鏡特斯 (GNTX) 2026年第三季財報電話會議：維持2027年營收展望

重點摘要

• Gentex 公布 2026 年第三季淨銷售額為 6.477 億美元，相較於去年同期的 6.552 億美元。受客戶問題及新產品延後推出影響，營收較公司最初的單季預測低了約 3,500 萬美元。
• 汽車業務淨銷售額從 5.737 億美元下滑至 5.525 億美元。若扣除中國市場壓力及福斯 (Volkswagen) 專案流失的影響，儘管全球輕型車產量下降超過 2%，汽車業務營收仍成長約 2%。
• 高級音響 (Premium Audio) 營收成長 27% 至 5,470 萬美元。非汽車業務總營收成長約 17%，佔公司總營收的 15%，高於去年同期的 12%。
• 毛利率從 34.4% 下降至 33.4%，反映出貴金屬價格通膨、不利的產品組合以及營運槓桿降低。調整後稀釋每股盈餘 (EPS) 維持在 0.47 美元不變。
• 管理層更新了 2026 年財測，預計營收約為 26.5 億美元，毛利率為 34%–34.5%，其中包括第四季 1,000 萬至 1,500 萬美元的額外新增成本。
• Gentex 維持 2027 年營收展望於 28 億至 29 億美元，意味著較更新後的 2026 年財測預計成長 6%–9%，即使其主要汽車市場的輕型車產量預計將下降約 1%。

核心財務業績

截至本季末，Gentex 擁有 1.344 億美元的現金及現金等價物，以及 2.429 億美元的長短期投資。庫存增加至 5.501 億美元，部分反映了電子零件與貴金屬相關材料庫存增加。

公司在本季以 1.326 億美元庫藏股回購 570 萬股，平均價格為每股 23.44 美元。今年以來累計回購 1,160 萬股，總額為 2.702 億美元；截至 2026 年 9 月 30 日，授權額度內仍剩餘約 2,430 萬股。

業務與營運表現

儘管北美地區輕型車產量下降 5%，北美汽車業務營收仍成長約 3%。在歐洲，受惠於有利的產品組合與單車電子配備價值提升，扣除福斯專案流失後的營收成長約 13%。然而，福斯帶來的逆風抵銷並超出了該基礎成長。

中國市場持續拖累出貨量與營收。管理層表示，目前認為中國業務大致穩定，但仍可能面臨額外壓力，且短期內預計無利多順風。

本季推出的產品中，先進汽車功能佔比超過 80%。其中包括全顯示後視鏡 (Full Display Mirror)、駕駛與車艙監控系統 (DMS/ICMS)、HomeLink 以及具備先進功能的 OEC 後視鏡。

Gentex 仍按計畫前進，預計 2026 年全顯示後視鏡出貨量將比 2025 年增加 20 萬至 40 萬台。公司亦預期 DMS 及 ICMS 的持續推出將有助於實現該類產品在 2027 年達到 1 億美元營收的目標。

第一個可調光遮陽板 (dimmable visor) 專案仍排定於 2027 年第四季開始量產。另有三家客戶正積極評估該技術。Gentex 還表示，其大面積元件隨著邁向量產準備階段，性能與耐用度持續提升。

高級音響的成長由家用分體式音響與系統產品引領。航太與消防業務營收分別成長 135% 和 136%，儘管售後市場及配件銷售下滑抵銷了部分增幅。

Gentex 在本季贏得首筆 PCBA 業務訂單。管理層表示，該訂單來自一家現有的汽車客戶，年化營收約為 1.8 億美元，預計將於 2029 年投產。

管理層業績展望

2026 年毛利率展望包含預計第四季增加的 1,000 萬至 1,500 萬美元額外成本。預計要到 2027 年上半年才能獲得相關的客戶補貼補償。

管理層對 2027 年營收展望的信心歸因於全顯示後視鏡、DMS 與 ICMS 的持續成長、單車配備價值提高、2026 年延後推出的專案重回正軌，以及高級音響經銷通路的擴展。公司在 2027 年預測中，未假設通膨相關客戶補償帶來顯著的營收成長。

管理層初步預測 2027 年毛利率可能落在 33%–34% 區間。此數據仍屬初步性質，部分取決於電子零件成本、客戶補貼補償、產品改款設計計畫，以及預期營收成長帶來的營運槓桿。

風險與關注領域

• 記憶體、DDR 及 PCB 裸板供應仍是短期最主要的零件限制。Gentex 表示，多數供應已涵蓋至年底，且對截至 2027 年年中的大部分需求感到放心，但仍有幾種大宗材料暴露於風險之中。
• 貴金屬通膨（尤其是白銀、黃金與釕）正在推升材料成本。管理層表示，釕 (ruthenium) 的價格在過去 18 個月內大漲了約 500%。
• 客戶對電子零件通膨的費用補貼通常滯後於成本上漲，因此即使預計日後能獲得補貼補償，短期內仍會面臨毛利率壓力。
• Gentex 預計 2026 年第四季全球輕型車產量將下降約 4%，2026 全年下降 2%。其主要市場（北美、歐洲及日韓）預計在 2027 年將下滑約 1%。
• 福斯專案流失與中國市場持續疲軟，仍是汽車業務營收的逆風。
• 由於 Gentex 增加庫存以確保零件供應，營運資金需求上升，導致營業現金流下降。

