What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-24 compared with 2025-02-25 · 208 added, 90 removed, 91 unchanged (77% of the section changed)

11 unchanged sentences

Selling, General and Administrative 7.0 5.2 4.9 47.0 7.5

Severance Expense 0.5 — — N/A N/A

Impairment Charges — 0.4 — N/A N/A

2 unchanged sentences

Income From Operations 18.7 19.9 21.6 3.1 (7.3)

19.9 21.6 19.3 (7.3) 34.0

Other (Loss)/Income (0.5) 0.5 0.4 (203.1) 35.0

0.5 0.4 (0.1) 35.0 3,368.0

Income Before Provision for Income Taxes 18.2 20.4 22.0 (2.4) (6.5)

Provision for Income Taxes 3.0 2.9 3.3 12.8 (11.6)

Net Income 17.5 % 18.6 % 16.6 % (5.6) % 34.4 %

Net Income Attributable to Gentex 15.2 % 17.5 % 18.6 % (4.9) % (5.6) %

Results of Operations:

In 2024, the Company's net sales increased by $14.1 million, or 1% compared to the prior year, representing the highest annual sales in Company history, despite light vehicle production in 2024 that decreased year-over-year by more than 4% in the Company's primary markets.

Net Sales In 2025, the Company's consolidated net sales increased by $221.0 million, or 10% compared to the prior year.

The Company completed its acquisition of VOXX on April 1, 2025 and included VOXX's results in the Company's financial statements beginning at the start of the second quarter of calendar year 2025.

Core Gentex sales were $2.27 billion for calendar year 2025, a 2% decline versus calendar year 2024, primarily driven by tariff and counter-tariff actions and resulting reduction in demand for exports of the Company's products into the China market.

In the Company's primary regions of North America, Europe, and Japan/Korea, automotive revenues increased approximately 1% year-over-year for calendar year 2025, despite a 1% decline in light‑vehicle production in those same markets compared to 2024.

For calendar year 2025, Gentex Automotive net sales without VOXX were $2.22 billion, which was a 2% decrease compared to $2.26 billion in 2024, and compared with a year-over-year decline in auto-dimming mirror shipments of 6%.

Gentex Other net sales (not including VOXX) for calendar year 2025, which includes dimmable aircraft windows, fire protection products, medical products, and biometric products were $51.1 million, compared to Other net sales of $48.6 million in calendar year 2024.

BioConnect, which operates in the Biometrics segment and was acquired on July 1, 2025, contributed total sales of $4.5 million to Gentex Other net sales for calendar year 2025.

VOXX, which operates in the Automotive, Premium Audio and Other segments, contributed total net sales of $267.2 million for calendar year 2025.

Cost of Goods Sold As a percentage of net sales, cost of goods sold decreased from 66.7% in 2024 to 65.8% in 2025.

The year over year improvement in the gross margin was primarily the result of purchasing cost reductions, operational efficiencies, and favorable product mix, partially offset by tariff related costs that were not reimbursed during the year.

On a year over year basis, improved labor costs and operational efficiencies had a positive impact of approximately 110 basis points and product mix had a positive impact of approximately 80 basis points on gross margin on a year over year basis.

These improvements were partially offset by incremental tariff‑related costs, which reduced gross margin in 2025 by approximately 110 basis points, net of recoveries, compared to calendar year 2024.

Operating Expenses Engineering, research and development expenses ("E, R & D") increased by $21.8 million or 12% from 2024 to 2025, and was 8% of net sales in both 2025 and 2024.

E, R & D increased year over year primarily due to the VOXX acquisition, which contributed $18.0 million to E, R, & D.

Selling, general and administrative expenses ("S, G & A") increased by $56.8 million or 47% from 2024 to 2025, representing 7% of net sales.

The primary reason for the year over year increase in S, G & A from 2024 to 2025 was the addition of VOXX, which contributed $55.1 million to S, G & A in 2025.

The Company also recorded total severance expense of $11.6 million during calendar year 2025, which was not present in the prior calendar year, related primarily to early‑retirement programs offered to certain Company employees in order to reduce ongoing operating expenses.

In calendar year 2024, the Company recorded impairment charges of $8.9 million for Goodwill and in-process research and development ("IPR&D"), as previously disclosed, which did not recur in 2025.

Total Other (Loss) Income Investment (loss) income, net, decreased $14.7 million to a net loss of $1.3 million for 2025, compared to net income of $13.4 million for 2024.

During calendar year 2025, this net loss included impairments of $14.1 million related to certain of the Company's equity investments.

Other, net decreased $10.7 million in 2025 versus 2024, primarily due to credit loss reserves of $7.4 million recorded in 2025 related to certain loans receivable.

Taxes The effective tax rate was 16.6% for the year ended December 31, 2025, compared to 14.3% for the prior year.

The effective tax rate in 2025 differed from the statutory federal income tax rate, primarily due to tax benefits related to stock-based compensation, as well as a lower benefit from the Foreign-Derived Intangible Income deduction ("FDII").

In 2024, the effective tax rate differed from the statutory federal income tax rate primarily due to FDII and R&D tax credits.

On July 4, 2025, the One Big Beautiful Bill Act was enacted into law.

