# Gentex Corp: Form 10-Q for the period ended Sep 30, 2022

- Company: [Gentex Corp](/companies/gntx.md) (CIK 355811)
- Form: 10-Q
- Filed: 2022-11-04
- Accepted by EDGAR: Nov 4, 2022, 09:45 ET
- Period: 2022-09-30
- Accession: 0000355811-22-000043
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/355811/000035581122000043/gntx-20220930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/355811/000035581122000043/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-07-01 to 2022-09-30 | $493.6m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2022-01-01 to 2022-09-30 | $1.43bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2022-07-01 to 2022-09-30 | $346.4m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2022-01-01 to 2022-09-30 | $969.3m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2022-07-01 to 2022-09-30 | $147.2m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2022-01-01 to 2022-09-30 | $456.0m | us-gaap:GrossProfit |
| Research and development | 3 months, 2022-07-01 to 2022-09-30 | $33.5m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2022-01-01 to 2022-09-30 | $98.4m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2022-07-01 to 2022-09-30 | $26.9m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2022-01-01 to 2022-09-30 | $81.7m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2022-07-01 to 2022-09-30 | $86.8m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2022-01-01 to 2022-09-30 | $275.9m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2022-07-01 to 2022-09-30 | $13.5m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2022-01-01 to 2022-09-30 | $41.7m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-07-01 to 2022-09-30 | $72.7m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2022-01-01 to 2022-09-30 | $232.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-07-01 to 2022-09-30 | $0.31 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2022-01-01 to 2022-09-30 | $0.99 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-07-01 to 2022-09-30 | $0.31 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2022-01-01 to 2022-09-30 | $0.99 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-07-01 to 2022-09-30 | 231,617,017 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2022-01-01 to 2022-09-30 | 231,529,453 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2022-01-01 to 2022-09-30 | $236.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2022-01-01 to 2022-09-30 | $108.5m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 9 months, 2022-01-01 to 2022-09-30 | $84.9m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months, 2022-01-01 to 2022-09-30 | $83.8m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2022-09-30 | $222.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2022-09-30 | $989.3m | us-gaap:AssetsCurrent |
| Total assets | at 2022-09-30 | $2.31bn | us-gaap:Assets |
| Current liabilities | at 2022-09-30 | $265.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2022-09-30 | $277.3m | us-gaap:Liabilities |
| Shareholders' equity | at 2022-09-30 | $2.03bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 48,478 characters.

### THIRD QUARTER 2022 VERSUS THIRD QUARTER 2021

*Net Sales.* Net sales for the third quarter of 2022 increased by $94.0 million or 24% when compared with the third quarter of 2021.

Automotive net sales for the third quarter of 2022 were $480.9 million, compared with automotive net sales of $391.3 million in the third quarter of 2021. The 17% increase in automotive mirror unit shipments in the third quarter of 2022 to 11.5 million units compared with 9.8 million units in the third quarter of 2021, was driven primarily by a 23% quarter over quarter increase in exterior auto-dimming mirror unit shipments.

The below table represents the Company's auto-dimming mirror unit shipments for the three and nine months ended September 30, 2022, and 2021 *(in thousands)*

|  | Three Months Ended September 30, 2022 | 2021 | % Change | Nine Months Ended September 30, 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| North American Interior Mirrors | 2,156 | 1,897 | 14% | 6,444 | 5,843 | 10% |
| North American Exterior Mirrors | 1,602 | 1,355 | 18% | 4,532 | 4,345 | 4% |
| Total North American Mirror Units | 3,758 | 3,252 | 16% | 10,976 | 10,188 | 8% |
| International Interior Mirrors | 5,287 | 4,629 | 14% | 15,282 | 15,219 | —% |
| International Exterior Mirrors | 2,444 | 1,928 | 27% | 6,926 | 6,605 | 5% |
| Total International Mirror Units | 7,731 | 6,557 | 18% | 22,208 | 21,823 | 2% |
| Total Interior Mirrors | 7,443 | 6,526 | 14% | 21,727 | 21,062 | 3% |
| Total Exterior Mirrors | 4,046 | 3,283 | 23% | 11,457 | 10,949 | 5% |
| Total Auto-Dimming Mirror Units | 11,489 | 9,809 | 17% | 33,184 | 32,011 | 4% |

#### Note: Percent change and amounts may not total due to rounding.

Other net sales were $12.7 million in the third quarter of 2022, compared to $8.3 million in the third quarter of 2021. This increase is in large part attributable to a 78% quarter over quarter increase in fire protection sales, which increased to $10.5 million for the third quarter of 2022, compared to $5.9 million in the same quarter of last year. Dimmable aircraft sales decreased by 7% for the third quarter of 2022 to $2.2 million, from $2.4 million in the same quarter of last year.

*Cost of Goods Sold.* As a percentage of net sales, cost of goods sold increased to 70.2% for the third quarter of 2022, versus 64.7% in the same quarter last year. The quarter over quarter decrease in the gross profit margin was primarily the result of raw material cost increases, unfavorable product mix, prior commitments to annual customer price reductions, and labor cost increases. On a quarter over quarter basis, raw material increases had a negative impact of approximately 250 - 300 basis points on gross margin. Both product mix shifts and annual customer price reductions each had a separate negative impact on gross margin of approximately 100 - 150 basis points on a quarter over quarter. Labor cost increases had a negative impact of approximately 50 - 100 basis points on gross margin on a quarter over quarter basis.

*Operating Expenses.* Engineering, research and development ("E, R & D") expenses for the third quarter of 2022 increased by $3.8 million, when compared with the third quarter of 2021.

Selling, general and administrative ("S, G & A") expenses increased by 17% or $3.9 million for the third quarter of 2022, compared to the third quarter of 2021. S, G & A expenses were 5% of net sales in the third quarter of 2022, compared to 6% of net sales in the third quarter of 2021. S, G, & A expenses increased on a quarter over quarter basis primarily due to staffing, professional fees, outbound freight expenses, and travel related expenses.

Total operating expenses were $60.4 million in the third quarter of 2022, an increase of 15% quarter over quarter or $7.7 million, from $52.7 million in the third quarter of 2021.

