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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q 
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024 or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission File Number: 0-10235
GENTEX CORPORATION
(Exact name of registrant as specified in its charter)
Michigan
38-2030505
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
600 N. Centennial
Zeeland
Michigan49464
(Address of principal executive offices)
(Zip Code)
(616) 772-1800
(Registrant’s telephone number, including area code)
________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.06 per shareGNTXNASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes:  þ    No:  o 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes:  þ    No:  o 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes:    No:   þ
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes:  No:  o
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
Shares Outstanding, April 26, 2024
Common Stock, $.06 Par Value
231,184,476

1


GENTEX CORPORATION AND SUBSIDIARIES
For the Three Months Ended March 31, 2024
FORM 10-Q
Index
Part I - Financial Information
Page
Item 1.
Item 2.
Item 3.
Item 4.
Part II - Other Information
Item 1A.
Item 2.
Item 6.


2


PART I —FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements.
GENTEX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2024 and December 31, 2023
March 31, 2024 (Unaudited)
December 31, 2023
(Note)
ASSETS
CURRENT ASSETS
Cash and cash equivalents$249,004,534 $226,435,019 
Short-term investments16,758,924 14,356,476 
Accounts receivable, net341,591,131 321,809,868 
Inventories436,537,244 402,473,028 
Prepaid expenses and other28,702,868 32,663,762 
Total current assets1,072,594,701 997,738,153 
PLANT AND EQUIPMENT—NET664,788,932 652,877,672 
OTHER ASSETS
Goodwill340,105,631 340,105,631 
Long-term investments311,028,408 299,080,876 
Intangible assets, net209,809,035 214,005,910 
Deferred tax asset44,741,075 41,113,759 
Patents and other assets, net70,146,788 66,515,551 
Total other assets975,830,937 960,821,727 
Total assets$2,713,214,570 $2,611,437,552 
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Accounts payable$191,736,616 $184,398,820 
Accrued liabilities112,674,602 87,210,156 
Total current liabilities304,411,218 271,608,976 
OTHER NON-CURRENT LIABILITIES32,439,563 27,311,507 
Total liabilities336,850,781 298,920,483 
SHAREHOLDERS’ INVESTMENT
Common stock13,871,933 13,887,326 
Additional paid-in capital991,053,652 968,245,875 
Retained earnings1,378,904,530 1,336,940,990 
Accumulated other comprehensive loss(7,466,326)(6,557,122)
Total shareholders’ investment2,376,363,789 2,312,517,069 
Total liabilities and shareholders’ investment$2,713,214,570 $2,611,437,552 

Note: The condensed consolidated balance sheet at December 31, 2023 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
3


GENTEX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 2024 and 2023
 
Three Months Ended March 31,
20242023
NET SALES
$590,225,211 $550,761,311 
COST OF GOODS SOLD
387,987,605 376,024,080 
Gross profit202,237,606 174,737,231 
OPERATING EXPENSES:
Engineering, research and development42,181,986 34,653,747 
Selling, general & administrative30,709,308 26,832,837 
Total operating expenses72,891,294 61,486,584 
Income from operations129,346,312 113,250,647 
OTHER INCOME (LOSS)
Investment (loss) income(3,368,524)2,939,195 
Other income (loss), net1,670,139 (194,740)
Total other (loss) income(1,698,385)2,744,455 
INCOME BEFORE PROVISION FOR INCOME TAXES127,647,927 115,995,102 
PROVISION FOR INCOME TAXES19,417,213 18,416,841 
NET INCOME$108,230,714 $97,578,261 
EARNINGS PER SHARE: (1)
Basic$0.47 $0.42 
Diluted$0.47 $0.42 
Cash Dividends Declared per Share$0.120 $0.120 
(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.

4


GENTEX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three Months Ended March 31, 2024 and 2023
Three Months Ended March 31,
20242023
Net income$108,230,714 $97,578,261 
Other comprehensive (loss) income before tax:
Foreign currency translation adjustments(950,213)(121,167)
Unrealized gains (losses) on debt securities, net51,910 2,581,777 
Other comprehensive (loss) income, before tax(898,303)2,460,610 
Income tax impact related to components of other comprehensive income (loss)10,901 542,173 
Other comprehensive (loss) income, net of tax(909,204)1,918,437 
Comprehensive income$107,321,510 $99,496,698 

5



GENTEX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
For the Three Months Ended March 31, 2024 and 2023
Common 
Stock
Shares
Common 
Stock
Amount
Additional 
Paid-In
Capital
Retained 
Earnings
Accumulated 
Other
Comprehensive
Income (Loss)
Total 
Shareholders’
Investment
BALANCE AS OF JANUARY 1, 2024231,455,443 $13,887,326 $968,245,875 $1,336,940,990 $(6,557,122)$2,312,517,069 
Issuance of common stock from stock plan transactions944,345 56,661 16,777,325 — — 16,833,986 
Repurchases of common stock(1,200,903)(72,054)(4,443,340)(38,523,693)— (43,039,087)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock— — 10,473,792 — — 10,473,792 
Dividends declared ($0.12 per share)
— — — (27,743,481)— (27,743,481)
Net income— — — 108,230,714 — 108,230,714 
Other comprehensive loss— — — — (909,204)(909,204)
BALANCE AS OF MARCH 31, 2024231,198,885 $13,871,933 $991,053,652 $1,378,904,530 $(7,466,326)$2,376,363,789 
BALANCE AS OF JANUARY 1, 2023234,169,335 $14,050,160 $917,499,323 $1,148,386,272 $(14,142,934)$2,065,792,821 
Issuance of common stock from stock plan transactions603,636 36,218 5,919,804 — — 5,956,022 
Repurchases of common stock(1,046,926)(62,815)(3,653,772)(24,746,045)— (28,462,632)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock— — 8,519,535 — — 8,519,535 
Dividends declared ($0.12 per share)
— — — (28,046,798)— (28,046,798)
Net income— — — 97,578,261 — 97,578,261 
Other comprehensive loss— — — — 1,918,437 1,918,437 
BALANCE AS OF MARCH 31, 2023233,726,045 $14,023,563 $928,284,890 $1,193,171,690 $(12,224,497)$2,123,255,646 