The legislation included certain potentially taxpayer-favorable provisions applicable to the 2025 tax year and future periods, including the restoration of depreciation and amortization in adjusted taxable income for purposes of the Section 163(j) interest limitation, the reinstatement of immediate deductibility of domestic research and development expenditures, and the permanent extension of 100% bonus depreciation for qualifying property.

In accordance with ASC 740, Income Taxes , the Company recognized the effects of the enacted tax law changes in its income tax provision for the year ended December 31, 2025.

Nevertheless, the potentially taxpayer-favorable provisions of the One Big Beautiful Bill did not have a material impact on our effective tax rate.

Net Income Net income decreased by $19.6 million in 2025, or 5% compared to 2024, in large part due to the year over year changes in Other (loss) income.

Results of Operations:

Net Sales In 2024, the Company's net sales increased by $14.1 million, or 1% compared to the prior year, representing the highest annual sales in Company history, despite light vehicle production in 2024 that decreased year-over-year by more than 4% in the Company's primary markets.

The Company's revenue outperformance in 2024 versus the underlying market was driven primarily by growth in FDM unit shipments.

2 unchanged sentences

Medical product sales were $1.4 million for calendar 2024.

Cost of Goods Sold.

As a percentage of net sales, cost of goods sold decreased from 66.8% in 2023 to 66.7% in 2024.

Cost of Goods Sold As a percentage of net sales, cost of goods sold decreased from 66.8% in 2023 to 66.7% in 2024.

The year over year increase in the gross margin was primarily the result of supplier cost reductions and lower freight costs, though these benefits were largely offset by weaker than expected product mix, higher labor costs, and the inability to leverage fixed overhead costs due to the lower than forecasted revenue for the year.

2 unchanged sentences

Labor costs and inability to leverage fixed overhead costs, each had a negative impact of approximately 25 - 50 basis points on gross margin on a year over year basis.

Operating Expenses.

Engineering, research and development expenses ("E, R & D") increased by $27.1 million or 18% from 2023 to 2024, which represents 8% of net sales in 2024, compared to 7% of net sales in 2023.

E, R & D increased year over year primarily due to additional staffing and engineering related professional fees to assist with the execution of a high number of new product launches, product redesigns to optimize costs, and new product development.

Selling, general and administrative ("S, G & A") expenses increased by $8.5 million or 8% from 2023 to 2024, which remained at 5% of net sales.

Operating Expenses E, R, & D increased by $27.1 million or 18% from 2023 to 2024, which represents 8% of net sales in 2024, compared to 7% of net sales in 2023.

E, R & D increased year over year primarily due to additional

staffing and engineering related professional fees to assist with the execution of a high number of new product launches, product redesigns to optimize costs, and new product development.

S, G & A expenses increased by $8.5 million or 8% from 2023 to 2024, which remained at 5% of net sales.

The primary reason for the year over year increase in S, G & A from 2023 to 2024 was increased staffing expenses.

The Company also recorded impairment charges of $8.9 million for Goodwill and in-process research and development ("IPR&D") related to the Vaporsens technology acquired in 2020, as previously disclosed.

Total Other Income (Loss).

Investment income decreased $0.1 million to $13.4 million for 2024 compared to $13.5 million for 2023.

The Company also recorded impairment charges of $8.9 million for Goodwill and IPR&D related to the Vaporsens technology acquired in 2020, as previously disclosed.

Total Other Income (Loss) Investment income decreased $0.1 million to $13.4 million for 2024 compared to $13.5 million for 2023.

Other income – net increased $3.3 million in 2024 versus 2023, primarily due to increased interest income from fixed income investments.

The effective tax rate was 14.3% for the year ended December 31, 2024, compared to 15.2% for the prior year.

The effective tax rates in 2024 and 2023 differed from the statutory federal income tax rate, primarily due to the Foreign Derived Intangible Income Deduction, and R&D tax credits.

Net income decreased by $23.9 million in 2024, or 6% compared to 2023, primarily due to the year over year changes in operating profits.

Results of Operations:

In 2023, the Company's net sales increased by $380.3 million, or 20% compared to the prior year.

Overall light vehicle production in 2023 increased by 12% when compared to 2022 in the Company's primary markets, meaning net sales in 2023 outperformed the underlying market by 8%.

The outperformance versus the underlying market was driven by growth from the continued adoption of FDM, exterior, auto-dimming mirrors, and continued penetration of the Company's base interior mirrors and electronic features.

The Company's sales growth was driven by a 15% year over year increase in automatic-dimming mirror shipments, from 44.2 million units in 2022 to 50.6 million units in 2023, together with product mix.

Other net sales for calendar year 2023 were $44.6 million, compared to Other net sales of $44.2 million in calendar year 2022.

Fire protection sales in 2023 decreased by 32% year over year, while dimmable aircraft windows increased by 211% in 2023 compared to calendar year 2022.

Cost of Goods Sold.

As a percentage of net sales, cost of goods sold decreased from 68.2% in 2022 to 66.8% in 2023.

The year over year increase in the gross margin was primarily the result of improved overhead leverage created by growth in revenue, lower freight costs, pricing increases and cost recoveries, and product mix.