*Total Other (Loss) Income.* Total other income for the third quarter of 2022 decreased by $2.4 million, when compared with the third quarter of 2021.

*Provision for Income Taxes.* The effective tax rate was 15.7% for, and an income tax expense of $13.5 million was recorded in, the third quarter of 2022, compared to an income tax expense of $13.2 million for the same quarter of 2021. Typically, effective tax rates for the Company differ from statutory federal income tax rates, due to provisions for state and local income taxes, permanent tax differences, research and development tax credits and the foreign-derived intangible income tax deduction.

*Net Income.* Net income for the third quarter of 2022 was $72.7 million, down from a net income of $76.7 million in the third quarter of 2021. The change in net income was primarily the result of quarter over quarter changes in gross margins and operating profits.

*Earnings Per Share.* The Company had earnings per diluted share for the third quarter of 2022 of $0.31, which compared to earnings per diluted share of $0.32 for the third quarter of 2021.

### NINE MONTHS ENDED SEPTEMBER 30, 2022 VERSUS NINE MONTHS ENDED SEPTEMBER 30, 2021

*Net Sales.* Net Sales for the nine months ended September 30, 2022 increased by $114.0 million or 9%, when compared with the same period in 2021.

Automotive net sales for the first nine months of 2022 were $1.4 billion, up 8% compared with automotive net sales of $1.3 billion for the first nine months of 2021, primarily due to a 4% period over period increase in automotive mirror unit shipments. Domestic automotive mirror shipments in the nine months ended September 30, 2022 increased 8% to 10.2 million units, compared with the same period in 2021.

Other net sales were $33.5 million for the first nine months of 2022, compared to $23.8 million for the same period last year. This increase is in large part attributable to a 59% period over period increase in fire protection sales, which increased to $28.6 million for the first nine months of 2022, compared to $18.0 million in the same period of 2021. Dimmable aircraft sales decreased by 15% for the first nine months of 2022 to $4.9 million, from $5.7 million for the same period in 2021.

*Cost of Goods Sold.* As a percentage of net sales, cost of goods sold increased to 68.0% for the first nine months of 2022, versus 63.7% in the same period last year. The period over period decrease in the gross profit margin was primarily the result of raw material cost increases, unfavorable product mix, prior commitments to annual customer price reductions, and labor cost increases in response to a tight labor market. On a period over period basis, raw material increases and unfavorable product mix each had a separate negative impact of approximately 100 - 150 basis points on gross margin. Annual customer price reductions had a negative impact of approximately 100 - 150 basis points on gross margin on a period over period basis. Labor cost increases had a negative impact on gross margin of approximately 50 - 100 basis points on a period over period basis.

*Operating Expenses.* E, R & D expenses for the nine months ended September 30, 2022 were $98.4 million, compared with $86.5 million for the same period last year. The 14% increase in E, R & D expenses, in the first nine months of 2022 compared to the same period in 2021 was primarily due to additional staffing, professional fees, new product development, and the ongoing product re-designs necessary to mitigate electronics part shortages.

S, G & A expenses for the first nine months of 2022 increased 21% or $14.2 million when compared with the same period last year. The increase in S, G & A expenses in the first nine months of 2022 compared to the first nine months of 2021 was primarily due to staffing, professional fees, increases in outbound freight expenses, and the return of in-person customer meetings and trade show related expenses.

*Total Other (Loss) Income.* Total other loss for the nine months ended September 30, 2022 was $1.6 million, compared with a total other income of $5.2 million for the same period last year.

*Provision for Income Taxes.* The effective tax rate was 15.2% for the nine months ended September 30, 2022, compared to 15.4% for the same period of 2021. Generally, effective tax rates for these periods differ from statutory federal income tax rates, due to provisions for state and local income taxes, permanent tax differences, the foreign-derived intangible income tax deduction, and research and development tax credits.

*Net Income.* Net income for the nine months ended September 30, 2022 decreased by $44.0 million or 16% to $232.6 million, versus $276.6 million in the same period last year. The decrease in net income was primarily the result of the period over period changes gross margins, and operating profits.

*Earnings Per Share.* The Company had earnings per diluted share for the nine months ended September 30, 2022 of $0.99, which compared to earnings per diluted share of $1.15 for the nine months ended September 30, 2021. The period over period decrease in earnings per share is primarily due to the lower net income, but was positively impacted by a lower diluted share count when compared to the same period of 2021.

### FINANCIAL CONDITION:

The Company's cash and cash equivalents as of September 30, 2022 were $222.9 million, which decreased $39.4 million compared to $262.3 million as of December 31, 2021. The decrease was primarily due to capital expenditures, dividend payments, and share repurchases during the nine months ended September 30, 2022, which was partially offset by cash flows from operations.

Short-term investments as of September 30, 2022 were $16.1 million, up from $5.4 million as of December 31, 2021, and long-term investments were $154.4 million as of September 30, 2022, compared to $207.7 million as of December 31, 2021. Equity method investments increased to $39.7 million, primarily as a result of additional investment purchases during the nine months ended September 30, 2022, including the investment in GreenMarbles in the second quarter of 2022. This investment in GreenMarbles was made with $20.0 million in cash and the issuance of $5.0 million of the Company's common stock.

Accounts receivable as of September 30, 2022 increased approximately $42.6 million compared to December 31, 2021, primarily due to the timing of sales during the nine months ended September 30, 2022. As of September 30, 2022, all of the Company's material tier one and OEM customers continue to be in good standing.

Inventories as of September 30, 2022 were $418.3 million, compared to $316.3 million as of December 31, 2021, primarily due to increases in raw materials and finished goods.

Accounts payable as of September 30, 2022 increased approximately $73.1 million to $171.4 million, when compared to December 31, 2021, primarily driven by month end payment timing, increased inventory, and increased capital expenditures.

Accrued liabilities as of September 30, 2022 increased approximately $10.4 million compared to December 31, 2021, primarily due to an increase in accrued salaries and wages, as well as accrued income taxes.

Cash flow from operating activities for the nine months ended September 30, 2022 decreased $63.0 million to $236.4 million, compared with $299.4 million during the same nine month period last year, primarily due to decreases in net income and changes in working capital.

Capital expenditures for the nine months ended September 30, 2022 were approximately $108.5 million, compared with approximately $44.4 million for the same nine month period last year.