6


GENTEX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2024 and 2023
20242023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$108,230,714 $97,578,261 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization23,953,768 24,041,648 
(Gain) on disposal of assets(25,671)(106,743)
Loss on disposal of assets6,838 41,843 
(Gain) on sale of investments and technology investment income(4,687,471)(1,199,707)
Loss on sale of investments and technology investment losses10,384,965 1,671,583 
Change in deferred income taxes(3,638,218)141,959 
Stock-based compensation expense related to employee stock options, employee stock purchases and restricted stock10,473,792 8,519,535 
Change in operating assets and liabilities:
Accounts receivable, net(19,781,263)(56,373,376)
Inventories(34,064,216)2,590,294 
Prepaid expenses and other4,663,897 (629,502)
Accounts payable6,080,702 11,112,425 
Accrued liabilities, excluding dividends declared28,279,293 33,525,890 
Net cash provided by operating activities129,877,130 120,914,110 
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Activity in investments:
Sales proceeds16,121,684 3,128,110 
Maturities and calls1,420,000 1,465,000 
Purchases(37,537,250)(32,178,155)
Plant and equipment additions(31,871,370)(42,819,075)
Proceeds from sale of plant and equipment9,500 118,410 
Increase in other assets(3,285,058)(2,110,935)
Net cash used for investing activities(55,142,494)(72,396,645)
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Issuance of common stock from stock plan transactions16,833,987 5,956,022 
Cash dividends paid(27,774,268)(28,099,993)
Repurchases of common stock(41,224,840)(25,675,972)
Net cash used for financing activities(52,165,121)(47,819,943)
NET INCREASE IN CASH AND CASH EQUIVALENTS22,569,515 697,522 
CASH, CASH EQUIVALENTS, and RESTRICTED CASH, beginning of period226,435,019 218,754,638 
CASH, CASH EQUIVALENTS, and RESTRICTED CASH, end of period$249,004,534 $219,452,160 

Three Months Ended March 31, 2024
SUPPLEMENTAL CASH FLOW DATA20242023
Non-cash investing and financing activities:
Change in property and equipment in accounts payable and accrued expenses and other current liabilities$557,154 $(1,283,303)
7


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



(1)    Basis of Presentation

The unaudited condensed consolidated financial statements included herein have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's 2023 annual report on Form 10-K. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only a normal and recurring nature, necessary to present fairly the financial position of the Company as of March 31, 2024, and the results of operations and cash flows for the interim periods presented.

(2)    Adoption of New Accounting Standards

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2023-07, Improvements to Reportable Segment Disclosures. This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. The Company will likely include additional disclosures when this ASU is adopted. The Company is currently evaluating the provisions of this ASU and expects to adopt the ASU for the year ending December 31, 2024.

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.

(3)    Goodwill and Other Intangible Assets

Goodwill represents the cost of an acquisition in excess of the fair values assigned to identifiable net assets acquired. The Company recorded Goodwill of: $307.4 million as part of the HomeLink® acquisition in 2013; $3.7 million as part of the acquisition of Vaporsens, Inc. ("Vaporsens") in 2020; $0.2 million as part of the acquisition of Air-Craftglass Production BV ("Air-Craftglass") in 2020; $1.0 million as a part of the acquisition of Argil, Inc. ("Argil") in 2020; $2.0 million as part of the acquisition of Guardian Optical Technologies ("Guardian") in 2021, and $26.7 million as part of the acquisition of eSight in the fourth quarter of 2023. The carrying value of Goodwill as of both March 31, 2024 and December 31, 2023 was $340.1 million, as set forth in the table below:

8


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Carrying Amount
Balance as of December 31, 2023$340,105,631 
Acquisitions 
Divestitures 
Impairments 
Other 
Balance as of March 31, 2024$340,105,631 

In addition to annual impairment testing, which is performed as of the first day of the fourth quarter, the Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair value of goodwill or other intangible assets thus resulting in the need for interim impairment 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 general industry, market and macroeconomic conditions. No such events or circumstances that might negatively impact the key assumptions were observed in the first quarter of 2024 and, as such, nothing indicated the need for interim impairment testing.

The Company also acquired In-Process Research & Development ("In-Process R & D") as part of the acquisitions of: Vaporsens; Air-Craftglass; Argil; and Guardian, each of which has been previously disclosed.

The patents and intangible assets and related change in carrying values are set forth in the tables below:

As of March 31, 2024:
Other Intangible AssetsGrossAccumulated AmortizationNetAssumed Useful Life
Gentex Patents$39,396,881 $(27,838,512)$11,558,369 Various
Other Intangible Assets
HomeLink® Trade Names and Trademarks
$52,000,000 $— $52,000,000 Indefinite
HomeLink® Technology
180,000,000 (157,500,000)22,500,000 12 years
Existing Customer Platforms43,000,000 (43,000,000) 10 years
Exclusive Licensing Agreement96,000,000 — 96,000,000 Indefinite
eSight Technology12,000,000 (416,667)11,583,333 12 years
eSight Trade Names and Trademarks870,000 (30,208)839,792 12 years
Vaporsens In-Process R&D11,000,000 — 11,000,000 Indefinite
Argil In-Process R&D6,278,132 — 6,278,132 Indefinite
Air-Craftglass In-Process R&D1,507,778 — 1,507,778 Indefinite
Guardian Trade Names1,300,000 — 1,300,000 Indefinite
Guardian In-Process R&D6,800,000 — 6,800,000 Indefinite
Total Other Intangible Assets$410,755,910 $(200,946,875)$209,809,035 
Total Patents & Other Intangible Assets$450,152,791 $(228,785,387)$221,367,404 




9


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


As of December 31, 2023:
Other Intangible Assets
Gross
Accumulated Amortization
Net
Assumed Useful Life
Gentex Patents
$39,199,107 $(27,769,803)$11,429,304 Various
Other Intangible Assets
HomeLink® Trade Names and Trademarks
$52,000,000 $— $52,000,000 Indefinite
HomeLink® Technology
180,000,000 (153,750,000)26,250,000 12 years
Existing Customer Platforms43,000,000 (43,000,000) 10 years
Exclusive Licensing Agreement
96,000,000 — 96,000,000 Indefinite
eSight Technology12,000,000 — 12,000,000 12 years
eSight Trade Names and Trademarks870,000 — 870,000 12 years
Vaporsens In-Process R&D11,000,000 — 11,000,000 Indefinite
Argil In-Process R&D6,278,132 — 6,278,132 Indefinite
Air-Craftglass In-Process R&D1,507,778 — 1,507,778 Indefinite
Guardian Trade Names1,300,000 — 1,300,000 Indefinite
Guardian In-Process R&D6,800,000 — 6,800,000 Indefinite
Total Other Intangible Assets$410,755,910 $(196,750,000)$214,005,910 
Total Patents & Other Intangible Assets$449,955,017 $(224,519,803)$225,435,214 

Amortization expense on patents and intangible assets was approximately $4.5 million during the three months ended March 31, 2024, compared to approximately $5.3 million for the same period ended March 31, 2023.