分析師問答亮點

管理層表示，第三季營收未達標主要集中在車廠 (OEM) 新車延後推出以及現代起亞 (Hyundai Kia) 的罷工事件，罷工導致產量估計減少 6 萬至 7 萬台。其影響不成比例地大，因為受影響的平台包含了單車配備價值較高的 DMS、ICMS 和全顯示後視鏡的新發佈計畫。此外，福特 (Ford) Super Duty 配件推出時間晚於預期也是原因之一。

在毛利率方面，管理層指出，電子成本補貼主要是時間問題，而貴金屬通膨則較難回收補償。預計 2027 年較高的銷售額可提供營運槓桿及額外邊際貢獻，部分抵銷物料清單 (BOM) 的成本壓力。

Gentex 正進行產品重新設計，以降低對昂貴或供應受限零件的依賴。預計自 2028 年開始擴大推廣的第四代全顯示後視鏡將不再使用 DDR 記憶體。

公司還強調，現有的內部電子製造產能與其美國生產基地，是爭取更多 PCBA 訂單時的優勢。管理層表示，將視未來合約的規模與獲利能力對擴增產能持開放態度。

在資本配置方面，管理層表明，庫藏股回購仍可能是股東回報的核心重點，特別是在股價疲軟時期。

法說會完整逐字稿

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完整財報電話會議逐字稿

管理層陳述

Operator

Good day, and thank you for standing by. Welcome to the Gentex Reports Third Quarter 2020 Financial Results. [Operator Instructions] Please be advised that today's call is being recorded.

I would now like to hand over to our first speaker, Josh O'Berski, Vice President of Investor Relations. Please go ahead.

Josh O'Berski

Thank you. Good morning, and thank you for joining us today for our third quarter 2026 earnings conference call. I'm Josh O'Berski, Gentex's Vice President of Investor Relations. And with me today are Steve Downing, President and CEO; Neil Bam, COO and CTO and Kevin Nash, Vice President of Finance and CFO.

Please note that a replay of this conference call webcast along with edited transcripts will be available following the call in the Investors section of our website at ir.gentex.com.

Many of the statements made during today's call are forward-looking and reflect our current expectations. These statements involve a number of risks and uncertainties, both known and unknown, including those described in our press release issued this morning and in our annual report on Form 10-K for the year ended December 31, 2025, as well as general economic conditions. Actual results may differ serially from these expressed or implied in these forward-looking statements if risks or uncertainties materialize or if our assumptions prove to be incorrect.

Ahead of our prepared remarks, I would like to remind the investment community that we will be participating in both the SEMA Show from November 3 through 6 and the 2027 Consumer Electronics Show from January 6 through 9, both in Las Vegas before our next call. At both of these events, there will be booth tours product demonstrations and an opportunity to see the future of our technology on display. If you're interested in joining us at these events, please reach out to me after this call or talk to your favorite analysts to join their scheduled booth tour.

I will now hand the call over to Steve Downing for our prepared remarks.

Steven Downing

Thank you, Josh. For the third quarter, net sales were $647.7 million compared with $655.2 million in the third quarter of last year. Automotive unit performance was generally in line with our expectations but revenue came in approximately $35 million below our beginning of quarter forecast due to certain customer issues and delayed launches. In North America, automotive revenue increased approximately 3% and despite a 5% decline in regional light vehicle production. In Europe, revenue, excluding the Volkswagen program loss, increased approximately 13%. However, the Volkswagen headwind more than offset that underlying growth. Globally, automotive revenue, excluding the previously discussed headwinds in China and at Volkswagen increased approximately 2% despite global light vehicle production declining by more than 2%.

And that performance reflects the continued content growth we have been seeing across our primary automotive markets. Outside of automotive, premium audio revenue increased approximately 27% to $54.7 million while Aerospace, Biometrics, Fire Protection and Automotive aftermarket revenue collectively increased about 5%. Overall, our third quarter results demonstrate the resilience of the business and the continued benefits of our strategy to grow through technology, product mix and diversification. So despite the challenges in China and Europe, sales were relatively flat year-over-year.

Strong performance in North America, driven by continued adoption of advanced feature content and growth across our nonautomotive product lines helped to offset those headwinds. In Europe, the continued rollout of DMS and ICMS products helped mitigate lower vehicle production and mirror unit shipments, reinforcing the value of increasing content per vehicle. China remained a headwind and with the industry conditions we have discussed, continuing to pressure unit shipments and revenue. On the positive side, our diversification strategy continued to gain momentum. Nonautomotive revenue increased approximately 17% and represented 15% of total company revenue in the quarter compared with 12% in the third quarter of last year.

