What changed in this filing

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Item 1A. Risk Factors

2025-02-25 compared with 2024-02-22 · 42 added, 59 removed, 173 unchanged (37% of the section changed)

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changes in tax laws;

import and export duty and tariff rates in or with the countries with which we conduct business;

import and export duty and tariff rates in or with the countries with which we conduct business, including those recently adopted and potential new tariffs;

negative impact of any governmental investigations and associated litigation, including securities litigation relating to the conduct of our business;

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Accordingly, any forward-looking statement should be read in conjunction with the additional information about risks and uncertainties identified under the heading “Risk Factors” in the Company’s latest Form 10-K and Form 10-Q filed with the SEC, which risks and uncertainties include supply chain constraints that have affected, are affecting, and will continue to affect, general economic and industry conditions, customers, suppliers, and the regulatory environment in which the Company operates.

Includes content supplied by S&P Global Mobility Light Vehicle Production Forecast of January 16, 2024 (http://www.gentex.com/forecast-disclaimer).

Forward-looking information includes content supplied by S&P Global Mobility Light Vehicle Production Forecast of January 16, 2025 (http://www.gentex.com/forecast-disclaimer).

T he following risk factors, together with all other information provided in this Annual Report on Form 10-K should be carefully considered.

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The automotive industry has always been cyclical and highly impacted by levels of economic activity.

The current economic environment, including inflation, continues to be uncertain, and continues to cause financial and production stresses evidenced by volatile automotive production levels, volatility with customer orders, supplier part and material shortages (especially electronics components), automotive and Tier 1 supplier plant shutdowns, customer and supplier financial issues, commodity raw material cost increases, supply constraints, tariffs, consumer vehicle preference shifts (where we have a lower penetration rate and lower content per vehicle), and supply chain stresses.

If automotive customers (including their Tier 1 suppliers) and suppliers experience significant plant shutdowns, work stoppages, strikes, part shortages, etc., it will further disrupt our shipments to these customers, which could adversely affect our business, financial condition, and/or results of operations.

The current economic environment, including tariffs and inflation, continues to be uncertain, and continues to cause financial and production stresses evidenced by volatile automotive production levels, volatility with customer orders, supplier

part and material shortages (especially electronics components), automotive and Tier 1 supplier plant shutdowns, customer and supplier financial issues, commodity raw material cost increases, supply constraints, consumer vehicle preference shifts (where we have a lower penetration rate and lower content per vehicle), and supply chain stresses.

When automotive customers (including their Tier 1 suppliers) and suppliers experience significant plant shutdowns, work stoppages, strikes, part shortages, etc., it disrupts our shipments to these customers, which adversely affects our business, financial condition, and/or results of operations.

Automakers continue to experience volatility and uncertainty in executing planned new programs on time, due in part to continued vehicle complexity increases and supply chain constraints.

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We have a number of large customers, including three automotive customers which each account for 10% or more of our annual net sales in 2024 (including direct sales to OEM customers and sales through their Tier 1 suppliers):

Volkswagen Group, Toyota Motor Company, and General Motors.

The loss of all or a substantial portion of the sales to, or decreases in production by, any of these customers (or certain other significant customers) could have a material adverse effect on our business, financial condition, and/or results of operations.

Toyota Motor Company, Volkswagen Group, and General Motors.

The loss of all or a substantial portion of the sales to, or decreases in production by, any of these customers (or certain other significant customers) would have a material adverse effect on our business, financial condition, and/or results of operations.

Pricing Pressures.

We continue to experience ongoing pricing pressures from our automotive customers and competitors, which have affected, and which will continue to affect our profit margins to the extent that we are unable to offset the pricing pressures with price adjustments, engineering and purchasing cost reductions, productivity improvements, increases in unit shipments of mirrors and electronics with advanced features, and/or

new or advanced technologies, each of which pose ongoing challenges, which continue to adversely impact our business, financial condition, and/or results of operations.

Raw Materials and Other Product Component Costs.

Increasing costs in raw materials, energy, commodities, labor, and other product component costs adversely affects our business, financial condition and/or results of operations.

Increasing costs in raw materials, energy, commodities, labor, and other product component costs continue to adversely affect our business, financial condition and/or results of operations.

These costs have generally increased as a result of supply chain disruptions, constrained labor availability, global economic factors, as well as inflationary impacts.

