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Gentex Corporation (NASDAQ:GNTX)

Officer Change Conference

May 21, 2013 6:00 pm ET

Executives

Mark Newton - Senior Vice President and Director

Fred T. Bauer - Founder, Executive Chairman and Chief Executive Officer

Connie Hamblin - Vice President of Investor Relations & Corporate Communications and Secretary

Analysts

John Murphy - BofA Merrill Lynch, Research Division

Adam Brooks - Sidoti & Company, LLC

Jason A. Rodgers - Great Lakes Review

Operator

Good evening, ladies and gentlemen, and welcome to today's Gentex Corporation Conference Call. As a reminder, today's call is being recorded. I would now like to turn the meeting over to Mr. Mark Newton, Senior Vice President. Please go ahead, Mr. Newton.

Mark Newton

Thank you very much. Thank you for joining us today on this call, which is to address our recent press release this afternoon, announcing an officer change. I'm joined today by Fred Bauer, our Chairman and Chief Executive Officer; Connie Hamblin, our Vice President of Investor Relations; Steve Downing, our Chief Financial Officer and Vice President of Finance; and Kevin Nash, our Chief Accounting Officer and Corporate Controller. What I'd like to do today to make certain that we communicated this recent information, which just came out earlier this afternoon, is I'll proceed through reading of our 8-K, announcing the change and our press release, and then we'll work to address any questions. Our 8-K announcement earlier this afternoon addresses departure of directors or certain officers, election of directors, appointment of certain officers, compensatory arrangement of certain officers.

Item 5.02 b. Gentex Corporation, the company announced that on May 17, 2013, Steve Dykman, Chief Financial Officer and Vice President, Finance is departing his current positions with the company to pursue other opportunities. Mr. Dykman will remain an employee of the company as a financial consultant upon terms and conditions that are in discussion. A copy of the company's news release concerning this announcement was attached. In addition, the company announced that Steve Downing, age 35, was appointed as the company's Chief Financial Officer and Vice President, Finance effective as of May 17, 2013. Mr. Downing was the company's Vice President of Commercial Management, a role he has held since 2012. He's been employed by the company since 2002, beginning as a financial analyst, moving on to senior financial analyst, and then serving in various roles in commercial management, including Director of Commercial Management until his promotion to Vice President of Commercial Management. He is a summa cum laude graduate of Liberty University, with Bachelor of Science Degrees in Finance and Management.

Mr. Downing does not have a written employment agreement and will remain as an at-will employee, as is the case with all other employees of the company. The company is currently negotiating the terms of Mr. Downing's employment arrangement, which will be effective upon approval by the Board of Directors. Mr. Downing does not have any family relationships with any director or executive officer of the company. The company also announced that Kevin Nash, age 38, was appointed as Chief Accounting Officer of the company on May 17, 2013. Mr. Nash has been employed by the company for more than 13 years, the past 6 as Corporate Controller.

The accompanying news release, Gentex announces officer change is as follows: May 21, 2013, Gentex Corporation, the Zealand, Michigan-based manufacturer of automatic-dimming rearview mirrors and camera-based lighting and driver-assist systems for the automotive industry, commercial fire protection products and dimmable aircraft windows, today reported that the company's Chief Financial Officer and Vice President, Finance, departed from those roles with the company effective as of May 17, 2013.

"Steve Dykman is a long-time valued associate at Gentex, and we wish him the best in his future endeavors," said Gentex Corporate Chairman and Chief Executive Officer, Fred Bauer. Mr. Bauer also said that the company named Steve Downing, previously the company's Vice President, Commercial Management, to succeed Mr. Dykman as the company's Chief Financial Officer and Vice President, Finance. Mr. Downing is a summa cum laude graduate of Liberty University with Bachelor of Science Degrees in Finance and Management. The company announced that Kevin Nash has been appointed Chief Accounting Officer of the company as well. The Finance and Accounting Department of the company will otherwise remain intact. Mr. Bauer noted that, The Gentex foundations of devotion to quality, devotion to innovation, ownership mentality and unpretentious management give us a cohesive and cooperative leadership team with a deep bench. Steve Downing has 11 years of success and increasing responsibility in cost accounting, quotation development, forecasting, strategic partnerships, and new business development that is central to all of the company's sales today. We view this change as an opportunity for Mr. Downing to grow his already important contributions to the day-to-day management of the company, and to further use his exceptional analytical skills, which summarizes the primary information that we want to communicate with this conference call.

With this, we would now like to try and introduce Mr. Downing and Mr. Nash to you and answer questions that you may require at this time. We can proceed with questions.

Question-and-Answer Session

Operator

[Operator Instructions] And at this time, there are no questions in the queue. [Operator Instructions]

Your first question will come from John Murphy with Bank of America Merrill Lynch.

