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GENTEX CORP (GNTX)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $576.8M, down 2% year over year, but slightly above S&P Global consensus ($572.1M); GAAP diluted EPS was $0.42 vs S&P Primary EPS actual of $0.434, modestly above the $0.420 consensus. The quarter saw sequential gross margin expansion to 33.2% (+70 bps q/q) amid purchasing cost reductions despite weaker trim-mix and new tariff costs . EPS and revenue consensus values from S&P Global.*
  • Guidance was materially cut due to tariff uncertainty and a proactive halt of China-bound mirror production: FY25 primary-market revenue reduced to $2.10–$2.20B (from $2.40–$2.45B), new China revenue range $50–$120M, gross margin to 33–34% (from 33.5–34.5%); FY26 revenue guidance withdrawn .
  • Tariffs are expected to add ~50 bps of full-year margin headwind assuming reimbursement without margin dollars, and ~$50M incremental COGS on direct imports; management is negotiating reimbursement with OEMs and adjusting sourcing to mitigate impacts .
  • Strategic developments: VOXX merger closed April 1 with expected FY25 revenue contribution of ~$240–$280M (pre-tariff) and annualized $325–$375M; share repurchases accelerated (3.1M shares at $24.52), signaling confidence amid share price pullback .

What Went Well and What Went Wrong

What Went Well

  • Sequential margin improvement: Gross margin rose to 33.2% (+70 bps q/q) driven by purchasing cost reductions and higher sales vs Q4 2024; management reiterated a margin recovery plan and cost initiatives .
  • Strong capital allocation: Repurchased 3.1M shares at $24.52; balance sheet liquidity improved with cash at $286.6M, and operating cash flow of $148.5M in Q1 .
  • Product/R&D pipeline: New launches across Full Display Mirror (FDM) and first driver monitoring system shipments (Rivian R1T/R1S); management expects FDM unit growth (~+100k in 2025 vs 2024) and multi-year ramp for driver monitoring .

What Went Wrong

  • Trim-mix and take-rate headwinds: Exterior mirror unit shipments fell 15% q/q in North America and 8% internationally, driving a $25–$30M sales shortfall; auto-dimming mirror units were down 7% y/y .
  • Tariff impacts: New tariff expenses (~$0.65M in Q1) pressured margins; broader tariff escalation prompted halt of China-bound production and order cancellations/pauses, necessitating a major guidance reset .
  • Operating expense uptick: OpEx rose 8% y/y to $78.7M, mainly from $2.9M severance and ~$0.9M VOXX transaction costs, though core growth was <3% .

Financial Results

Core P&L vs Prior Periods

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$608.5 $541.6 $576.8
Gross Margin %33.5% 32.5% 33.2%
Operating Income ($USD Millions)$125.7 $89.8 $113.0
Net Income ($USD Millions)$122.5 $87.7 $94.9
Diluted EPS ($USD)$0.53 $0.39 $0.42
Effective Tax Rate %15.7% 10.3% 16.5%

Year-over-Year (Q1)

MetricQ1 2024Q1 2025YoY Change
Revenue ($USD Millions)$590.2 $576.8 -2%
Gross Margin %34.3% 33.2% -110 bps
Operating Income ($USD Millions)$129.3 $113.0 -13%
Net Income ($USD Millions)$108.2 $94.9 -12%
Diluted EPS ($USD)$0.47 $0.42 -11%

Q1 2025 Actual vs S&P Global Consensus

MetricConsensusActualSurprise
Revenue ($USD)$572.1M*$576.8M +$4.7M; +0.8%*
Primary EPS ($USD)$0.420*$0.434*+$0.014; +3.3%*

Values retrieved from S&P Global.*

Note: Company-reported GAAP diluted EPS was $0.42 ; S&P “Primary EPS” actual differs due to methodology.*

Segment Breakdown (Q1)

SegmentQ1 2024 ($M)Q1 2025 ($M)YoY Change
Automotive Net Sales$577.6 $563.9 -2%
Other Net Sales$12.6 $12.9 +2%

KPIs (Auto-Dimming Mirror Shipments, Thousands)

MetricQ1 2024Q1 2025YoY Change
North American Interior Mirrors2,262 2,249 -1%
North American Exterior Mirrors1,621 1,370 -15%
International Interior Mirrors5,554 5,140 -7%
International Exterior Mirrors3,034 2,783 -8%
Total Auto-Dimming Mirror Units12,471 11,542 -7%

Balance Sheet and Cash Flow Highlights (Q1)

MetricQ4 2024Q1 2025
Cash & Cash Equivalents ($M)$233.3 $286.6
Accounts Receivable ($M)$295.3 $330.6
Inventories ($M)$436.5 $408.9
Operating Cash Flow ($M)—$148.5
Capital Expenditures ($M)—$36.7
D&A ($M)—$25.5
Shares Repurchased (M)0.603 in Q4 3.1 in Q1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue – Primary MarketsFY 2025$2.40–$2.45B $2.10–$2.20B Lowered
Revenue – ChinaFY 2025Included above $50–$120M New disclosure
Gross MarginFY 202533.5–34.5% 33–34% Lowered
Operating Expenses (excl. severance)FY 2025$310–$320M $300–$310M Lowered
Tax RateFY 202515–17% 15–17% Maintained
Capital ExpendituresFY 2025$125–$150M $100–$125M Lowered
D&AFY 2025$85–$90M $85–$90M Maintained
RevenueFY 2026$2.55–$2.65B Withdrawn Withdrawn

