Gentex Corp (GNTX) 2016 Q3 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the Gentex reports third-quarter 2016 financial results conference call.

Today's call is being recorded.

And I would now like to turn the meeting over to Mr. Josh O'Berski with Gentex, Investor Relations Manager. Please go ahead, sir.

Good morning and welcome to the Gentex Corporation third-quarter 2016 earnings release conference call. I am Josh O'Berski, Gentex Investor Relations Manager, and I'm joined by Steve Downing, Senior Vice President and Chief Financial Officer; Kevin Nash, Vice President and Chief Accounting Officer; and Neil Boehm, Vice President of Engineering.

This call is live on the Internet by way of an icon on the Gentex website at www.Gentex.com. All contents of this conference call are the property of Gentex Corporation, and may not be copied, published, reproduced, rebroadcast, retransmitted, transcribed, or otherwise redistributed. Gentex Corporation will hold responsible and liable any party for any damages incurred by Gentex Corporation with respect to any unauthorized use of the contents of this conference call.

This conference call contains forward-looking information within the meaning of the Gentex Safe Harbor statement included in the Gentex reports third-quarter 2016 financial results press release from earlier this morning and, as always, shown on the Gentex website. Your participation in this conference call implies consent to these terms. Now I will turn the call over to Steve Downing, who will give the third-quarter 2016 financial summary.

Thank you, Josh. For the third quarter of 2016, the Company is pleased to report net sales of $429.6 million, which was an increase of 10%, compared to net sales of $389.8 million in the third quarter of 2015. The 10% sales growth was driven by a 9% increase in auto-dimming mirror unit shipments, while overall automotive light vehicle production in the Company's primary regions declined approximately 40 basis points for the third quarter of 2016 when compared with the same quarter in 2015.

The gross profit margin in the third quarter of 2016 was 40.5% compared with a gross profit margin of 39% in the third quarter of 2015. The increase in the gross profit margin was driven by purchasing cost reductions and favorable product mix, which more than offset annual customer price reductions.

Income from operations for the third quarter of 2016 increased 15% to $134.2 million when compared to income from operations of $116.3 million for the third quarter of 2015, as a result of the improved gross profit margin and consistent financial discipline in the Company's operating expense growth. Net income for the third quarter of 2016 increased 18% to $92.1 million compared with net income of $78.3 million in the third quarter of 2015.

Earnings per diluted share in the third quarter of 2016 increased 19% to $0.32 compared with earnings per diluted share of $0.27 in the third quarter of 2015. The increase was primarily driven by the increase in net income, but was aided by a lower diluted share count on a quarter-over-quarter basis as a result of the Company continuing to execute a consistent capital allocation strategy.

During the third quarter of 2016, the Company repurchased 1.8 million shares of its common stock at an average price of $16.59 per share. As of September 30, 2016, the Company has approximately 9 million shares remaining available for repurchase, including the most recent authorization of 7.5 million shares by the Company's Board of Directors. The Company intends to continue to repurchase additional shares of its common stock in the future, depending on macroeconomic issues, market trends, and other factors that the Company deems appropriate.

During the third quarter of 2016, the Company paid down $10 million on its revolver loan, in addition to its normally scheduled principal repayment on the Company's term loan. The Company may at its discretion pay additional principal towards its loans in the future, depending on macroeconomic trends, capital expenditure spending, cash and money market interest rate, the amount of free cash flow, and other factors that it deems appropriate for timing and amounts of incremental debt repayments. Now I will turn the call over to Kevin Nash with some third-quarter financial details.

Thanks, Steve. Automotive net sales in the third quarter of 2016 were $419.8 million, an increase of 11% compared with automotive net sales of $379.9 million in the third quarter of 2015. As noted previously, this increase was driven by a 9% increase in auto-dimming mirror unit shipments, in addition to favorable shifts in product mix. Other net sales in the third quarter of 2016, which includes dimmable aircraft windows and fire protection products, were $9.8 million, which was relatively consistent with other sales of $9.9 million in the third quarter of 2015.

ER&D expenses increased 10%. SG&A expenses increased 13% for the third quarter of 2016 to $23.6 million and $16 million, respectively. ER&D expenses increased primarily as a result of increased staffing to support new product launches. SG&A expenses increased primarily due to increased travel and marketing expenses, as well as increases in staffing.

The tax rate during the third quarter was 31.5%, which varied from the statutory rate of 35%, primarily due to the domestic manufacturing deduction. Based on the Company's forecast and current legislation, the Company continues to expect this tax rate to be between 31.5% and 32.5% for calendar-year 2016.

