $563.9 million in the first quarter of 2025, despite the quarter over quarter decline in global light vehicle production and 6% decrease in total mirror unit shipments in the first quarter of 2026, compared to the first quarter of 2025.
The below table represents the Company's auto-dimming mirror unit shipments for the three months ended March 31, 2026, and 2025 (in thousands):
Three Months Ended March 31,
2026 2025 % Change
North American Interior Mirrors 2,272 2,249 1%
North American Exterior Mirrors 1,401 1,370 2%
Total North American Mirror Units
3,673 3,619 1%
International Interior Mirrors 4,509 5,140 (12)%
International Exterior Mirrors 2,671 2,783 (4)%
Total International Mirror Units
7,180 7,923 (9)%
Total Interior Mirrors 6,781 7,389 (8)%
Total Exterior Mirrors 4,072 4,153 (2)%
Total Auto-Dimming Mirror Units 10,853 11,542 (6)%
Note: Percent change and amounts may not total due to rounding.
Core Gentex Other net sales (excluding VOXX) were $20.5 million in the first quarter of 2026, compared to $12.9 million in the first quarter of 2025, an increase of 59%. Other net sales for the first quarter of 2026 included security and access control sales of $3.0 million, an increase of $2.1 million over the first quarter of 2025, primarily generated from the Company's BioConnect subsidiary acquired on July 1, 2025. Dimmable aircraft window sales increased during the first quarter of 2026 to $8.3 million, compared to $4.9 million in the same quarter of last year. Fire protection sales were $8.8 million in the first quarter of 2026, compared to $6.7 million in the same quarter of last year.
Cost of Goods Sold. For the first quarter of 2026, the Company's consolidated gross margin was 33.8% compared to 33.2% in the same quarter last year, which did not include VOXX. The quarter over quarter increase in the gross margin resulted primarily from operational efficiencies and improved product mix, which was partially offset by tariff related costs and commodity price increases. The core Gentex gross margin (excluding VOXX) was 34.0% in the first quarter of 2026, representing an 80 basis-point increase compared to the first quarter of 2025, which did not include VOXX.
Operating Expenses. Consolidated operating expenses were $105.0 million in the first quarter of 2026, compared to $78.7 million in the first quarter of 2025, which did not include VOXX. The increase was primarily due to the VOXX acquisition, which accounted for $23.2 million of the increase. Consolidated operating expenses for the quarter were also impacted by intangible asset impairment charges of $2.8 million related to In-Process R&D previously acquired by the Company. On a non-GAAP basis, core Gentex adjusted operating expenses were $78.3 million in the first quarter of 2026, compared to $75.0 million in the first quarter of 2025, when excluding the impact of intangible asset impairment charges, acquisition related costs, and severance costs in each of the quarters, for comparability.
Engineering, research and development expenses for the first quarter of 2026 increased by $5.7 million, when compared with the first quarter of 2025, primarily due to the VOXX acquisition, as well as staffing and engineering related professional fees.
Selling, general and administrative ("S, G & A") expenses increased by $19.9 million for the first quarter of 2026, compared to the first quarter of 2025, primarily due to the VOXX acquisition. S, G & A expenses were approximately 7% of net sales in the first quarter of 2026, compared to 5% in the first quarter of 2025, which did not include VOXX.
Other (Loss) Income, Net. Total Other loss, net for the first quarter of 2026 was $5.6 million, when compared with total Other income, net, of $0.6 million for the first quarter of 2025. The quarter over quarter decline was driven by lower investment income, as well as an impairment charge of $2.7 million related to one of the Company's technology investments and an increase in credit loss reserves related to loans receivable of $2.2 million during the first quarter of 2026.
Provision for Income Taxes. The effective tax rate was 16.6% for, and an income tax expense of $19.6 million was recorded in, the first quarter of 2026, compared to an effective tax rate of 16.5% for, and an income tax expense of $18.8 million recorded in, the same quarter of 2025. Generally, effective tax rates for the Company differ from statutory federal income tax rates due to provisions for state and local income taxes, the FDDEI deduction, and research and development tax credits.
