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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 June 30, 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, July 26, 2024
Common Stock, $.06 Par Value
230,217,225

1

GENTEX CORPORATION AND SUBSIDIARIES
For the Three and Six Months Ended June 30, 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 June 30, 2024 and December 31, 2023
June 30, 2024 (Unaudited)
December 31, 2023
(Note)
ASSETS
CURRENT ASSETS
Cash and cash equivalents$260,241,951 $226,435,019 
Short-term investments15,534,338 14,356,476 
Accounts receivable, net306,565,681 321,809,868 
Inventories, net
463,492,305 402,473,028 
Prepaid expenses and other38,049,578 32,663,762 
Total current assets1,083,883,853 997,738,153 
PLANT AND EQUIPMENT—NET679,486,957 652,877,672 
OTHER ASSETS
Goodwill340,105,631 340,105,631 
Long-term investments308,051,778 299,080,876 
Intangible assets, net205,790,910 214,005,910 
Deferred tax asset52,335,039 41,113,759 
Patents and other assets, net68,630,894 66,515,551 
Total other assets974,914,252 960,821,727 
Total assets$2,738,285,062 $2,611,437,552 
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
CURRENT LIABILITIES
Accounts payable$206,001,837 $184,398,820 
Accrued liabilities98,726,663 87,210,156 
Total current liabilities304,728,500 271,608,976 
OTHER NON-CURRENT LIABILITIES33,257,035 27,311,507 
Total liabilities337,985,535 298,920,483 
SHAREHOLDERS’ INVESTMENT
Common stock13,813,772 13,887,326 
Additional paid-in capital1,000,014,813 968,245,875 
Retained earnings1,394,446,595 1,336,940,990 
Accumulated other comprehensive loss(7,975,653)(6,557,122)
Total shareholders’ investment2,400,299,527 2,312,517,069 
Total liabilities and shareholders’ investment$2,738,285,062 $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 and Six Months Ended June 30, 2024 and 2023
 
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
NET SALES
$572,925,778 $583,472,846 $1,163,150,989 $1,134,234,157 
COST OF GOODS SOLD
384,362,469 390,389,807 772,350,073 766,413,887 
Gross profit188,563,309 193,083,039 390,800,916 367,820,270 
OPERATING EXPENSES:
Engineering, research and development44,003,994 37,973,790 86,185,980 72,627,537 
Selling, general & administrative29,675,293 27,819,861 60,384,602 54,652,698 
Total operating expenses73,679,287 65,793,651 146,570,582 127,280,235 
Income from operations114,884,022 127,289,388 244,230,334 240,540,035 
OTHER (LOSS) INCOME
Investment (loss) income(12,393,771)2,890,934 (15,762,295)5,830,128 
Other income (loss), net(1,159,272)(1,576,538)510,867 (1,771,277)
Total other (loss) income(13,553,043)1,314,396 (15,251,428)4,058,851 
INCOME BEFORE PROVISION FOR INCOME TAXES101,330,979 128,603,784 228,978,906 244,598,886 
PROVISION FOR INCOME TAXES15,290,541 19,448,381 34,707,753 37,865,222 
NET INCOME$86,040,438 $109,155,403 $194,271,153 $206,733,664 
EARNINGS PER SHARE: (1)
Basic$0.37 $0.47 $0.84 $0.88 
Diluted$0.37 $0.47 $0.84 $0.88 
Cash Dividends Declared per Share$0.120 $0.120 $0.240 $0.240 
(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 and Six Months Ended June 30, 2024 and 2023
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Net income$86,040,438 $109,155,403 $194,271,153 $206,733,664 
Other comprehensive (loss) income before tax:
Foreign currency translation adjustments(509,541)(1,456,377)(1,459,754)(1,577,544)
Unrealized gains on debt securities, net
271 554,565 52,181 3,136,342 
Other comprehensive (loss) income, before tax(509,270)(901,812)(1,407,573)1,558,798 
Income tax impact related to components of other comprehensive (loss) income
57 116,459 10,958 658,632 
Other comprehensive (loss) income, net of tax(509,327)(1,018,271)(1,418,531)900,166 
Comprehensive income$85,531,111 $108,137,132 $192,852,622 $207,633,830 