Gross margin for the third quarter was 33.4% compared with 34.4% in the third quarter of 2025. The year-over-year decline was primarily driven by higher precious metals costs unfavorable product mix and reduced operating leverage from lower-than-anticipated sales. While gross margin was below our expectations, the underlying drivers were relatively concentrated to just a couple of areas. Precious metal inflation has increased our bill of material costs over the last several quarters and the sales shortfall relative to our forecast reduced our expected operating leverage. Our operations teams continue to perform well, and we remain focused on engineering solutions and other cost reduction opportunities to help offset inflation across several commodity areas.

Consolidated operating expenses were $101.3 million in the third quarter compared with $102.8 million last year. On an adjusted basis, operating expenses were $97.5 million compared with $101.8 million last year, excluding impairment, acquisition-related and severance costs. The reduction in operating expenses on both a GAAP and adjusted basis reflects our continued focus on managing spending as sales growth has moderated during 2026. While we continue to focus on operating expenses, we are also supporting a significant number of launches and core R&D initiatives that are important to our long-term growth.

As we shared at our Analyst and Investor Day in August, we are making meaningful progress on the dimmable visor program, which is scheduled to launch late next year, and we continue to move our large-area device project closer to a qualified product with a scalable manufacturing footprint. Income from operations was $115.1 million for the third quarter compared with $122.3 million last year. Adjusted income from operations was $118.8 million compared with $123.4 million in the third quarter of last year. Our effective tax rate for the quarter was 15.5% compared with 16.3% in the third quarter of last year. Net income attributable to Gentex was $90.6 million compared with $101 million last year.

Adjusted net income attributable to Gentex was $97.8 million compared with $103.7 million in the third quarter of 2025. Diluted earnings per share attributable to Gentex were $0.43 compared with $0.46 in the third quarter of last year. On an adjusted basis, diluted earnings per share were $0.47 in both periods.

I will now hand the call over to Kevin for some further financial details.

Kevin Nash

Thanks, Steve. Automotive net sales were $552.5 million in the third quarter of '26 compared to $573.7 million in the third quarter of '25. Automotive revenue performance during the quarter reflected expected unit trends and strong content growth across the company's primary markets. Reported results include discrete headwinds in China and from the VW program line. Excluding these items, automotive revenue increased approximately 2% quarter-over-quarter, led by significant North American market outgrowth and a 13% growth in Europe supported by favorable product mix and increased electronic content per vehicle.

Net sales from the premium audio category were $54.7 million in the third quarter of '26 compared with $43 million in the third quarter of '25 an increase of approximately 27%. The increase was driven primarily by higher sales of home separates and systems products. Home separates growth reflected increased sales of reference premier speakers, while systems growth was led by Flexus the second generation of the 5, 7s and 9s and ProMedia products. Net sales from the other products category were $40.5 million in the third quarter of '26, Which was a 5% increase compared to the third quarter of '25.

Growth was driven primarily by aerospace and fire protection revenues, which increased 135% and 136%, respectively, but were partially offset by lower aftermarket and accessory sales. During the third quarter of '26, the company repurchased 5.7 million shares of its common stock at an average price of $23.44 per share for a total of $132.6 million. And year-to-date, the company has repurchased 11.6 million shares for a total of $270.2 million at an average price of $23.28 per share. And as of September 30 of '26, approximately 24.3 million shares remain available for repurchase under the previously announced share repurchase plan.

Turning to the balance sheet. Our comparisons today are based on September 30 of '26 versus December 31 of '25. Starting with liquidity. Cash and cash equivalents were $134.4 million at quarter end compared to $145.6 million at year-end and short-term and long-term investments totaled $242.9 million compared to $278.4 million at the end of '25. Accounts receivable was $404.6 million at September 30 compared to $368.5 million at year-end, reflecting the timing of sales and inflections during the quarter. Inventories totaled $550.1 million at September 30 compared to $516.3 million at year-end, primarily reflecting higher raw material balances associated with electronic components and precious metal related materials.

And accounts payable was $263.6 million at September 30 compared to $249 million at year-end, primarily driven by timing of payments and inventory purchases. Preliminary cash flow from operations was $83.5 million for the quarter compared with $147 million in the third quarter of'25. The decline was primarily driven by working capital changes. Higher inventories along with higher accounts receivable due to sales and collection timing, partially offset by higher payables levels. And for the first 9 months of '26, preliminary cash flow from operations totaled $405.2 million compared to $461.6 million in the same period of '25, also due to changes in working capital.

Capital expenditures were $17.7 million for the third quarter compared with $35.6 million in the third quarter of '25 and for the first 9 months of '26, capital expenditures totaled $53.9 million compared with $103.4 million in the same period of '25. And depreciation and amortization expense was $25.7 million in the third quarter '26 compared to $25.9 million last year. And for the first 9 months of '26. Depreciation and amortization expense totaled approximately $77.1 million compared with $78.8 million in the same period of '25.

I'll now hand the call over to Neil for a product update.

