Josh O'Berski - IR, Manager Steve Downing - SVP & CFO Kevin Nash - VP & CAO Neil Boehm - VP of Engineering

Chris Van Horn - FBR Rich Kwas - Wells Fargo Brett Hoselton - KeyBanc David Whiston - Morningstar John Murphy - Bank of America

Thank you. Good morning and welcome to the Gentex Corporation second quarter 2017 earnings release conference call.

I am Josh O'Berski, Gentex's Investor Relations, Manager, and I am joined by Steve Downing, Senior Vice President and Chief Financial Officer; Kevin Nash, Vice President and Chief Accounting Officer; and Neil Boehm, Vice President, Engineering. This call is live on the Internet by way of an icon on the Gentex website at www.gentex.com.

All contents of this conference call are the property of Gentex Corporation and may not be copied, published, reproduced, rebroadcast, retransmitted, transcribed or otherwise redistributed. Gentex Corporation will hold responsible and liable any party for any damages incurred by Gentex Corporation with respect to any unauthorized use of the contents of this conference call.

This conference call contains forward-looking information within the meaning of Gentex Safe Harbor statement included in the Gentex Reports second quarter 2017 financial results press release from earlier this morning and as always shown on the Gentex website. Your participation in this conference call implies consent to these terms.

Now, I will turn the call over to Steve Downing who will give the second quarter 2017 financial summary.

Thank you, Josh. For the second quarter of 2017, the Company reported net sales of $443.1 million, which was an increase of 5% compared to net sales of $423.8 million in the second quarter of 2016.

The 5% quarter-over-quarter net sales growth was driven by a 6% quarter-over-quarter increase in auto-dimming unit shipments despite overall automotive light vehicle production in our primary regions decreasing by approximately 1% for the second quarter of 2017, when compared to the second quarter of 2016. The gross profit margin in the second quarter of 2017 was 37.7% compared with the gross profit margin of 39.4% in the second quarter of 2016.

The quarter-over-quarter net decrease and the gross profit margin was the result of annual customer price reductions that were not fully offset by purchasing cost reductions, as well as the Company's inability to leverage fixed overhead costs as a result of the unfavorable product mix. The unfavorable product mix was driven by a higher percentage of base auto-dimming mirror shipments versus advanced feature mirrors when compared to the second quarter of 2016.

Operating income for the second quarter of 2017 decreased 2% to $125.9 million when compared to income from operations of $128.7 million for the second quarter of 2016, due to lower quarter-over-quarter gross profit margin percentage which more than offset the quarter-over-quarter increase in net sales. Other income increased to $2.1 million in the second quarter of 2017 compared to a loss of $1.1 million in the second quarter of 2016 due to an increase in investment income and realized gains on the sale of investments compared to the second quarter of 2016.

Net income for the second quarter of 2017 increased 2% to $88.5 million compared with net income of $86.5 million in the second quarter of 2016. Earnings per diluted share in the second quarter of 2017 increased 3% to $0.31 compared with earnings per diluted share of $0.30 in the second quarter of 2016.

During the second quarter of 2017, the Company repurchased 2.2 million shares of its common stock at an average price of $19.51 per share. As of June 30, 2017, the Company has approximately 3.1 million shares remaining available for repurchase in the plan.

The Company intends to continue to repurchase additional shares of its common stock in the future depending on macroeconomic issues, market trends and other factors if the Company deems appropriate. During the second quarter of 2017, the Company paid down $25 million of debt on the Company's term loan which in combination with its normally scheduled principal repayment was a total of $26.9 million in debt repayment during the quarter.

The Company expects to continue at its discretion and based on previously disclosed factors to pay additional principal towards its future in anticipation of such debt maturing on September 27, 2018. I'll now hand the call over to Kevin Nash for the second quarter 2017 financial details.

Thank you, Steve. Automotive net sales in the second quarter of 2017 were $433.9 million, an increase of 5% compared with automotive net sales of $414.4 million in the second quarter of 2016 which was driven by 10% increase in international auto-dimming mirror unit shipments that was partially offset by 3% lower auto-dimming mirror unit shipments in North America on a quarter-over-quarter basis.

