The Gentex Edge
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The Gentex Edge: SAFE HARBOR STATEMENT This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended, that are based on management’s belief, assumptions, current expectations, estimates and projections about the global automotive industry, the economy, the ability to control and leverage fixed manufacturing overhead costs, unit shipment and revenue growth rates, the ability to control E,R&D and S,G&A expenses, gross margins, and the Company itself. Words like “anticipates,” “believes,” “confident,” “estimates,” “expects,” “forecast,” “hopes,” “likely,” “plans,” “projects,” “optimistic,” and “should,” and variations of such words and similar expressions identify forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict with regard to timing, expense, likelihood and degree of occurrence. These risks include, without limitation, employment and general economic conditions, worldwide automotive production, the maintenance of the Company’s market share, the ability to achieve purchasing cost reductions, competitive pricing pressures, currency fluctuations, interest rates, equity prices, the financial strength/stability of the Company’s customers (including their Tier 1 suppliers), supply chain disruptions, potential ssaleale of OEM business segments or ssuppliersuppliers, potential customer (including their Tier 1 suppliers) bankruptcies, the mix of products purchased by customers, the ability to continue to make product innovations, the success of certain products (e.g. SmartBeam® and Rear Camera Display Mirror), and other risks identified in the Company’s other filings with the Securities and Exchange Commission. Therefore, actual results and outcomes may materially differ from what is expressed or forecasted. Furthermore, the Company undertakes no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise. 2 1 COMPANY SNAPSHOT • 3 product lines: Interior and exterior automatic-dimming rearview mirrors for automotive vehicles (approximately 96% of revenues), fire protection products for commercial applications, and dimmable aircraft windows • 2008 CY unit shipments of approximately 14.4 million automatic- dimm ing m irrors (approx. -5% vs. 2007) • ~2,450 Employees (~20% technical/R&D) 3 AUTO-DIMMING MIRROR UNIT SHIPMENTS AND COMPANY REVENUES HISTORY 20% compounded annual revenue growth since 1987 15,500,000 $700,000,000 15,000,000 14,500,000 14,000,000 13, 500, 000 $600,000,000 13,000,000 12,500,000 12,000,000 11,500,000 11,000,000 $500,000,000 10,500,000 Revenues 10,000,000 9,500,000 9,000,000 $400,000,000 8,500,000 Units 8,000,000 7,500,000 7,000,000 6,500,000 $300,000,000 6,000,000 5,500,000 5,,,000,000 4,500,000 $200,000,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 $100,000,000 1,500,000 1,000,000 500,000 - $- Exterior Mirror Units Interior Mirror Units Total Company Revenues 4 2 AUTO-DIMMING MIRROR UNIT SHIPMENTS BY REGION CY1999 CY2008 North American Asia-Pacific/Other Transplants – 1% Asia-Pacific/Other 7% Europe 17% 23% North American Transplants Europe 14% “Detroit 3” 45% 69% “Detroit 3” 24% Top Gentex Customers Units in pie charts are calculated based (revenues – year ended on the location to which they are shipped. 12/31/08) Daimler AG – 14% General Motors – 14% Toyota Motor Corporation – 14% Volkswagen/Audi – 13% BMW – 11% Ford Hyundai/Kia Nissan Chrysler 5 NEW VEHICLE PROGRAMS IN 2009/10 MODEL YEARS (ANNOUNCED TO DATE)* • Dodge Journey (A) or (E) Toyota Tundra Mercury Milan • Volvo XC60 (B) • Jaguar XF (A) or (D) and (J) Hyundai Grandeur • Toyota iQ (A) • Hyundai Grandeur /Azera (C), (G), (J) • Toyota Yaris (A) • Audi A4 (K) • Range Rover (A), (J), (K) • Audi A5 (K) Tata Motors BMW X6 • Ford Fusion (I), (L) Toyota Yaris • Audi Q7 (K) Lexus RX 350 Discovery 4 • Ford Mustang (I), (L) • Toyota Crown Royal (A) • Mercury Milan (I ))(L), (L) • Ford Flex (B), (E), (H) • Toyota Verso (A, L) Ford Fusion • Toyota Tacoma (L) • Toyota Tundra (C, J, L) • BMW X6 (C), (K) Jaguar XF Toyota RAV 4 • Toyota Sequoia (C, J, L) • Chrysler Town and Country (A, E, J, K) Town & Country • Range Rover Sport (A, K) • Opel/Vauxhall Insignia (K) • Land Rover Discovery 4 (A, K) BMW X1 • Toyota FJ Cruiser (L) • Opel/Vauxhall Astra (K) VW Passat CC • Honda Civic (A) Tata Motors Ford Fiesta • BMW X1 (C), (J), (K) • Kia Soul (L) Range Rover • Daihatsu Mira Cocoa (L) • Ford Fiesta- Europe (A) • Kia Opirus (L) • Toyota Venza (B, K) Ford Mustang • Kia Forte (L) • Toyota RAV4 (A), (L) Toyota Venza Toyota Crown Royal • Kia Morning (L) • Ford E-Series Van (L) • Kia Sorento (L) • Volkswagen Passat CC (A, J) • Lexus LS (H, J, K) Toyota iQ • Mercedes-Benz GLK (B, C, E, J) Toyota Sequoia • Lexus RX 350 (A, B, J, K, L) BMW 1 Ser ies MdMercedes-BGLKBenz GLK • BMW 1 Series (C, K) Lexus LS • BMW Z4 (K) Honda Civic A = auto-dimming interior base