Excluding the impact of any future acquisitions, the Company estimates amortization expense for the year ending December 31, 2024 to be approximately $18 million, for the year ending December 31, 2025 to be approximately $15 million, and for each of the years ending December 31, 2026, December 31, 2027, and December 31, 2028 to be approximately $3 million.


(4)    Investments
Available for sale securities
The Company follows the provisions of Accounting Standards Codification ("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 with respect to a company’s use of fair-value measurements, including the effect of such measurements 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, municipal bonds, and corporate 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 cost, which approximates fair value.
10


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


On October 4, 2023, the Company entered into a Stock Purchase Agreement to acquire up to 3,137,500 shares of VOXX International Corporation ("VOXX") Class A Common Stock. The Company agreed to purchase the shares in two tranches: (1) on October 6, 2023, the Company purchased 1,568,750 shares of Class A Common Stock at a price of $10 per share, and (2) on January 5, 2024, the Company purchased 1,568,750 shares of Class A Common Stock at a price of $10 per share. The VOXX shares held by the Company are publicly traded and have a readily determinable fair market value and are considered Level 1 assets. The investment is accounted for in accordance with ASC 321, Investments - Equity Securities, with changes in fair value recorded in Investment income, net in consolidated statements of income.

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 $133.9 million as of March 31, 2024, of which $130.4 million and $3.5 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 do not have control over the investee under the equity method, with the Company’s share of the earnings or losses of non-controlled affiliates recognized within Other (loss) income, net in the Company's consolidated statement of income. All other technology investments that the Company holds are primarily accounted for under the measurement alternative of ASC 321. Under the measurement alternative, the carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

Assets or liabilities that have recurring fair value measurements are shown below as of March 31, 2024 and December 31, 2023:
As of March 31, 2024:
Fair Value Measurements at Reporting Date Using
Total as of
Quoted Prices in
Active Markets for
Identical Assets
Significant Other
Observable
Inputs
Significant
Unobservable
Inputs
Description
March 31, 2024(Level 1)(Level 2)(Level 3)
Cash & Cash Equivalents$249,004,534 $249,004,534 $ $ 
Short-Term Investments:
Certificate of Deposit746,125 746,125   
Corporate Bonds1,955,083  1,955,083  
Government Securities7,382,970  7,382,970  
Municipal Bonds1,730,433  1,730,433  
Other1,477,288 1,477,288   
Long-Term Investments:
Asset Backed Securities32,561,930  32,561,930  
Certificate of Deposit748,245 748,245   
Corporate Bonds66,095,516  66,095,516  
Government Securities6,781,490  6,781,490  
Municipal Bonds47,375,455  47,375,455  
Common Stock27,020,275 27,020,275   
Total$442,879,344 $278,996,467 $163,882,877 $ 
11


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



As of 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
Unobservable
Inputs
Description
December 31, 2023(Level 1)(Level 2)(Level 3)
Cash & Cash Equivalents$226,435,019 $226,435,019 $ $ 
Short-Term Investments:
Certificate of Deposit994,013 994,013   
Corporate Bonds1,943,886  1,943,886  
Government Securities4,759,507  4,759,507  
Municipal Bonds1,726,658  1,726,658  
Other1,465,388 1,465,388   
Long-Term Investments:
Asset-backed Securities27,146,504  27,146,504  
Certificate of Deposit748,358 748,358   
Corporate Bonds65,404,340  65,404,340  
Governmental Securities6,227,129  6,227,129  
Municipal Bonds56,336,921  56,336,921 
Common Stock18,610,519 18,610,519   
Total$411,798,242 $248,253,297 $163,544,945 $ 

The amortized cost, unrealized gains and losses, and market value of investment securities are shown as of March 31, 2024 and December 31, 2023:

As of March 31, 2024:
Unrealized
Cost
Gains
Losses
Market Value
Short-Term Investments:
Certificate of Deposit$750,000 $ $(3,875)$746,125 
Corporate Bonds1,970,327  (15,244)1,955,083 
Government Securities7,401,456  (18,486)7,382,970 
Municipal Bonds1,749,223  (18,790)1,730,433 
Other1,477,288   1,477,288 
Long-Term Investments:
Asset Backed Securities32,384,759 363,920 (186,749)32,561,930 
Certificate of Deposit750,000  (1,755)748,245 
Corporate Bonds67,027,320 319,188 (1,250,992)66,095,516 
Government Securities6,826,404  (44,914)6,781,490 
Municipal Bonds49,025,853 287,737 (1,938,135)47,375,455 
Common Stock33,012,386 123,840 (6,115,951)27,020,275 
Total$202,375,016 $1,094,685 $(9,594,891)$193,874,810 


12


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


As of December 31, 2023:    
Unrealized
CostGainsLossesMarket Value
Short-Term Investments:
Certificate of Deposit$1,000,000 $ $(5,987)$994,013 
Corporate Bonds1,976,195  (32,309)1,943,886 
Government Securities4,754,495 21,141 (16,129)4,759,507 
Municipal Bonds1,749,038  (22,380)1,726,658 
Other1,465,388   1,465,388 
Long-Term Investments:
Asset-backed Securities26,923,803 331,847 (109,146)27,146,504 
Certificate of Deposit750,000 (1,642)748,358 
Corporate Bonds66,214,398 748,471 (1,558,529)65,404,340 
Government Securities6,217,774 10,675 (1,320)6,227,129 
Municipal Bonds58,261,615 811,128 (2,735,822)56,336,921 
Common Stock17,324,886 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 March 31, 2024, are as follows:
Aggregate Unrealized LossesAggregate Fair Value of Investments
Loss duration of less than one year$6,442,204 $67,460,003 
Loss duration of greater than one year3,152,687 60,198,609 
       Total
$9,594,891 $127,658,612 

Unrealized losses on investments as of December 31, 2023, are as follows:
Aggregate Unrealized Losses
Aggregate Fair Value of Investments
Loss duration of less than one year$126,074 $13,449,592 
Loss duration of greater than one year4,400,003 76,966,258 
       Total
$4,526,077 $90,415,850 

Effective January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The guidance modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. The Company utilized the guidance provided by ASC 326 to determine whether any of the available-for-sale debt securities held by the Company were impaired. No investments were considered to be impaired during the periods presented. The Company has the intention and current ability to hold its debt investments until any amortized cost basis has been recovered.