The Company believes its existing and planned facilities are currently suitable, adequate, and have the capacity required for current and near-term planned business. Nevertheless, the Company continues to evaluate longer term facility needs. In the first quarter of 2022, the Company began construction on a 350,000 square-foot manufacturing facility located at a 140 acre site in Zeeland, Michigan, where the Company previously performed master planning and completed land infrastructure improvements. The total cost of the building project is still expected to be approximately $80 - $90 million, which will be funded with cash and cash equivalents on hand. The facility is expected to be operational in the fourth quarter of 2023. The Company has also begun construction on two building expansions during the second quarter of 2022. The Company is expanding its current distribution center for an additional 300,000 square feet, with a total cost still expected to be approximately $40 - $45 million. The Company is also expanding one of its manufacturing facilities for an additional 60,000 feet, with a total cost still expected to be $20 - $30 million. Both expansion projects will be funded with cash and cash equivalents on hand.

The Company estimates that it currently has building capacity to manufacture approximately 34 - 37 million interior mirror units annually and approximately 15 - 18 million exterior mirror units annually, based on current product mix. The Company also evaluates equipment capacity on an ongoing basis and adds equipment as needed.

Management considers the current working capital and long-term investments, in addition to internally generated cash flow, its Credit Agreement, and credit worthiness, 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 long-term investments:

|  | September 30, 2022 | December 31, 2021 |
| --- | ---: | ---: |
| Working Capital | $724,158,632 | $691,319,649 |
| Long-Term Investments | 154,429,190 | 207,693,147 |
| Total | $878,587,822 | $899,012,796 |

The Company has a previously announced share repurchase plan under which the Board of Directors has authorized the repurchase of shares of the Company's common stock, which remains a part of the broader publicly disclosed capital allocation strategy. Future share repurchases may vary from time to time and will take into account macroeconomic events (including the COVID-19 pandemic, industry-wide parts shortages, and global supply chain and labor constraints), market trends, and other factors the Company deems appropriate (including the market price of the stock, anti-dilutive effect of repurchases, and available cash). During the nine months ended September 30, 2022, the Company repurchased 3,290,496 shares. The Company has 21,533,572 shares remaining under the plan as of September 30, 2022, as is further detailed in Part II, Item 2 of this Form 10-Q.

### BUSINESS UPDATE

For the third quarter of 2022, the Company reported net sales of $493.6 million, compared to net sales of $399.6 million in the third quarter of 2021, a 24% increase quarter over quarter. For the third quarter of 2022, global light vehicle production in North America, Europe, Japan/Korea, and China increased approximately 26%, when compared to the third quarter of 2021. Light vehicle production in the Company's primary markets of North America, Europe, and Japan/Korea was up 22% on a quarter over quarter basis. These increases were primarily a result of some improvements in the ongoing global supply chain constraints, as well as overall light vehicle production growth. Nevertheless, product mix and overall sales were impacted in the third quarter by customer order adjustments, supply chain related issues, and labor availability issues, causing unit shipments to be approximately 750,000 units lower than forecasted at the beginning of the quarter, resulting in a significant revenue shortfall versus beginning of quarter forecast. While there appears to be some improved stability in the light vehicle production environment as compared to a year ago, the Company is still experiencing significant customer order fluctuations on a week-to-week basis and difficulty in sourcing advanced electronics components..

In the third quarter of 2022, the Company had 50 total new launches of interior and exterior auto-dimming mirrors and electronic features. Over 50% of the launches in the third quarter of 2022 were advanced feature launches with HomeLink®, Full Display Mirror®, and the Digital Video Recorder being the bulk of such launches.

The Company is engaged in ongoing conversations with certain customers regarding the inflationary aspects of the business and how to address the higher cost structure that has come as a result of electronics and supply chain issues and labor shortages during the last 18 months. The Company is working in a collaborative manner with its customers with the goal of growing the business and maintaining good business relationships, while at the same time meaningfully addressing the impact of existing inflationary pressures. These conversations and negotiations are expected to last throughout 2022 and likely into calendar 2023 for some customers, as the Company works to offset cost increases with updated pricing.

### PRODUCT UPDATE

#### Camera Systems

The Full Display Mirror® began production in the fourth quarter of 2015. Current automotive design trends are yielding vehicles with small rear windows that are often further obstructed by headrests, passengers, and roof support pillars which can significantly hinder the mirror’s rearward view. The Company's Full Display Mirror® is an intelligent rear vision system that uses a custom, internally or externally mounted video camera and mirror-integrated video display to optimize a vehicle driver’s rearward view. This rear vision system consists of a hybrid Full Display Mirror® that offers bi-modal functionality. In mirror mode, the product functions as an auto-dimming rearview mirror which means that during nighttime driving, digital light sensors talk to one another via a microprocessor to automatically darken the mirror when glare is detected. With the flip of a switch, the mirror enters display mode, and a clear, bright display appears through the mirror’s reflective surface, providing a wide, unobstructed rearward view. The bi-modality of the Full Display Mirror® is essential, because in the event of any failure of the camera or display, the product is able to function as a mirror, which meets long-standing safety requirements in the automotive industry. In addition, the driver has the ability to switch between modes to accommodate usage preferences for various weather conditions, lighting conditions, and driving tasks.

As of the third quarter of 2022, the Company is shipping production Full Display Mirrors® to fourteen different automaker customers, which are General Motors, Subaru, Toyota, Nissan, Jaguar Land Rover, Mitsubishi, Aston Martin, Stellantis, along with Maserati and Fiat, Mercedes, Ferrari, Ford, and Hyundai. As of the end of the third quarter of 2022, the Company is shipping Full Display Mirror® on 79 nameplates. The Company remains confident that ongoing discussions with certain other customers may in the future cause such customers to consider adding the Full Display Mirror® into their product road-map for future vehicles. As of the end of the third quarter of 2022, the Company has been awarded Full Display Mirror® programs with 14 OEMs.