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Tariffs/MacroNo material tariff execution; margin plan extended to 2025; trim-mix/production shortfalls impacted Q3/Q4 New tariff costs (~$0.65M), proactive halt of China-bound production; ~50 bps FY margin headwind assumed; ~$50M incremental COGS on imports with planned reimbursement Deteriorating; elevated uncertainty
China ExposureNot highlighted beyond production forecasts China revenue guide $50–$120M (vs ~$220–$240M initial); $43M shipped in Q1; expectation of decontenting if tariffs persist Downside risk; cautious stance
Product Performance (FDM)Q3 record revenue; FDM drove outperformance 2025 FDM growth still expected (~+100k units), but headwinds from North American volume declines Moderating growth
R&D Execution/Driver MonitoringElevated R&D spend; launches planned First DMS shipments (Rivian); 3 additional launches through early 2026; multi-year ramp to multi-hundred-million opportunity Positive execution
VOXX IntegrationAnnounced acquisition (Dec 2024) Closed Apr 1; FY25 contribution ~$240–$280M pre-tariff; gross margin high-20s; near breakeven EPS pre-tariff; sourcing shifts to reduce tariff costs Integration underway
Supply Chain/Trim-MixQ3/Q4 production and mix headwinds Weaker trim-mix; exterior mirror take rate declines; OEM incentives signaling cost-cutting Continued pressure
Capital AllocationOngoing buybacks 3.1M shares repurchased; potential for more with LOC capacity More aggressive

Management Commentary

  • “During the first quarter of 2025, trim-mix… impacted take rates… especially exterior mirror unit shipments… Overall, the weakness resulted in a shortfall of expected sales of approximately $25–$30 million for the quarter.” — Steve Downing .
  • “Gross margin… impacted by new tariff expenses of approximately $650,000… We remain committed to cost improvement initiatives… expanding this program… to offset margin pressures.” — Steve Downing .
  • “Revenue for the year in our primary markets is expected to be between $2.1B and $2.2B… Revenue for 2025 in China is expected to be between $50M and $120M… Gross margins… 33% to 34%… Capex… $100M to $125M.” — Steve Downing .
  • “The last few months have been undeniably chaotic as we work to understand the impact that tariffs will have… we still believe… new technologies… will provide a strong revenue trajectory over the next five years.” — Steve Downing .
  • “Our first driver monitoring system launch is now available and has been shipping on the Rivian R1T and R1S… other launches… later in 2025 and into early 2026.” — Neil Boehm .

Q&A Highlights

  • Tariff assumptions and margin impact: Management embeds ~50–100 bps margin headwind for 2025 and targets reimbursement of direct import tariffs, implying ~$50M incremental COGS passing through without margin .
  • China shipments and production halt: Minimal shipments post-April 11 trigger; existing China inventory and in-transit stock used to bridge demand while agreements are negotiated; low-end China revenue scenario effectively assumes limited additional shipments .
  • VOXX contribution and elasticity: FY25 VOXX revenue $240–$280M pre-tariff; gross margin high-20s; near breakeven EPS pre-tariff; management evaluating consumer price elasticity and sourcing alternatives .
  • FDM trajectory: Growth remains positive despite North American volume reductions; ~+100k unit increase expected in 2025 vs 2024, but moderated by production declines .
  • OEM behavior and trim-mix: Incentives and cost-cutting driving decontenting (e.g., removal of passenger-side auto-dimming mirrors), pressuring take rates and mix .

Estimates Context

  • Q1 2025 actuals vs S&P Global consensus: Revenue $576.8M vs $572.1M (+0.8%); Primary EPS $0.434 vs $0.420 (+3.3%). Company-reported GAAP diluted EPS was $0.42; methodology differences explain variance with S&P Primary EPS . Values retrieved from S&P Global.*
  • Implications: Modest beats on revenue and EPS, but the material FY25 guidance cut and FY26 withdrawal likely overshadow near-term beats; estimate revisions should trend down for FY25 revenue and margin, with upside optionality contingent on tariff relief and VOXX sourcing progress .

Key Takeaways for Investors

  • The quarter delivered a small beat on revenue and EPS, but the narrative is dominated by tariff-driven uncertainty and a significant FY25 guidance reset; stock drivers will be clarity on tariff outcomes and China demand elasticity .
  • Management proactively halted China-bound production to avoid building non-sellable inventory; low-end China revenue guidance essentially bakes in minimal incremental shipments, creating upside if tariffs are delayed or reduced .
  • Margin recovery continues despite mix headwinds; expect ~50–100 bps FY25 headwind from tariff reimbursement dynamics, partially mitigated by ongoing cost programs and sourcing changes (including VOXX supply chain realignment) .
  • VOXX adds scale and diversification; near-term gross margin dilution likely (high-20s GM at VOXX), but synergy opportunities across sourcing, public company costs, and premium audio positioning may support medium-term profitability .
  • FDM and driver monitoring are multi-year growth vectors; despite near-term production pressure, launches and content expansion underpin outgrowth vs primary markets over time .
  • Capital allocation is active with buybacks; balance sheet strength (cash up to $286.6M) and LOC capacity enable opportunistic repurchases during volatility .
  • Near-term trading: Expect sensitivity to tariff headlines and OEM production schedules; medium-term thesis rests on new product ramps (DMS, large-area devices) and normalization of tariffs/supply chains .