Net Income Attributable to Gentex Corporation. Consolidated net income attributable to Gentex for the first quarter of 2026 was $98.5 million, an increase of 4% compared to net income attributable to Gentex of $94.9 million in the first quarter of 2025, which did not include VOXX. The quarter over quarter increase in net income for the first quarter of 2026 was due to higher sales and income from operations compared to the same quarter last year. Non-GAAP consolidated net income attributable to Gentex was $103.7 million in the first quarter of 2026, compared to $98.0 million in the first quarter of 2025 (which did not include VOXX), when adjusting for the impact of impairment charges, acquisition related costs, and severance costs in each of the quarters, for comparability.
Earnings Per Share Attributable to Gentex Corporation. The Company had consolidated earnings per diluted share attributable to Gentex for the first quarter of 2026 of $0.46, which compared to earnings per diluted share of $0.42 for the first quarter of 2025, which did not include VOXX. Earnings per diluted share were also positively impacted by the increase in sales and improved profitability of the Company, partially offset by other losses incurred in the first quarter of 2026. On a non-GAAP basis, consolidated adjusted earnings per diluted share attributable to Gentex were $0.48 for the first quarter of 2026, compared to $0.43 for the first quarter of 2025 (which did not include VOXX), excluding the impact of impairment charges, acquisition related costs, and severance costs in each of the quarters, for comparability.
The Company has not recognized any potential refund of IEEPA tariffs in its first quarter financial results. The Company remains in the process of assessing the impact of the invalidation of IEEPA tariffs by the U.S. Supreme Court. As of March 31, 2026, the Company estimates that approximately $15 million of IEEPA tariff costs have been capitalized in inventory, which have not yet been expensed as of that date. Since the inception of the IEEPA tariffs, the Company (including VOXX) has directly paid a cumulative total of approximately $42 million (excluding amounts paid indirectly through suppliers), partially offset by approximately $5 million of costs recovered from customers. While the Company is pursuing refunds as it determines appropriate, the availability, amount, and timing of any potential refunds remains highly uncertain and subject to further legal, regulatory, and administrative developments. As such, the Company is unable to conclude any recovery is probable and reasonably estimable as of March 26, 2026.
NON-GAAP FINANCIAL MEASURES:
Financial information for the three months ended March 31, 2026 is provided in accordance with Generally Accepted Accounting Principles ("GAAP"). In addition, the Company believes that it is useful for the three months ended March 31, 2026 to provide certain non-GAAP measures, including Adjusted Operating Expenses, Adjusted Income from Operations, Adjusted Other (Loss) Income, Adjusted Net Income Attributable to Gentex Corporation, and Adjusted Earnings per Share, with the adjustments set forth in the "Reconciliation of Non-GAAP Measures" table below. This non-GAAP financial information allows investors to evaluate current performance in the Company's core business in relation to historical performance by excluding the impact of certain impairment charges, acquisition related costs, and severance costs set forth in the table below.
The Company believes that the presentation of these non-GAAP financial measures provides insight into the Company's core performance and trends with respect to the same. Management of the Company similarly uses such non-GAAP financial measures in assessing the business internally. A reconciliation of Adjusted Operating Expenses, Adjusted Income from Operations, Adjusted Other (Loss) Income, Adjusted Net Income Attributable to Gentex Corporation, and Adjusted Earnings per Share to the most directly comparable GAAP measures is provided in the "Reconciliation of non-GAAP Measures" tables below. Like all non-GAAP financial measures, these non-GAAP measures are intended to supplement, not to replace, GAAP measures.
All non-GAAP financial measures are subject to inherent limitations because not all of the expenses required by GAAP are included.