Fixed income securities as of March 31, 2024 have contractual maturities as follows:
Due within one year
$11,814,611 
Due between one and five years
87,792,966 
Due over five years
65,769,670 
$165,377,247 
13


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



(5)    Inventories
Inventories consisted of the following at the respective balance sheet dates:
March 31, 2024December 31, 2023
Raw materials
$307,222,769 $283,126,566 
Work-in-process
45,325,627 46,343,955 
Finished goods
83,988,848 73,002,507 
Total Inventory
$436,537,244 $402,473,028 


(6)    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. For a period of net loss, net loss is not allocated to participating securities.

The following table sets forth the computation of basic and diluted net income per common share under the two-class method for the three months ended March 31, 2024 and March 31, 2023:
14


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Three Months Ended March 31,
20242023
Basic Earnings Per Share
Net Income$108,230,714 $97,578,261 
Less: Dividends and undistributed earnings allocated to participating securities1,578,908 1,456,913 
Net Income available to common shareholders$106,651,806 $96,121,348 
Basic weighted average shares outstanding227,929,048 230,605,626 
Net Income per share - Basic$0.47 $0.42 
Diluted Earnings Per Share
Allocation of Net Income used in basic computation$106,651,806 $96,121,348 
Reallocation of undistributed earnings2,425 1,276 
Net Income available to common shareholders - Diluted$106,654,231 $96,122,624 
Number of shares used in basic computation227,929,048 230,605,626 
Additional weighted average dilutive common stock equivalents479,090 290,220 
Diluted weighted average shares outstanding228,408,138 230,895,846 
Net Income per share - Diluted$0.47 $0.42 
Shares related to stock plans not included in diluted average common shares outstanding because their effect would be anti-dilutive409,297 1,810,685 

(7)    Stock-Based Compensation Plans
As of March 31, 2024, the Company had two equity incentive plans, which include the Gentex Corporation 2019 Omnibus Incentive Plan ("2019 Omnibus Plan"), and an employee stock purchase plan. Those plans and any prior 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 awards and 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.
Readers should refer to Note 5 of the consolidated financial statements in the Company's Annual Report on Form 10-K for the calendar year ended December 31, 2023, for additional information related to the Prior Plans.
The Company recognized total compensation expense for share-based payments of $10,487,261 for the three months ended March 31, 2024. The Company recognized compensation expense for share-based payments of $8,519,535 for the three months ended March 31, 2023. A portion of the compensation cost for share based payment awards is capitalized as part of inventory.
15


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


2019 Omnibus Incentive Plan

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. Pursuant to the terms of the 2019 Omnibus Plan, each type of award counts against the available shares based on a predetermined conversion rate (shown in the table below). As of March 31, 2024, 10,390,056 share awards have been made under the Plan, resulting in 27,178,740 shares granted of the 45,000,000 total shares available to be issued under the Plan. The shares issued are presented net of shares from canceled/expired options and shares.

Shares GrantedConversion RateTotal Shares Under 2019 Omnibus Plan
Non-Qualified Stock Options4,903,558 1.004,903,558 
Restricted Stock4,480,985 4.0618,192,799 
Performance Shares1,005,513 4.064,082,383 
Total10,390,056 27,178,740 
Employee Stock Options
Under the 2019 Omnibus Plan and the Employee Stock Option Plan, the option exercise price equals the stock’s market price on the date of grant. The options vest after one to five years and expire after five to ten years. As of March 31, 2024, there was $7,042,117 of unearned compensation cost associated with stock options granted under the 2019 Omnibus Incentive Plan and the Employee Stock Option Plan, which is expected to be recognized over the remaining vesting periods.
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:
Three Months Ended March 31,
20242023
Dividend Yield (1)
1.64 %1.76 %
Expected volatility (2)
28.29 %29.04 %
Risk-free interest rate (3)
4.21 %3.60 %
Expected term of options (years) (4)
4.144.15
Weighted-avg. grant date fair value$9.08$6.84
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.


Restricted Shares
Restricted shares awarded under the 2019 Omnibus Plan and the Second Restricted Stock 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 the Compensation Committee, appointed by the Board of Directors, but may not exceed ten years under the terms of such plans. As of March 31, 2024, the Company had unearned stock-based compensation of $48,288,792 associated with the restricted stock grants issued under the 2019 Omnibus Plan and the Second Restricted Stock Plan. The unearned stock-based compensation related to these grants is being amortized to compensation expense over the applicable restriction periods. Compensation expense from restricted stock grants in the three months ended March 31, 2024 was $6,687,341. Compensation expense from restricted stock grants in the three months ended March 31, 2023 was $5,946,054.
16


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



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 average closing stock price on the twenty days preceding 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 March 31, 2024, the Company had unearned stock-based compensation of $20,603,455 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 these performance share grants in the three months ended March 31, 2024 was $1,772,630. Compensation expense related to these performance share grants in the three months ended March 31, 2023 was $502,206.

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 in the three months ended March 31, 2024 was $422,846.

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. Under that plan, the Company sold shares at 85% of the stock’s market price at date of purchase. Under ASC 718, Compensation - Stock Compensation, the 15% discounted value was recognized as compensation expense. As of March 31, 2024, the Company has issued 1,624,122 shares under this prior plan.

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 the plan, the Company sells shares at 85% of the stock's market price at date of purchase. Under ASC 718, the 15% discounted value is recognized as compensation expense. As of March 31, 2024, the Company has issued 321,682 shares under this plan.


(8)    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 certain debt investments and foreign currency translation adjustments.