To enhance capability and usability of the Company's Full Display Mirror®, the Company previously introduced its three-camera rear vision system that streams rear video in multiple composite views to its Full Display Mirror®. The Company believes it is the industry’s first practical and comprehensive rear vision solution designed to meet automaker, driver, safety, and regulatory requirements. The Company's rear vision system, known generally as a camera monitoring system ("CMS"), uses three cameras to provide a comprehensive view of the sides and rear of the vehicle. The side-view cameras are discretely housed in downsized, automatic-dimming exterior mirrors. Their video feeds are combined with that of a roof-mounted or rear window based camera and stitched together into multiple composite views, which are streamed to the driver using the Full Display Mirror®. The system’s modular nature lets the automaker customize functionality while offering it as an affordable, optional feature thereby enhancing safety by allowing the system to fail safe. During any failures due to weather conditions or otherwise that disrupt the digital view, drivers can still safely use the interior and exterior mirrors. The system also supports user preference by permitting drivers to use standard mirror views, camera views, or both. The system can also be tuned to meet the various regulatory field-of-view requirements around the world by using different types of flat and curved glass, combined with simple alterations to the video viewing modes. Downsized exterior mirrors provide automakers with significant weight savings and fuel efficiency improvements. To further enhance safety, the Company's CMS solution can also work in conjunction with a vehicle’s side blind zone warning system. When a trailing vehicle enters a side blind zone, a warning indicator illuminates in both the interior and exterior mirrors while the corresponding side-view video feed appears in the display until the vehicle passes.

On March 31, 2014, the Alliance of Automobile Manufacturers petitioned the National Highway Traffic Safety Administration ("NHTSA") to allow automakers to use cameras as an option to replace conventional rearview mirrors within the United States. At the annual SAE Government-Industry Meeting in January 2017, NHTSA requested that SAE develop Recommended Procedures for test protocols and performance criteria for camera monitoring systems that would replace mirror systems on light vehicles in the U.S. market. SAE assigned the task to the Driver Vision Committee, and the SAE Driver Vision Committee created a CMS Task Force to draft the Recommended Procedures. NHTSA published a report dated October 2018 related to camera monitoring systems for outside mirror replacements. On October 10, 2019, an Advanced Notice of Proposed Rulemaking (ANPRM) was published seeking public comment on permitting camera-based rear visibility systems, as an alternative to inside and outside rearview mirrors required under Federal motor vehicle safety standard (FMVSS) No. 111, “Rear Visibility,” which currently requires that vehicles be equipped with rearview mirrors to provide drivers with a view of objects that are to their side or to their side and rear. This ANPRM builds on NHTSA's prior efforts to obtain supporting technical information, data, and analysis on CMS so that the agency can determine whether these systems can provide the same level of safety as the rearview mirrors currently required under FMVSS No. 111. The ANPRM states that one reason NHTSA is seeking additional information is because research conducted by NHTSA and others between 2006 and 2017 has consistently shown that prototype and preproduction camera-based rear visibility systems can exhibit safety-relevant performance issues.

On October 18, 2019, a petition for temporary exemption from FMVSS 111 submitted by Audi of America was published requesting NHTSA to grant a two-year exemption to sell up to 2,500 vehicles for each twelve month period (up to 5,000 vehicles) that are equipped with camera monitoring systems and do not include FMVSS 111 compliant outside mirrors.

In July 2016, a revision to UN-ECE Regulation 46 was published with an effective date of June 18, 2016, which allows for CMS to replace mirrors in Japan and European countries. Since January 2017, camera monitoring systems are also permitted as an alternative to replace mirrors in the Korean market. Notwithstanding the foregoing, the Company continues to believe rearview mirrors provide a robust, simple and cost effective means to view the surrounding areas of a vehicle and remain the primary safety function for rear vision today. Cameras when used as the primary rear vision delivery mechanism have some inherent limitations, such as: electrical failure; cameras being blocked or obstructed; depth perception challenges; and viewing angles of the camera. Nonetheless, the Company continues designing and manufacturing not only rearview mirrors, but CMOS imagers and video displays as well. The Company believes that combining video displays with mirrors may well provide a more robust product by addressing all driving conditions in a single solution that can be controlled by the driver. As noted, the Company has been in production with the Company's Full Display Mirror® since 2015 and has, in the ordinary course of business, been awarded programs with fourteen OEM customers. The Company is currently shipping production Full Display Mirrors® to fourteen automaker customers. The Company's CMS solution uses three cameras to provide a comprehensive view of the sides and rear of the vehicle while still providing the traditional safety of interior and exterior mirrors, which mirrors continue to function when cameras are obstructed or are not functioning. The Company has also previously announced that it continues development in the areas of imager performance, camera dynamic range, lens design, image processing from the camera to the display, and camera lens cleaning. The Company acknowledges that as such technology evolves over time, such as cameras replacing mirrors and/or autonomous driving, there will be increased competition.

The Company began shipping Full Display Mirror® with Digital Video Recording ("DVR" capability) for the Toyota Harrier in the second quarter of 2020. This mirror and system launched in the Japan market and combine the superior functionality of the Full Display Mirror®, with the added capability to record video from the rearward facing and forward-facing cameras simultaneously. The data is stored to an SD storage card as requested by the customer. This integrated solution provides consumers with the features they want, while allowing the OEM to control the integration and execution in the vehicle. In the third quarter of 2022, the Company began shipping auto-dimming mirrors containing DVR for both the Toyota Yaris and the Yaris Cross for the Japan market. These are the Company's first launches of a base auto-dimming mirror with this DVR capability. This product is also the first Gentex DVR product that has an app available to allow the consumer to pull recorded information from the mirror to a phone, which creates a more user friendly experience.

SmartBeam® is the Company's proprietary high beam control system integrated into its auto-dimming mirror. SmartBeam® Generation 4, which was developed using the fourth generation of the Company's custom designed CMOS imager, has an advanced feature set made possible by the high dynamic range of the imager including: high beam assist; dynamic forward lighting with high beams constantly on; LED matrix beam; and a variety of specific detection applications including tunnel, fog, and road type as well as certain lane tracking features to assist with lighting control. The Company has the ability to package the control electronics inside of its interior rearview mirrors with a self-calibrating camera attached to the mirror mount with optimal mechanical packaging which also provides for ease of service. In addition, the Company has long been integrating its camera products to optimize performance by combining with other systems on the vehicle, including radar, navigation, steering, and related modules provided by other suppliers. This enables the Company to provide its customers with highly customizable solutions that meets their unique needs and specifications.