For some balance sheet items, the balance sheet items represent a comparison versus December 31, 2015, which is also included in today's press release. Cash and cash equivalents, $534.5 million, down from $551.6 million, as a result of short-term investment purchases, capital expenditures, accelerated debt repayments, and share repurchases, all of which were mostly offset by cash flow from operations during the nine months ended. Short-term investments, $152.2 million, up from $4.5 million, and long-term investments, $57.5 million, down from $95.2 million at year end, primarily due to changes in investment mix.

Accounts receivable, $229.2 million, up from $196 million, primarily due to the timing of sales within each comparable period. Inventories, $179.4 million, up from $174.7 million, primarily due to increases in finished goods. Accrued liabilities, $85.5 million, up from $64.7 million, due to the timing of tax and certain wage payments.

Some cash flow highlights: cash flow from operations for the third quarter of 2016 increased to $99.6 million from $91.3 million in the third quarter of 2015, primarily due to increases in net income and changes in working capital. Year-to-date cash flow from operations increased to $353 million from $283.2 million through nine months in 2015, also due to increases in net income and changes in working capital.

CapEx for the third quarter was $34.5 million compared with $18.4 million in the third quarter of 2015. Year-to-date CapEx was $91.5 million, compared with $62.3 million through nine months in 2015. The Company is maintaining its capital expenditure guidance in the $115 million to $130 million range for the calendar-year 2016.

Depreciation and amortization expense for the third quarter was $23.1 million, compared to $21.2 million for 2015, and year to date was $68.4 million compared to [$63.8] million in 2015. The Company continues to estimate that depreciation and amortization for calendar-year 2016 will be between $90 million and $100 million. Now to Neil Boehm for a product and business development update.

Thank you, Kevin. In the third quarter of 2016, there were 21 net new nameplate launches of our inside and outside [electronic mirrors] and electronic features.

The third quarter of 2016 represented the strongest third-quarter launch level in the last several years. For example, the net 21 nameplate launches represents a 50% increase over the 2015 third-quarter launches, and is approximately 5 times larger than the third-quarter launches of 2013 and 2014.

For additional context, the launches in the third quarter were reduced by some minor losses of content on six nameplates, meaning the 21 nameplates were the number of launches net of losses. With this very high level of launch activity in the third quarter, we continue to see strong mix, as approximately 40% of the net new launches in the quarter were advanced features.

As an update to our integrated toll module system, the Company continues to see strong interest from our customers, and we continue to work on the hardware and integration of the product. Over the next few quarters, we will be working to finalize the initial designs and complete drive testing of prototypes, with the stated goal of having our first confirmed customer toward the end of next year. We continue to see evidence that this product can represent another growth channel for the Company over the next several years.

As previously announced, Gentex continues to work on the development and launch of full display mirror products for our first four customers. General Motors now has four vehicles in the Cadillac lineup currently offering our full-display mirror.

We believe this product is very relevant for OEMs, and we continue to see market interest, not only from our initial launch customers but also from other OEMs. As evidence of this, the Company is pleased to announce that we can now confirm that a fifth OEM has sourced Gentex as a supplier of this all-new technology. We continue to believe that we will see additional program awards for full-display mirror in the coming years.

Lastly, we would like to invite our investors and analysts to visit our booth space at CES in January 2017 to see some exciting new product concepts that we will be showing this year. Please feel free to reach out to Josh or anyone on our team if you are interested in spending some time with us at the show. Now back to Steve Downing for remainder-of-the-year guidance and closing remarks.

Thank you, Neil. Our fourth-quarter 2016 estimates are based on October IHS production forecasts for the fourth quarter, which is expected to be up 1% versus the fourth quarter of 2015. Based on this, as well as the Company's forecasted product mix, we estimate fourth-quarter sales will increase between 5% and 10% over the fourth-quarter sales of 2015. This brings the 2016 annual revenue estimate to the range of $1.68 billion to $1.71 billion.

Based on actual results for nine months ended September 30, in addition to currently forecasted sales and product mix, the Company is raising its estimated gross profit margin to be between 39.3% and 39.7% for calendar-year 2016. This updated guidance represents the Company's strong margin performance through nine months this year, as well as our confidence that we can continue with much of that strong margin performance throughout the remainder of calendar-year 2016. Based on actual expenses for the first nine months of the year, the Company also estimates that operating expenses will be between $152 million and $157 million for calendar-year 2016.

