Gentex (GNTX) Q3 2026 earnings call transcript

Thank you. Good morning and thank you for joining us today for our third quarter 2026 earnings conference call. I'm Josh Obersky, Gentex Vice President of Investor Relations, and with me today are Steve Downing, President and CEO, Neil Boehm, 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 Investor 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 materially 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'd like to remind the investment community that we will be participating in both the SEMA show from November 3rd through 6th and the 2027 Consumer Electronics Show from January 6th through 9th, 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 analyst to join their scheduled booth tour. I will now hand the call over to Steve Downing for our prepared remarks.

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%, 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%. 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 non-automotive product lines, helped offset those headwinds. In Europe, the continued rollout of DMS and ICMS products helped mitigate lower vehicle production and mere unit shipments, reinforcing the value of increasing content per vehicle. China remained a headwind 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. Non-automotive 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.

Thanks, Steve. Automotive net sales were $552.5 million in the third quarter of 2016, compared to $573.7 million in the third quarter of 2015. 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 loss. 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 2016, compared with $43 million in the third quarter of 2015. 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 5s, 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 36 percent 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 30th of 26th, 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 30th of 26th versus December 31th of 25th. 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 2025. Accounts receivable was $404.6 million at September 30, compared to $368.5 million at year-end, reflecting the timing of sales and collections 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 2025. 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 nine 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 nine 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 of 26 compared to $25.9 million last year. And for the first nine 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.

Thank you, Kevin. I'd like to begin by thanking all of the analysts and investors that traveled to our facilities in Dealingo, Michigan in August for our Analyst and Investor Day It 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, home link, 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 Escalade earn the Comfort and Convenience Award in J. D. Power's 2026 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 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 DS7 and gaining traction at other customers in the region. For 2026, we're still on target to achieve our 200 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 GV90 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 $80 to $100 million revenue target from DMS and ICMS for 2027.

Customer interest in our dimmable visor and large area device technology remains strong. Our first dimmable visor program remains on track with a 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 LUAR. Our cinema speakers, normally behind the theater screens, were front and center, blending cultural relevancy with premium audio performance. The party continues at Klipsch Fest, our homegrown celebration taking place on November 6th and 7th at our global Klipsch headquarters in Indianapolis.

We'll be wrapping up the 80th anniversary celebrations for Klipsch and Ankyo with a two-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 headphone system, the Stratus series, which hits the market in November, along with the fan favorite reference Premier 3 Passive Home Theater loudspeakers. On the Bluetooth speaker front, our music series Gen 2 will be launching this holiday season alongside Ankyo's Japanese design-inspired Creator Series GX AIO all-in-one powered tabletop speaker system.

So, go out and purchase these awesome products. The holidays will never sound so good. These first nine 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.

Thanks, Neil. I think that's the first time I've ever heard you say cultural relevancy. 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. 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 nine 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 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 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 6-9% 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 and 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 visor 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. We can now proceed to questions.

Yeah, I mean, I think if you look at the delay, I mean, it's pretty normal in this industry. I mean, obviously, and, you know, 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, anytime 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, you know, if you look at the precious metals and what's going on in the rest of the commodities, some of 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 yeah there are definitely some headwinds heading into next year The one thing we have in our favor though is despite the headwinds on the bill and material side if we hit the growth rates we talking about we haven 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 and 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.

Yeah, if you look at, you're talking about the 4% in terms of automotive, light vehicle production?

Yeah, well, if we talk units for a minute, you know, units were down, I think, about a million units on a year-over-year basis, and it's almost all tied directly to those two causes that you mentioned, both the China reductions and the Volkswagen loss.

So then the difference in that, right, the difference in that is the growth in the other regions and increased content.

Yeah, so that's a great question. If you look at it, 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 OEM launches, and one of them was also impacted by the Hyundai-Kia strike, the union strike on the ground there.

And so I think that took a good 60,000, 70,000 units out of production for us 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 were getting back online, the volumes didn't come in as high as we were expecting. And then the other one was, Neil mentioned, the F-250, 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 one time in nature, and so 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 Vox 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.

No, I mean, if I was doing the way too early college football top 25, I'd probably say, you know, next year is probably more in that 33 to 34 percent 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 raw PCBs. 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, but we believe with the growth and some of the new launches, that will help offset some of those headwinds we're seeing on the bill material side.

Yep.

Yeah, thank you.

Sure.

Yeah, a little bit of color just on the electronic components, and Steve will add some more on top of it. You know, 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 one 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. And to put this into just kind of rough ballparks, I mean, what we're seeing from our existing supply base, and this is wild, anywhere from 8 to 10x price increases on a per unit basis. So, I mean, literally a component that cost $4 or $5 earlier this year is now $40.

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, you know, 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. Yeah, back to the component shortage days five years, four years ago, where we learned how to iterate design 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 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.

David, you also asked about PCB capacity, correct?

Yeah, so we're sitting really good. I mean, obviously, with some of the reductions in volumes we've seen, 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 is 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.

Yeah, 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, you know, the volume starts to pick back up in the fourth quarter where they were kind of lacking in Q3. So that's where you start to get visibility. But, yeah, our Q4 numbers are really based on primarily customer orders. And if you look from the Vox 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.

And that's really been driven by a brand-new product. So, you know, 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.

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 recoveries. So, I mean, and the reason why we're saying that is there's going to be a combination of a recovery period, 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 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, you know, 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.

I want to go, I'm going off of a mixture of like 26 updates and 27 forecasts, 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 has, 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 in that you really had a handful of micros that really drove the vast majority of cost increases. But there were other deflationary areas, too. I mean, like LCDs were still deflationary. Yeah, and the passes were still pretty stable.

Yeah, 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.

Yeah, 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, You know, 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, you know, 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 a DDR.

It's probably the most constrained commodity right now. As we move forward, though, as Neil 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.

Yeah, no, thanks, Mark. I'd say for most things, we're clear through the end of the year. 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, you know, if you start looking at those levels, once we get through the first half of the year, those run rates 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 forecasts 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.

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

Yeah. I mentioned it briefly that still a lot of work going on there. We've got three 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.

Yeah, I think right now from a total return standpoint, we're probably going to tend to focus more on the share repurchase side. Obviously, you know, we've been – the stock has not performed at 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 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.

Thanks, Matthew. Thanks, Matthew.

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 three 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, 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 year and a half. 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 one 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 just to minimize the headwind associated with those commodity prices.

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

No, I would say – I want to say I think we hit most of them. I mean, if you look at, you know, DDR and raw PCBs, those would probably be the biggest.

Thanks, David.

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