Reconciliation of Non-GAAP Measures
(Unaudited)
Supplemental Information Three Months Ended March 31,
Gentex VOXX Consolidated 2026 Consolidated 2025
Operating Expenses - GAAP $ 81,802,062 $ 23,164,932 $ 104,966,994 $ 78,746,481
Less:
Impairment Charge - Intangible Assets 2,800,000 - 2,800,000 -
Acquisition Related Costs - - - 879,467
Severance Costs 689,341 33,200 722,541 2,889,112
Adjusted Operating Expenses - (Non-GAAP) $ 78,312,721 $ 23,131,732 $ 101,444,453 $ 74,977,902
Income from Operations - GAAP $ 117,917,632 $ 5,742,287 $ 123,659,919 $ 112,987,106
Less:
Impairment Charge - Intangible Assets 2,800,000 - 2,800,000 -
Acquisition Related Costs - - - 879,467
Severance Costs 689,341 33,200 722,541 2,889,112
Adjusted Income from Operations - (Non-GAAP) $ 121,406,973 $ 5,775,487 $ 127,182,460 $ 116,755,685
Other (Loss) Income - GAAP $ (6,049,584) $ 437,227 $ (5,612,357) $ 640,476
Less:
Impairment Charge - Technology Investment (2,739,466) - (2,739,466) -
Adjusted Other (Loss) Income - (Non-GAAP) $ (3,310,118) $ 437,227 $ (2,872,891) $ 640,476
Adjusted Net Income and Adjusted Earnings per Share: Adjusted Net Income Attributable to Gentex Corporation and Adjusted Earnings per Share are also presented as supplemental measures of the Company's performance for the same reasons set forth above. Adjusted Net Income is defined as Net Income adjusted for impairment charges, acquisition related
costs and severance costs during the first quarter of 2026 and 2025. Adjusted Earnings per Share is defined as Adjusted Net Income divided by weighted average diluted shares outstanding.
Reconciliation of Non-GAAP Measures (continued)
(Unaudited)
Three Months Ended March 31,
Gentex VOXX Consolidated 2026 Consolidated 2025
Net Income Attributable to Gentex Corporation - GAAP $ 93,818,074 $ 4,637,069 $ 98,455,143 $ 94,874,045
Impairment Charges - Intangible Assets, net of tax 2,335,200 - 2,335,200 -
Acquisition Related Costs, net of tax - - - 734,355
Severance Costs, net of tax 574,910 27,689 602,599 2,412,409
Impairment Charges - Technology Investment, net of tax 2,284,715 - 2,284,715 -
Adjusted Net Income Attributable to Gentex Corporation - (Non-GAAP) $ 99,012,899 $ 4,664,758 $ 103,677,657 $ 98,020,809
Adjusted Earnings Per Share:
Basic $ 0.46 $ 0.02 $ 0.48 $ 0.43
Diluted $ 0.46 $ 0.02 $ 0.48 $ 0.43
FINANCIAL CONDITION:
The Company's cash and cash equivalents as of March 31, 2026 were $164.8 million, an increase of $19.1 million, compared to $145.6 million as of December 31, 2025. The increase was primarily due to cash flows from operations, including increases in accounts payable and accrued liabilities, offset by cash outflows related to share repurchases, dividend payments, capital expenditures, and investment purchases during the three months ended March 31, 2026.
Short-term investments as of March 31, 2026 were $10.3 million, an increase from $5.4 million as of December 31, 2025, and long-term investments were $270.1 million as of March 31, 2026, down from $273.0 million as of December 31, 2025.
Accounts receivable as of March 31, 2026 increased approximately $51.0 million compared to December 31, 2025, primarily due to the timing of customer payments during the three months ended March 31, 2026.
Inventories as of March 31, 2026 were $523.5 million, compared to $516.3 million as of December 31, 2025, primarily due to an increase in work-in-process inventory at March 31, 2026.
Accounts payable as of March 31, 2026 increased approximately $27.7 million to $276.6 million, compared to December 31, 2025, primarily driven by timing of payments within the period.
Accrued liabilities as of March 31, 2026 increased approximately $29.3 million compared to December 31, 2025, primarily due to an increase in income taxes payable.
Cash flow from operating activities for the three months ended March 31, 2026 decreased $11.4 million to $137.1 million, compared with $148.5 million during the same period last year, primarily due to changes in working capital.
Capital expenditures for the three months ended March 31, 2026 were approximately $17.0 million, compared with approximately $36.7 million for the same period last year. The decrease was primarily due to the timing of completion and commencement of projects, including the completion of the Gentex Discovery Preschool in 2025, as further described below.
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 facility needs.
During the fourth quarter of 2025, the Company completed construction 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. The total cost of the building project was approximately $20 million and was funded with cash on hand.