Neil Boehm

Thank you, Kevin. I'd like to begin by thanking all of the analysts and investors that traveled to our facilities in Zealand, Michigan in August for our Analyst and Investor Day. It's not always easy to get here, but being at our facilities allows us to demonstrate the progress and latest direction for many of our products. Investors were able to see the latest Full Display Mirror, driver monitoring and large area device products. It was also a great opportunity for us to take people on tours of the facilities and see the capital and automation that has been put in place to support all of these technologies.

So again, thank you for taking the time to check out what we do. Now for a quick review of launches and product updates. In the third quarter of 2026, we continued to have strong feature launches of our automotive products. Automotive features like Full Display Mirror, in-cabin monitoring, HomeLink and advanced feature OEC mirrors accounted for over 80% of our launches in the quarter. It's clear that even with the headwinds facing our industry, the consumer demand for advanced features continues to grow. Full Display Mirror continues to perform well for Gentex and the market acceptance has only increased for the product.

At Cadillac, Gentex's FDM helped the Cadillac escalate earn the Comfort and Convenience Awards in J.D. Power's 2026 and U.S. tech Experience Index study by enabling better visibility, eliminating blind spots and requiring very little learning or adjustment from users. At our Analyst Day, we announced that we had launched as an accessory platform for Ford on the Super Duty. We believe that there is further opportunity to continue rolling this out across their lineup and to drive increased volume on their high-end trim packages. In Europe, FDM continues its steady progress, launching this quarter on the DS 7 and gaining traction at other customers in the region.

For 2026, we're still on target to achieve our 200,000 to 400,000 FDM unit increase over what we shipped in 2025. Driver monitoring and in-cabin monitoring system launches continue to be strong. We're pleased to have launched on the Genesis GE90, along with a handful of additional platforms at Hyundai Kia and BMW. These programs continue to grow through this year and into 2027, and we expect continued launches at these OEMs to help drive our to $100 million revenue target from DMS and ICMS for 2027. Customer interest in our dimmable Advisor and large are device technology remains strong. Our first DemableAdvisor program remains on track with the start of production plan for the fourth quarter of 2027.

We are actively working with other OEMs on the product design and testing to secure additional awards later this year and into early 2027. The large-area device product continues to improve in performance and durability. As we've been able to work through many of our biggest challenges, we are progressing well to move this to a production-ready product. In September, our teams at Premium Audio took place in New York Fashion Week in collaboration with Lear. Our cinema speakers normally behind the theater screens were front and center blending cultural relevancy with premium audio performance. The party continues at Clips Best, our homegrown celebration taking place on November 6 and 7 at our global Clips headquarters in Indianapolis.

We'll be wrapping up the 80th anniversary celebrations for Klipsch and Onkyo with a 2-day listening experience. Artifacts and memorabilia from the last 80 years, facility tours live listening demos and a chance to experience a fleet of well-equipped automotive and adventure vehicles. The premium audio teams have also been busy gearing up for the launch of our flagship headpoint system, the Stratus series, which hits the market in November, along with the fan favorite reference premier I passive home theater loud speakers. On the Bluetooth speaker front, our music series Gen 2 will be launching this holiday season alongside Onco Japanese design inspired Creator series, GX-AIO, all-in-one power and tabletop speakers system.

So go out and purchase these awesome products, the holidays will never sound so good. These first 9 months of 2026 have been busy and rapidly changing in many ways, but the teams at Gentex have continued to deliver on the things that help set us apart from our peers, quality, consistency and innovation.

I'll now hand the call back over to Steve for guidance and closing remarks.

Steven Downing

Thanks, Neil. I think that's the first time I've ever heard you say cultural relevance. The company's light vehicle production assumptions are based on the mid-October 2026 mobility global outlook. Global light vehicle production is forecast to decline approximately 4% in the fourth quarter of 2026 and approximately 2% for full year 2026 compared with last year. Global production is expected to increase approximately 1% in 2027 and however, production in our primary automotive markets of North America, Europe and Japan, Korea is forecast to decline approximately 1%, with the only growth in LVP coming from China and other markets. .

Based on actual results for the first 9 months of 2026, the light vehicle production forecast and our expectations for the Automotive, Premium Audio and other products categories, we are updating certain elements of our full year 2026 guidance. Consolidated revenue is now expected to be approximately $2.65 billion for the year. Gross margin is now expected to be between 34% and 34.5% for the year. This range includes an estimated $10 million to $15 million of incremental cost increases expected in the fourth quarter with related recoveries not anticipated until the first half of 2027.

Operating expenses, excluding severance and impairments are now expected to be between $395 million and $410 million. The tax rate is now expected to be between 16% and 16.5%. Capital expenditures are now expected to be between $100 million and $115 million and depreciation and amortization is now expected to be between $100 million and $105 million. Based on the mid-October 2026 Mobility Global light vehicle production forecast, our current expectations for Automotive, Premium Audio and other products revenue and despite the lower revenue for 2026, we are maintaining our 2027 revenue outlook of $2.8 billion to $2.9 billion.

This outlook represents a 6% to 9% revenue growth compared with our updated 2026 guidance, despite light vehicle production in our primary markets being forecast to decline approximately 1%. We believe this represents a significant acceleration in outgrowth versus the underlying market and reflects the increasing contribution from new technology, higher content per vehicle and our diversifying customer base. As we look ahead, we're increasingly confident in the growth opportunities in front of us. We're beginning to see the impact of our broader product and growth strategy reflected in our forward outlook. This acceleration in growth is being driven by new technology, higher content per vehicle and a more diversified customer base.

The progress we demonstrated at our Analyst and Investor Day in August also shows how far several of these programs have advanced towards commercialization. Our interior adviser program and large area device portfolio continue to move forward. Launches of our fourth generation Full Display Mirror are now in full swing, and our engineering teams continue to improve product design and cost while delivering some of the most advanced technology and features we have ever offered. We are also pleased to have secured our first PCBA business award during the quarter, with production expected to begin in 2029. This is another opportunity to leverage Gentex's advanced manufacturing capabilities in new products and markets, and we are actively pursuing additional PCBA opportunities with similar production timing.

While the new technology and launches are keeping us very busy, we are also actively managing the challenges developing across the supply chain. Strong demand for memory and other electronic components is creating supply constraints and cost pressure across the electronics industry and precious metal pricing remains volatile after significant increases over the last year. We expect these pressures to continue into the fourth quarter, and our teams are working with customers on appropriate reimbursement, while our engineering teams pursue design changes and other cost reduction opportunities.

Taken together, we believe that the higher content new product launches, diversification and expansion into new markets are changing the growth profile of Gentex. If we execute on these growth opportunities while continuing to offset the cost pressures facing the industry, we believe we can create meaningful long-term value for our shareholders. That completes our prepared comments for today, and we can now proceed to questions.

Operator

[Operator Instructions] Our first question will come from the line of Joseph Spak from UBS.

分析師問答

Joseph Spak

I guess just to start, obviously, a little bit more cost pressure year at the end of the year, and you talked about the $10 million to $15 million in the fourth quarter, and you're expected to get that back into the first half. But like -- it seems like, and you alluded to this, like there is just sort of more general pressure. So like while you're going to get back in the first half of next year, some of these costs are in turn now, like can you get to for lack of a better term par in '27 and sort of be more real time? Or are you're always sort of playing catch up? And to that extent, does that add some risk that the '27 gross margin is below the midterm level you laid out at the Analyst Day.

Steven Downing

Yes. I mean I think if you look at the delay, I mean, it's pretty normal in this industry. I mean, obviously, and we'll get into some details probably about DRAM and the cost and what's happening with RAM pricing. But obviously, that creates a bit of a headwind for us immediately because it takes a while for the customers to agree to what that new pricing is and so that's hence the delay in terms of reimbursement. So you are always -- any time there's escalating prices like this in our industry in particular, you're always behind that curve a little bit. But you do catch up. .

Now I would say that if you look at the precious metals and what's going on in the rest of the commodities, some those are more difficult to recover. The electronics piece is pretty cut and dry. It's just about timing of getting that back. And so yes, there definitely some headwinds heading into next year. The 1 thing we have in our favor though is despite the headwinds on the bill materials side, if we hit the growth rates we're talking about, we haven't had a tailwind of the operational efficiency side of a growth rate like that in a bit. And so those can help offset quite a bit of the margin headwinds created by bill of material increases just through operational efficiency and the higher growth rate. And obviously, the contribution margin on incremental sales always helps offset that as well.

Joseph Spak

And then just I noticed you think your shipments in the release this quarter, it sounds -- if I was following your math, it sounded like the BW and China headwinds which you you've talked about for a while was like 6 percentage points, I think, to auto. But is there any sort of high-level commentary you can give us for the auto business in terms of what between mirror volume, price and mix that sort of gets you to the reported 4% decline.

Steven Downing

Yes. If you look at -- you're talking about the 4% in terms of automotive light vehicle production demand.

Joseph Spak

Yes.

Steven Downing

Well, we'll talk -- if we talk units for a minute, units were down, I think, about 1 million units on a year-over-year basis. it's almost all tied directly to those 2 clauses that you mentioned, both the China reductions and the Volkswagen loss. .

Joseph Spak

Okay. So then...

Steven Downing

The difference in that is the growth in the other regions and increased content. .

Operator

Next question will come from the line of Rajat Gupta from JPM.

Rajat Gupta

Great. I mean it looks like you feel comfortable reiterating the '27 outlook despite, I think, like 2 quarters in a row where revenues come in weaker than expected. How should we get comfortable with that outlook? Have you figured out any offsets? Already to some of the challenges you're seeing right now? Or is it just some delays from this year that are pushing it into next year? And then maybe if you could give us any sense of like how much of like the '27 revenue is kind of contracted versus dependent on more wins.

Steven Downing

Yes. So that's a great question. If you look at it, there's -- you're absolutely right. The quarter came in this year lighter than anticipated. We kind of referenced it in the press release, but really, it was driven by a couple of OEM launches. And 1 of them and 1 of them was also -- it was also impacted by the Hyundai Kia strike, the union strike in -- on the ground there. And so that, I think that took a good 60,000, 70,000 units out of production for us during that -- during the third quarter.

Unfortunately, for us, it was also where we were launching DMS and ICMS and FDM. And so you had a disproportionate impact due to those units because it's where we were launching some of our highest content and so not only did it delay those products, but then the ramp-up was slower because as the strike was ending and they're getting back online, the volumes didn't come in as high as we were expecting. And then the other 1 was, Neil mentioned the F250 350 launch. It was a little later than we anticipated and the launch volumes weren't quite what we expected. So the big misses were there.

So if you take those out of it, we view those as onetime in nature and so it should not impact go forward in '27, like we mentioned before, the growth for '27 is really driven by additional FDM growth, additional ICMS and driver monitoring awards. And then the other reason why we feel confident in keeping that guidance is FOX team had announced that they've done a deal with Alpine to take over distribution for Alpine products. And so if you look at that, that's going to be another tailwind heading into next year that we weren't anticipating initially when we gave our very first 2027 guidance.

Rajat Gupta

Understood. That's helpful. And then just to tie about like the previous question around like just margin and recoveries into next year. Any early prelim color you can give us on the margins for next year? What are the puts and takes we should keep in mind? I mean do you expect to improved gross margins on an annualized basis, just how you're going to manage OpEx just given some of the choppiness here? .

Steven Downing

No. I mean if I was doing the way too early college football top 25, I'd probably say next year is probably more in that 33% to 34% range. And obviously, we're shaking out a lot of deals right now with our supply base on what's going on with the electronic supply constraints. And there's a lot of them right now. I mean we're not talking about just Ram anymore. You're starting to talk about issues with all PCs. There's a lot of pressure on the industry right now. So we're still trying to fight through that. So if I were given that way too early prediction, I'd say that's probably the right range to think about it. The headwinds are actually probably would tend to drive that below that we believe with the growth in some of the new launches, that will help offset some of those headwinds we're seeing on the build materials side.

Rajat Gupta

Got it. And then OpEx would be contained in that matter I imagine.

Unknown Executive

Yes.

Operator

Our next question will come from the line of David Baker from Robert Baird.

Davis Baker

Maybe to start, could you provide some additional color on what you're seeing in the like components market, just given the incremental tightening in supply. And then along those same lines, just advantages of your internal PCB capacity in this environment?

Neil Boehm

Yes. A little bit of color just on the electronic components, and Steve will add some more on top of it. we're seeing the impact. Obviously, the DDR and the memory piece has been a significant challenge for several quarters and will continue into '27 as well. So that's obviously, everybody knows about that one. Circuit boards is another 1 that's really jumped up as a cost. And it's not actually the circuit board itself. It's actually subcomponents, multiple tiers below that material is getting consumed and replaced for data center circuit boards.

So we're starting to see multiple tiers below the supply is getting tighter to be able to build automotive boards, which means prices are going to continue to move upward. Those are big ones. There's a lot of activity around passive devices as well. But at this stage, those are all manageable and contained. But as we look into '27, there will be additional constraints put in some of those areas.

Davis Baker

Like just kind of rough ballparks, I mean what we're seeing from our existing supply base and this is wild anywhere from 8 to 10 price increases on a per unit basis. So I mean, literally a component that costs $4 or $5 this -- earlier this year is now $40 million. And so that's a lot of the headwinds that we're kind of working through right now, both how to manage that with our customer base. How to make sure we're getting appropriate reimbursement and then also longer term, realizing that, that type of cost structure won't support the business model for these products. So we've got to engineer our way out of those solutions.

Neil Boehm

Yes, back the component shortage days years, 4 years ago, where we learned how to iterate designs and drive VAVE cost-savings initiatives through. The teams have been doing a great job on that with precious metals this year. So we've been able to start driving some improvements in savings that we'll see some good savings through or the lack of increases in '27, but also with products like our Full Display Mirror Generation 4 as that starts -- we're launching that actively at multiple customers that rollout begins in '28. That product does not use the DDR. So we have designs that we're working on to get around these challenges. It's just going to take through '27 to get them deployed.

Steven Downing

David, you also asked about PCB capacity, correct? .

Davis Baker

Yes. How that is an advantage in the environment? .

Steven Downing

Yes. So we're sitting really good. I mean, obviously, with some of the reductions in volumes we've seen, we have -- we do have capacity in our electronics manufacturing footprint. As we prepare for the PCBA award that we talked about in the prepared comments, we're actively working on what does that floor space need to look like. We feel like to get started. We have plenty as it is, but we're not opposed to adding additional capacity, depending on the size and profitability of the awards. And so it's something that we'll continue to monitor and we're excited about looking forward to because it's a very unique footprint from a geography standpoint where we manufacture and it definitely has a lot of appeal right now to many customers in terms of our location in the U.S. and our ability to do high-end electronics in a very efficient manner.