Other net sales in the second quarter of 2017 which includes dimmable aircraft windows and fire protection products were $9.2 million, a decrease of 2% compared to other sales of $9.4 million in the second quarter of 2016. The tax rate during the second quarter was 30.8% which varied from the statutory rate of 35%, primarily due to the domestic manufacturing deduction, as well as favorable discrete items related to newly adopted accounting guidance impacting the tax treatment of share-based compensation.

Excluding future impacts of the new accounting standard, the Company continues to expect its tax rate to be approximately 31.5% to 32.5% for calendar year 2017. Now for some balance sheet items.

The following balance sheet items represent a comparison versus December 31, 2016 which is also included in today's press release. Cash and cash equivalents were $580.6 million up $34.1 million from $546.5 million primarily due to cash flow from operations during the six month period but was partially offset by share repurchases, accelerated debt repayments, capital expenditures and dividend payments.

Accounts receivable was $229.3 million up from $211.6 million primarily due to the higher sales level, as well as timing of sales within each of the periods. Inventories were $196.5 million up from $189.3 million.

Short-term investments were $184.6 million up from $177 million and long-term investments were $49.3 million compared to $49.9 million. The costs payable was $82.9 million up from $80 million and accrued liabilities were $188.2 million up from $69.9 million primarily due to the reclassification of $100 million of debt from long-term short-term as a result of the Company's plans to make accelerated debt payments over the course of the next year in addition to increases in accrued compensation.

Some cash flow highlights, second quarter cash flow from operations was $132.3 million versus $103.3 million in the second quarter of 2016 and year-to-date 2017 cash flow from operations was $263.6 million versus $255.1 million year-to-date 2016 both of which were driven by changes in working capital and increased net income. Capital expenditures for the second quarter were $29.1 million compared with $34.5 million for the second quarter of 2016.

And year-to-date CapEx was $56.2 million compared with $54.8 million year-to-date 2016. Depreciation and amortization for the second quarter was $25.2 million compared with $23 million in the second quarter of 2016 and year-to-date depreciation and amortization was $50.4 million compared with $45.8 million for year-to-date calendar 2016.

And based on estimated completion dates for the Company's current and planned capital expenditure projects, the Company is maintaining its capital expenditure guidance at $115 million to $130 million range for calendar year 2017 and is also maintaining it's estimates for depreciation and amortization in a $95 million to $105 million range for calendar year 2017. I will now hand the call over to Neil Boehm for product and technology update.

Thank you, Kevin. In the second quarter of 2017 there were 24 net new nameplate launches of our inside and outside electrochromic mirrors and electronic features.

During the second quarter, approximately two-thirds of the net inside mirror launches were advanced features. This higher rate of advanced feature launches was stronger than the Company's historical average.

Over the next several years we continue to be encouraged about the overall product strategy that we debuted at CES in 2017, especially when considering the total potential content per unit that are newest features like full display mirror, Integrated Tool Module, camera monitoring systems and biometric systems can enable. Gentex continues to work in development and launch of our full disclaimer products for our initial launch customers.

As previously discussed, we are currently shipping on seven models for General Motors and we continue to believe that will we will see additional program launches for full display mirror over the next several years at Good morning. During the second quarter, Gentex began shipping full display mirrors for our second customer.

This second OEM launch is exciting because we believe it points to the global acceptance of this product and improves that new vision based technologies like our full display mirror have the opportunity to provide value for the OEM and the consumer on many vehicle segments, not just luxury branded vehicles. Gentex is pleased to announce that Subaru is available for sale currently in Japan market with our all new full display mirror.

Additionally, we'd like to update the overall status of our business development activities for full display mirror. As we previously announced, we received program awards with five different OEM for our full display mirror and we believe that in the third quarter conference call, we should be able to announce our third OEM launch into production.

As a quick update to new products that we debuted at CES in 2017, we continue to see interest from several customers on our camera monitoring system, integrated tool module system, iris based biometric solution, as well as our HomeLink home automation technology. It is important to remember that the business development phase for new products typically requires at least two to three years to acquire new business awards which is then followed by another two to three year development phase to bring those new features into production.

