Shares of Gentex Corp. (GNTX) slid Friday after the auto-tech company delivered a mixed second-quarter report. Earnings came in ahead of Wall Street expectations, but revenue fell short — and management painted a pretty grim picture of its China business, which is expected to keep shrinking through next year.
For the quarter, Gentex reported adjusted earnings of 58 cents per share, easily beating the analyst consensus of 50 cents. Revenue rose just 1% year over year to $651.3 million, missing the $669.5 million estimate. Automotive revenue actually declined from the prior quarter, dragged down by weaker demand in Europe, Japan, Korea, and especially China. Growth in North America helped offset some of the pain, but not enough.
Gross margin improved to 37% from 34.2% a year ago, a 280-basis-point jump. That was helped by about $18 million in IEEPA tariff reimbursements, a favorable product mix, and better execution. Even compared to the first quarter, gross margin ticked up 50 basis points, despite lower automotive revenue and higher tariff costs. Management credited a better product mix and stronger profitability in the Other Products segment.
Gentex also bought back 2.7 million shares during the quarter for $66 million, leaving about 29.9 million shares still available under its repurchase authorization.
Segment Performance
Automotive revenue fell to $560.1 million from $578.1 million a year earlier, reflecting lower light vehicle production and fewer shipments of auto-dimming mirrors. Premium Audio revenue jumped 16% to $51.7 million, driven by demand for Powered Systems and Onkyo products, plus new launches. Other Products revenue rose 12% to $39.4 million, supported by growth in aerospace, biometric solutions, and accessories.
China: The Big Headwind
Gentex's outlook suggests the worst isn't over for its China business. On the earnings call, management said China revenue is expected to fall to about $100 million in 2026, down from roughly $150 million in 2025 and $200 million in 2024. And they warned that sales will likely keep declining through 2027. The company blamed ongoing geopolitical tensions, tariff-related disruptions, and softer demand, calling China one of the biggest headwinds to its automotive business.
Despite that, Gentex reaffirmed its fiscal 2026 sales guidance of $2.65 billion to $2.75 billion, compared with the analyst consensus of $2.69 billion. It also maintained fiscal 2027 sales guidance of $2.8 billion to $2.9 billion, versus the consensus estimate of $2.83 billion.
CEO Steve Downing said the company continued to execute well despite the geopolitical challenges in China and ongoing weakness in its core mirror business. He emphasized that Gentex remains focused on innovation, profitability, operational efficiency, and disciplined capital allocation, while continuing to improve the financial performance of VOXX following its acquisition.
Looking ahead, Gentex expects new products — including dimmable visors, dimmable sunroofs, fourth-generation Full Display Mirror, driver and interior monitoring systems, and advanced manufacturing initiatives — to support growth over the coming years.
On the macro front, Gentex expects global light vehicle production to decline about 2% year over year in the third quarter of 2026 and about 3% for the full year. It forecasts production to remain broadly flat in 2027, with growth led by emerging markets while North America, Europe, and Japan and Korea continue to face headwinds.
At the time of publication Friday, Gentex shares were down 5.55% at $22.49.