These positive impacts were partially offset by increased raw materials costs and annual customer price reductions.

On a year over year basis, fixed overhead leverage and lower freights costs each had a positive impact of approximately 100 - 150 basis points on gross margin on a year over year basis.

Price increases and cost recoveries, and product mix, each had a positive impact of approximately 50 - 100 basis points on gross margin on a year over year basis.

Increased raw material costs and annual customer price reductions each had a negative impact of approximately 50 - 100 basis points on gross margin on a year over year basis.

Operating Expenses.

E, R & D increased by $21.1 million or 16% from 2022 to 2023, but remained at 7% of net sales.

E, R & D increased year over year primarily due to additional staffing and engineering related professional fees to assist with the execution of high number of new product launches, product redesigns to optimize costs, and new product development.

S, G & A expenses increased by $6.0 million or 6% from 2022 to 2023, which represents 5% of net sales in 2023 compared to 6% of net sales in 2022.

The primary reason for the year over year increase in S, G & A from 2022 to 2023 was increased staffing expenses, which were partially offset by lower freight expenses.

Total Other Income (Loss).

Investment income increased $8.7 million to $13.5 million for 2023 compared to $4.8 million for 2022 primarily due to increases in interest income from fixed income investments and interest rates on other cash holdings.

Other income – net increase $0.8 million in 2023 versus 2022, primarily due to increases in interest income from fixed income investments.

The effective tax rate was 15.2% for the year ended December 31, 2023 compared to 13.8% for the prior year.

The effective tax rates in 2023 and 2022 differed from the statutory federal income tax rate, primarily due to the Foreign Derived Intangible Income Deduction, as well as additional equity compensation deductions and various tax credits.

Net income increased by $109.6 million in 2023, or 34% compared to 2022, primarily due to the year over year changes in gross margin and operating profits.

Taxes The effective tax rate was 14.3% for the year ended December 31, 2024, compared to 15.2% for the prior year.

The effective tax rates in 2024 and 2023 differed from the statutory federal income tax rate, primarily due to FDII, and R&D tax credits.

Net Income Net income decreased by $23.9 million in 2024, or 6% compared to 2023, primarily due to the year over year changes in operating profits.

NON-GAAP FINANCIAL MEASURES:

Financial information for the year ended December 31, 2025 is provided in accordance with Generally Accepted Accounting Principles ("GAAP").

In addition, the Company believes that it is useful for the years ended December 31, 2025 and 2024 to provide certain non-GAAP measures, including Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Expenses, Adjusted Income from Operations, Adjusted Net Income Attributable to Gentex Corporation, and Adjusted Earnings per Share Attributable to Gentex Corporation, with the adjustments set forth in the tables below.

Use of the terms "adjusted" or "excluding," as appropriate, in connection with a financial measure can identify and reflect a non-GAAP financial measure.

This non-GAAP financial information allows investors to evaluate recent performance in the Company's core business in relation to historical performance by excluding the impact of certain purchase price adjustments pursuant to ASC 805, Business Combinations , acquisition related costs, severance costs, and certain impairment charges as set forth in the tables below.

The Company believes that the presentation of these non-GAAP financial measures provides insight into the Company's core performance and trends with respect to the same.

Management of the Company similarly uses such non-GAAP financial measures in assessing the business internally.

A reconciliation of Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Expenses, Adjusted Income from Operations, Adjusted Net Income Attributable to Gentex Corporation, and Adjusted Earnings per Share Attributable to Gentex Corporation to the most directly comparable GAAP measures is provided in the tables below.

Like all non-GAAP financial measures, these non-GAAP measures are intended to supplement, not to replace, GAAP measures.

All non-GAAP financial

measures are subject to inherent limitations because not all of the adjustments and expenses required by GAAP are included.

Twelve Months Ended December 31,

Gentex VOXX Consolidated 2025 Consolidated 2024

Gross Profit - GAAP 787,399,074 79,309,866 $ 866,708,940 $ 771,090,190

Inventory purchase price step-up adjustments pursuant to ASC 805

398,301 2,498,442 2,896,743 —

Adjusted Gross Profit - (Non-GAAP) $ 787,797,375 $ 81,808,308 $ 869,605,683 $ 771,090,190

Gross Margin - GAAP 34.7% 29.7% 34.2 % 33.3 %

Adjusted Gross Margin - (Non-GAAP) 34.7 % 30.6 % 34.3 % 33.3 %

Operating Expenses - GAAP 318,453,383 74,319,803 392,773,186 311,363,617

Acquisition Related Costs 2,316,164 1,515,844 3,832,008 1,866,998

Severance Costs 10,432,974 1,211,764 11,644,738 —

Impairment Charges

— — — 8,864,704

Adjusted Operating Expenses - (Non-GAAP) $ 305,704,245 $ 71,592,195 $ 377,296,440 $ 300,631,915

Income from Operations - GAAP

468,945,691 4,990,063 473,935,754 459,726,573

Inventory purchase price step-up adjustments pursuant to ASC 805

398,301 2,498,442 2,896,743 —

Acquisition Related Costs 2,316,164 1,515,844 3,832,008 1,866,998

Severance Costs 10,432,974 1,211,764 11,644,738 —

Impairment Charges

— — — 8,864,704

Adjusted Income from Operations - (Non-GAAP)

$ 482,093,130 $ 10,216,113 $ 492,309,243 $ 470,458,275

Adjusted Net Income and Adjusted Earnings per Share Attributable to Gentex Corporation:

Adjusted Net Income Attributable to Gentex Corporation and Adjusted Earnings per Share Attributable to Gentex Corporation are also presented as supplemental measures of the Company's performance for the same reasons set forth above.