I'll now hand the call back over to Steve for remaining 2017 guidance and closing remarks.

Thanks Neil. Based on the July 2017 IHS light vehicle production forecast and current forecasted product mix for the third and fourth quarters of 2017, that Company currently expects revenues in the second half of calendar year 2017 to increase between 6% and 10% when compared with the third and fourth quarters of calendar year 2016, with the third quarter of 2017 expected to be at or around the lower end of that range and the fourth quarter of 2017 expected to be at or around the higher end of the range.

Based on actual results for the first half of calendar year 2017, and currently forecasted sales and product mix, the Company estimates that the gross profit margin will be between 38.5% and 39% for calendar year 2017. Based on actual expenses for the first half of calendar year 2017, the company estimates that operating expenses will be between $165 million and $170 million for calendar year 2017.

Lastly, based on 2018 light vehicle production forecast and current forecasted product mix, the Company is making no changes to its previously announced revenue estimates for calendar year 2018 which continues to be estimated to be over and above the foregoing 2017 revenue estimates in the range of 6% to 10%. We can now proceed to questions.

Thank you.

So just on - the price reduction that you saw during the quarter, do you think that looking forward it seems like you're kind of implying a better back half margin here. Do you think these price reductions are pretty much behind us and do you see kind of higher margin product mix in the back half that gets you there?

Yes, if you look at - the pricing reductions were kind of flow through the rest of the year. It typically they happen in the first half and then in the second half on a comp basis year-over-year it's going to be the same type of the headwind.

But what we're looking at is the mix kind of returning back to what it was in prior quarters or at least closer to that. And so what we would expect is the mix to be better in the second half and then also the PPV will probably fully rollout in the second half as well.

So when you look at those factors, that's why we believe the second half margin should be better than Q2.

And then correct if I'm wrong - the second Full Display Mirror customer is the camera and display based product right, so a little bit higher price point. Could you remind us of the next three rollouts the timing of those and then what technologies that is, is it both camera display or can you disclose that?

So you're correct, on the current product with the Subaru it is our camera and display than with the next one that we’re hoping to announce in Q3 that would also be the camera and display. And then the fourth customer would be a display only and then the fifth one that’s a little further out it would be camera and display as well.

And in terms of timing that fifth one is kind of mid to late 2018.

Late 2018.

And the fourth should be kind of probably second quarterish of 2018.

Correct.

And then final one from me, the product launches this quarter it seems like two-thirds were advanced features. You've kind of gone from two-thirds to 50% a couple of times now, but it seems like that you're continuing to trend higher here on a calendar basis.

Do you see that kind of going forward as continuing or any visibility there?

It’s hard to predict it on a per quarter basis because a lot of it comes down the vehicle timing and when those SOP actually take place. What the trend though is you’re absolutely right the trend is that we've a lot of interest in technology, a lot of trends - the trend is definitely towards more advanced feature than base mirror launches.

To put this in perspective historically we've been slightly below or around the 50% kind of 50-50 of our launches were base sometimes a little more than 50% were base mirrors in the past. And what we seen is that kind of the new lower-level watermark that we've been seeing the last year, year and a half and really there's a net positive trend towards more advanced features.

So we’re excited about it when you have the base mirror launches obviously like we talked about with the market is that is kind of our geography and how we get into the marketplace and then from there it’s a business development exercise to try to add content advanced features to that product. So we’re seeing growth in both areas, but of course we love it when we see a little bit more growth on the advanced features side as it tends to help margins.

Wanted to follow-up on the gross margin for the second quarter. So typically your margins grows on a gross basis at least go up sequentially from Q1 to Q2 as the price down hit the first quarter and then you get more productivity in the second quarter.

The commentary you seems to imply but the base mix was meaningfully higher and I don’t know if you could put numbers around that. But just curious - the step down on gross margin what are the numbers around base mix and then was there any sort of contenting differences that went on relative to mid April when you last reported because you did guide to a lower revenue number or growth number here for Q2/Q3 but it does seem like the mix went against you intra-quarter and I know there were some pullback on North American production on a unit basis but just curious on additional color there.

Yes, so I think if you look at what kind of what we had guided production - what we thought production was going to be at the beginning of the quarter and then how that ended you're absolutely right. North America were some pretty significantly so down about 2.7% lower than what we thought it was going to be going into the quarter.

Europe improved slightly by about 2% but if you look at our content play, remember that we're higher penetration rates in the North American market and with that posting the largest losses obviously they had a negative impact to our overall ability to grow. Europe did improve but it didn't improve necessarily in the right segmentation.

So one of the things we’d like to talk about is that you look at across segment but this was consistent really both in North America and Europe. CD&E segment vehicles performed very poorly in the quarter.

Really the growth - the growth or improvement at least in those areas came from these segments primarily and we don't have a lot of penetration or content on those vehicles. If we do it’s primarily base mirrors and that’s when we talk about the headwind and the segmentation it’s just that not only did it - not in our favor from our overall kind of segment level but then the trend was towards base mirror mix inside of the quarter as well.

So that's really what helped us. If you look at though and we talk about the primary markets being down 1% in the quarter and a growth rate of 5% is really a 6% outperformance to market which is kind of that range we’ve talked about.

Obviously we love it wanted to hear higher but we’ve kind of talked in that 6% to 10% outperformance to market conditions and that’s what this quarter was.

And Steve was there anything explicit here apart from the mix – you did talk about not leveraging fixed cost, but was there anything around customers coming in and pressing harder on price or anything along those lines that – you wouldn't have anticipated going back a few months ago?

No, it wasn't any macroeconomic issues or anything related to like kind of an OEM driven influence on the business I’d say the single biggest negative impact is really the PPV levels. So the contribution from our supply community has not been what we expected or what we had hoped for this year.

So that gap between what we're giving to our customers versus what we're getting from the supply community is really what that second factor that causes a big impact on the negative impact on gross margins.

That assumed to get better at least from here in the second half in terms of getting the March gross margin sequentially higher?

Yes, we think there will be some improvement in that area and then we think mix will revert back to more historical levels not what we saw in Q2. In other words if you look at the - if you line up the last couple years for instance Q2 was below average in terms of mix performance.

And so we're not forecasting that to continue into the second half and we would expect there to be some pick up in the second half of the year from a supply community.

And then that assumes all the transition with some of your key customers particularly on the truck side as we move into second half some benefit from that front the launches.

Yes, that’s correct.

And then last one from me so you bought some stock back in the quarter at least in recent history stock weakening here today again towards levels where you’ve been more aggressive what’s the updated view on return of capital to shareholders?

I think the U.S. office is pretty consistent but like you mentioned when we see performance like today in the market you’ll tend to see us get more aggressive on that repurchase philosophy.

We think the market reaction is here over reacted to what this performance is and our guidance for the second half of the year, the midpoint of that guidance being around 8% for the second half of the year which would imply back into that 8% or so outperformance to market 7% to 8% outperformance to market conditions. So, if you look at the underlying philosophy of the Company nothing has really changed today.

Obviously the quarter wasn't the best quarter but when we see market conditions react negatively on what we believe to be a very short term view, you'll tend to see get more aggressive on share repurchases.

Wanted to talk a little about the full display mirror and I was hoping to take a step back and - can you talk a little bit about the competitive landscape what you're seeing in the full display mirror area. And in particularly, in what ways would you consider your full display mirror to be proprietary.

I think we talked previously about competitive systems that people have shown and demonstrated that have been marketed or advertised. I think when you look at the product and the technology that we demonstrated and have shown to customers and that are shipping in the market of several areas of the technology that are proprietary and how we do that technology.

The fact that we're vertically integrated and do a lot of our own coding processes for that helps to improve things such as the quality and the brightness of the technology which then helps overcome certain dynamic situations that you get into a vehicle today where we get some like conditions that can create display washout. That's a huge advantage for us based on how we do the technology not just electronics and backlighting but also in with our coding that we utilized to make that successful.