5


GENTEX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
For the Three Months Ended June 30, 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 APRIL 1, 2024231,198,885 $13,871,933 $991,053,652 $1,378,904,530 $(7,466,326)$2,376,363,789 
Issuance of common stock from stock plan transactions433,321 25,999 3,382,323 — — 3,408,322 
Repurchases of common stock(1,402,667)(84,160)(5,344,160)(42,871,254)— (48,299,574)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock— — 10,922,998 — — 10,922,998 
Dividends declared ($0.12 per share)
— — — (27,627,119)— (27,627,119)
Net income— — — 86,040,438 — 86,040,438 
Other comprehensive loss— — — — (509,327)(509,327)
BALANCE AS OF JUNE 30, 2024230,229,539 $13,813,772 $1,000,014,813 $1,394,446,595 $(7,975,653)$2,400,299,527 
BALANCE AS OF APRIL 1, 2023233,726,045 $14,023,563 $928,284,892 $1,193,171,690 $(12,224,497)$2,123,255,648 
Issuance of common stock from stock plan transactions624,323 37,459 7,889,328 — 7,926,787 
Repurchases of common stock(920,374)(55,223)(3,258,126)(21,790,142)— (25,103,491)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock— — 9,744,670 — — 9,744,670 
Dividends declared ($0.12 per share)
— — — (28,011,420)— (28,011,420)
Net income— — — 109,155,403 — 109,155,403 
Other comprehensive loss— — — — (1,018,271)(1,018,271)
BALANCE AS OF JUNE 30, 2023233,429,994 $14,005,799 $942,660,764 $1,252,525,531 $(13,242,768)$2,195,949,326 

6

GENTEX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
For the Six Months Ended June 30, 2024 and 2023
Common 
Stock
Shares		Common 
Stock
Amount		Additional 
Paid-In
Capital		Retained 
Earnings		Accumulated 
Other
Comprehensive
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 transactions1,377,666 82,660 20,159,649 — — 20,242,309 
Repurchases of common stock(2,603,570)(156,214)(9,787,501)(81,394,947)— (91,338,662)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock— — 21,396,790 — — 21,396,790 
Dividends declared ($0.24 per share)
— — — (55,370,601)— (55,370,601)
Net income— — — 194,271,153 — 194,271,153 
Other comprehensive loss
— — — — (1,418,531)(1,418,531)
BALANCE AS OF JUNE 30, 2024230,229,539 $13,813,772 $1,000,014,813 $1,394,446,595 $(7,975,653)$2,400,299,527 
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 transactions1,227,959 73,677 13,809,133 — — 13,882,810 
Issuance of common stock related to acquisitions— — — — — — 
Repurchases of common stock(1,967,300)(118,038)(6,911,897)(46,536,187)— (53,566,122)
Stock-based compensation expense related to stock options, employee stock purchases and restricted stock— — 18,264,205 — — 18,264,205 
Dividends declared ($0.24 per share)
— — — (56,058,218)— (56,058,218)
Net income— — — 206,733,664 — 206,733,664 
Other comprehensive income
— — — — 900,166 900,166 
BALANCE AS OF JUNE 30, 2023233,429,994 $14,005,799 $942,660,764 $1,252,525,531 $(13,242,768)$2,195,949,326 

7

GENTEX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2024 and 2023
20242023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$194,271,153 $206,733,664 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization47,942,132 48,841,936 
(Gain) on disposal of assets(1,261,727)(214,593)
Loss on disposal of assets29,782 220,568 
(Gain) on sale of investments and technology investment income(4,708,185)(2,747,586)
Loss on sale of investments and technology investment losses29,061,771 4,201,138 
Deferred tax expense
(11,232,239)(5,122,661)
Stock-based compensation expense related to employee stock options, employee stock purchases and restricted stock21,396,790 18,264,205 
Change in operating assets and liabilities:
Accounts receivable, net15,244,187 (73,915,719)
Inventories(61,019,277)14,334,001 
Prepaid expenses and other(3,559,130)(2,722,437)
Accounts payable17,318,424 22,410,431 
Accrued liabilities, excluding dividends declared15,643,764 11,483,186 
Net cash provided by operating activities259,127,445 241,766,133 
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Activity in investments:
Sales proceeds19,649,880 21,523,990 
Maturities and calls6,260,000 11,650,000 
Purchases(60,360,047)(65,945,596)
Plant and equipment additions(63,634,852)(90,277,995)
Proceeds from sale of plant and equipment127,000 140,610 
Increase in other assets(4,120,881)(3,486,284)
Net cash used for investing activities(102,078,900)(126,395,275)
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Issuance of common stock from stock plan transactions20,242,309 13,882,810 
Cash dividends paid(55,517,709)(56,146,939)
Repurchases of common stock(87,966,213)(54,195,766)
Net cash used for financing activities(123,241,613)(96,459,895)
NET INCREASE IN CASH AND CASH EQUIVALENTS33,806,932 18,910,963 
CASH, CASH EQUIVALENTS, and RESTRICTED CASH, beginning of period226,435,019 218,754,638 
CASH, CASH EQUIVALENTS, and RESTRICTED CASH, end of period$260,241,951 $237,665,601 