The following table presents the net changes in the Company's accumulated other comprehensive loss by component (all amounts shown are net of tax):
17


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Three Months Ended March 31,
20242023
Foreign currency translation adjustments:
Balance at beginning of period$(4,534,719)$(4,032,239)
Other Comprehensive loss before reclassifications
(950,213)(121,167)
Net current-period change(950,213)(121,167)
Balance at end of period
(5,484,932)(4,153,406)
Unrealized (losses) gains on available-for-sale debt securities:
Balance at beginning of period
(2,022,403)(10,110,695)
Other Comprehensive (loss) income before reclassifications
(548,457)277,718 
Amounts reclassified from accumulated other comprehensive income
589,466 1,761,886 
Net current-period change
41,009 2,039,604 
Balance at end of period
(1,981,394)(8,071,091)
Accumulated other comprehensive loss, end of period
$(7,466,326)$(12,224,497)
The following table presents details of reclassifications out of accumulated other comprehensive loss for the three and three months ended March 31, 2024 and 2023:

Details about Accumulated Other Comprehensive Loss ComponentsAmounts Reclassified from Other Comprehensive LossAffected Line item in the Consolidated Statements of Income
Three Months Ended March 31,
20242023
Unrealized gains (losses) on available-for-sale debt securities
Realized gain (loss) on sale of securities$(746,159)$(2,230,236)Investment income
Provision for income taxes156,693 468,350 Provision for income taxes
Total net reclassifications for the period$(589,466)$(1,761,886)



(9)    Debt and Financing Arrangements

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 $250.0 million ("Revolver") that matures on February 21, 2026, replacing in its entirety the Company's above referenced prior $150.0 million revolving credit facility scheduled to mature 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. As of March 31, 2024, there was no outstanding balance on the Revolver.

As of March 31, 2024, the Company is in compliance with its covenants under the Credit Agreement.
18


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)




(10)    Equity

The decrease in common stock during the three months ended March 31, 2024, was primarily due to the repurchases of 1.2 million shares, partially offset by the issuance of 0.9 million shares of the Company’s common stock, net of cancellations, under the Company’s stock-based compensation plans. The total net decrease was 0.3 million shares.

The Company recorded a cash dividend of $0.120 per share during the first quarter of 2024 as compared to a cash dividend of $0.120 per share during the first quarter of 2023. The first quarter 2024 dividend of $27.7 million was declared on March 5, 2024 and was paid on April 17, 2024.


(11)    Contingencies
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, regulatory, 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 any of these matters constitute material pending legal proceedings that will have a material adverse effect on the financial position or future results of operations or cash flows of the Company.


(12)    Segment Reporting

The Company's automotive segment develops and manufactures digital vision and connected car products and electronics, including: automatic-dimming rearview mirrors with and without electronic features; non-auto dimming rearview mirrors with and without electronic features; and other electronics. The Company also develops and manufactures variably dimming windows and laminate products for the aerospace industry and fire protection products for the commercial construction industry. In 2020, the Company acquired Vaporsens, which specializes in nanofiber chemical sensing. In 2023, the Company acquired certain technology assets from eSight, which 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 four non-automotive segments are combined into the "Other" segment as shown below.
Three Months Ended March 31,
20242023
Revenue:
Automotive Products$577,602,196 $537,422,988 
Other12,623,015 13,338,323 
Total$590,225,211 $550,761,311 
Income (Loss) from operations:
Automotive Products$129,546,140 $111,439,798 
Other(199,828)1,810,849 
Total$129,346,312 $113,250,647 




19


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


(13)    Income Taxes
The effective tax rate was 15.2% in the three months ended March 31, 2024, compared to an effective tax rate of 15.9% for the same period in 2023. Generally, effective tax rates for these periods differ from statutory federal income tax rates, due to provisions for state and local income taxes, permanent tax differences, the foreign-derived intangible income tax deduction, and research and development tax credits.

(14)    Revenue

The following table shows the Company’s Automotive revenue and Other Products revenue disaggregated by geographical location for Automotive Products for the three month periods ended March 31, 2024 and March 31, 2023:
Three Months Ended March 31,
Revenue
20242023
Automotive Products
U.S.
$165,140,622 $170,781,604 
Japan89,004,62872,155,984
Germany75,694,888 80,579,465 
Korea53,695,112 23,478,469 
Mexico37,621,163 34,287,544 
Other156,445,783 156,139,922 
Total Automotive Products$577,602,196 $537,422,988 
Other Products (U.S.)12,623,015 13,338,323 
Total Revenue$590,225,211 $550,761,311 

Revenue by geographic area may fluctuate based on many factors, including: exposure to local economic, political, and labor conditions; global supply chain constraints; 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; labor strikes, armed conflicts and acts of terrorism and war; and tariffs, quotas, customs and other import or export restrictions and other trade barriers.

20


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


The following table disaggregates the Company’s Automotive revenue and Other revenue by major source for the three month periods ended March 31, 2024 and March 31, 2023:
Three Months Ended March 31,
Revenue20242023
Automotive Segment
Automotive Mirrors & Electronics
$550,184,430 $505,731,576 
HomeLink Modules*
27,417,766 31,691,412 
Total Automotive Products$577,602,196 $537,422,988 
Other Segment
Fire Protection Products6,836,038 9,301,153 
Aerospace Products5,770,800 4,037,170 
Medical Products16,177  
Total Other$12,623,015 $13,338,323 
*Excludes HomeLink revenue where HomeLink electronics are integrated into interior auto-dimming mirrors.


(15)    Leases

The Company has operating leases for certain sales, manufacturing, and engineering offices, as well as other vehicles and equipment, which are included within "Plant and Equipment - Net" section of the condensed 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 March 31, 2024 was 4 years, with a weighted average discount rate of 6.3%.

Future minimum lease payments for operating leases as of March 31, 2024 were as follows:
Year ending December 31,
2024 (excluding the three months ended March 31, 2024)$1,828,676 
20251,743,522 
20261,202,399 
2027901,441 
2028662,837 
Thereafter57,651 
Total future minimum lease payments6,396,526 
Less imputed interest(482,318)
Total$5,914,208 

Reported as of March 31, 2024
Accrued Liabilities$2,310,126 
Other Non-Current Liabilities3,604,082 
Total$5,914,208 

21


GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



(16)    Acquisition

On November 2, 2023, the Company, in the ordinary course of business, acquired certain technology assets from eSight for approximately $18.9 million in cash, the assumption of a $9.4 million promissory note given in exchange for the 20% equity the Company previously held in the assets, as well as an earn out provision over a ten year period. The earn out provision consists of multiple potential payments based on the revenue over the next ten calendar years, with the total earn out not to exceed $70 million. The Company funded the acquisition with cash on hand. The technology acquired from eSight provides advanced and versatile low-vision smart glasses for those with visual impairments and is compatible with more than 20 eye conditions including Macular Degeneration, Diabetic Retinopathy, and Stargardt disease. These assets are classified within the Company's Other segment.