The European New Car Assessment Program ("Euro NCAP") provides an incentive for automobiles sold in Europe to apply safety technologies that include driver assist features such as lane detection, vehicle detection, and pedestrian detection as standard equipment. Euro NCAP compliant driver assist systems are also capable of including high beam assist as a function. The increased application of Euro NCAP on European vehicles has had the effect of replacing, and could potentially continue replacing, the Company's SmartBeam® application on these vehicles.

On December 8, 2015, NHTSA proposed changes to the NHTSA's 5-Star Safety Ratings for new vehicles (also known as the New Car Assessment Program or NCAP) and initiated a comment period. The proposed changes will, for the first time, encompass assessment of crash-avoidance technologies, which includes lower beam headlamp performance, semi-automatic headlamp switching, and blind spot detection. NHTSA initially intended to implement the enhancements in NCAP in 2018, beginning with model year 2019 vehicles. The NCAP implementation has been delayed. Under these proposed changes, the Company believes that its SmartBeam® technology will qualify with the semi-automatic headlamp NCAP rating system, and that its SmartBeam® technology and exterior mirrors with blind spot alert lighting can be included in a system that qualifies with the lower beam headlamp performance and blind spot detection NCAP rating system, respectively. On October 16, 2019, NHTSA issued a press release comparing NCAP to other regions’ version of NCAP, identified new technologies that are not currently included in NCAP, and suggested Congress legislatively direct actions to improve NCAP. In March 2020, HR 6256 was introduced, which would require NHTSA to update NCAP. There are multiple bills being discussed in both the U.S. House of Representatives and the U.S. Senate that relate to NCAP.

On October 12, 2018, NHTSA published a Notice of Proposed Rulemaking ("NPRM") for amendments to Federal Motor Vehicle Safety Standard ("FMVSS") No. 108: *Lamps, reflective devices, and associated equipment*, and initiated a comment period. The NPRM proposes amendments that would permit the certification of adaptive driving beam headlighting systems, if the manufacturer chooses to equip vehicles with these systems. NHTSA proposes to establish appropriate performance requirements to ensure the safe introduction of adaptive driving beam headlighting systems if equipped on newly manufactured vehicles. The Company believes that its dynamic SmartBeam® lighting control system (dynamic forward lighting or DFL), which has been sold in markets outside of North America for several years, will meet the requirements of the new FMVSS 108 standards, if amended. The Company's SmartBeam® application has and will continue to be affected by increased competition by suppliers of multi-function driver assist camera products, which are able to achieve some of the same functionality as SmartBeam® but at a lower cost, due to other suppliers leveraging similar hardware costs, but offering products with multiple software features.

As noted, on October 10, 2019, an Advanced Notice of Proposed Rulemaking ("ANPRM") was published seeking public comment on permitting camera-based rear visibility systems, as an alternative to inside and outside rearview mirrors required under FMVSS No. 111, “Rear Visibility,” which currently requires that vehicles be equipped with rearview mirrors to provide drivers with a view of objects that are to their side or to their side and rear. This ANPRM builds on NHTSA's prior efforts to obtain supporting technical information, data, and analysis on CMS so that the agency can determine whether these systems can provide the same level of safety as the rearview mirrors currently required under FMVSS No. 111. The ANPRM states that one reason NHTSA is seeking additional information is because research conducted by NHTSA and others between 2006 and 2017 has consistently shown that prototype and preproduction camera-based rear visibility systems can exhibit safety-relevant performance issues.

The final rule issued by NHTSA for adaptive driving beans (AEB) was made effective February 22, 2022. The Company believes its adaptive SmartBeam® (dynamic lighting system), which has been manufactured and sold for many years in jurisdictions outside the United States, will be permitted under the NHTSA Final Rule.

#### Connected Car

The Company's HomeLink® products are the auto industry's most widely used and trusted car-to-home communication system, with an estimated 50 million units on the road. The system consists of two or three in-vehicle buttons that can be programmed to operate garage doors, security gates, home lighting, and other radio-frequency-controlled devices. During the first quarter of 2017, the Company demonstrated the next generation of HomeLink®, commonly referred to as HomeLink Connect®, which uses both RF and wireless cloud-based connectivity to deliver complete vehicle-to-home automation. With HomeLink Connect®, a HomeLink® button press communicates with the HomeLink Connect® app on the user’s smartphone. The app contains predefined, user-programmed actions, from single device operations to entire home automation scenes. The app, in turn, communicates to the home’s smart hub over the cloud activates the appropriate devices, including security systems, door locks, thermostats, lighting, and other home automation devices, providing comprehensive vehicle-to-home automation. The ability to prepare the home for arrival or departure can occur with one button press. For the automaker, it allows them to offer a customizable, yet proven solution without the engineering effort or security concerns associated with integrating third party software into the vehicle’s computer network. The Company also continues to work on providing HomeLink® applications for alternative automobile and vehicle types which include, but are not limited to, motorcycles, mopeds, snowmobiles, tractors, combines, lawn mowers, loaders, bulldozers, road-graders, backhoes, and golf carts. In May 2021, the Company announced the Volkswagen as the first automaker to offer Bluetooth® enabled mirror for home automation that works in conjunction with HomeLink Connect®. The Company further continues to work with compatibility partners for HomeLink® applications in newer markets like China. The unique attributes of the China market allow for potential different use cases of these products and offer the potential for additional growth opportunities for the HomeLink® brand and products. In 2017, the Company began its first volume production shipments of HomeLink® units on vehicles for the China market.

In January 2016, the Company announced a partnership with TransCore to provide automobile manufacturers with a vehicle-integrated tolling solution that enables motorists to drive on nearly all U.S. toll roads without a traditional toll tag on the windshield. Currently more than 75 percent of new car registrations are in states with toll roads with over 50 million drivers accessing these roads each year. The interior mirror is the optimal location for a vehicle-integrated toll transponder and it eliminates the need to affix multiple toll tags to the windshield and helps automakers seamlessly integrate toll collection into the car. Since the Integrated Toll Module® or ITM® enables travel across almost all United States toll roads, and others in North America, motorists would no longer need multiple toll tags for different regions of the country or to manage multiple toll accounts. The Company's vehicle-integrated solution simplifies and expedites local, regional, and national travel. ITM® provides transportation agencies with an interoperability solution without costly infrastructure changes to the thousands of miles of toll lanes throughout North America. The Company believes that this product could potentially represent another growth opportunity over the next several years.