Six Months Ended June 30
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$(912,142)$5,064,356 
8

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 June 30, 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 by the Company. 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 June 30, 2024 and December 31, 2023 was $340.1 million, as set forth in the table below:

9

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 June 30, 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 second 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 June 30, 2024:
Other Intangible AssetsGrossAccumulated AmortizationNetAssumed Useful Life
Gentex Patents$39,013,180 $(27,602,158)$11,411,022 Various
Other Intangible Assets
HomeLink® Trade Names and Trademarks
$52,000,000 $— $52,000,000 Indefinite
HomeLink® Technology
180,000,000 (161,250,000)18,750,000 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 (666,667)11,333,333 12 years
eSight Trade Names and Trademarks870,000 (48,333)821,667 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 $(204,965,000)$205,790,910 
Total Patents & Other Intangible Assets$449,769,090 $(232,567,158)$217,201,932 




10

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 $4.4 million and $8.7 million during the three and six months ended June 30, 2024, respectively, compared to approximately $5.2 million and $10.5 million for the same periods ended June 30, 2023, respectively.

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.
11

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. As of June 30, 2024, the Company holds a total of 3,311,308 shares of VOXX. 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. During the three and six months ended June 30, 2024, the Company recorded $16.6 million and $23.8 million, respectively, of mark to market adjustments in investment 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 $146.2 million as of June 30, 2024, of which $142.7 million and $3.5 million are recorded in long-term investments and short-term investments, respectively, 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, respectively, 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 June 30, 2024 and December 31, 2023:
As of June 30, 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
June 30, 2024(Level 1)(Level 2)(Level 3)
Cash & Cash Equivalents$260,241,951 $260,241,951 $— $— 
Short-Term Investments:
Certificate of Deposit995,838 995,838 — — 
Government Securities4,591,123 — 4,591,123 — 
Municipal Bonds5,079,264 — 5,079,264 — 
Other1,401,088 1,401,088 — — 
Long-Term Investments:
Asset Backed Securities40,725,036 — 40,725,036 — 
Corporate Bonds62,832,820 — 62,832,820 — 
Government Securities8,380,081 — 8,380,081 — 
Municipal Bonds43,932,270 — 43,932,270 — 
Common Stock10,463,734 10,463,734 — — 
Total$438,643,205 $273,102,611 $165,540,594 $— 
12

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 June 30, 2024 and December 31, 2023:

As of June 30, 2024:
Unrealized
Cost
Gains
Losses
Market Value
Short-Term Investments:
Certificate of Deposit$1,000,000 $— $(4,162)$995,838 
Government Securities4,608,148 — (17,025)4,591,123 
Municipal Bonds5,137,053 — (57,789)5,079,264 
Other1,401,088 — — 1,401,088 
Long-Term Investments:
Asset Backed Securities40,635,021 343,922 (253,907)40,725,036 
Corporate Bonds63,561,430 203,037 (931,647)62,832,820 
Government Securities8,434,018 17,187 (71,124)8,380,081 
Municipal Bonds45,668,584 216,797 (1,953,111)43,932,270 
Total$170,445,342 $780,943 $(3,288,765)$167,937,520 


13

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 available-for-sale securities as of June 30, 2024, are as follows:
Aggregate Unrealized LossesAggregate Fair Value of Investments
Loss duration of less than one year$455,438 $58,239,483 
Loss duration of greater than one year2,833,327 62,929,099 
       Total
$3,288,765 $121,168,582 