When you look at some of the competitive sides, what typically happens is you have people bring pieces and parts together and trying to make a competing product and what we're constantly doing and I think we talked about this in general before is before the first product ever got the market, we were innovating and designing the second product and tooling and then the third product was in concept before the first product ever got to markets. So we're continually changing where that technology goes to have a competitive edge and to be able to drive some intellectual property around those features and the ways of executing the technology.

This is [Samick] here on behalf of Ryan Brinkman. The first question I had, I did want to get an update on if possible on SmartBeam revenues this quarter relative to last year.

I know you said previously that revenues for SmartBeam are expected to be flat or decline slightly but if you could give us a sense of the award wins as well which would sort of help us, get a sense of what the growth might look like in the deals or so.

Yes, really if you look at SmartBeam in Q2 have performed fairly in line with prior quarter, well a little bit better than year-over-year comps and if you look at the trend really what we are guiding to those kind of longer-term trend say over the course of the next year, so that kind of flat to slightly down. So in Q2 it really wasn't that big of a net impact on sales for the quarter.

It was really pretty consistent with prior year. So what I would look at and say, as it relates to SmartBeam – that's kind of a longer-term trajectory as it relates to - as it relates to the headwinds associated with that product and the reason why we brought that up is, it's not going to be the growth driver that has been leading up to the really thoughts of creation of the product.

And if you head out over the next couple of years, we'd expect that flat to slightly down trend on the SmartBeam product over the next year or so.

So just to follow up on that, in terms of the drivers for revenue growth or outperformance relative to which advance features will really be driving back. Now that SmartBeam is sort of decelerating, which are the advanced features that you expect to drive the outperformance?

If you look at - if you start kind - at that top part you look at HomeLink full display mirror and really a lot of our other advanced features and these are - we talk about not necessarily about name but by the fact that they are customized solutions for an OEM. So you know whether our camera system, that's part of our full display mirror or for the FDM itself, also if go out beyond and then we talked about - really that in terms of the next year.

So when we start looking out beyond that call to next three years, the features that we believe will continue to drive that are really full display mirror, HomeLink, that home automation version of HomeLink, some of the other features that we debuted at CES including camera monitoring system, integrated tool module system and advanced features. And those are the things we're really looking at to continue to be growth drivers of the business and that out year.

And a minor clarification point, I know your integration in North America is much higher than other geographies but is there a difference in terms of the penetration of your advanced features as well between the geographies that you noticed as you sort of launching on a lot of these products with advanced features, is there difference between their accretion greater than option as well.

It's pretty similar honestly to the penetration rate. So the penetration rate of the features is really pretty similar to that as mirrors, in that North America has historically been a leader not only in the penetration rate but also in the content level of vehicles.

It is one of the higher priced markets in the world. And so when you see North America perform poorly, it hurts not only on the volume perspective but also on the advanced feature side.

Now what we would say is that, a lot of the announcements you've seen from us in the last two years are advanced feature win and content wins in the Asian market, that’s a new development for the company. Really if you backup five years ago, most of our wins in Asia for instance were predominantly based mirror wins and so now we’re starting to see like in Neil's announcement about the full display mirror and for sale in the Japan market and the reason why we're excited about that is historically that's been a tougher market for us from content standpoint.

And some of our newer technologies we believe offer better growth opportunities than just based mirrors alone.

Just sticking on the mix issue for a minute. I'm confused why are you optimistic that this is going to improve in the North American market is almost certainly done growing for year-over-year and probably for the cycle.

I mean are your customers actually telling you they will be more advanced product for sure in the second half.

Well because you had two distinct factors happening there, one is overall production levels and even if that pulls back or stays fairly flat, what we saw in Q2 was anomaly in terms of the content play. There was nothing that happened.

There was no decision that was made by an OEM that affected that. It was really just timing of sales and how - what those orders were and how they flow through.

And so even if the market pulls back slightly, what we are optimistic about that our content should return to its historical level because we have releases and we have view into what that should look like from OEM customers throughout the second half of the year. If you take Q2 out of it or even if you average the last 12 months for instance, what you're going to see is that Q2 was a bit of an anomaly as related to the weakness in mix.

There is no reason to believe that Q2 would be to further - to go forward trajectory. Really what you look at is the last 12 months and look at orders from customers and you look at those releases and you can start to see, you know what the back half what should look like.

And so that's why we feel somewhat optimistic about the second half improving from a mix standpoint.

And were there any advanced features in particular that were really weak or was that most of your product line across the board in the advanced part.

It was pretty spread evenly across the Board and I think the big thing is one of them on the mix side and so we talk about some of the places that we're doing well for instance in the European market. Some of our French customers did quite well in the quarter and that historically has been based on the dimming product and so you see some uptick in those customers in - they're kind of quantity of parts.

But then also the percentage of the total units that were shipped, that are going to those customers increased. And so that's what a lot of what drove kind of that mix weakness, it wasn't just that it was all downside, you have to look at it on the upside as well and see that, where did the growth come from and who were the drivers contributing to that growth, and unfortunately it happen to be a lot of based auto-dimming customers.

And can you share anything about conversations you're having with your customers for the next - over the next maybe one or two years are there more - are they getting more cautious, little more pessimistic about where we are in the cycle or is it still about the same as it was last quarter.

I would say it's pretty same - pretty much the same as it was last quarter I'd say that. Though this year has been a different feeling and say the last two years at a customer level, and I say that about production levels and how customers are responding to and what levels of purchases there will be.

Nothing has changed really from the desire for new technology and what the car - OEMs are requiring or looking for in technology in the vehicle environment, that hasn't changed. The change is mainly around how do they match up the inventory levels with production levels to make sure - to make sure that everyone's right size for the next couple of years in terms of what probably the natural progression will be in production.

I just want to follow up on - one thing you said - it sounded like that North American production came in I think you said 2.7% lower than you thought at the beginning of the quarter. Was that correct?

Was kind of shaving schedules for the quarter…

That's correct.

So why do you have comfort in the forward two quarters and what's out there because I mean obviously the markets deteriorating, there is some miss estimation by the automakers on their schedules beginning in the second quarter. Why do you think there more accurate on environment mix in the second half of the year.

Well two things, one of them is the function of the launches that Neil discussed in the quarter and other one is the new products that have gone into production right now. Secondly is the release information that we're seeing so these are actual orders from customers.

And there is some variability in those obviously but when we’re looking at that typically you’re seeing anywhere from 4 to 12 weeks of order information and when we look at that date and what our customers are planning, and you look at their shutdown times, we look at that and we obviously make some assessments and judgments of that data but all in all it looks to be net positive. Now the important part there John as we did talk about as Q3 will probably be at the lower end of the range but Q4 we expect to be at the higher end of the range.

And so part of that is based on year-over-year comps but then also that customer order information.

And did you just feel that their schedules are just little conservative in a - maybe a lighter demand environment and they're just being more realistic right now than they may had been at the beginning of the second quarter?

Yes, I think so and then part of it - part of it is also as I just - making that assessment for them. So you really have two different data, kind of high assessment of what the OEMs are saying and then you also have direct orders from the OEMs and we take those to an aggregate and kind of look at them and try to find what truth really reside and what is in second half realistically going to be based on two distinct data sources.

Yes, that’s incredibly helpful. And then if we - and just also just wanted to clarify one thing, I thought that on the base mirrors you guys were doing much better gross margins and then as we saw features role in, just some of the pass-through content or incremental content you’re buying from the suppliers might create a little bit of pressure on margins.

So it sounds like in the quarter there was more base mirrors sold, so wouldn't that have been margin accretive or is it just the other factors that offset that benefit?

No, it's actually quite the opposite. If you look at our - historically our base auto dimming mirrors on the inside mirrors for instance, typically those were in the low $20 price point range and they are typically in that low to mid-20 gross margin profile.

And so that is one of the reasons why we like to be a little more full disclosure about that, it's just help with that conversation around mix. So when based auto dimming outperforms, you will tend to see a headwind on margin, when advance features perform well, you’ll tend to see a tailwind, and obviously that varies by what advanced features are doing well but that’s kind of the rough thumbnail of margin profile.