The Company has its first OEM award of ITM® with Audi. Currently, the Company is shipping ITM® on 11 platforms, which are: the A4, A5, A6, A7, A8, Q5, Q5 Sportback, Q7, Q8, e-tron, and the e-tron Sportback. The Company expects further ITM® nameplate launches with Audi throughout the remainder of 2022 and 2023. During the third quarter of 2021, the Company began shipping ITM® to a second OEM customer, Mercedes, on the EQS model. In April 2020, the Company was honored with an Automotive News PACE Award for its ITM® product, which recognizes automotive suppliers for superior innovation, technological advancement, and business performance.

Further, the Company has previously announced an embedded biometric solution for vehicles that leverages iris scanning technology to create a secure environment in the vehicle. There are many use cases for authentication, which range from vehicle security to start functionality to personalization of mirrors, music, seat location and temperature, to the ability to control transactions not only for the ITM® system, but also the ride sharing car of the future. The Company believes iris recognition is among the most secure forms of biometric identification, with a false acceptance rate as low as one in 10 million, far superior to facial, voice, and other biometric systems. The Company's future plans include integrating biometric authentication with HomeLink® and HomeLink Connect®. The biometric system will allow HomeLink® to provide added security and convenience for multiple drivers by activating the unique home automation presets of different authorized users. The Company announced in January 2018 that it completed an exclusive licensing agreement, in the ordinary course of business, with Fingerprint Cards AB to deploy its ActiveIRIS® iris-scanning biometric technology in automotive applications.

In November 2020, the Company announced a partnership, in the ordinary course of business, with PayByCar™, to pursue compatibility between the Company's Integrated Toll Module and PayByCar's innovative payment solution that allows drivers to use their smartphones and toll transponder to fuel up at certain gas stations without using cash or a credit card. Compatibility between these two technologies can help to grow each company's respective consumer base while introducing new users to the benefits of the transactional vehicle.

In January 2021, the Company announced a partnership, in the ordinary course of business, with Simplenight to provide drivers and vehicle occupants with access to enhanced mobile capability for booking personalized entertainment and lifestyle experiences in addition to everyday purchases. Simplenight delivers a customizable and robust platform that enables brands to globally offer real-time book-ability across multiple categories such as dining, accommodations, attractions, events, gas, parking, shopping and more. The platform is unique in that it is designed to seamlessly integrate into automaker infotainment and navigation systems, as well as mobile applications and voice assistants. Simplenight can be integrated into the Company's current and future connected vehicle technologies, including HomeLink®, the automotive industry’s leading car-to-home automation system. HomeLink® consists of vehicle-integrated buttons that can be programmed to operate a myriad of home automation devices. Integration of Simplenight into the Company's HomeLink Connect® app is underway and will allow users to program their HomeLink® buttons and control cloud-based devices from their vehicles.

#### Dimmable Devices

The Company previously announced that it is providing variably dimmable windows for the Boeing 787 Dreamliner series of aircraft. The Company continues to work with other aircraft manufacturers that have an interest in this technology regarding potential additional programs. In January 2019, the Company announced that its latest generation of dimmable aircraft windows will be offered as optional content on the new Boeing 777X. During the third quarter of 2019, the first production shipments of variably dimmable windows were made to Boeing for the 777X program. In January 2020, the Company announced that Airbus will also be offering the Company's dimmable aircraft windows on an aircraft with production having began in the fourth quarter of 2021.

#### Medical

In January 2020 the Company unveiled an innovative lighting technology for medical applications that was co-developed with Mayo Clinic. This new lighting concept represents the collaboration of a global, high-technology electronics company with a world leader in health care. The Company's new intelligent lighting system combines ambient room lighting with camera-controlled, adaptive task lighting to optimize illumination for surgical and patient-care environments. The system was developed over an 18 month period of collaboration between Company engineers and Mayo Clinic surgeons, scientists, and operating room staff. The teams researched, designed, and rapidly iterated multiple prototypes in order to develop unique features intended to address major gaps in current surgical lighting solutions. In 2022, the Company continues to further develop and work on the intelligent medical lighting system in order to assess system performance and work toward obtaining any necessary approvals.

### OTHER

Automotive revenues represent approximately 97% - 99% of the Company's total revenue, consisting of interior and exterior electrochromic automatic-dimming rearview mirrors and automotive electronics.

Even as the Company engages with automotive customers regarding the inflationary aspects of the business, it continues to experience pricing pressure from such customers and competitors, in addition to raw material cost increases, labor cost increases, and logistics costs, which will continue to cause downward pressure on its sales and profit margins. The Company works continuously to offset these supply chain issues and inflationary pressures with engineering and purchasing cost reductions, productivity improvements, increases in unit sales volume, and negotiations with customers to reduce the impact of the inflationary pressures, but there is no assurance the Company will be able to do so in the future.

Because the Company sells its products throughout the world, and automotive manufacturing is highly dependent on economic conditions, the Company can be affected by uncertain economic conditions that can reduce demand for its products, including the current inflationary environment. The Company has been likewise affected by the COVID-19 pandemic and industry-wide parts shortages and global supply constraints and labor shortages.

The Company believes that its patents and trade secrets provide it with a competitive advantage in dimmable devices, electronics, and other features that it offers for the automotive, aerospace, and medical industry. Claims of patent infringement can be costly and time-consuming to address. To that end, the Company obtains intellectual property rights in the ordinary course of business to strengthen its intellectual property portfolio and to minimize the risk of infringement.

The Company does not have any significant off-balance sheet arrangements or commitments that have not been recorded in its consolidated financial statements.