When these prices rise and we are unable to recover such cost increases from our customers, those increases have an adverse effect on our business, financial condition and/or results of operations.

The geopolitical environment between the Unites States and other jurisdictions, most significantly China, continues to cause uncertainty on tariffs and trade.

Business Combinations.

Acquisitions of businesses, technologies, and assets are playing a role in our future growth.

We cannot be certain that we will be able to identify attractive acquisition targets, have resources available for or obtain financing for acquisitions on satisfactory terms, successfully acquire identified targets, or manage timing of acquisitions with our businesses.

Additionally, we are not always successful in integrating acquired businesses into our existing operations, achieving projected synergies, and/or maximizing the value of acquired technologies and businesses.

Competition for acquisition opportunities in the various industries in which we operate already exists and may increase, thereby increasing our costs of making acquisitions or causing us to refrain from making further acquisitions.

We are also subject to applicable antitrust laws and must avoid anticompetitive behavior.

These and other acquisition-related factors negatively and adversely impact our business, financial condition, and/or results of operations.

The geopolitical environment between the Unites States and other jurisdictions, most significantly China, continues to cause uncertainty, especially in light of recently imposed tariffs, tariffs threatened to be imposed, and those already existing.

Previously enacted tariffs have increased the Company's input costs and challenge the Company's competitive position in foreign markets.

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or international trade policy could have a further adverse impact on our business.

Technology Investments.

We have invested in certain companies and projects that we do not have full control over operations, management, or decision-making, which are accounted for under the measurement alternative method of accounting or equity method of accounting.

For investments accounted for under the equity method of accounting, we rely on the investment partner for the reporting of the financial results of the investment, and to the extent that the financial reporting of the investments is incorrect, our financial results reported using that information may be incorrect.

These investments are subject to risks related to the businesses in which we invest, which may be different than the risks inherent in our own business.

These investments could become impaired or have realized

or unrealized losses in future periods, which could have an adverse effect on our financial condition and results of operations.

We recognize that Magna Mirrors, our main competitor, has considerably more resources available to it, and presents a formidable competitive threat.

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We acknowledge that dimming device (e.g., electrochromic) technology is the subject of research and development efforts by numerous third parties.

On March 31, 2014 the Alliance of Automobile Manufacturers petitioned the National Highway Traffic Safety Administration ("NHTSA") to allow automakers to use CMS as an option to replace conventional rearview mirrors within North America, however, no final rule or legislation was made in response to this petition.

At the annual SAE Government-Industry Meeting in January 2017, NHTSA requested that SAE develop Recommended Procedures for test protocols and performance criteria for CMS that would replace mirror systems on light vehicles in the U.S.

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.

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 monitor systems to replace mirrors within Japan and European countries.

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The Company believes that combining video displays with mirrors provides a more robust product by addressing all driving conditions in a single solution that can be controlled by the driver.

The Company has been in production with the Company's FDM ® since 2015 and has, in the ordinary course of business, been awarded programs with fourteen (14) OEM customers.

The Company is currently shipping production FDM ® to all fourteen of these customers.

The Company has been in production with the Company's FDM ® since 2015 and has, in the ordinary course of business, been awarded programs with sixteen (16) OEM customers.

The Company is currently shipping production FDM ® to all sixteen of these customers.

The Company's CMS solution uses three cameras to provide a comprehensive view of the sides and rear of the vehicle while still providing the traditional safety of interior and exterior mirrors, that still function when cameras are obstructed, or not functioning.

The Company has previously announced that the Company continues to

develop in the areas of imager performance, camera dynamic range, lens design, image processing from the camera to the display, and camera lens cleaning.

The Company has previously announced that the Company continues to develop in the areas of imager performance, camera dynamic range, lens design, image processing from the camera to the display, and camera lens cleaning.

The Company acknowledges that as such technology evolves over time, such as cameras replacing mirrors and/or autonomous driving, there will be increased competition.

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We sell products that have varying profit margins.

Our financial performance can be impacted depending on the mix of products we sell and to which customers, during a given period.

Our financial performance has been impacted by the mix of products we sell and to which customers, during a given period.

The automotive industry is subject to rapid technological change, vigorous competition, short product life cycles and cyclical, ever-changing consumer demand patterns.

When our customers are adversely affected by these factors, we may be similarly affected to the extent that our customers reduce the volume of orders for our products.