Unrealized losses on available-for-sale securities 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 June 30, 2024 have contractual maturities as follows:
Due within one year
$10,666,225 
Due between one and five years
89,477,474 
Due over five years
66,392,732 
$166,536,431 
14

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



(5)    Inventories, net
Inventories consisted of the following at the respective balance sheet dates:
June 30, 2024December 31, 2023
Raw materials
$322,616,747 $283,126,566 
Work-in-process
52,272,636 46,343,955 
Finished goods
88,602,922 73,002,507 
Total Inventory
$463,492,305 $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 and six months ended June 30, 2024 and June 30, 2023:
15

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Basic Earnings Per Share
Net Income$86,040,438 $109,155,403 $194,271,153 $206,733,664 
Less: Dividends and undistributed earnings allocated to participating securities1,202,737 1,616,981 2,782,172 3,095,900 
Net Income available to common shareholders$84,837,701 $107,538,422 $191,488,981 $203,637,764 
Basic weighted average shares outstanding227,377,169 230,005,782 227,490,367 230,135,955 
Net Income per share - Basic$0.37 $0.47 $0.84 $0.88 
Diluted Earnings Per Share
Allocation of Net Income used in basic computation$84,837,701 $107,538,422 $191,488,981 $203,637,764 
Reallocation of undistributed earnings1,578 1,147 3,968 2,462 
Net Income available to common shareholders - Diluted$84,839,279 $107,539,569 $191,492,949 $203,640,226 
Number of shares used in basic computation227,377,169 230,005,782 227,490,367 230,135,955 
Additional weighted average dilutive common stock equivalents431,760 222,568 454,753 255,153 
Diluted weighted average shares outstanding227,808,929 230,228,350 227,945,120 230,391,108 
Net Income per share - Diluted$0.37 $0.47 $0.84 $0.88 
Shares related to stock plans not included in diluted average common shares outstanding because their effect would be anti-dilutive435,981 2,355,346 422,639 1,549,824 

(7)    Stock-Based Compensation Plans
As of June 30, 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.
16

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


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 $10,964,419 and $21,451,680 for the three and six months ended June 30, 2024, respectively. The Company recognized compensation expense for share-based payments of $9,744,670 and $18,264,205 for the three and six months ended June 30, 2023, respectively. A portion of the compensation cost for share based payment awards is capitalized as part of inventory.
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 June 30, 2024, 10,767,342 share awards have been made under the Plan, resulting in 28,493,236 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 Options4,974,566 1.004,974,566 
Restricted Stock4,784,639 4.0619,425,634 
Performance Shares1,008,137 4.064,093,036 
Total10,767,342 28,493,236 
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 June 30, 2024, there was $6,433,486 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 June 30,Six Months Ended June 30,
2024202320242023
Dividend Yield (1)
1.62 %1.75 %1.63 %1.76 %
Expected volatility (2)
28.00 %28.97 %28.15 %29.01 %
Risk-free interest rate (3)
4.33 %4.13 %4.27 %3.87 %
Expected term of options (years) (4)
4.144.154.144.15
Weighted-avg. grant date fair value$8.49$7.38$8.78$7.11
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
17

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


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 June 30, 2024, the Company had unearned stock-based compensation of $51,380,007 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 and six months ended June 30, 2024 was $6,883,839 and $13,571,180, respectively. Compensation expense from restricted stock grants in the three and six months ended June 30, 2023 was $5,862,755 and $11,808,809, respectively.

Performance Shares

Performance shares awarded under the 2019 Omnibus Plan are considered performance condition awards as attainment is based on the Company's performance relative to pre-established metrics. The fair value of such performance share awards was determined using the Company's 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 June 30, 2024, the Company had unearned stock-based compensation of $18,244,290 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 and six months ended June 30, 2024 was $2,023,635 and $3,796,264, respectively. Compensation expense related to these performance share grants in the three and six months ended June 30, 2023 was $1,635,022 and $2,137,228, respectively.