The Company estimates that it currently has building capacity to manufacture approximately 42 - 45 million interior automatic-dimming mirror units annually, and approximately 19 - 22 million exterior mirror units annually, based on current product mix. The Company also evaluates equipment capacity on an ongoing basis and adds equipment as needed.
Management considers the current working capital and long-term investments, in addition to internally generated cash flow, its Credit Agreement, and credit worthiness, 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 long-term investments:
March 31, 2026 December 31, 2025
Working Capital $ 763,613,741 $ 740,891,499
Fixed Income Long-Term Investments 103,369,919 108,145,410
Total $ 866,983,660 $ 849,036,909
The Company has a previously announced share repurchase plan under which the Board of Directors has authorized the repurchase of shares of the Company's common stock, which remains a part of the broader publicly disclosed capital allocation strategy. Future share repurchases may vary from time to time and will take into account macroeconomic events, market trends, and other factors the Company deems appropriate (including, but not limited to, the market price of the stock, anti-dilutive effect of repurchases, and available cash). During the three months ended March 31, 2026, the Company repurchased 3,252,696 shares. The Company had 32,747,032 shares remaining available for repurchase under the plan as of March 31, 2026, as is further detailed in Part II, Item 2 of this Form 10-Q.
BUSINESS UPDATE
For the first quarter of 2026, the Company reported net sales of $675.4 million, compared to net sales of $576.8 million in the first quarter of 2025 (which did not include VOXX), a 17% increase quarter over quarter. Core Gentex revenue (excluding VOXX) for the first quarter of 2026 increased 2% versus the first quarter of 2025, despite a global decline in light vehicle production of approximately 3% in the first quarter of 2026, compared to the first quarter of 2025.
During the three months ended March 31, 2026, over 65% of the Company's mirror launches were interior and exterior auto-dimming mirrors with advanced electronic features, with HomeLink® and Full Display Mirror®, ("FDM") as the primary drivers of growth.
PRODUCT UPDATE
Mirror Systems
In 2024, the United Nations Economic Commission (UN ECE) established a working group (Task Force Glare Protection) on the subject of glare in road traffic. The Task Force Glare Protection will investigate the burden and danger of road glare from vehicle headlamps and initiate necessary measures. The Company believes its auto-dimming mirror products can be a solution for necessary measures initiated by this UN ECE task force.
Camera Systems
The Company's FDM began production in 2015. Current automotive design trends are yielding vehicles with small rear windows that are often further obstructed by headrests, passengers, and roof support pillars, which can significantly hinder the mirror's rearward view. The Company's FDM is an intelligent rear vision system that uses a custom, internally or externally mounted video camera and mirror-integrated video display to optimize a vehicle driver's rearward view. This rear vision system consists of a hybrid FDM that offers bi-modal functionality. In mirror mode, the product functions as an auto-dimming rearview mirror which means that during nighttime driving, digital light sensors talk to one another via a microprocessor to automatically darken the mirror when glare is detected. With the flip of a switch, the mirror enters display mode, and a clear, bright display appears through the mirror's reflective surface, providing a wide, unobstructed rearward view. The bi-modality of the FDM is essential, because in the event of any failure of the camera or display, the product is able to function as a mirror, which meets long-standing safety requirements in the automotive industry. In addition, the driver has the ability to switch between modes to accommodate usage preferences for various weather conditions, lighting conditions, and driving tasks. FDM remained a leading performer for the Company for the first quarter of 2026.
To enhance capability and usability of the FDM, the Company previously introduced its three-camera rear vision system that streams rear video in multiple composite views to its FDM. The Company believes it is the industry's first practical and comprehensive rear vision solution designed to meet automaker, driver, safety, and regulatory requirements. The Company's rear vision system, known generally as a camera monitoring system ("CMS"), uses three cameras to provide a comprehensive view of the sides and rear of the vehicle. The side-view cameras are discretely housed in downsized, automatic-dimming exterior mirrors. Their video feeds are combined with that of a roof-mounted or rear window-based camera and stitched together into multiple composite views, which are streamed to the driver using the FDM. During any failures due to weather conditions or otherwise that disrupt the digital view, drivers can still safely use the interior and exterior mirrors. The system also supports user preference by permitting drivers to use standard mirror views, camera views, or both. The system can also be tuned to meet the various regulatory field-of-view requirements around the world by using different types of flat and curved glass, combined with simple alterations to the video viewing modes. Downsized exterior mirrors provide automakers with significant weight savings and fuel efficiency improvements. To further enhance safety, the Company's CMS solution can also work in conjunction with a vehicle's side blind zone warning system. When a trailing vehicle enters a side blind zone, a warning indicator illuminates in both the interior and exterior mirrors, while the corresponding side-view video feed appears in the display until the vehicle passes. CMS solutions also helped drive revenue growth in the first quarter of 2026, compared to the first quarter of 2025, with CMS product shipping to Rivian, Volvo, and Polestar. The Company expects to begin shipping CMS products to additional OEM customers in the second and third quarters of 2026.