That completes our prepared comments. We can now proceed to questions. Thank you.

(Operator Instructions)

Our first question is from Christopher Van Horn with FBR.

Good morning, guys. Congrats on another great quarter.

Thanks, Chris.

Thanks, Chris.

Since you mentioned it, I have to ask, on the fifth OEM, we now have a very, very good docket of OEMs rolling out. We know about GM. Can you give us a little more clarity -- I'm not sure if you can say yet who the OEMs are, but maybe if you could just tell us when the model year rollout, when we are going to see the product on some actual cars.

We can't share the OEMs' names yet, but early next year, probably by mid next year, two more of the OEMs will be disclosed, and then the third one that is not shipping yet will be later in the year, next year. Then the fifth OEM that we announced probably looking at a late 2018, SOP.

Great. And then on that fifth OEM, since it is a new award, can you give us a sense of the number of programs? Is it multiple vehicle lines or can you just not say yet?

No, it's going to be a multiple vehicle line OEM, so it's not a single car platform. This OEM is looking at it as a broader execution across several vehicles inside of their lineup.

Okay. Great. Can you give us an update on around the tech mix that you are shipping?

Is it leaning toward SmartBeam or HomeLink, or is it combination of all of it? Is anything standing out for you when we talk about the tech shipments?

Not in this quarter, Chris. It's actually pretty even across all of the various technologies.

Okay, great. And finally, the gross margins were kind of at a three-year high here, is this something that you -- I know you raised the guidance, but with this, was it just the perfect storm of volume and mix and cost savings, or is it really just a culmination of the things you've been doing over the past 12 months are now coming to fruition and you feel really good about this level?

Yes, I think you are right on all those fronts. We had contributions from our purchasing cost reductions, mix was very solid in the quarter, and then, you know, some of the other things weren't going against us. Manufacturing was pretty efficient this quarter. So, it was the perfect storm of everything going the right way.

If you look at that margin performance, it was slightly better than we had anticipated coming in the quarter. And like Kevin mentioned, all the stars aligned.

Really, if you look at it, though, it is a combination and you bring it up very well, Chris, and that is it's kind of a combination of things we have been working on over the last few years and those disciplines have all kind of paid out in this quarter. Obviously, it's been increasing over the last three years, like you mentioned. If you go back in the Company's history, this margin performance we haven't seen since the early 2000s.

Thanks for taking the questions.

Thank you.

The next question is from David Leiker with Baird.

This is Adam Schmitz on the line for David.

Good morning.

Were there any products or features in particular that contributed to the gross margin improvement?

If you look at the mix itself was fairly consistent. We've always talked about that 10% growth level being a tipping point. If we can get to that growth level it helps with margin expansion, which it did this quarter.

The mix was fairly consistent versus what we anticipated. Like we talked about in the last couple of calls, and Neil mentioned again today, the number of launches have been a little more weighted towards advanced features than what they have been over the last several years. Whenever that happens, you are going to see a little stronger margin performance than when the mix is weighted towards base mirrors.

Then on the international shipment growth in the quarter, I guess, were there any markets that you are seeing higher penetration gains than others?

We saw decent growth in the China market and Europe was fairly strong as well.

Okay. Then lastly, taking a quick look at 2017, obviously this year you are going to finish gross margins around the 39.5% level. Do you see an opportunity to move higher from here? And maybe you can talk about some of the puts and takes to the gross margin level.

I would say our guidance that we started this year with is probably what we will guide next year with, so kind of in that 39% to 39.5% range probably would be the typical range you would see us in. There is a lot of puts and takes, obviously, on January 1. That is, we are just starting that process of looking at the backlog with sales orders and then kind of extrapolating out both what our OEM contracts look like and hopefully what we will see out of our purchasing. Our goal is to when we hit these margin levels is find a way to maintain them. That's what the Company will be focused on going into the end of this year, beginning of next.

Definitely, thanks, guys.

Thank you.

The next question is from Jason Rodgers with Great Lakes Review.

Hi, guys.

Good morning.

Question on the customer price reductions, it has continued to remain at the same level and if you think that there is a risk that those could increase with automotive production slowing.

Yes, I think, if you look, though, like you mentioned, we have been running in this range for the last few years. We feel like most of our contracts are designed around an endpoint around that 2% to 2.5% range. We have been right around that, 2.25% to 2.5% the last few years.

We feel pretty comfortable that that is the appropriate range. In our industry there is always a risk, especially when production starts to drop, pressures can happen to the tier-one suppliers. We are well aware of that.