As part of its objective of attracting and retaining management to fulfill the Company's strategic goals, the Compensation Committee recommended and the Board approved on February 16, 2023, a retention grant of performance share awards ("PSAs"). In addition to the retention of management, the PSAs have been granted to further align management goals with those of the Company's shareholders. For that reason, the PSAs have been granted with performance criteria and will be based upon achievement of the Company's relative total shareholder return ("TSR") over a four year period (2023-2026), against a predetermined peer group. The grant date fair value of PSAs with TSR targets was determined using a Monte Carlo simulation. Compensation expense related to these retention grants in the three and six months ended June 30, 2024 was $445,793 and $888,639, respectively. Compensation expense related to these retention grants in the three and six months ended June 30, 2023 was $516,493 and $641,218, respectively.

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 June 30, 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 June 30, 2024, the Company has issued 362,488 shares under this plan.


18

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


(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):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Foreign currency translation adjustments:
Balance at beginning of period$(5,484,932)$(4,153,406)$(4,534,719)$(4,032,239)
Other Comprehensive loss before reclassifications
(509,541)(1,456,377)(1,459,754)(1,577,544)
Net current-period change(509,541)(1,456,377)(1,459,754)(1,577,544)
Balance at end of period
(5,994,473)(5,609,783)(5,994,473)(5,609,783)
Unrealized (losses) gains on available-for-sale debt securities:
Balance at beginning of period
(1,981,394)(8,071,091)(2,022,403)(10,110,695)
Other Comprehensive (loss) income before reclassifications
(281,297)547,342 (829,754)825,060 
Amounts reclassified from accumulated other comprehensive income
281,511 (109,236)870,977 1,652,650 
Net current-period change
214 438,106 41,223 2,477,710 
Balance at end of period
(1,981,180)(7,632,985)(1,981,180)(7,632,985)
Accumulated other comprehensive loss, end of period
$(7,975,653)$(13,242,768)$(7,975,653)$(13,242,768)
The following table presents details of reclassifications out of accumulated other comprehensive loss for the three and six months ended June 30, 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 June 30,Six Months Ended June 30,
2024202320242023
Unrealized gains (losses) on available-for-sale debt securities
Realized gain (loss) on sale of securities$(356,343)$138,274 $(1,102,503)$(2,091,962)Investment income
Provision for income taxes74,832 (29,038)231,526 439,312 Provision for income taxes
Total net reclassifications for the period$(281,511)$109,236 $(870,977)$(1,652,650)



19

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


(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 June 30, 2024, there was no outstanding balance on the Revolver.

As of June 30, 2024, the Company is in compliance with its covenants under the Credit Agreement.


(10)    Equity

The decrease in common stock during the six months ended June 30, 2024, was primarily due to the repurchases of 2.6 million shares, partially offset by the issuance of 1.4 million shares of the Company’s common stock, net of cancellations, under the Company’s stock-based compensation plans. The total net decrease was 1.2 million shares.

The Company recorded a cash dividend of $0.120 per share during the second quarter of 2024 as compared to a cash dividend of $0.120 per share during the second quarter of 2023. The second quarter 2024 dividend of $27.6 million was declared on May 29, 2024 and was paid on July 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.
20

GENTEX CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Revenue:
Automotive Products$559,290,095 $574,109,748 $1,136,892,291 $1,111,532,736 
Other13,635,683 9,363,098 26,258,698 22,701,421 
Total$572,925,778 $583,472,846 $1,163,150,989 $1,134,234,157 
Income (Loss) from operations:
Automotive Products$114,652,174 $128,729,058 $244,198,314 $240,168,856 
Other231,848 (1,439,670)32,020 371,179 
Total$114,884,022 $127,289,388 $244,230,334 $240,540,035 



(13)    Income Taxes
The effective tax rate was 15.2% in the six months ended June 30, 2024, compared to an effective tax rate of 15.5% 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 and six month periods ended June 30, 2024 and June 30, 2023, respectively:
Three Months Ended June 30,Six Months Ended June 30,
Revenue
2024202320242023
Automotive Products
U.S.
$164,948,637 $177,940,475 $330,089,259 $348,722,079 
Japan82,261,79384,178,567171,266,421 156,334,551 
Germany71,510,830 73,990,846 147,205,718 154,570,310 
Korea31,457,450 33,920,149 85,152,562 57,398,619 
Mexico47,955,922 36,803,254 85,577,085 71,090,798 
Other161,155,463 167,276,457 317,601,246 323,416,379 
Total Automotive Products$559,290,095 $574,109,748 $1,136,892,291 $