As a result of such changes and circumstances impacting our customers, our sales mix can shift, which may have either favorable or unfavorable impact on revenue and would include shifts in regional growth, in OEM sales demand, as well as in consumer demand related to vehicle segment purchases, and content penetration.

A decrease in consumer demand for specific types of vehicles where we have traditionally provided higher value content would have a significant effect on our business, financial condition, and/or results of operations.

When our customers are adversely affected by these factors, we are similarly affected to the extent that our customers reduce the volume of orders for our products or certain of our products.

As a result of such changes and circumstances impacting our customers, our sales mix shifts, which has either favorable or unfavorable impact on revenue and would include shifts in regional growth, in OEM sales demand, as well as in consumer demand related to vehicle segment purchases, and content penetration.

A decrease in consumer demand for specific types of vehicles where we have traditionally provided higher value content has a significant effect on our business, financial condition, and/or results of operations.

Our forward guidance and estimates assume a certain geographic sales mix as well as a product sales mix.

When actual results vary from this projected geographic and product mix of sales, our business, financial condition, and/or results of operations are impacted.

Business Combinations.

Acquisitions of businesses, technologies, and assets play a role in our future growth.

We cannot be certain that we will be able to identify attractive acquisition targets, have resources available for or obtain financing for acquisitions on satisfactory terms, successfully acquire identified targets or manage timing of acquisitions with capital obligations across our businesses.

Additionally, we may not be successful in integrating acquired businesses into our existing operations, achieving projected synergies, and/or maximizing the value of acquired technologies and businesses.

We are also subject to applicable antitrust laws and must avoid anticompetitive behavior.

These and other acquisition-related factors may negatively and adversely impact our business, financial condition, and/or results of operations.

Intellectual Property.

We believe that our patents and trade secrets provide us with a competitive advantage in automotive rearview mirrors, variable dimmable devices, certain electronics, and fire protection products, although no single patent is necessarily required for the success of our products.

We believe that our patents and trade secrets provide us with a competitive advantage in automotive rearview mirrors, variable dimmable devices, certain electronics, and fire protection technologies, although no single patent is necessarily required for the success of our products.

The loss of any significant combination of patents and trade secrets regarding our products could adversely affect our business, financial condition, and/or results of operations.

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We continue to invest significantly in engineering, research and development projects.

Should these efforts ultimately prove unsuccessful, our business, financial condition, and/or results of operations could be adversely affected.

When any such efforts ultimately prove to be less successful than anticipated, our business, financial condition, and/or results of operations are adversely affected.

Intellectual Property Litigation and Infringement Claims.

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If a person or company claims that our products infringed their intellectual property rights, any resulting litigation would be costly, time consuming, and would divert the attention of management and key personnel from other business issues.

The complexity of the technology involved in our business and the uncertainty of intellectual property

litigation significantly increases these risks and makes such risk part of our ongoing business.

The complexity of the technology involved in our business and the uncertainty of intellectual property litigation significantly increases these risks and makes such risk part of our ongoing business.

To that end, we periodically obtain intellectual property rights, in the ordinary course of business, to strengthen our intellectual property portfolio and minimize potential risks of infringement.

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Any of these adverse consequences could potentially have an effect on our business, financial condition and/or results of operations.

Certain automakers and Tier 1 customers from time to time may consider the sale of certain business segments or bankruptcy as a result of financial stress.

Certain automakers and Tier 1 customers from time to time may consider the sale of certain business segments or bankruptcy or other changes as a result of financial stress.

Should one or more of our larger customers (including sales through their Tier 1 suppliers) declare bankruptcy or sell their business, it could adversely affect the collection of receivables, our business, financial condition, and/or results of operations.

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We face certain security threats, including threats to the confidentiality, availability and integrity of our data and systems.

We maintain an extensive network of technical security controls, policy enforcement mechanisms, monitoring systems and management and Board oversight in order to address these threats.

We maintain an extensive network of technical security controls, policy enforcement mechanisms, monitoring systems and management, Board, and Board committee oversight in order to address these threats.

While these measures are designed to prevent, detect and respond to unauthorized activity in, or otherwise compromise of, our systems, certain types of attacks, including cyber-attacks, could result in significant financial or information losses and/or reputational harm.

We, and certain of our third-party vendors, receive and store personal information in connection with our human resources operations and other aspects of our business.