So it's something that we keep looking at and pushing hard for. And quite frankly, I mean, we're really excited about this opportunity outside of automotive as well.

Operator

Our next question comes from the line of James Picariello from BNP Paribas.

James Picariello

Just on the implied 4Q revenue guide, if we assume continued strong growth in the other segment, it would still imply a mid-single-digit type growth rate for auto sales, maybe something around 4% on a year-over-year basis. Can you just share the visibility you have in terms of the bridge to see that inflection on a year-over-year basis for the fourth quarter because, obviously, the first 3 quarters, given the China challenges, the issues with the VW business. We haven't seen that type of growth rate thus far this year.

Kevin Nash

Yes. I mean, all of our short-term forecasts are built based on customer orders as they have been consistently, but they don't usually also predict strikes. So I mean, the nice part about getting back to production is some of those launches that we said were delayed DMS, ICMS and FDM, the volumes start to pick back up in the fourth quarter where they were kind of lacking in Q3. So that's where you start to give visibility. But yes, our Q4 numbers are really based on primarily customer orders. And if you look at the -- from the box or the PAC side, this ends up being the strongest part of their season as well, and we're seeing good demand. As you've seen the sales growth on a year-over-year basis all year .

Steven Downing

And that's really been driven by a brand-new product -- so the growth that we've seen earlier in the year, we wouldn't expect to not produce similar outgrowth versus last year given the demand for the newer products. .

James Picariello

Got it. And then just back on the electronics sourcing for next year and the inflationary recoveries that will be a swing factor. So Visteon yesterday almost doubled their expectation for DRAM and semis recoveries for next year relative to a high forecast that they already had in place. and they tied it back to the 2022 time frame when we saw all that significant inflationary pressure on semis. Just curious if you would related back to that time period as well in terms of what you're -- how you're thinking about next year? And if you could remind us what the level of recoveries were for back in 2022, if that's a good context for you guys?

Steven Downing

Yes. I'd say, first of all, we're not -- in our forecast right now for next year, we're really not modeling significant price increases due to the recovery. So I mean -- and the reason why we're saying that is there's going to be a combination of a recovery period. And -- but we're hopeful that we can get through that recovery period in fairly short order and move on to like what Neil was describing, which is redesigns it keeps the price point more attainable for our customer base and the consumer. But there's definitely a tailwind from a pure revenue basis from pricing -- the potential for price increases, the issue is, obviously, there's virtually no margin on those once you do recover -- once you recover the actual cost change. So we're looking at this on a pure baseline basis. We're not building in any of that growth tied to recoveries, helping drive that price. .

Operator

Our next question is come from the line of Mark Delaney from Goldman Sachs.

Mark Delaney

Another one, if I could please, around the scope of the cost challenges. I think the electronics and semiconductor buy from Gentex has been running at least previously at about an $800 million annualized level. I know you spoke about some components seeing pretty substantial increases. But I imagine it's only certain pieces of the buy. So I don't know if you could help us with where that $800 million would be running at spot rates and help us sensitize the scope of the cost issues that the company is currently seeing?

Steven Downing

I want to go -- I'm going off of a mixture of like '26 updates and '27 forecast. So probably I wouldn't quote me on this exact number, but I think the last thing I looked at was somewhere in the $900 million range. and that might have included some of the price increases that we're talking about. But that's -- you're right, $800 kind of -- probably over the trailing 12 is probably about right. As we kind of right now look forward, it's probably going to be closer to that $900 million range, maybe even more, depending on if we hit our sales growth levels. If you try to back it up to '22, it's really hard to make a direct comparison to what we saw there.

I mean, I would say it was different was different in that, like you really had a handful of micros that really drove the vast majority of cost increase but there were other deflationary areas too. I mean, like LCDs were still deflationary. Yes, in the passes were still pretty stable. Yes, it's I wouldn't say it's dissimilar from a strategic standpoint. It's just totally different areas of the electronics buy that are now inflationary.

Mark Delaney

Understood. And my other question around supply chain. As you look at the growth you're expecting to drive in 2027, I know that the cost of driving that growth will be higher with where you're seeing these components come in at. But in terms of the availability, maybe speak a bit more around actually getting enough volume of these parts for next year, just what are all of these different opportunities in front of Gentex?

Steven Downing

Yes. No, that's a great question. That's probably the most challenging part. I mean once you even agree on pricing, you still have the potential for constraints. One of the things we always work hard on, and that's why Kevin talked a little bit about inventories being higher we try to make sure we have plenty of inventory on hand. And obviously, the value of that inventory rises as the price goes up. But we're not shy about making sure we secure as much as we can and keep it on hand.

So we're constantly working with the supply base. I would say the immediate risk right there is still DDR. It's probably the most constrained commodity right now. As we move forward though, as Neal mentioned, as a lot of the raw circuit board manufacturers have changed their manufacturing process over to what's needed for their process, what's needed over for data centers. Obviously, that's removed some capacity from the automotive support side. So it's something that we're looking at very carefully now. We obviously have multiple suppliers we can rely on, but trying to make sure we secure that capacity for next year becomes really important, especially given the growth rate that we're seeing.