The Company began shipping FDM with Digital Video Recording ("DVR") capability in 2020. This mirror and system launched in the Japan market and combines the superior functionality of the FDM with the added capability to record video from the rearward facing and forward-facing cameras simultaneously. In 2025, the Company introduced its next-generation FDM, which incorporates the Company's Dynamic View Assist, a series of dynamic viewing modes that can enhance driving safety and make using a digital mirror feel more natural. By utilizing a higher resolution imager, the FDM can automatically expand the mirror's digital view, digitally tilt downward, while reversing, and can display picture in picture functions.
In July 2016, a revision to UN-ECE Regulation 46 was published with an effective date of June 18, 2016, which allows for camera monitoring systems to replace mirrors in Japan and European countries. Since January 2017, camera monitoring systems are also permitted as an alternative to replace mirrors in the Korea market. China released an updated version of its GB15084, effective in 2023, 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 a 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 angles 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 may well provide a more robust product by addressing all driving conditions in a single solution that can be controlled by the driver. The Company has also previously announced that it continues development 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 is increased competition.
Connected Car
The Company's HomeLink® products are the auto industry's most widely used and trusted car-to-home communication system. The system consists of two or three in-vehicle buttons that can be programmed to operate garage doors, security gates, home lighting, and other radio-frequency-controlled devices. In 2017, the Company demonstrated the next generation of HomeLink®, commonly referred to as HomeLink Connect®, a smartphone app that uses both RF and wireless cloud-based connectivity to deliver complete vehicle-to-home automation. With HomeLink Connect®, a HomeLink® button press communicates with the HomeLink Connect® app on the user's smartphone. The app contains predefined, user-programmed actions, from single device operations to entire home automation scenes. The app, in turn, communicates to the home's smart hub over the cloud, activating the appropriate devices, including security systems, door locks, thermostats, lighting, and other home automation devices, providing comprehensive vehicle-to-home automation. The ability to prepare the home for arrival or departure can occur with one button press. For automakers, this functionality allows them to offer customizable, yet proven solutions without the engineering efforts or security concerns associated with integrating third party software into the vehicle's computer network. In 2021, the Company announced Volkswagen as the first automaker to offer Bluetooth® enabled mirror for home automation that works in conjunction with HomeLink Connect®.
In 2016, the Company announced a partnership with TransCore to provide automobile manufacturers with a vehicle-integrated tolling solution that enables motorists to drive on nearly all U.S. toll roads without a traditional toll tag on the windshield. The interior mirror is the optimal location for a vehicle-integrated toll transponder, and it eliminates the need to affix multiple toll tags to the windshield and helps automakers seamlessly integrate toll collection into the car. The Company's Integrated Toll Module® or ITM® simplifies and expedites local, regional, and national travel and provides transportation agencies with an interoperability solution without costly infrastructure changes to the thousands of miles of toll lanes throughout North America. Currently, the Company is shipping ITM® on 11 Audi platforms, as well as on the Mercedes EQS model. In 2020, the Company was honored with an Automotive News PACE Award for its ITM® product, which recognizes automotive suppliers for superior innovation, technological advancement, and business performance.
Further, the Company previously 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 current biometric systems. The Company's future plans include integrating biometric authentication with many of its other electronic features, including HomeLink® and HomeLink Connect®. The biometric system will allow HomeLink® to provide added security and convenience for multiple drivers by activating the unique home automation presets of different authorized users.