Adjusted Net Income Attributable to Gentex Corporation is defined as Net Income Attributable to Gentex Corporation, adjusted for purchase price adjustments pursuant to ASC 805, acquisition related costs, severance costs, and certain impairment charges during the years ended December 31, 2025 and 2024.

Adjusted Earnings per

Share Attributable to Gentex Corporation is defined as Adjusted Net Income Attributable to Gentex Corporation divided by the weighted average shares outstanding.

Twelve Months Ended December 31,

Gentex VOXX 2025 Consolidated 2024 Consolidated

Net Income Attributable to Gentex Corporation - GAAP

$ 378,714,570 $ 6,126,797 $ 384,841,367 $ 404,487,743

Inventory purchase price step-up adjustments pursuant to ASC 805, net of tax (1)

332,183 2,083,701 2,415,884 —

Acquisition Related Costs, net of tax (1)

1,931,681 1,264,214 3,195,895 1,600,017

Severance Costs, net of tax (1)

8,701,100 1,010,611 9,711,711 —

Impairment charges, net of tax (1)

— — — 7,597,051

Adjusted Net Income Attributable to Gentex Corporation - (Non-GAAP)

$ 389,679,534 $ 10,485,323 $ 400,164,857 $ 413,684,811

Adjusted Earnings Per Share Attributable to Gentex Corporation:

Basic $ 1.76 $ 0.05 $ 1.81 $ 1.81

Diluted $ 1.76 $ 0.05 $ 1.81 $ 1.81

(1) Tax effect adjustments are made using the Company's effective tax rate and such rate reasonably reflects the tax effects of applicable adjustments.

Liquidity and Capital Resources

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Cash flow from operating activities was $587.1 million, $498.2 million and $537.2 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Cash flow from operating activities decreased $39.0 million for the year ended December 31, 2024 compared to the prior year, primarily due to decreases in net income and changes in working capital.

Cash flow from operating activities increased $199.0 million for the year ended December 31, 2023 compared to the same period in 2022, primarily due to due to increases in net income and changes in working capital.

Cash flow used for investing activities for the year ended December 31, 2024 decreased by $97.3 million to $202.1 million, compared with cash flow used for investing activities of $299.4 million for the year ended December 31, 2023, primarily due to decreased capital expenditures in 2024 compared to 2023, as well as decreased expenditures on business acquisitions year over year.

Cash flow used for investing activities for the year ended December 31, 2023 increased by $126.7 million to $299.4 million, compared to cash flow used for investment activities for the year ended December 31, 2022, primarily due to increased technology investment purchases during the year, as well as increased capital expenditures in 2023 compared to 2022.

Cash flow from operating activities increased $88.9 million for the year ended December 31, 2025, compared to the prior year, primarily due to increases in accounts payable, accrued royalties, and accrued sales incentives incurred by VOXX.

Cash flow from operating activities decreased $39.0 million for the year ended December 31, 2024 compared to the same period in 2023, primarily due to decreases in net income and changes in working capital.

Cash flow used for investing activities for the year ended December 31, 2025 increased by $64.8 million to $266.9 million, compared with cash flow used for investing activities of $202.1 million for the year ended December 31, 2024, primarily due to an increase in business acquisitions year over year, offset by a reduction in capital expenditures, as well as a decrease in purchases of investments and higher sales of available-for-sale securities.

Cash flow used for investing activities for the year ended December 31, 2024 decreased by $97.3 million to $202.1 million, compared to cash flow used for investment activities for the year ended December 31, 2023, primarily due to decreased capital expenditures in 2024 compared to 2023, as well as decreased expenditures on business acquisitions in 2024 compared to 2023.

Capital expenditures were $129.1 million, $144.7 million, and $183.7 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Capital expenditures for the year ended December 31, 2024 decreased by $39.0 million compared with the year ended December 31, 2023, primarily due to decreased in expenditures related to building and facility construction projects.

Capital expenditures for the year ended December 31, 2023 increased by $37.2 million compared to the year ended December 31, 2022, primarily due to building and facility construction projects previously discussed.

Cash flow used for financing activities for the year ended December 31, 2024, increased $59.1 million to $289.3 million, compared to $230.2 million for the year ended December 31, 2023, primarily due to an increase in the amount of shares of common stock repurchased, which totaled $206.1 million during the calendar year 2024 as compared to $147.4 million during the calendar year 2023.

Capital expenditures for the year ended December 31, 2025 decreased by $15.6 million compared with the year ended December 31, 2024, as a result of a reduction in expenditures related to building and facility construction projects primarily due to the timing of the initiation and completion of projects.