The Company will account for the acquisition under the provisions of FASB ASC Topic 805, Business Combinations. The Company is still in the process of verifying data and finalizing information related to the valuation and recording of identifiable intangible assets, net working capital, contingent liabilities, and the resulting effects on the amount of recorded goodwill. The Company expects to finalize these matters within the measurement period, which is currently expected to remain open through the third quarter of 2024. Less than $0.1 million of revenue of the business of eSight was included in the Company's consolidated statement of income and comprehensive income for the quarter ended March 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 Property75,000 
Right of Use Asset (Lease)116,562 
ESight Technology12,000,000 
Trade Names and Trademarks870,000 
Goodwill26,696,012 
Total Assets$40,198,802 
Lease Liability$116,562 
Contingent Earn Out Liability12,000,000 
Total Liabilities$12,116,562 
22



Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.


FIRST QUARTER 2024 VERSUS FIRST QUARTER 2023
Net Sales. Net sales for the first quarter of 2024 increased by $39.5 million or 7%, when compared with the first quarter of 2023.
Automotive net sales for the first quarter of 2024 were $577.6 million, a 7% increase when compared with automotive net sales of $537.4 million in the first quarter of 2023. The 2% decrease in automotive mirror unit shipments in the first quarter of 2024 to 12.5 million units, compared with 12.7 million units in the first quarter of 2023, was driven by a 5% quarter over quarter decrease in interior auto-dimming mirror unit shipments, which was partially offset by a 3% quarter over quarter increase in exterior auto-dimming mirror unit shipments.

The below table represents the Company's auto-dimming mirror unit shipments for the three months ended March 31, 2024, and 2023 (in thousands):
Three Months Ended March 31,
20242023% Change
North American Interior Mirrors2,262 2,426 (7)%
North American Exterior Mirrors1,621 1,619 —%
Total North American Mirror Units
3,883 4,045 (4)%
International Interior Mirrors5,554 5,771 (4)%
International Exterior Mirrors3,034 2,901 5%
Total International Mirror Units
8,588 8,672 (1)%
Total Interior Mirrors7,816 8,197 (5)%
Total Exterior Mirrors4,655 4,519 3%
Total Auto-Dimming Mirror Units12,471 12,717 (2)%
Note: Percent change and amounts may not total due to rounding.

Other net sales were $12.6 million in the first quarter of 2024, compared to $13.3 million in the first quarter of 2023. Fire protection sales decreased to $6.8 million for the first quarter of 2024, compared to $9.3 million in the same quarter of last year. Dimmable aircraft sales increased during the first quarter of 2024 to $5.8 million, compared to $4.0 million in the same quarter of last year.

Cost of Goods Sold. As a percentage of net sales, cost of goods sold decreased to 65.7% for the first quarter of 2024, versus 68.3% in the same quarter last year. The quarter over quarter increase in the gross profit margin was primarily the result of raw material cost reductions, customer price changes made after the first quarter of 2023, and manufacturing related efficiencies. On a quarter over quarter basis, raw material cost reductions had a positive impact on gross margin of approximately 100 -150 basis points. Manufacturing related efficiencies, including direct labor related efficiencies had a positive impact of approximately 100 - 150 basis points on gross margin. Other positive factors to gross margin on a year over year basis included lower freight and tariff costs.
Operating Expenses. Engineering, research and development expenses for the first quarter of 2024 increased by $7.5 million, when compared with the first quarter of 2023, primarily due to staffing and engineering related professional fees and testing expenses.
.
Selling, general and administrative ("S, G & A") expenses increased by 14% or $3.9 million for the first quarter of 2024, compared to the first quarter of 2023, primarily due to increased staffing. S, G & A expenses were remained at 5% of net sales in the first quarter of both 2024 and 2023.
23



Total operating expenses were $72.9 million in the first quarter of 2024, an increase of 19% quarter over quarter or $11.4 million, compared to $61.5 million in the first quarter of 2023.

Total Other Income (Loss). Total other income for the first quarter of 2024 decreased by $4.4 million, when compared with the first quarter of 2023.

Provision for Income Taxes. The effective tax rate was 15.2% for, and an income tax expense of $19.4 million was recorded in, the first quarter of 2024, compared to an effective tax rate of 15.9% for, and an income tax expense of $18.4 million recorded in, the same quarter of 2023. Typically, effective tax rates for the Company differ from statutory federal income tax rates, due to provisions for state and local income taxes, permanent tax differences, research and development tax credits and the foreign-derived intangible income tax deduction.
Net Income. Net income for the first quarter of 2024 was $108.2 million, up from a net income of $97.6 million in the first quarter of 2023. The change in net income was primarily the result of quarter over quarter increases in net sales and operating profits.
Earnings Per Share. The Company had earnings per diluted share for the first quarter of 2024 of $0.47, which compared to earnings per diluted share of $0.42 for the first quarter of 2023.
24


FINANCIAL CONDITION:
The Company's cash and cash equivalents as of March 31, 2024 were $249.0 million, an increase of $22.6 million, compared to $226.4 million as of December 31, 2023. The increase was primarily due to cash flows from operations, which were partially offset by capital expenditures, investment purchases, dividend payments, and share repurchases during the three months ended March 31, 2024.
Short-term investments as of March 31, 2024 were $16.8 million, up from $14.4 million as of December 31, 2023, and long-term investments were $311.0 million as of March 31, 2024, up from $299.1 million as of December 31, 2023, primarily due to the $15.7 million investment in VOXX, as discussed in Note 4 of the consolidated financial statements.
Accounts receivable as of March 31, 2024 increased approximately $19.8 million compared to December 31, 2023, primarily due to the increase in sales and timing thereof during the three months ended March 31, 2024. As of March 31, 2024, all of the Company's material tier one and OEM customers continue to be in good standing.
Inventories as of March 31, 2024 were $436.5 million, compared to $402.5 million as of December 31, 2023, primarily due to increases in finished goods in order to meet forecasted customer demands.