### OUTLOOK

The Company’s most recent forecasts for light vehicle production for the fourth quarter of 2022, and full years 2022 and 2023 are based on the mid-October 2022 S&P Global Mobility light vehicle production forecast for light vehicle production in North America, Europe, Japan/Korea, and China. Fourth quarter of 2022 and calendar years 2022 and 2023 forecasted light vehicle production volumes are shown below:

*Light Vehicle Production (per S&P Global Mobility mid-October light vehicle production forecast)*

*(in Millions)*

| Region | Q4 2022 | Q4 2021 | % Change | Calendar Year 2023 | Calendar Year 2022 | Calendar Year 2021 | 2023 vs 2022 % Change | 2022 vs 2021 % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| North America | 3.68 | 3.29 | 12% | 15.39 | 14.47 | 13.05 | 6% | 11% |
| Europe | 4.16 | 4.02 | 3% | 16.65 | 15.63 | 15.89 | 7% | (2)% |
| Japan and Korea | 3.03 | 2.77 | 9% | 11.88 | 11.06 | 10.87 | 7% | 2% |
| China | 7.39 | 7.69 | (4)% | 26.65 | 26.41 | 24.84 | 1% | 6% |
| Total Light Vehicle Production | 18.26 | 17.77 | 3% | 70.57 | 67.57 | 64.65 | 4% | 5% |

Based on the aforementioned light vehicle production forecast and the results for the first nine months of 2022, the Company is updating certain guidance for calendar year 2022 as shown below.

- Revenue is expected to be between $1.90 and $1.95 billion
- Gross Margin is expected to be between 32% and 33%
- Operating Expenses are expected to be approximately $235 to $240 million
- Estimated Annual Tax Rate, which assumes no changes to the statutory rate, is expected to be between 14% and 15%
- Capital Expenditures are expected to be between $140 and $150 million
- Depreciation and Amortization is expected to be between $100 and $105 million

Due to high levels of volatility in customer orders and vehicle production volumes, electronics supply chain constraints, the Ukraine-Russia conflict, labor shortages, and overall economic uncertainty, the Company believes that revenue remains difficult to forecast for the remainder of the year. Ongoing uncertainties remain, including: light vehicle production levels; industry-wide parts shortages and global supply chain constraints; impacts of already in place and potential additional future tariffs; impacts of regulation changes; automotive plant shutdowns; vehicle sales rates in Europe, Asia and North America; 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; etc., all of which could disrupt shipments to these customers and make forecasting difficult.

In accordance with the previously announced share repurchase plan, the Company will consider the appropriateness of continuing to repurchase additional shares of common stock in the future in support of the capital allocation strategy, but share repurchases may vary from time to time and will take into account macroeconomic events (including the COVID-19 pandemic and issues related to the microchip shortage as well as other supply chain and labor constraints), market trends, and other factors the Company deems appropriate (including the market price of the stock, anti-dilutive effect of repurchases, and available cash). As of September 30, 2022, the Company has 21.5 million shares remaining available for repurchase under the previously announced share repurchase plan.

Additionally, based on the mid-October 2022 light vehicle production estimates for 2023, the Company is providing revenue guidance for 2023, despite the fact that there continues to be uncertainty regarding: macroeconomic conditions (including inflation); underlying overall consumer demand for light vehicles worldwide; supply chain and labor constraints; and the lingering impact from the COVID-19 pandemic. The Company still estimates that revenue for calendar year 2023 will be approximately 15% - 20% higher than the updated 2022 estimated revenue estimates of $1.90 - $1.95 billion. As noted above, continuing uncertainties make forecasting difficult.

### CRITICAL ACCOUNTING POLICIES:

The preparation of the Company’s consolidated condensed financial statements contained in this report, which have been prepared in accordance with accounting principles generally accepted in the United States, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates these estimates. Estimates are based on historical experience and/or on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that may not be readily apparent from other sources. Historically, actual results have not been materially different from the Company’s estimates. However, actual results may differ from these estimates under different assumptions or conditions.

The Company has identified critical accounting policies used in determining estimates and assumptions in the amounts reported in its Management’s Discussion and Analysis of Financial Condition and Results of Operations in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

## Market risk

As filed, 1,263 characters.

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 could negatively impact the Company's financial performance due to realized losses on the sale of fixed income investments and/or recognized losses due to impairment of available for sale securities (mark-to-market adjustments), as well as the impact on demand for light vehicles. For the quarter ended September 30, 2022, any material changes in risk factors that were disclosed in the Company's report on Form 10-K for the year ended December 31, 2021 are set forth herein.

The Company has some assets, liabilities, and operations outside the United States, including euro-denominated and Chinese Yuan Renminbi accounts, which currently are not significant overall to the Company as a whole. Because the Company sells its automotive mirrors throughout the world, and automotive manufacturing is highly dependent on general economic conditions and the global supply chain, the Company has been and will continue to be affected by uncertain economic conditions in North American and foreign markets, including inflation, that have and could continue to reduce demand for its products.

## Controls and procedures

As filed, 9,984 characters.

Evaluation of Disclosure Controls and Procedures.

Under the supervision of, and with the participation of management, the Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2022, and have concluded that as of that date, the Company's disclosure controls and procedures are effective.

#### Changes in Internal Control Over Financial Reporting

There were no changes in the Company's internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the quarter ended September 30, 2022 that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

### SAFE HARBOR STATEMENT:

This Quarterly Report contains contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The statements contained in this communication that are not purely historical are forward-looking statements. Forward-looking statements give the Company’s current expectations or forecasts of future events. These forward-looking statements generally can be identified by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “future,” “goal,” “guidance,” “hope,” “intend,” “may,” “opinion,” “optimistic,” “plan,” “poised,” “predict,” “project,” “should,” “strategy,” “target,” “will,” "work to," and variations of such words and similar expressions. Such statements are subject to risks and uncertainties that are often difficult to predict and beyond the Company’s control, and could cause the Company’s results to differ materially from those described. These risks and uncertainties include, without limitation: changes in general industry or regional market conditions, including the impact of inflation; changes in consumer and customer preferences for our products (such as cameras replacing mirrors and/or autonomous driving); our ability to be awarded new business; continued uncertainty in pricing negotiations with customers and suppliers; loss of business from increased competition; changes in strategic relationships; customer bankruptcies or divestiture of customer brands; fluctuation in vehicle production schedules (including the impact of customer employee strikes); changes in product mix; raw material and other supply shortages; labor shortages, supply chain constraints and disruptions; our dependence on information systems; higher raw material, fuel, energy and other costs; unfavorable fluctuations in currencies or interest rates in the regions in which we operate; costs or difficulties related to the integration and/or ability to maximize the value of any new or acquired technologies and businesses; changes in regulatory conditions; warranty and recall claims and other litigation and customer reactions thereto; possible adverse results of pending or future litigation or infringement claims; changes in tax laws; import and export duty and tariff rates in or with the countries with which we conduct business; negative impact of any governmental investigations and associated litigation including securities litigation relating to the conduct of our business; and the length and severity of the COVID-19 (coronavirus) pandemic, including its impact across our business on demand, operations, and the global supply chain. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made.