Capital expenditures for the year ended December 31, 2024, decreased by $39.0 million compared to the year ended December 31, 2023, primarily due to a decrease in expenditures related to building and facility construction projects.

Cash flow used for financing activities for the year ended December 31, 2025, increased $118.6 million to $407.9 million, compared to $289.3 million for the year ended December 31, 2024, primarily due to an increase in spending on shares of common stock repurchased, which totaled $315.5 million during the calendar year 2025 as compared

to $206.1 million during the calendar year 2024.

Cash flow used for financing activities for the year ended December 31, 2024, increased $59.1 million to $289.3 million compared to the year ended December 31, 2023, primarily due to an increase in the amount of shares of common stock repurchased which totaled $206.1 million during the calendar year 2024, as compared to $147.4 million during the calendar year 2023.

Short-term investments as of December 31, 2024 were $22.3 million, up from $14.4 million as of December 31, 2023 and long-term investments were $339.6 million as of December 31, 2024, up from $299.1 million as of December 31, 2023, due to changes in the Company's overall investment portfolio.

Accounts receivable as of December 31, 2024 decreased $26.5 million compared to December 31, 2023, primarily due to a decrease in sales in the fourth quarter of 2024 compared to the fourth quarter of 2023.

Inventories as of December 31, 2024, increased $34.0 million compared to December 31, 2023, primarily due to increases in raw materials and finished goods.

Intangible Assets, net as of December 31, 2024, decreased $18.8 million compared to December 31, 2023, due to the amortization of definite lived intangible assets and patents, which is discussed further in Note 10 of the Consolidated Financial Statements, in addition to a $5.2 million impairment charge on the Vaporsens IPR&D in the fourth quarter of 2024.

Accounts payable as of December 31, 2024, decreased $16.1 million compared to December 31, 2023, primarily due to decreases in capital expenditure payments and timing of payments.

Management considers the Company’s current working capital and long-term investments, as well as its existing credit financing arrangement (notwithstanding covenants prohibiting additional indebtedness), discussed further in Note 2 of the Consolidated Financial Statements, in addition to internally generated cash flow, to be sufficient to cover anticipated cash needs for the foreseeable future considering its contractual obligations and commitments.

Short-term investments as of December 31, 2025 were $5.4 million, down from $22.3 million as of December 31, 2024, and long-term investments were $273.0 million as of December 31, 2025, down from $339.6 million as of December 31, 2024, due primarily to changes in the Company's overall investment portfolio.

Accounts receivable as of December 31, 2025 increased $73.2 million compared to December 31, 2024, primarily due to the addition of VOXX sales, as well as the timing of customer payments.

Inventories as of December 31, 2025, increased $79.8 million compared to December 31, 2024, primarily due to an increase in finished goods as a result of the acquisition of VOXX.

Intangible Assets, net as of December 31, 2025, decreased $5.8 million compared to December 31, 2024, due to the amortization of definite lived intangible assets (including the full amortization of certain assets and the commencement of amortization of IPR&D assets put into service), which is discussed further in Note 9 , Goodwill and Intangible Assets of the Consolidated Financial Statements, offset in part by the addition of intangible assets acquired in conjunction with the acquisition of BioConnect in July 2025, as further discussed in Note 11 , Acquisitions .

Accounts payable as of December 31, 2025, increased $80.7 million compared to December 31, 2024, primarily due to the timing of payments, as well as the addition of VOXX.

Total accrued liabilities as of December 31, 2025 increased approximately $54.2 million compared to December 31, 2024, primarily due to increases in accrued royalties, accrued salaries and wages payable, and accrued sales incentives which were all driven by the VOXX acquisition.

Management considers the Company’s current working capital and long-term investments, as well as its existing credit financing arrangement (notwithstanding covenants prohibiting additional indebtedness), discussed further in Note 2 of the Consolidated Financial Statements, in addition to internally generated cash flows, 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 fixed income long-term investments:

4 unchanged sentences

Total $ 849,036,909 $ 926,596,968 $ 881,992,429

The increase in working capital as of December 31, 2024, compared to December 31, 2023, is primarily due to an increase in prepaid expenses, increases in inventory, and a decrease in accounts payable.

The increase in working capital as of December 31, 2023, compared to 2022, is primarily due to increases in cash and accounts receivable, which were partially offset by increases in accounts payable.

The decrease in working capital as of December 31, 2025, compared to December 31, 2024, is primarily due to an increase in accounts payable and accrued expenses and a decrease in short term investments, offset by increases in accounts receivable, inventory, and prepaid expenses.

The increase in working capital as of December 31, 2024, compared to 2023, was primarily due to increases in prepaid expenses and in inventory, partially offset by a decrease in accounts payable.

Please refer to Part II, Item 5 , with regard to the Company's previously announced share repurchase plan.

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The S&P Global Mobility mid-January 2026 forecast for light vehicle production for calendar year 2026 are approximately 15.0 million units for North America, 16.9 million units for Europe, 11.9 million units for Japan and Korea, and 32.7 million units for China.

Based on the foregoing, and excluding any impact of the Company's pending acquisition of VOXX (which remains subject to certain regulatory and VOXX stockholder approvals), the Company estimates that top line revenue for calendar year 2025 will be between $2.40 and $2.45 billion.