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. The Company continues to work with other aircraft manufacturers that have an interest in this technology regarding potential additional programs. The Company also previously announced that its latest generation of dimmable aircraft windows would be offered as optional content on the Boeing 777X aircraft. In 2019, the first production shipments of variably dimmable windows were made to Boeing for the 777X program. As also previously announced, Airbus is now offering, as optional content, the Company's dimmable aircraft windows on its aircraft, with production having begun in 2021.
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
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, in the ordinary course of business, the Company acquired certain technology assets from eSight. The technology acquired provides the most advanced and versatile low-vision smart glasses available for those with visual impairments and is compatible with more than 20 eye conditions including Macular Degeneration, Diabetic Retinopathy, and Stargardt disease.
Biometric Products
In 2024, the Company acquired GalvanEyes, LLC, which is the managing partner and 50% owner of the BioCenturion joint venture with Eyelock, a majority-owned subsidiary of VOXX. BioCenturion specializes in creating and deploying authentication solutions to help clients secure their worlds, optimize their workloads, 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. With the acquisition of VOXX on April 1, 2025, which included its majority-owned subsidiary EyeLock®, and the subsequent acquisition of the remaining interest in EyeLock® in August 2025, the Company now owns 100% of BioCenturion. These acquisitions have also enabled the Company to gain full access to the EyeLock® iris biometric technology, which will provide more product applications in the Company's automotive, aerospace, and medical markets. In July 2025, the Company acquired BioConnect, a multi-modal biometric authentication platform provider for physical and digital access control, serving a number of industries. The Company intends to utilize this acquisition to further expand its reach in the biometric space.
Fire Protection
During 2025, the Company began shipments of its PLACE product line. PLACE is a suite of advanced, multi-functional smoke and carbon monoxide alarms designed to elevate home safety, comfort, and security through room-specific intelligence. The system is managed via an intuitive mobile app and features an industry-first low-frequency sounder, engineered to improve alarm effectiveness for deep sleepers, children, and individuals with hearing impairments. It also aligns with emerging safety standards, including updated residential codes adopted in states like California.
Premium Audio Products
With the acquisition of VOXX on April 1, 2025, the Company made strategic additions to its portfolio of products, as VOXX's product lines both complement the Company's existing businesses and will help the Company continue to expand in the consumer technology and connected home space. During the first quarter of 2026, the teams at Klipsch, Onkyo, and Integra launched premium audio products that were showcased at CES in January of 2026, including the The Fives®, The Sevens®, and The Nines® powered speaker products.
OTHER
Automotive revenues represented approximately 86% of the Company's total revenue during the three months ended March 31, 2026, consisting of interior and exterior electrochromic automatic-dimming rearview mirrors and other automotive electronics.
The Company has been, is being, and will continue to be impacted by tariffs, trade regulatory actions, and changes in international trade policies as further explained below.
The Company continues to experience pricing pressure from automotive customers and competitors, in addition to tariff increases, raw material cost increases, labor cost increases, and logistics cost increases, which will continue to cause downward pressure on its sales and profit margins. The Company works continuously to offset these tariff costs, supply chain issues, and inflationary pressures with engineering and purchasing cost reductions, productivity improvements, increases in unit sales volume, and negotiations with customers to reduce the impact of the same, but there is no assurance the Company will be successful in doing so in the future.
Because the Company sells its products throughout the world, and automotive manufacturing is highly dependent on economic conditions, the Company is affected by uncertain economic conditions that reduce demand for its products, including the current inflationary environment and tariffs. The Company is likewise affected by industry-wide parts shortages and global supply constraints and labor shortages.
The Company believes that its patents and trade secrets provide it with a competitive advantage in dimmable devices, electronics, and other features that it offers for the automotive, premium audio, fire protection, aerospace, medical, consumer electronics, and access and control, and biometrics industries. Claims of patent infringement, however, can be costly and time-consuming to address. To that end, the Company obtains intellectual property rights in the ordinary course of business to strengthen its intellectual property portfolio and to minimize the risk of infringement.
The Company does not have any significant off-balance sheet arrangements or commitments that have not been recorded in its Unaudited Condensed Consolidated Financial Statements.