The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law or the rules of the NASDAQ Global Select Market. Accordingly, any forward-looking statement should be read in conjunction with the additional information about risks and uncertainties identified under the heading “Risk Factors” in the Company’s latest Form 10-K and Form 10-Q filed with the SEC, which risks and uncertainties now include the impacts of an inflationary environment, COVID-19 (coronavirus) pandemic, and supply chain and labor constraints that have affected, are affecting, and will continue to affect, general economic and industry conditions, customers, suppliers, and the regulatory environment in which the Company operates. Includes content supplied by S&P Global Mobility Light Vehicle Production Forecast of October 18, 2022 (http://www.gentex.com/forecast-disclaimer).

#### Other Information

On November 1, 2022, Steve Downing, President and Chief Executive Officer of the Company, entered into a stock trading plan in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, providing for a third-party broker to sell shares of common stock of the Company that Mr. Downing may acquire upon the vesting of: 37,000 restricted shares awarded in 2018; 17,792 restricted shares awarded in 2020; and 41,516 performance shares (payable in common stock) awarded in 2020, subject to certain performance conditions. This plan also provides for a third-party broker to sell 17,730 shares of common stock issuable upon exercise of stock options awarded to Mr. Downing in 2016. Options will be exercised and/or shares will be sold under the stock trading plan on the open market over the period of time and in accordance with other parameters set forth in the stock trading plan. The stock trading plan terminates upon the earlier of all the transactions set forth in the plan being executed or March 1, 2023.

On November 1, 2022, Kevin Nash, Vice President of Finance, Chief Financial Officer, and Treasurer of the Company, entered into a stock trading plan in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, providing for a third-party broker to sell shares of common stock of the Company that Mr. Nash may acquire upon the vesting of: 5,535 restricted shares awarded in 2020; and 12,916 performance shares (payable in common stock) awarded in 2020, subject to certain performance conditions. This plan also provides for a third-party broker to sell 6,776 shares of common stock issuable upon exercise of stock options awarded to Mr. Nash in 2016. Options will be exercised and/or shares will be sold under the stock trading plan on the open market over the period of time and in accordance with other parameters set forth in the stock trading plan. The stock trading plan terminates upon the earlier of all the transactions set forth in the plan being executed or March 1, 2023.

On November 1, 2022, Matt Chiodo, Chief Sales Officer and Senior Vice President of Sales of the Company, entered into a stock trading plan in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, providing for a third-party broker to sell shares of common stock of the Company that Mr. Chiodo may acquire upon the vesting of: 5,000 restricted shares awarded in 2020; and11,394 performance shares (payable in common stock) awarded in 2020, subject to certain performance conditions. The shares will be sold under the stock trading plan on the open market over the period of time and in accordance with other parameters set forth in the stock trading plan. The stock trading plan terminates upon the earlier of all the transactions set forth in the plan being executed or March 1, 2023.

On November 1, 2022, Neil Boehm, Chief Technology Officer and Vice President of Engineering, entered into a stock trading plan in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, providing for a third-party broker to sell shares of common stock of the Company that Mr. Boehm may acquire upon the vesting of: 6,035 restricted shares awarded in 2020; and 14,081 performance shares (payable in common stock) awarded in 2020, subject to certain performance conditions. This plan also provides for a third-party broker to sell 1,242 shares of common stock issuable upon exercise of stock options awarded to Mr. Boehm in 2016. Options will be exercised and/or shares will be sold under the stock trading plan on the open market over the period of time and in accordance with other parameters set forth in the stock trading plan. The stock trading plan terminates upon the earlier of all the transactions set forth in the plan being executed or April 15, 2023.

On November 1, 2022, Scott Ryan, Vice President, General Counsel, and Corporate Secretary, entered into a stock trading plan in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, providing for a third-party broker to sell shares of common stock of the Company that Mr. Ryan may acquire upon the vesting of: 4,325 restricted shares awarded in 2020; 10,091 performance shares (payable in common stock) awarded in 2020, subject to certain performance conditions. This plan also provides for a third-party broker to sell 4,580 shares of common stock issuable upon exercise of stock options awarded to Mr. Ryan in 2016. Options will be exercised and/or shares will be sold under the stock trading plan on the open market over the period of time and in accordance with to the other parameters set forth in the stock trading plan. The stock trading plan terminates upon the earlier of all the transactions set forth in the plan being executed or March 1, 2023.

Rule 10b5-1 trading plans are permitted under the Company’s insider trading policy and other policies, and, to the extent required, transactions under such trading plans will be disclosed publicly through Form 144 and/or Form 4 filings with the Securities and Exchange Commission. Except as may be required by law, the Company does not undertake any obligation to report Rule 10b5-1 plans by officers or directors of the Company in the future, or to report modifications or terminations of any such plans, whether or not any such plans were publicly announced.

## Risk factors

As filed, 543 characters.

Information regarding risk factors appears in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part I – Item 2 of this Form 10-Q and in Part I – Item 1A – Risk Factors of the Company’s report on Form 10-K for the fiscal year ended December 31, 2021. There have been no material changes to the risk factors previously disclosed in the Company’s report on Form 10-K for the year ended December 31, 2021, except to the extent described in Part I – Item 2 and Item 3 of this Form 10-Q, and otherwise herein.

Filed Nov 4, 2022.
Source: SEC EDGAR, the filing index for accession 0000355811-22-000043. Last ingested by Listed: Nov 6, 2026, 14:07 ET. No prices; not investment advice.