Accounts payable as of March 31, 2024 increased approximately $7.3 million to $191.7 million, when compared to December 31, 2023, primarily driven by supplier payment terms and increased inventory purchases.
Accrued liabilities as of March 31, 2024 increased approximately $25.5 million compared to December 31, 2023, primarily due to an increase in accrued salaries and wages.
Cash flow from operating activities for the three months ended March 31, 2024 increased $9.0 million to $129.9 million, compared with $120.9 million during the same three month period last year, primarily due to an increase in net income, which was partially offset by changes in working capital.
Capital expenditures for the three months ended March 31, 2024 were approximately $31.9 million, compared with approximately $42.8 million for the same quarter last year. The decrease was primarily due to timing of payments and a decrease in expenditures related to building and facility construction projects previously disclosed as certain manufacturing facility construction was completed, 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. In 2023, the Company completed construction on a 345,000 square-foot manufacturing facility located at a 140 acre site in Zeeland, Michigan. The total cost of the building project was approximately $85 million, which was funded with cash and cash equivalents on hand. The Company has began construction on two building expansions during 2022. The Company is expanding its current distribution center for an additional 300,000 square feet, with a total cost still expected to be approximately $40 - $45 million. The Company is also expanding one of its manufacturing facilities for an additional 60,000 feet, with a total cost still expected to be $20 - $30 million. Both expansion projects will be funded with cash and cash equivalents on hand. The Company also entered into a multi-year lease for 32,000 square feet of manufacturing space at a location approximately 20 miles from its main campus that began operations during the second quarter of 2023.
During 2023, the Company began the design and initial build phase of the previously announced Gentex Discovery Preschool, an on-site daycare and preschool designed to provide Company employees with convenient, cost-effective access to quality childcare. Construction is expected to begin in 2024, with an expected completion date in 2025. The total cost of the building project is expected to be $12 - $15 million, which will also be funded with cash and cash equivalents on hand.
The Company estimates that it currently has building capacity to manufacture approximately 34 - 37 million interior mirror units annually and approximately 19 - 22 million exterior mirror units annually, based on current product mix (excluding the impact of the above referenced ongoing construction). The Company also evaluates equipment capacity on an ongoing basis and adds equipment as needed.
25


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, 2024December 31, 2023
Working Capital$768,183,483 $726,129,177 
Fixed Income Long-Term Investments153,562,636 155,863,252 
Total$921,746,119 $881,992,429 

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 (including, but not limited to, industry-wide parts shortages, and global supply chain and labor constraints), 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, 2024, the Company repurchased 1,200,903 shares. The Company has 14,650,276 shares remaining under the plan as of March 31, 2024, as is further detailed in Part II, Item 2 of this Form 10-Q.

BUSINESS UPDATE

For the first quarter of 2024, the Company reported net sales of $590.2 million, compared to net sales of $550.8 million in the first quarter of 2023, a 7% increase quarter over quarter. For the first quarter of 2024, global light vehicle production in North America, Europe, and Japan/Korea decreased approximately 3%, when compared to the first quarter of 2023.

In the first quarter of 2024, the Company had 31 net new launches of interior and exterior auto-dimming mirrors and electronic features. Over 60% of the launches in the first quarter of 2024 were advanced feature launches, with HomeLink®,Full Display Mirror®, and outside auto-dimming mirrors being the bulk of such launches.

PRODUCT UPDATE

Mirror Systems

In 2023, The People's Republic of China newly issued GB15084 and the related procedures, which allow for the Company's frameless inside mirrors to be used on vehicles in the China domestic market.

Camera Systems

Full Display Mirror® 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 Full Display Mirror® 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 Full Display Mirror® 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 Full Display Mirror® 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.

As of the first quarter of 2024, the Company is shipping production Full Display Mirrors® to sixteen different automaker customers. The Company remains confident that ongoing discussions with certain other
26


customers may in the future cause such customers to consider adding the Full Display Mirror® into their product road-map for future vehicles.

To enhance capability and usability of the Company's Full Display Mirror®, the Company previously introduced its three-camera rear vision system that streams rear video in multiple composite views to its Full Display Mirror®. 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 Full Display Mirror®. The system’s modular nature lets the automaker customize functionality while offering it as an affordable, optional feature thereby enhancing safety by allowing the system to fail safe. 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.

On March 31, 2014, the Alliance of Automobile Manufacturers petitioned the National Highway Traffic Safety Administration ("NHTSA") to allow automakers to use camera monitoring systems as an option to replace conventional rearview mirrors within the United States. At the annual SAE Government-Industry Meeting in January 2017, NHTSA requested that SAE develop Recommended Procedures for test protocols and performance criteria for camera monitoring systems that would replace mirror systems on light vehicles in the U.S. market. SAE assigned the task to the Driver Vision Committee, and the SAE Driver Vision Committee created a CMS Task Force to draft the Recommended Procedures. NHTSA published a report dated October 2018 related to camera monitoring systems for outside mirror replacements. On October 10, 2019, an Advanced Notice of Proposed Rulemaking (ANPRM) was published seeking public comment on permitting camera-based rear visibility systems, as an alternative to inside and outside rearview mirrors required under Federal Motor Vehicle Safety Standard (FMVSS) No. 111, “Rear Visibility,” which currently requires that vehicles be equipped with rearview mirrors to provide drivers with a view of objects that are to their side or to their side and rear. This ANPRM builds on NHTSA's prior efforts to obtain supporting technical information, data, and analysis on CMS so that the agency can determine whether these systems can provide the same level of safety as the rearview mirrors currently required under FMVSS No. 111. The ANPRM states that one reason NHTSA is seeking additional information is because research conducted by NHTSA and others between 2006 and 2017 has consistently shown that prototype and preproduction camera-based rear visibility systems can exhibit safety-relevant performance issues. In November 2022, NHTSA conducted a public meeting and discussed the on-going research of this technology.
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. As noted, 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. As noted, the Company has been in production with the Company's Full Display Mirror® since 2015 and has, in the ordinary course of business, been awarded
27


programs with sixteen OEM customers. The Company is currently shipping production Full Display Mirrors® to all sixteen of these automaker 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, which mirrors continue to function when cameras are obstructed or are not functioning. 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.
The Company began shipping Full Display Mirror® with Digital Video Recording ("DVR" capability) for the Toyota Harrier in 2020. This mirror and system launched in the Japan market and combine the superior functionality of the Full Display Mirror®, with the added capability to record video from the rearward facing and forward-facing cameras simultaneously. The data is stored to an SD storage card as requested by the customer. This integrated solution provides consumers with the features they want, while allowing the OEM to control the integration and execution in the vehicle. The Company also continues shipping auto-dimming mirrors containing DVR for both the Toyota Yaris and the Yaris Cross for the Japan market. This product is the first Gentex DVR product that has an app available to allow the consumer to pull recorded information from the mirror to a phone, which creates a more user friendly experience.
Connected Car
The Company's HomeLink® products are the auto industry's most widely used and trusted car-to-home communication system, with an estimated 50 million units on the road. 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®, which 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 activates 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 the automaker, it allows them to offer a customizable, yet proven solution without the engineering effort or security concerns associated with integrating third party software into the vehicle’s computer network. The Company also continues to work on providing HomeLink® applications for alternative automobile and vehicle types which include, but are not limited to, motorcycles, mopeds, snowmobiles, tractors, combines, lawn mowers, loaders, bulldozers, road-graders, backhoes, and golf carts. In 2021, the Company announced the Volkswagen as the first automaker to offer Bluetooth® enabled mirror for home automation that works in conjunction with HomeLink Connect®. The Company further continues to work with compatibility partners for HomeLink® applications in other markets, like China. The unique attributes of the China market allow for potential different use cases of these products and offer the potential for additional growth opportunities for the HomeLink® brand and products. In 2017, the Company began its first volume production shipments of HomeLink® units on vehicles for the China market.

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. Currently more than 75 percent of new car registrations are in states with toll roads with over 50 million drivers accessing these roads each year. 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. Since the Integrated Toll Module® or ITM® enables travel across almost all United States toll roads, and others in North America, motorists would no longer need multiple toll tags for different regions of the country or to manage multiple toll accounts. The Company's vehicle-integrated solution simplifies and expedites local, regional, and national travel. ITM® provides transportation agencies with an interoperability solution without costly infrastructure changes to the thousands of miles of toll lanes throughout North America. The Company believes that this product could potentially represent another growth opportunity over the next several years.

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The Company previously announced its first OEM award of ITM® with Audi. Currently, the Company is shipping ITM® on 11 Audi platforms, which are: the A4, A5, A6, A7, A8, Q5, Q5 Sportback, Q7, Q8, e-tron, and the e-tron Sportback. The Company expects further ITM® nameplate launches with Audi throughout the remainder of 2024. The Company is also shipping ITM® to a second OEM customer, Mercedes, on the 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 has 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 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. The Company announced in 2018 that it completed 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 2020, the Company announced a partnership, in the ordinary course of business, with PayByCar™, to pursue compatibility between the Company's Integrated Toll Module® and PayByCar's innovative payment solution that allows drivers to use their smartphones and toll transponder to fuel up at certain gas stations without using cash or a credit card. Compatibility between these two technologies can help to grow each company's respective consumer base, while introducing new users to the benefits of the transactional vehicle.

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®, which, again, is the automotive industry’s leading car-to-home automation system. HomeLink® consists of vehicle-integrated buttons that can be programmed to operate a myriad of home automation devices. Integration of Simplenight into the Company's HomeLink Connect® app is underway and will allow users to program their HomeLink® buttons and control cloud-based devices from their vehicles.

Dimmable Devices

The Company previously announced that it is providing variably dimmable windows for 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. In 2019, the Company announced that its latest generation of dimmable aircraft windows will be offered as optional content on the new Boeing 777X. 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 system was developed over an 18 month
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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. In 2024, the Company continues to further develop and work on the intelligent medical lighting system in order to assess system performance and work toward obtaining any necessary approvals.

On November 2, 2023, in the ordinary course of business, the Company acquired certain technology assets from eSight Corporation 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 technology acquired from eSight 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.

OTHER

Automotive revenues represent approximately 97% - 99% of the Company's total revenue, consisting of interior and exterior electrochromic automatic-dimming rearview mirrors and automotive electronics.

Even as the Company engages with automotive customers regarding the inflationary aspects of the business, it continues to experience pricing pressure from such customers and competitors, in addition to raw material cost increases, labor cost increases, and logistics costs, which will continue to cause downward pressure on its sales and profit margins. The Company works continuously to offset these 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 inflationary pressures, but there is no assurance the Company will be able to do so in the future.

Because the Company sells its products throughout the world, and automotive manufacturing is highly dependent on economic conditions, the Company can be affected by uncertain economic conditions that can reduce demand for its products, including the current inflationary environment. The Company has been likewise affected by industry-wide parts shortages and global supply constraints and labor shortages, as well as the UAW strikes.

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, aerospace, and medical industry. Claims of patent infringement 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 consolidated financial statements.

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OUTLOOK

The Company’s current forecasts for light vehicle production for the second quarter of 2024, and full years 2024 and 2025 are based on the mid-April 2024 S&P Global Mobility forecast for light vehicle production in North America, Europe, Japan/Korea, and China. Second quarter of 2024, and calendar years 2024 and 2025, forecasted light vehicle production volumes are shown below:

Light Vehicle Production (per S&P Global Mobility mid-April light vehicle production forecast)
(in Millions)
RegionQ2 2024Q2 2023% ChangeCalendar Year 2025Calendar Year 2024Calendar Year 20232025 vs 2024
% Change
2024 vs 2023
% Change
North America4.15 4.09 %16.42 16.01 15.68 %%
Europe4.52 4.66 (3)%17.52 17.49 17.88 — %(2)%
Japan and Korea3.03 3.13 (3)%11.80 12.16 12.77 (3)%(5)%
China7.51 6.74 11 %30.85 29.72 29.04 %%
Total Light Vehicle Production19.21 18.62 %76.59 75.38 75.37 %— %

Based on the aforementioned light vehicle production forecast and the actual results for the first three months of 2024, the Company is making no changes to its previously provided guidance for calendar year 2024 as shown below.
Revenue is expected to be between $2.45 and $2.55 billion
Gross Margin is expected to be between 34%