All estimates are based on light vehicle production forecasts in the primary regions to which the Company ships product, as well as the estimated option rates for its mirrors and electronics on prospective vehicle models and anticipated product mix.

Based on the foregoing, the Company estimates that top line revenue for calendar year 2026 will be between $2.60 and $2.70 billion.

Estimates are based on:

light vehicle production forecasts in the primary regions to which the Company ships its automotive products;

estimated option rates for its mirrors and electronics on prospective vehicle models;

anticipated product mix;

market conditions in the Company's primary markets;

the continuing impact on the China market from tariffs and counter-tariffs;

and expected incremental sales contribution from the VOXX

Continuing uncertainties, such as:

1 unchanged sentence

the Ukraine-Russia war;

the Israel-Hamas war;

labor shortages;

1 unchanged sentence

sales rates in Europe, Asia, and North America;

challenging macroeconomic and geopolitical environments, including inflation, and potential tax law changes;

challenging macroeconomic and geopolitical environments, including inflation;

OEM strategies and cost pressures;

customer inventory management and the impact of potential automotive customer (including their Tier 1 suppliers) and supplier bankruptcies;

work stoppages, strikes, etc.;

could disrupt shipments to customers and make forecasting difficult.

The Company is estimating that the gross margin will be between 33.5% and 34.5% for calendar year 2025.

work stoppages;

could disrupt shipments to customers and continue to make forecasting difficult.

The Company estimates that the gross margin will be between 34.0% and 35.0% for calendar year 2026.

Historically, annual customer price reductions have placed pressure on gross margin on an annual basis.

Given the current revenue forecast and projected product mix for 2025, the Company hopes it may be able to offset certain annual customer price reductions with raw material cost decreases, improved operational efficiencies, and leverage on the Company's fixed costs, but there is no certainty of being able to do so.

The Company is also estimating that its operating expenses, which include E, R & D and S, G & A, are expected to be between $310 and $320 million for calendar year 2025, due in part to continued investments that support growth and launch of new business as well as development of new products, which are primarily staffing related.

The Company continues to invest heavily in technology directed at funding the development of its current product portfolio and creating iterations of those products that help keep its products new and attractive to our customers, as well as new products, though these expense estimates for 2025 represent a lower growth rate in operating expenses as the Company believes the new baseline established for engineering spend is sufficient to support current initiatives.

The Company is a technology leader in the automotive industry, with a focus on developing uniquely designed solutions that are proprietary.

The Company continues to make investments intended to maintain a competitive advantage in its current markets, as well as to use its core competencies to develop products that are applicable in other markets.

Based on current light vehicle production forecasts, and the Company's resultant forecast its automatic-dimming mirrors and electronics, the Company currently anticipates that 2025 capital expenditures will be between $125 and $150 million, a majority of which will be related to production equipment purchases.

Given the current revenue forecast and projected product mix for 2026, as well as external headwinds in the form of tariff-related costs, the Company hopes to offset certain annual customer price reductions with raw material cost decreases, a continued focus on driving greater operational efficiencies, and leveraging the Company's fixed costs, while also attempting to negotiate reimbursements to offset incremental tariff-related costs.

There is, however, no certainty of being able to do so.

The Company also estimates that its operating expenses, which include E, R & D and S, G & A, are expected to be between $410 and $420 million for calendar year 2026, due in part to continued investments that support growth initiatives, launch of new business, and develop new products, which are primarily staffing related, as well as a full year of VOXX operating expenses.

The Company continues to invest heavily in technology directed at funding the development of its current product portfolio and creating advancements of those products so as to be fresh and attractive to customers, as well as new products.

The Company is a technology leader in the automotive industry, with a focus on developing uniquely designed solutions that are generally proprietary.

With the acquisition of VOXX in 2025, the Company is now a leading manufacturer and distributor of premium audio electronics and solutions, aftermarket electronics, and consumer technologies.

The Company continues to make investments intended to maintain a competitive advantage in its existing markets, as well as to use its core competencies to develop products that are applicable in other markets.

Based on current light vehicle production forecasts, the Company's resultant forecast for sales of its automatic-dimming mirrors and electronics, and the Company's estimates for its other products, including premium audio, aerospace, medical, fire protection, and consumer electronic products, the Company anticipates that 2026 capital expenditures will be between $125 and $140 million, a majority of which will be related to production equipment purchases.

Capital expenditures for calendar year 2026 are currently anticipated to be financed from current cash and cash equivalents on hand and cash flows from operating activities.

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and other factors that the Company deems appropriate.

The Company is also providing top line revenue guidance for calendar year 2026, taking into account anticipated increases in light vehicle production in 2026 compared to 2025, but excluding any impact of the Company's pending acquisition of VOXX.

The Company is also providing top line revenue guidance for calendar year 2027, taking into account the same considerations used in 2026 guidance, including light vehicle production outlook and the Company's estimates for premium audio, aerospace, medical, fire protection, and aftermarket and consumer electronic products.