Mark Delaney

Yes. Just 1 last follow-up there, and then I'll pass it on. But just kind of how far are you with that process? I mean you're kind of halfway there? I know maybe just kind of early in the kind of the planning phase. So maybe that's just typical not to kind of be fully secured for next year's volumes, but just give a little bit more color around how far along you are with some of those supply discussions and how much more work is 1 to be done?

Steven Downing

Yes. Yes. No, thanks, Mark. I'd say for most things, we're clear through the end of the year through most things were probably good all the way through midpoint next year. There's just a handful of commodities there that we're worried about between now and midpoint next year. Beyond that, if you start looking at those levels, once we get through the first half of the year, as long as those run rate should be pretty close to what the end of the year run rates are. So if we can get through the first half, we should be pretty good for the second half. .

But obviously, that's a lot of work that goes into the supply base, giving them longer-term leads, making sure we have out-year forecast that give them the planning they need to be able to pull that off. So it is a lot of work. I'd say we're probably about halfway through next year where we feel pretty good.

Operator

Our next question will come from line of Matthew Mas from B. Riley Securities.

Unknown Analyst

Congrats on the first PCBA award. I'm just wondering, can you share the type of customer and roughly the annual revenue and whether it lines up with $150 million to $200 million you framed it always?

Steven Downing

Yes. No, first of all, thanks. It was a lot of work going into that. So I appreciate that. It is 1 of our existing automotive customers and that first award is annualized at about $180 million a year roughly. .

Unknown Analyst

All right. Great. That's helpful. And in terms of advisers, I'm wondering like is there any update on adding Pfizer customers ahead of the late 2027 March?

Neil Boehm

Yes. I mentioned it briefly that still a lot of work going on there. We've got 3 additional customers that are pretty active and doing evaluations, but nothing to announce yet as far as a sale or closure of a deal yet. .

Unknown Analyst

Got it. Last question for me, just a quick one. In terms of capital allocation, you roughly doubled the buyback this quarter. Just wondering how we should think about that pace going forward and the possible dividend increases, if any?

Steven Downing

Yes. I think right now, from a total return standpoint, we're probably going to tend to focus more on the share repurchase side. Obviously, we've been -- the stock has not performed it all really well over the last year. And so when we look at these prices versus what our growth rate and our cash generation is over the next couple of years, we struggle to understand the stock price. And so when we see downturns like this, we tend to get more aggressive like what you saw in Q2. So I think what you'll see out of us is probably very similar in what we did in Q2 as we move through the end of this year and into next. .

Operator

[Operator Instructions] Our next question will come from the line of David Weston from Morningstar. .

David Whiston

On precious metal inflation -- is there any kind of major obvious fix that would be out there beyond your control such as the Iran war ending or anything like that? Or is this well beyond any kind of geopolitical conflicts.

Steven Downing

It's well beyond that. I mean if you look at our primary -- if you look at the ones that are hurting the most, right, it's silver, gold and ruthenium. Those are the 3 biggest commodity areas that have hurt from a pricing standpoint. The silver and gold are interesting because they're industrial products. Obviously, there's been a big move towards investment grade as well. And so you see this surge in demand, data centers, electronic -- custom electronics, these type of products all use silver and gold. And so the demand has gone up on the industrial side. It's also gone up on the investment-grade side. And so it's just been a lot of pressure there.

Ruthenium is a much more thinly traded commodity, very difficult. I mean I think, Kevin, that's probably up 500% in the last 1.5 years. And so that one's been kind of a runaway train. Our real approach there is less about getting help from supply is not going to increase dramatically in either of these cases to lower costs. So 1 of the things that Neil's team has been working on very hard is how do we create VAV opportunities that reduce the amount of material that needs to be used in each of our products.

And -- the teams have already launched and executed a handful of those. We have a bunch more that we'll be rolling out over the next 18 months. And so the goal is to just to minimize the headwind associated with those commodity prices.

David Whiston

Okay. And then on China, I know maybe it's a little early to ask this, but do you see any chance of real improvement there in '27 versus '26?

Unknown Executive

In No. I mean, our plan right now is that we think we're basically at a kind of a stable level of what our China business will be there'll probably be likely a little bit of headwinds yet, but we're not expecting any tailwinds anytime soon.

David Whiston

Okay. And are there any other major supply chain constraints out there?

Steven Downing

No, I would say -- I want to say, I think we hit most of them. I mean if you look at DDR and RAWPCBs or those would probably be the biggest.

Operator

I'm not showing any further questions in the queue at this moment. I would now like to turn it back over to Josh for closing remarks.

Josh O'Berski

All right. Thank you, everyone, for your time and questions today. We look forward to seeing our customers and investors of CEMA and CES, and other than that, we hope everyone has a good weekend, and good rest of your day. .

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.