OUTLOOK
The Company's light vehicle production forecast for the second quarter of 2026 and full years 2026 and 2027 are based on the mid-April 2026 S&P Global Mobility outlook for North America, Europe, Japan/Korea, and China (see table below). Based on the S&P Global mobility forecast, global light vehicle production for the second quarter of 2026 is expected to decline 2% versus the second quarter of 2025, while light vehicle production in the Company's primary markets is expected to be down over 3% quarter over quarter. Full-year 2026 production in the Company's primary markets is also expected to decline 2% year over year based on the S&P Global mobility forecast. Forecasted light vehicle production volumes from S&P Global Mobility for the second quarter of 2026 and calendar years 2026 and 2027 are shown below:
Light Vehicle Production (per S&P Global Mobility mid-April light vehicle production forecast)
(in Millions)
Region Q2 2026 Q2 2025 % Change Calendar Year 2027 Calendar Year 2026 Calendar Year 2025 2027 vs 2026
% Change 		2026 vs 2025
% Change
North America 3.81 3.95 (4) % 15.30 14.96 15.27 2 % (2) %
Europe 4.31 4.47 (4) % 16.87 16.75 17.05 1 % (2) %
Japan and Korea 2.95 3.02 (2) % 11.57 11.82 12.07 (2) % (2) %
China 7.73 7.76 - % 32.46 32.34 33.10 - % (2) %
Total Light Vehicle Production 18.80 19.20 (2) % 76.20 75.87 77.49 - % (2) %

Based on the updated light vehicle production forecast and actual results for the first three months of 2026, as well as the Company's estimates for premium audio, aerospace, medical, fire protection, and consumer electronic products, the Company has made certain changes to its full-year 2026 guidance. This most recent guidance reflects the anticipated impact of all known tariffs effective as of April 24, 2026.
2026 Annual Guidance (as of April 24, 2026)
•Consolidated Revenue: $2.65 - $2.75 billion (previously: $2.60 - $2.70 billion)
•Gross Margin: 34% - 35% (no change)
•Operating Expenses (excluding severance and impairments): $410 - $420 million (no change)
•Tax Rate: 16% - 18% (no change)
•Capital Expenditures: $125 - $140 million (no change)
•Depreciation & Amortization: $100 - $110 million (no change)
Based on the mid-April 2026 S&P Global Mobility light-vehicle production outlook and the Company's estimates for premium audio, aerospace, medical, fire protection, and consumer electronics products, the Company continues to expect calendar-year 2027 revenue to range between $2.80 billion and $2.90 billion.
Ongoing uncertainties remain, including: prolonged and intensifying trade wars, including the impacts of tariffs already in place, and potential additional future tariffs, trade restrictions, and retaliatory measures; the war in Iran; the Ukraine-Russia war; the Israel-Hamas war; light vehicle production levels; impacts of regulation changes; automotive plant shutdowns; vehicle sales rates, especially in Europe, Asia and North America; OEM strategies and cost pressures; supply chain constraints: customer inventory management and the impact of potential automotive customer (including their Tier 1 suppliers) and supplier bankruptcies; etc., all of which are disrupting and will further disrupt shipments to customers, disrupt global capital flows, and heighten market volatility.
In accordance with the previously announced share repurchase plan, the Company will consider the appropriateness of continuing to repurchase additional shares of common stock in the future in support of the capital allocation strategy, but share repurchases will vary from time to time and will take into account macroeconomic events, market trends, and other factors the Company deems appropriate (including the market price of the stock, anti-dilutive effect of repurchases, and available cash). As of March 31, 2026, the Company had 32.7 million shares remaining available for repurchase under the previously announced share repurchase plan.
CRITICAL ACCOUNTING POLICIES:
The preparation of the Company's consolidated condensed financial statements contained in this report, which have been prepared in accordance with accounting principles generally accepted in the United States, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates these estimates. Estimates are based on historical experience and/or on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that may not be readily apparent from other sources. Historically, actual results have not been materially different from the Company's estimates. However, actual results may differ from these estimates under different assumptions or conditions.
The Company has identified critical accounting policies used in determining estimates and assumptions in the amounts reported in its Management's Discussion and Analysis of Financial Condition and Results of Operations herein and in its Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
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