S&P Global Mobility forecast (as of mid-January 2026) for light vehicle production for calendar year 2027 are approximately 15.5 million units for North America, 17.2 million units for Europe, 11.6 million units for Japan and Korea, and 32.8 million units for China.

Based on these forecasts, as well as the Company's estimates for fire protection, aerospace, medical, and biometrics sales for calendar year 2026, the Company is estimating that revenue for calendar year 2026 will be between $2.55 and $2.65 billion.

Based on these forecasts and estimates for calendar year 2027, the Company is estimating that revenue for calendar year 2027 will be between $2.75 and $2.85 billion.

As noted above, continuing uncertainties make forecasting difficult.

Market Risk Disclosure

The Company is subject to market risk exposures of varying correlations and volatilities, including foreign exchange rate risk, and interest rate risk.

Fluctuating interest rates and securities prices could negatively impact the Company's financial performance due to realized losses on the sale of fixed income investments and/or realized losses due to an impairment adjustment on investment securities.

The Company does not currently believe such risks are necessarily material.

The Company has some assets, liabilities and operations outside the United States, including multi-currency accounts, which currently are not significant overall to the Company as a whole.

Because the Company sells its automotive mirrors throughout the world and automobile manufacturing is highly dependent on general economic conditions, it could be significantly affected by weak economic conditions in foreign markets that could reduce demand for its products.

Most of the Company’s non-U.S.

sales are invoiced and paid in U.S.

During calendar year 2024, approximately 7% of the Company’s net sales were invoiced and paid in foreign currencies (compared to 8% for calendar year 2023 and 7% for calendar year 2022).

The Company currently expects that approximately 7-8% of the Company’s net sales in calendar year 2025 will be invoiced and paid in foreign currencies.

The Company does not currently engage in hedging activities of foreign currencies.

The Company is subject to market risk exposures of varying correlations and volatilities, including changes in interest rates, commodity price risk, and foreign currency exchange rates.

Interest Rate Risk

Fluctuating interest rates and securities prices could negatively impact the Company's financial performance as a result of realized losses on the sale of fixed income investments and/or realized losses due to an impairment adjustment on investment securities.

The Company is exposed to interest rate risk primarily through its available-for-sale security portfolio, which consists mainly of investment-grade debt securities.

Changes in interest rates may affect the fair value of these investments.

Though the Company does have a short-term borrowing, such debt bears interest at a fixed rate.

As such, changes in market interest rates will not materially affect any such interest expense.

The Company did not have an outstanding balance related to its revolving credit facility at December 31, 2025, or 2024.

Management does not believe that interest rate risk has a material impact on the Company’s financial condition, results of operations, or cash flows.

Commodity Price Risk

In the ordinary course of business, the Company has exposure to commodity price fluctuations related to the purchases of certain materials used in its manufacturing operations.

Such materials used in manufacturing operations can increase in price based on competitive market conditions.

To the extent that the Company has established pricing terms with customers through contracts or similar arrangements, the ability to increase prices of its products to offset the increased costs of materials may be limited.

The Company does not currently enter into derivative financial instruments associated with commodities.

Foreign Currency Exchange Rates

A portion of the Company's operations consist of activities outside of the U.S.

As a result, the Company has currency risk on the transactions in other currencies and translation adjustments resulting from the conversion of international financial results into the U.S.

A substantial majority of the Company's operations and investment activities are transacted in the U.S.

Less than 10% of revenues for the years ended December 31, 2025, 2024, and 2023 were earned in non-U.S.

dollar denominated currencies.

The Company has one subsidiary that enters into foreign currency forward contracts from time to time to manage exposure to certain U.S.

dollar-denominated transactions.

These contracts are used solely for risk management purposes and are not material to the Company’s financial statements.

Management does not believe that foreign currency exchange rate risk, including the use of such forward contracts, has a material impact on the Company’s financial condition, results of operations, or cash flows.

The Company does not have any significant off-balance sheet arrangements or commitments that have not been recorded in its Consolidated Financial Statements.

Significant Accounting Policies and Critical Accounting Estimates

The preparation of the Company's Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States, requires management to make estimates, assumptions and apply judgments that affect its financial position and results of operations.

The preparation of the Company's Consolidated Financial Statements, which have been prepared in accordance with GAAP, requires management to make estimates, assumptions and apply judgments that affect its financial position and results of operations.

On an ongoing basis, management evaluates these estimates and assumptions.

Management also continually reviews its accounting policies and financial information disclosures.

The Company’s significant accounting policies are described in Note 1 of the Consolidated Financial Statements.

The Company’s significant accounting policies are described in Note 1 , Summary of Signi ficant Accounting and Reporting Policies of the Consolidated Financial Statements.

Certain of our accounting policies require management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period.

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However, these estimates and assumptions are inherently subject to a degree of uncertainty.

As a result, actual results in these areas may differ significantly from our estimates, as is the case in any application of generally accepted accounting principles.

As a result, actual results in these areas may differ significantly from our estimates, as is the case in any application of GAAP.

The Company considers an accounting estimate to be critical if:

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• Changes in the estimate or different estimates that could have been selected would have had a material impact on our financial condition or results of operations.

Revenue Recognition.

The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers .

Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers .

Accordingly, revenue is recognized in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services when it transfers those goods or services to customers.

To do this, the Company applies the five-step model prescribed by the FASB, which requires it to:

(i) identify the contract with the customer;

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenue when, or as, the Company satisfies its performance obligations.

Sales are shown net of returns, which have not historically been significant.

The Company does not generate sales from arrangements with multiple deliverables.

The Company generally receives purchase orders from customers on an annual basis in the ordinary course of business.

The Company accounts for a contract or purchase order when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable.

The Company generally receives purchase orders from its automotive customers on an annual basis in the ordinary course of business.

Typically, such purchase orders provide the annual terms, including pricing, related to a particular vehicle model.

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Such amounts are estimated and accrued as a reduction of revenue as products are shipped to those customers.

For any shipments of product that may be subject to retroactive price adjustments that are then being negotiated, the Company records revenue based on the Company’s best estimate of the amount of consideration to which the entity will be entitled in exchange for transferring the promised goods to the customer.

For any shipments of product that may be subject to retroactive price adjustments that are then being negotiated, the Company records revenue based on the Company’s best estimate of the amount of consideration to which it will be entitled in exchange for transferring the promised goods to the customer.

The Company's best estimate requires significant judgment based on historical results and expected outcomes of ongoing negotiations with customers.

The Company's approach is to consider these adjustments to the contract price as variable consideration which is estimated based on the then most likely price amount.

In addition, the Company has ongoing adjustments to our pricing arrangements with customers based on the related content, the cost of our products and other commercial factors.

Such pricing accruals are adjusted as they are settled with our customers.

In addition, the Company has ongoing adjustments to its pricing arrangements with customers based on the related content, the cost of its products and other commercial factors.

Such pricing accruals are adjusted as they are settled with customers.

The Company also offers sales incentives to certain customers in the form of:

(1) co-operative advertising allowances;

(2) market development funds;

(3) volume incentive rebates;

and (4) other trade allowances.

The Company accrues the cost of co-operative advertising allowances, volume incentive rebates, and market development funds at the later of when the customer purchases products or when the sales incentive is offered to the customer.

The Company records the provision for other trade allowances at the later of when the sales incentive is offered or when the related revenue is recognized.

Except for other trade allowances, all sales incentives require the customer to purchase the Company's products during a specified period of time and to claim the sales incentive within a certain time period (referred to as the "claim period").

All costs associated with sales incentives are classified as a reduction of net sales.

Depending on the specific facts and circumstances, the Company utilizes either the most likely amount or the expected value methods to estimate the effect of uncertainty on the amount of variable consideration to which the Company would be entitled.

Both methods are based upon the contractual terms of the incentives and historical experience with each customer.

Although the Company makes its best estimate of sales incentive liabilities, many factors, including significant unanticipated changes in the purchasing volume and the lack of claims from customers can have a significant impact on the liability for sales incentives and, as such, reported operating results.

The Company records estimates for cash discounts, promotional rebates, and other promotional allowances in the period the related revenue is recognized (“Customer Credits”).

The provision for Customer Credits is recorded as a reduction from gross sales and reserves for Customer Credits are presented within Accrued liabilities - Other on the Consolidated Balance Sheet.

Business Combinations The Company accounts for business combinations in accordance with ASC 805, Business Combinations .

The purchase price of each business acquired is allocated to the tangible and intangible assets acquired and the liabilities assumed based on information regarding their respective fair values on the date of acquisition.

Any excess of the purchase price over the fair value of the separately identifiable assets acquired and liabilities assumed is allocated to goodwill.

Determining the fair value of assets acquired and liabilities assumed requires management's judgment and often involves the use of significant estimates and assumptions, including

assumptions with respect to future cash inflows and outflows, discount rates, and market multiples, among other items.

The Company determines the fair values of intangible assets acquired generally in consultation with third-party valuation advisors.

The valuation of assets acquired and liabilities assumed requires a number of judgments and is subject to revision as additional information about the fair values becomes available.

The Company recognizes any adjustments to provisional amounts that are identified during the period not to exceed twelve months from the acquisition date (the "measurement period").

Acquisition costs are expensed as incurred.

The results of operations of businesses acquired are included in the Consolidated Financial Statements from their dates of acquisition, in accordance with applicable guidance.

As part of the agreement to acquire certain subsidiaries, the Company may be obligated to pay contingent consideration should the acquired entity meet certain earnings or other contractually agreed upon objectives subsequent to the date of acquisition.

As of the acquisition date, contingent consideration is recorded at fair value as determined through the use of an appropriate fair value model, depending on the nature of the arrangement.

The models could involve the estimation of future subsidiary performance, probability of likelihood, projected cash flows, weighted average discount rates, and expected long-term growth rates.

The fair value is measured subsequent to the acquisition date at least annually and any changes are recorded within cost and operating expenses within the Company's Consolidated Statement of Income until the contingent consideration is settled.

Changes in either the growth rates, expected probabilities, related earnings, or the discount rate could result in a material change to the amount of the contingent consideration accrued.

See also Item 13 of Part III with respect to "Certain Transactions", which is incorporated herein.

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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 7. Management’s Discussion and Analysis