feature mirror Volvo XC60 B = auto-dimming interior mirror with compass Tata Motors Ford Flex C = auto-dimming interior mirror with compass display and universal garage door opener Range Rover Sport D = auto-dimming interior mirror with universal garage door opener E = auto-dimming interior mirror with Gentex’s proprietary integrated, hands-free microphone F = auto-dimming interior mirror with compass/outside temp. display and universal garage door opener G = auto-dimming interior mirror with rear camera display and Gentex Z-Nav compass transducer Toyota Verso H = auto-dimming interior base feature mirror with Gentex Z-Nav compass transducer I = auto-dimming interior mirror with rear camera display and Gentex microphone *SmartBeam & RCD programs are Dodge Journey J = auto-dimming exterior mirrors also listed separately in their K= SmartBeam respective sections on slides 24, 28 6 L= Rear Camera Display (RCD) Mirror and 29. 3 FIRE PROTECTION GROUP ¾ Revenues in the Fire Protection Group were $22.1 million in calendar year 2008,,p a 7% decline compared with calendar year 2007. ¾ The Company has developed a series of carbon monoxide (CO) alarms. ¾ CO alarms may become required in certain commercial residential construction markets such as hotels, hospitals, dormitories, and nursing homes. 7 THIRD QUARTERS ENDED SEPTEMBER 30, 2009 AND 2008, AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 Operating Operating Net Sales Net Income Net Sales Income Net Income Income ) ) $200 $600 ns ↓ 27% ions io ll 2% $550 $501.5 (mi (mill $175 $500 $155.7 $153.1 $150 $450 $366.9 $400 $125 $350 $100 $300 $250 $75 42% 58% $200 ↓48% ↓52% $50 $150 $33.1 $99.0 $72.5 $23.3 $23.9 $100 $51.4 $25 $15.1 $34.6 $50 $0 $0 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 Third Quarters Ended 09/30 Nine Months Ended 09/30 8 4 HIGH GROWTH/HIGH MARGIN BUSINESS Factors Impacting Margins: Positive Negative: *Purchasing Cost Reductions *Annual Customer Price Reductions *Engineering Cost Reductions (VAVE) *Top Line Growth of <10% *Top Line Growth of 10%+ *Lower North American light vehicle production *Manufacturing Yield Improvements *Learning Curve: Lower Yields on New Products/Processes Additional negative factors over the past several years 3Q 2004 - 4Q 2006 New Product/Processes: Introduction of SmartBeam and Microelectronics production capabilities 2Q 2004 - ? Production Declines: GM T800-900 (full size truck/SUV) changeover and reduction in vehicle production levels 1Q 2005 - 4Q 2006 Product Re-Design: Introduction of Bezel-Free OEC mirror to meet increased field-of-view requirements in Europe 3Q 2004 - 3Q 2006 Product Re-Design: Complete re-design of all interior mirror circuit boards to eliminate certain materials (i.e. lead) to meet End of Life Vehicle (ELV) requirements 50 Gross Margin 40 Operating Margin 30 20 New Centennial East. Mfg. Facility New Exterior Mirror Coater New Riley St. Mfg. Facility New State Street. Mfg. 10 Facility Addition 0 1Q97 3Q97 1Q98 3Q98 1Q99 3Q99 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 9 GENTEX: AN INTERNATIONAL COMPANY SERVING A GLOBAL INDUSTRY • 5 manufacturing plants (4 automotive, 1 fire protection) – all located in Zeeland, Michigan. • Current estimated building capacity to manufacture approximately 20 million interior and nine million exterior mirror units annually (based on current mix). Production line capacity is added as required with each new model year. • In 2007, the Company added building capacity to its State Street exterior mirror facility that provided incremental building capacity for four million exterior mirror units. • Automotive Sales/Engineering Offices in Livonia, Michigan; Munich and Erlenbach, Germany; Nagoya and Yokohama, Japan; Seoul, Korea; Coventry, England; Paris, France; and Gothenburg, Sweden. Automotive sales, engineering, and warehouse facility in Shanghai, China. Gentex Sweden (Sales & Engineering Office) Gentex Corporation World Headquarters and Manufacturing Gentex Mirrors, Ltd. (U.K.) (Sales & Engineering Office) Facilities Gentex Technologies Zeeland, Michigan Korea Co., Ltd. GtGentex GbHGmbH (Germany ) (Sales & Engineering Office) (2 Sales & Engineering Offices and Gentex France S.A.S. Warehouse Distribution) Gentex Corporation Gentex Japan, Inc. (Sales & Engineering (Livonia Sales Office) (2 Sales & Engineering Offices) Office) Gentex Electronics Company, Ltd. Shanghai, China (Sales & Engineering Office, Light Assembly) 10 5 AGGRESSIVE INVESTING FOR FUTURE GROWTH: R&D INVESTMENT THREE TIMES THE TYPICAL AUTO SUPPLIER • Currently investing approximately 8% of net sales in ER&D. - Many programs will not produce revenues for another 2-3 years. • Also i nvesti ng to d eve lop t he in frastructure for our o ffices i n Western EEdurope and AAisia. - Need to prepare for the strong growth expected in those markets over the next 3-5 years.