Our job is to find a way to make sure that that doesn't overly impact our gross margin performance on a go-forward basis. We look at the manufacturing efficiencies and the benefit we get from the supply community, we feel like we've partnered really well with those partners to make sure that we can stabilize margins. We feel like we have a pretty good shot at making sure we can stabilize these margins in the next year as well.

All right. Looking at the new manufacturing facility, is that still on track to be completed at the end of 2016, early 2017?

We began distribution activities in the middle of the summer, then they are finishing off the rest of the facility, which lines up with the first part of 2017, you are correct.

Then there will be a third phase of that will open into 2017, of that same building.

Finally, it's a small part of the total, obviously, but why were other sales flat in the quarter?

It's consistently -- consistent sales in the market. There has not been a whole lot of launches from the aerospace side. There has not been a new variance. Timing of certain sales within the prior quarter lead to consistency there.

So, you are really looking at -- when it comes to the aerospace side, you're looking at the Boeing 787 production volumes, that's what drives that. As they got their peak volumes, or higher-level volumes last year, it's been fairly consistent production levels since then.

Thank you very much.

Thank you, Jason.

And we will take our next question from Rich Kwas with Wells Fargo Securities.

Good morning, gentlemen.

Good morning, Rich.

On the quarter here in terms of -- just a couple of questions here -- domestic interior, growth low-single digits, what impacted that? Anything specific as it relates to mix?

I know you don't look at ASP as closely anymore, but from our vantage point, that was up year over year. Was it a function of the exterior mirror growth being strong helping margin and then the mix of the domestic interiors being pretty good, despite volume growth being muted? How do we think about that?

I think in the North American markets, specifically, we had fairly, Detroit 3 was fairly weak. And then we had talked about some losses on a year-over-year basis and specifically to German OEM in the transplant side.

That was weak in the quarter. But otherwise fairly good strong product mix like we talked about earlier, Neil mentioned and Steve mentioned already.

On the ASP side, Rich, really what you are looking at there is that outside mirror strength is actually deterrent to the ASP growth. When you see the ASP start to move like that, it's a function of the advanced feature launches that Neil referenced in his prepared comments. Those areas are growing and they're growing very well. And that's what's going to drive ASP up.

Normally when you're looking at outside mirror, you're looking at kind of a low 30 or slightly below average price point, which is pretty far below our corporate ASP. Those sales being strong on OECs really show you the strength on the inside mirror content side that was occurring behind the scenes.

That makes sense. That's what I was getting at. Seemed like you had a favorable mix on the interior side.

Absolutely.

Just as we think about fourth quarter for the gross margin, you had a strong year to date here and kind of implies a 39%-ish type gross margin for the fourth quarter, at least if you take that midpoint. So, you have typically not had that sort of sequential decline from Q3 to Q4.

There has been episodes in the past where you've had some one offs, but generally speaking you don't have that sort of decline. In some cases it can be up. Curious what is underpinning the margin outlook and what you are seeing as it relates to production mix or launches or features, etcetera, etcetera.

Sure. Typically we tend to be a hair conservative going into Q4. We had a few years where the second half of December can vaporize almost overnight.

So, when we look at the comments and we see what OEMs are talking about for next quarter and potentials for just slightly lower production levels, we tend to look at that very conservatively and try to find -- sorry, Josh is (laughter) -- try to find a way that we look at and say what is probably a very realistic outcome, given the risks that exists in the market for Q4 and the potentials for shorter shutdowns to happen towards the end of the year. The other side of that is, you are looking at a lot of tier 1 involvement.

When we talk about OECs and HomeLink modules, those all ship through tier 1s. Typically they go through inventory adjustment periods. When you talk about the potential for outside mirrors and HomeLink shipments to be a little less than they have been in year to date, then that would tend to have a little bit of margin pressure, given the margin profile of those product lines.

But to your point, the midpoint of that range is pretty much in line with our year-to-date gross margins. I don't know --

Don't deduce too much.

Exactly.

So, it sounds like you are factoring in the potential adjustments that may occur as the quarter goes on in trying to accommodate that --

Yes, exactly, especially on the tier 1 side. That seems to be the biggest risk factor for us at the end of the year.

Followup on capacity, as we think about as the capacity rolls out over the course of 2017, my recollection is you don't expect any tangible margin pressure from that. Could you expand on that?