Very different than we heard from people historically. Maybe just on the camera and display, why are some automakers choosing to use you guys for camera and full display mirrors and so I’m just using full display mirrors.

Curious what the decision process is there and how much better camera and display is for you guys in just to display?

Back to your previous comment, just want to clarify the last - I'd say 3.5 years, we've been trying to be very clear about our margin profile. So, we've mentioned before at conferences and other public events, we do tend glop through some of the higher level kind of features, adders, margin profiles, if you’re lacking that information obviously, we can talk about how we fill in some of those gaps but that's been pretty consistent from this team for the last few years talking about revenue and margin profiles.

So apologize if that was…

Yes, we could follow up on that.

Sorry, your second question was around…

Sure, so our large customer price in GM was getting to market quickly and the quickest way for them to get to market was to take what they had already sourced off-the-shelf camera, and then have us work with that supplier to get this product into their vehicles as quickly as possible and that's what we did. When you have more time to design the system, what we've been able to prove is that taking one supplier who can control the input being the camera side and the output being display side we can engineer that solution to be more seamless.

You can control the size of the camera better, the location of the camera, we can move processing into the mirror if it should be there versus on the camera itself. There is a lot more flexibility we can design the whole system around an individual vehicle and when - and you look at the content play the other thing that's interesting is we’re able to help them come up with new location of cameras.

And then when you look at this camera that we’re selling, it’s going into places in a vehicle where there is never been a camera located before. So Gentex product for instance new market opportunities looking at locations in a short fin antenna high mounted in the rear window of the vehicle, higher up mounted in your backup cameras today.

And one thing that we like to point out here is, this is not replacing a backup camera in today's market every FDMX execution is an incremental rearward facing camera because of the field of view and where that cameras is looking.

Just real quick, would you guys ever consider taking on more debt to buy back stock, I mean you’re on your path there having almost no debt in short order given where the stock is and where rates are and your cash flow is. I mean would you ever consider taking on a little debt to buy back stock more aggressively?

Historically the company's philosophy has been that we use cash and cash generated of the business to handle share repurchases. That being said, we would never say no across the board to any kind of a request or comment like that.

But right now we don't see the need to given our strength in our balance sheet. So our focus right now is to continue to execute the strategy and to use our strong balance sheet to help fund our share repurchases and really to help use the income statement.

We still produce tremendous amount of earnings off of our current business and we want to use that to help secure the future from a product strategy standpoint but then also to help offset dilution. And then more importantly to acquire stock when it's appropriate.

Operator [Operator Instructions] And our next question is from the line of James [indiscernible] with Muller Road Capital. Your line is open.

A couple questions to follow-up. On the aviation window side, Kevin I have few questions, I like you to comment on the new JV the PPG announced and if that would potentially replace your JV offerings or if that new purchasement is going to be additive to which you’re already doing with them that's number one.

Number two on the HomeLink side is that goes to a smart home platform, do you have licensing arrangements that will let that work with other embedded systems specifically the Android format or the Google Home, excuse me the Amazon offerings that they’re rolling out so that it can work seamlessly or would you possibly be at risk of losing those two smartphone deployed method if you don't have those. And then on the camera and specifically first win on the CT6, want to say is GM already has a high mounted camera for this and so if you know they felt I am not trying to be difficult but trying to get some clarity with the question if they felt that your solution was an enhanced final delivery over that which they were getting by going with the third-party and just using for the FDM, why do you believe that's going to change your first one went wrong way and didn't incorporate both profit from you.

Sure Jim we’ll start and first nice to speak with you, we’ll kind of go through these in reverse order if that’s okay, just because I got CT6 question on mind now. So, one things we talked about over the last - I think 18 months we talked about GM strategy we have not predicted that we would become the camera supplier for the GM execution.

We feel very comfortable that we’ll be the display partner and focus on new innovations around that display mirror that we’re going to be partnering with GM's preferred partner on the camera supply side. Really what we’re talking about is, three of those next four launch OEMs are going to be where we’re going to be a system’s provider.