Despite our implementation of security measures, our IT systems, like all IT systems, are vulnerable to damages from computer viruses, natural disasters, unauthorized access, cyber-attack and other similar disruptions.

Despite our implementation of security measures, our IT systems, like all IT systems, are vulnerable to damages from computer

viruses, natural disasters, unauthorized access, cyber-attack and other similar disruptions.

Any such system failure, accident or security breach results in disruptions to our operations.

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The Dodd-Frank Wall Street Reform and Consumer Protection Act contains provisions to improve transparency and accountability concerning the supply of certain minerals, known as conflict minerals, originating from the Democratic Republic of Congo ("DRC") and adjoining countries.

As a result, in August 2012 the SEC adopted annual disclosure and reporting requirements for those companies who use conflict minerals mined from the DRC and adjoining countries in their products.

As a result, in 2012 the SEC adopted annual disclosure and reporting requirements for those companies who use conflict minerals mined from the DRC and adjoining countries in their products.

These requirements necessitate due diligence efforts, and the Company has disclosed its findings annually to the SEC on Form SD around May 30 each year since 2012.

As there are only a limited number of suppliers offering "conflict free" minerals necessary for our products, the

Company cannot always be absolutely certain that we will be able to obtain necessary conflict minerals from such suppliers in sufficient quantities or at competitive prices.

As there are only a limited number of suppliers offering "conflict free" minerals necessary for our products, the Company cannot always be absolutely certain that we will be able to obtain necessary conflict minerals from such suppliers in sufficient quantities or at competitive prices.

Also, the Company may face reputational challenges if we determine that certain of our products contain minerals not determined to be conflict free or if the Company is unable to sufficiently verify the origins for all conflict minerals used in the Company's products through the procedures the Company has implemented.

On December 8, 2015, NHTSA proposed changes to the Administration’s 5-Star Safety Ratings for new vehicles (also known as the New Car Assessment Program or NCAP) and initiated a comment period.

The proposed changes will, for the first time, encompass assessment of crash-avoidance technologies, which includes lower beam headlamp performance, semi-automatic headlamp switching, and blind spot detection.

NHTSA originally intended to implement the enhancements in NCAP in 2018 beginning with model year 2019 vehicles.

The NCAP implementation has been delayed.

Under these proposed changes, the Company believes that its SmartBeam ® technology will qualify with the semi-automatic headlamp NCAP rating system, and that its SmartBeam ® technology and exterior mirrors with blind spot alert lighting can be included in a system that qualifies with the lower beam headlamp performance and blind spot detection NCAP rating system, respectively.

On October 16, 2019, NHTSA issued a press release comparing NCAP to other regions’ version of NCAP, identified new technologies that are not currently included in NCAP, and suggested Congress legislatively direct actions to improve NCAP.

On January 14, 2021, NHTSA issued a request for comment regarding NCAP with advanced driver assist features, including forward collision, lane keeping, blind spot detection and forward pedestrian impact avoidance technologies.

As noted, 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 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.

In November 2022, NHTSA conducted a public meeting and discussed the ongoing research of this technology.

Antitakeover Provisions.

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and other foreign jurisdictions.

Changes in tax rates, adoption of new tax laws or other additional tax policies, and other proposals to reform United States and foreign tax laws could adversely affect the Company's operating results, cash flows, and financial condition.

Changes in tax rates, adoption of new tax laws or other additional tax policies, the expiration of existing tax benefits, and other proposals to reform United States and foreign tax laws could adversely affect the Company's operating results, cash flows, and financial condition.

The Company’s domestic and international tax liabilities are dependent upon the location of earnings among these different jurisdictions.

Our business success depends on attracting and retaining qualified personnel.

Throughout our Company, our ability to sustain and grow our business requires us to hire, retain and develop a highly skilled and

diverse management team and workforce.

Throughout our Company, our ability to sustain and grow our business requires us to hire, retain and develop a highly skilled and diverse management team and workforce.

Failure to ensure that we have the leadership capacity with the necessary skill sets and experience and a skilled workforce could impede our ability to deliver our growth objectives and execute our strategic plan.

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Any continued adverse worldwide economic conditions, currency exchange rates, trade war, war or significant terrorist acts, could each affect worldwide automotive sales and production levels, thereby impacting the Company;

• Climate change

• Public health crises (e.g.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors