Gentex (GNTX) Q4 2025 earnings review
Core Margin Recovery Hits Target, but VOXX Integration Drags on Bottom Line
Gentex closed 2025 with a tale of two companies. Consolidated revenue surged 19% in Q4, driven entirely by the VOXX acquisition. However, the 'Core Gentex' business remained flat YoY, struggling against a 2% decline in light-vehicle production across primary markets. The standout achievement is the recovery of core gross margins to 35.5%—the highest level since 2021—reaching management's long-term target despite a 150 bps headwind from tariffs. While revenue is growing, Net Income (+6%) is not keeping pace, reflecting the lower-margin profile of the newly acquired VOXX segment and a $8.7M 'other loss' from investment impairments.
🐂 Bull Case
Core Gentex margins reached 35.5% in Q4, up 300 bps YoY. This confirms management's ability to drive internal efficiencies and purchasing cost reductions to offset persistent tariff pressures.
In primary markets (NA, Europe, Japan/Korea), revenue grew 3% in Q4 against a 2% market production decline. This 5-point outperformance proves the content-per-vehicle strategy (FDM, DMS) is working.
🐻 Bear Case
VOXX margins (approx. 30%) remain significantly lower than the core business. As VOXX becomes a permanent part of the mix, consolidated margins will face structural pressure compared to historical Gentex levels.
Sales to China have stabilized but at a drastically lower level ($34.5M in Q4). Total 2025 China revenue of ~$146M is a massive drop from the original ~$240M expectations pre-tariff escalation.
⚖️ Verdict: ⚪
Neutral. The operational recovery in core margins is impressive and provides a floor for the valuation. However, the lack of organic growth in the core business and the dilutive nature of the VOXX acquisition suggest the stock will remain range-bound until 2026 guidance (implying only 5% growth) shows signs of upward revision.
Key Themes
Core Margin Trajectory Hits the Bullseye
Management successfully navigated the 'chaotic' trade environment to return Core Gentex gross margins to the 35-36% range. This was **Accelerating** throughout the year, rising from 33.2% in Q1 to 35.5% in Q4. The 300 bps YoY expansion in Q4 was driven by purchasing cost reductions and operational efficiencies, which more than offset 150 bps of net tariff headwinds.
China Revenue: A Permanent Downshift
China revenue has moved from a collapse to a **Stable** but diminished state. Q4 sales into China were $34.5M, consistent with Q2/Q3 levels but down nearly 30% for the full year. Management attributes this to a combination of tariffs and local OEMs favoring domestic suppliers. This represents a structural loss of a high-growth territory that formerly contributed $50M+ per quarter.
VOXX Integration & Seasonal Tailwinds
VOXX delivered over $100M in Q4 revenue, exceeding the prior quarterly run rate of ~$80M due to holiday seasonality in premium audio and consumer electronics. While integration is 'on track,' the focus shifts to achieving the $40M annual free cash flow synergy target. VOXX accounted for nearly all of the consolidated revenue growth in 2025.
Other Loss & Impairment Drag
A notable red flag in the Q4 report is the 'Total Other Loss' of $8.7M, a sharp **Reversing** from $8.0M income in the prior year. This was driven by impairment losses on investments and credit loss reserve adjustments. This $16.7M YoY swing significantly muted the impact of the strong operating income performance on the bottom line.
Macro Picture: LVP Weakness Persists
The company's outlook is capped by S&P Global Mobility forecasts showing a 1% decline in global Light Vehicle Production (LVP) for 2026. North America is expected to be down 2%. Gentex must rely entirely on its technology pipeline (DMS, Dimmable Visors) to generate growth in this environment.
Other KPIs
Shipments were down 3% YoY in Q4 and 6% for the full year. This unit volume **Deceleration** highlights that Gentex is increasingly reliant on higher ASP products like Full Display Mirrors (FDM) to maintain revenue levels as base mirror demand softens.
A 35% increase vs. 2024. The company utilized its strong balance sheet to repurchase 13.6 million shares ($319M) during 2025, taking advantage of share price volatility. $106.9M was paid in dividends. 35.9 million shares remain on the current authorization.
Increased 26% YoY, largely due to the VOXX acquisition ($74.3M impact). However, Core Gentex OpEx growth was held to just 2% for the year, reflecting tight cost control and head-count reductions (severance costs of $10.4M) implemented earlier in the year.
Guidance
**Decelerating**. This implies ~4.6% growth at the midpoint ($2.65B) compared to 2025. This reflects a full year of VOXX contribution but a cautious outlook on global auto production and the China market.
**Stable**. This guidance is slightly lower than the Q4 core performance (35.5%) because it factors in the lower-margin VOXX business for the full year. It suggests management expects to maintain current efficiency gains.
**Accelerating**. The 2027 forecast implies growth returns to the ~6% range as new products like dimmable visors and advanced Driver Monitoring Systems (DMS) begin to contribute material volume.
Key Questions
Investment Impairment Details
What specifically drove the $8.7M other loss in Q4? Was this related to a specific technology partner or a broader mark-to-market adjustment?
VOXX Synergy Timeline
With VOXX delivering $103M in Q4 but consolidated net income only growing 6%, when will the $40M in targeted annual free cash flow synergies begin to meaningfully impact the bottom line?
China Competitive Landscape
Revenue in China has bottomed out at ~$34M/quarter. Do you see any path to regaining the $50M+ run rate, or is decontenting by local OEMs a permanent shift?
New Product Launch Cadence
You mentioned the first production award for dimmable visors. What is the expected SOP (Start of Production) date, and how many OEMs are currently in the 2027 revenue guidance for this product?