Sure, I mean, if you look at really the building, like Kevin mentioned earlier, I would say 30% or so occupied in that building right now from a distribution standpoint, by the end of the year, we will be working on final assembly lines that will take -- that will occupy another 20% or so of that building roughly. So, when we look at those numbers, some of those are starting to roll on already, and it hasn't affected margins significantly. Really what the change in that is because we are kind of easing into the pool in terms of use of that building versus historically what you have seen from the Company, which is usually the building opens and we need it overnight to be fully operational, we don't expect those margin impacts.

Secondly, the other factors to look at is just the law large numbers. As the Company continues to grow an individual plant has less of a total impact on gross margin performance based on those costs.

Lastly, our manufacturing teams continue to do more with less. They are using the same building capacity in some of our places that they have been -- their capacity has increased 20% to 30% without any more footprint.

Got you. On the 6% to 10% for 2017, you made a point in saying production [is it the same] factors in the recent production cuts as you look at 2017.

Steve, how do we think about that range? What would need to happen to get to 10% versus 6%?

Well, really, if we saw like this year, if we saw production up in our primary markets up 1% to 2%, that obviously helps us significantly. Usually those net changes are either added or reducing our total sales level.

Really, if you look at it, the things that will help and hurt is continued strength in the foreign markets. You mentioned, Rich, the international sales did quite well. As we see those international markets, if they stay strong, that's definitely a help for us.

The other one is the rollout of products like FDM. If those are stronger than we anticipate, those would tend to help. Really, on the negative side, you have the roll off of a couple of technologies that we have been talking about.

The Mobileye integration, for instance, if that were to be faster than anticipated, it would drive you towards the bottom end of the range. Those are kind of the big puts and takes to hitting that range.

Do we think of the -- within the 6% to 10%, does the midpoint assume 1% to 2% production growth for your relevant markets?

I would say about 1%. When we talk about midpoint, it was really based on our assumption of around 1%.

Okay. Great.

Thank you. I will pass it on.

Thanks, Rich.

We will take our next question from Ryan Brinkman from JPMorgan.

Thank you for taking my question. One on shipment trends and penetration about international shipments, which include emerging markets, they were very strong in the quarter. Interior shipments in North America were maybe up only 1% or so.

Similar to the industry. So, the question is, really, where do you think we are in terms of, I guess, the maturation of penetration of auto-dimming mirrors in various markets around the world, including in the US and other developed markets, relative to emerging markets where the consensus is it's much earlier days.

We talk about this a lot. It's no secret that North America is our highest penetrative region. Most of the growth there is going to be in B and C segment cars going forward.

We have high content on the luxury and SUV market. That's why the [full disclaimer here] is key for North America going forward. Detroit 3 on a year-over-year basis was soft for us.

We saw strong growth in the transplant OEMs in North America, but it was muted there. Then we, again, we talk about Europe being somewhere in the 40%-ish, 35% to 40% penetrated and the Asia regions are more like 10% to 15% or 15%-ish. So, obviously, we are working hard to grow that market over time and we saw a good performance, and like we have consistently for the last several years.

That is helpful. Thank you.

The last question is a followup to, you know, your observation at your Analyst Day and then our conference thereafter, about the substantial growth opportunity for HomeLink in China over the next number of years. I was curious if you are starting to see any progress there or a road map for further penetrating the market?

Yes, it's a new market that is still in development, obviously. We have low-volume production vehicle that is going in there right now, late this year. A couple more OEMs that start production with HomeLink into the China market, beginning of 2017.

Our only constraint is that it's still a new market. Lot of vehicles. Easy implementation, but it's the selling and creating a business case for the OEM on why it's a necessity.

Okay. Thanks for the color.

Thank you.

We will take the next question from John Murphy from Bank of America, Merrill Lynch.

This is Aileen Smith on for John. Going back to Adam's earlier question, you mentioned that China and Europe were strong in the quarter, which had helped with the international shipment growth.

Can you talk about the specific customers that are driving that growth? Is it really just the German luxury OEMs, and are there any specific platform or program launches that you can call out in the quarter?

Nothing that we are going to break out specifically in the region. It was really driven by growth and penetration of, again, the same OEMs that we are shipping to in all the regions, just further penetration and uptake of our primarily inside mirrors in that region.

Looking at the luxury OEMs in Germany are the primary drivers of that. But we did fairly well with Volkswagen during that time as well. We continue to see strength with all of our German OEMs.

As a side question, can you remind us what your total revenue, or what percent of your total revenue is now attributable to China?

Between 5% and 6%.