John Murphy - BofA Merrill Lynch, Research Division

Just a question, in general, will there be any changes in sort of capital allocation decisions you're being share buybacks or dividends or sort of the placement of cash and actively managed funds?

Mark Newton

With this announcement that we have now, again, this Mark Newton, we've got no changes in our business or operating from all of the information that we've recently made available in our earnings release and our public documents related to that. So there's no operating changes in anything that we have with the company that accompanies this officer change.

Operator

And next, we'll go to David Leiker with Baird.

Unknown Analyst

This is John Lyne [ph] for David. The announcement, I'm wondering, it seems like a bit of a surprise, I'm just wondering, if internally, this was a bit unexpected, and then maybe, if you can comment on Steve's plan, if you are aware.

Mark Newton

We don't often have officers leave the company at Gentex, but it does happen. In this particular case at this time, when we're still in discussions on terms, we want to honor the confidentiality of that process. So we don't have those details today but intent to have them for you as soon as they're defined. When we do have officers leave the company at Gentex on a rare times that it occurs, we do remain committed to the same strategy and methods that have always made it successful. And I think effectively, the primary message that we hope to communicate to you in this is that our management team here, we have strong confidence in it, we want to try and communicate that to you as well and wants you to believe the same. In this specific case, we have no change in the operating tactics or strategy of the company. We've got no changes in the accounting and finance department. Kevin Nash has been Corporate Controller in that department for the past 6 years, reporting to Steve Dykman in this with a primary segments of the department reporting to him. Steve Downing has been involved in the commercial aspects of the business which relate to our financing and accounting execution throughout his career at Gentex. And as I stated earlier, our hope is to communicate to you our strong confidence in this team, and our intention to continue forward as we have been doing.

Unknown Analyst

Okay. And then did Steve's decision to stay on is more of an advisory role, is that more to just make sure there's a smooth transition?

Mark Newton

That's our planning and target and as we always do in these situations to ensure smooth transition, as well as advice and information.

Operator

Moving on, we'll hear from Adam Brooks with Sidoti & Company.

Adam Brooks - Sidoti & Company, LLC

Yes, just one quick question here. Can you give us a sense of if you have any time to prepare, as in was it kind of out of the blue, or is it something that maybe can have some discussions for 1 month or 2?

Mark Newton

Actually, this information is generally new, but all the details of it we're still working to finally find before we release them in this. So I don't know that we can add much further detail related to that.

Fred T. Bauer

No. I think, Steve Downing, I think, and Kevin Nash have long experience with us more than 1 decade each and I think, we operate by consensus at the company anyway. This is Fred Bauer. So I think we bring a strong team with very few changes. I think one advantage that we have was, Steve Downing also is that he has an intimate knowledge of the customer base and the shop floor and many other things. So I think we'll bring a very solid team, and we are trying our best, I think we've made some tremendous improvements in our efficiency in recent -- in the recent quarter that we just announced. So I think we just have a very strong team, we have a foundation's principle, which is an ownership mentality, through stock options and profit sharing and those things which is a good thing, and we have dedication to quality, which is never going to change as long as I'm around. And I love innovation. It's got to be the right innovation to make money, but innovation is a great thing. So -- and we don't like arrogant, any kind of arrogance. So we like managers that can easily talk with their associates to try to run a kind of constructive organization, and I think their morale is very high. Every customer that comes through sees the people here and without a doubt, is probably our best selling tool. The people know what they're talking about, then they're highly engaged in their activities and we have a very little turnover, in general, as a company compared to many other companies.

Operator

[Operator Instructions] From Great Lakes Review, we'll go to Jason Rodgers.

Jason A. Rodgers - Great Lakes Review

Does Mr. Dykman have a noncompete agreement in place, and what controls are in place to protect Gentex's trade secrets?

Mark Newton

The standard controls that Gentex has for all of its corporate officers include noncompete definition and agreements for that and for protection of intellectual property in these. The company is always been very, very thorough in those documents and Connie, I believe, we have these available generally as a standard practice for the company. It's always been in the company's history to have this. So yes, those are in place with Mr. Dykman.

Fred T. Bauer

And there isn't a big danger in a no compete situation, it's a highly technical company we have, out of a total headcount of around 3,800 people, roughly. We have about 720 engineers and scientists, and I don't think Steve would be able to know too many of our trade secrets and technology things. So I don't think that's a risk, but nevertheless, we still have a very rigorous policy and noncompete, as Mark just explained.

Operator

At this time, there are no further questions.

Mark Newton

If no further questions, are there any other further comments on this side that we want to make a point of, anything further we can try to provide tonight? Okay, if not, then shall we proceed to wrap up this call?

Fred T. Bauer

Thank you, and thanks for your support. We very much appreciate it.

Mark Newton

Absolutely. Thank you.

Connie Hamblin

Thanks for your participation. We are signing off.

Operator

Ladies and gentlemen, that does conclude today's presentation. We do thank everyone for your participation.

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