One of those for next will also be the same situation as GM will be the mirror supplier partnering with their chosen camera supplier. And so we’re not trying to imply that we’re going to be the system’s integrator on a 100% of the vehicles or awards that we get.

So we’re not trying to think that somehow GM's is going to change to a Gentex supply camera as part of our business development efforts. On the office aerospace, I think Neil hit HomeLink the aerospace side yes so we’re familiar with PPG they’ve talked about one of the things they were looking for some different technology they found that in the partner they were looking for.

We have zero reason to believe this will impact any of our current book of business. We have great relationships with Boeing, we feel like they’re very committed to that product on 787.

That is our only program right now that we have that shipping with PPG. So it’s the entire book of business is really around Boeing today.

We continue to be optimistic though about our marketing of that product directly ourselves to the OEMs and we believe there's a lot of interest in the space for our windows on additional Boeing, or Airbus or any manufacturer we continue to look for opportunities to find wins. The issue with the aerospace industry as you're familiar is a very long lead time business development standpoint.

So we have to wait for programs that naturally want to fit and then obviously make a compelling offering about the product and also about the business case of our product.

Yes, in regard to the HomeLink and home automation question, one of the things that we’ve been working on at CES 2017 we displayed and talked about that next days of HomeLink and tying those fixed buttons in a vehicle and that direct transmit of that device to a Bluetooth low energy connection on to a phone and then be able to trigger off smart home type devices like a smart link any of those smart things or any of those other types of hub technologies. Based on CES, the interest level that we received we are actively in discussions about establishing those relationships and how to make that product to the next step and I believe in the next six months here or so we’ll be having further discussions and laying out some of those technology has more openly.

But we are active in that area. It’s important obviously to have the relationships like with HomeLink what we've learned is having those technical relationship on the compatibility side is what key to the product and we’re taking that same philosophy into the home automation.

Now would have to get licensing arrangement let’s say a Google or an Amazon or would you just be offering app development solution so to consist right for that?

It depends on different automation groups that you're working with. So at this point we really can't get into that from a discussion point.

But we’ll gladly discuss that in the next six months when we start rolling out what that looks like.

Except for the generic we have to say that some home automation suppliers are open source where it doesn't require any agreement, others obviously had some proprietary side that you have to work with them on gaining access to that.

We’ll become part of the development cycle in the app side.

That's correct.

I am sorry, so thank you for all the answers and the time you allowed me just one last if I may. How should we be thinking about the cadence of some of the traditional advanced features that have been in your mirrors moving to the dash say the compass feature, the temperature feature other things as more and more stuff is on a universal can bus as the cars get more digitized and information residing there anyway.

How should we think about - what you see is the cadence of that happening more or less - to what will happen this quarter we had more base shipments and you just there?

The better indicator though of what we believe the future looks like is our launch activity which is net positive on the feature side. It's not to say there won't be some losses in some content over time but right now if you look at compass for instance that business has hold up remarkably well in fact been growing really for the last few years.

I mean that’s really predicated not on the availability of the network or could you do it somewhere else, a lot of times in vehicles compass information resides in two or three different locations it’s really about the consumer. And does the consumer demand that information in a place where it’s comfortable easy to access and make sense to them and so we look at compass as an example we continue to see that you for a long time we’ve been planning around pressure that could come from navigation systems or other systems, but customers continue to like that feature in that location, so we continue to work on the growth prospects there.

It’s not to imply that is going to last forever but right now we see, net positive in terms of demand for our location, geography and the technology that we're bringing. Really when you talk about the feature losses that we've experienced is the things we talked about over the last couple years, we’ve had some microphone reductions that continue to roll through currently, you see some changes you know in other features whether it’s outside mirror de-contenting by OEMs when they’re trying to achieve cost targets, but we tend to be pretty, pretty public about those losses so that we can discuss them with you and help you understand what they are, why they’re happening and what their impact would be to the business.

Thank you everyone for your time today. If you have any follow-up questions feel free to reach out.

Have a great rest at your weekend.