Okay. Then one last question, your growth in interior mirrors has been outstripping that of exterior mirrors for the past couple of quarters. Do you believe that mix shift can hold going forward, or is the pattern of the past few quarters driven by launches or something else in particular?

I wouldn't look at it as a trend. If you back up more than the last few quarters you are referencing and look at the two years prior to that, outside mirrors were outpacing inside mirrors. Outside mirrors in fact in that two-year period prior to the quarters you referenced, some of those were in between 15% and 20% growth rate.

Part of it is just the law of large numbers and the compounding effect of those large growth rates on outside mirrors, and then them coming back down to a more normalized level. Additionally, what we talked about was we had one luxury OEM who was going through a de-contenting to try to address some cost concerns.

So, we did have some fairly small but somehow still changing the numbers, obviously, change based off that OEM going through those cost pressures, and then de-contenting some outside mirrors. When you see that and you look at those, if those units had stabilized and that hadn't occurred and you look at the growth rates, it would have been right in line with what our historical growth rate, and more in line with what those inside mirror growth rates were.

That was helpful. That's all for me.

The next question is from David Whiston from Morningstar.

Good morning, David.

Margins are really excellent right now, and hopefully that will continue. But it does get me thinking in a downturn, can you talk at all about where you would expect operating margins to go?

Any time we get below -- as sales drop in the mid-single-digit range, that is when you start to see pressure. If they start to flatten to zero and then they decline, obviously, we invest heavily in automation. There is some fixed cost base.

We do have some natural hedges built in with the way the variable compensation works with the Company. But, again, outside of product mix, if we can be in the mid-single digit, to close to double-digit growth rates, we feel like we can manage it in the range we have been talking about for a long, long time, 38.5%, 39.5%.

Obviously, when the stars align, we did better this quarter. So, we feel like, given our forecast and everything outside of a macro event, we feel fairly comfortable that margins are going to be in the range that they have been.

Okay. And you talked about the Detroit 3 being weak this quarter, can you just talk about the general tone you are hearing from both your American OEM customers and Asian and European, in terms of are they mostly optimistic, are they cautiously optimistic or are they a little more fearful for the next year or so?

If you back up, just to walk through the progression is the best way to look at it. If you back up a year, I'd say they were all optimistic. The Detroit 3 and the international guys were looking at the North American market as solid growth driver for them.

I would say now I would characterize it more as cautiously optimistic. You start to see a few people that are a little more negative than the cautiously optimistic. That is about the product lineup and how their vehicles are doing inside the marketplace today.

The one thing that's very interesting is trucks and SUVs continue to do really well in this market. So, from a content standpoint, that usually bodes really well for us. We continue look at it and say, hey, what is the mix change going to be?

One thing that's interesting is when you watch fuel prices drop like they have been recently or continue to at least be at lower levels, you tend to see the mix move a little bit away from A and B segment and more towards trucks and SUVs, which obviously plays well for us. We have an expanding book of business, however, in the B and C segment in North America.

That's where a lot of the growth has come from for us over the last 18 months to two years. So, we feel like we are well positioned. I would say OEMs are a little more cautious than they were a year ago on the North American market, but we continue to see content and features being the key to driving growth rates for this marketplace.

Okay. My last question, there has been a lot of talk this year about autonomous vehicles, especially last night with Tesla's announcement. Can you talk about how autonomous can be an opportunity rather than a threat for Gentex?

If you look at a lot of the technologies we have been working on over the last several years, if you look at the HomeLink play, talk about the integrated toll module, and what we are working on is a connected car strategy, that includes HomeLink and includes the transactional vehicle in our toll module product. We believe we have a very unique position in the marketplace to be able to help equip cars and OEMs with the type of technologies they are looking for.

If you look at our camera technology, our full-display mirror system, all these technologies align well with what OEMs are trying to accomplish inside the autonomous vehicle space. It doesn't mean that everyone views autonomous as if you are the algorithm provider for autonomous that that is the only play. That is clearly not the case. You are looking for comfort and convenience, security, those type of features that can help drive Gentex growth into the car of the future.

Thank you very much.

Thanks, David.

We have no further questions in queue. I would like to turn the call back to management for additional or closing remarks.

Thank you for dialing in. And for the good questions. As Neil mentioned, we are happy to host our analysts and investors at CES.

Feel free to reach out if you are interested in coming by the booth. If there are any other questions, let us know. Otherwise, have a great day.

This does conclude today's conference call. Thank you for your participation. You may now disconnect.