VOXX International Corporation Reports its Fiscal 2023 First Quarter Financial Results
VOXX International Corporation (NASDAQ: VOXX) reported a net loss of $6.5 million for the first quarter of Fiscal 2023, compared to net income of $2.7 million in the same period last year. Net sales decreased by 6.1% to $128.7 million, with declines in both Automotive Electronics and Consumer Electronics segments due to supply chain issues and high retailer inventory levels. The company remains optimistic, anticipating growth driven by new automotive programs and increased Onkyo product sales.
- Expecting growth in the second half of the year due to new Automotive programs.
- Secured over $750 million in new OEM awards over the past three years.
- Net sales decreased by 6.1% from the prior year.
- Operating loss increased to $6.7 million from $0.4 million year-over-year.
- Gross margin declined to 25.8% from 26.8% due to rising costs.
ORLANDO, Fla., July 11, 2022 /PRNewswire/ -- VOXX International Corporation (NASDAQ: VOXX), a leading manufacturer and distributor of automotive and consumer technologies for the global markets, today announced its financial results for its Fiscal 2023 first quarter ended May 31, 2022.
Commenting on the Company's results and business outlook, Pat Lavelle, President and Chief Executive Officer stated, "During the Fiscal 2023 first quarter, we continued to experience supply chain issues though the biggest impact was the lack of chips which directly impacted our automotive OEM and aftermarket business. Retailer buying also slowed in March given high inventory positions which impacted sales in our Consumer Electronics segment. While these challenges will persist, we are still poised for growth and expect to have a strong second half of the year based on new Automotive programs, increased production and sales of Onkyo products, along with expanding worldwide distribution, and a host of new products coming to market."
Lavelle continued, "As we look out over the next few years, we are very encouraged with our prospects and our optimism is driven by over
Fiscal 2023 and Fiscal 2022 First Quarter Comparisons
Net sales in the Fiscal 2023 first quarter ended May 31, 2022, were
- Automotive Electronics segment net sales in the Fiscal 2023 first quarter were
$39.6 million as compared to$42.7 million in the comparable year-ago period, a decrease of$3.1 million or7.2% . For the same comparable periods, OEM product sales were$16.7 million as compared to$14.9 million , driven by higher sales of OEM rear-seat entertainment systems, partially offset by ongoing supply chain constraints and component, part and chip shortages. Aftermarket product sales were$22.9 million as compared to$27.7 million , with the decline driven primarily by higher load-ins in the prior Fiscal year period as well as component and part shortages, partially offset by higher aftermarket accessory product sales. - Consumer Electronics segment net sales in the Fiscal 2023 first quarter were
$88.9 million as compared to$94.1 million in the comparable year-ago period, a decrease of$5.2 million or5.5% . For the same comparable periods, Premium Audio product sales were$69.9 million as compared to$71.6 million , with the decline primarily attributable to lower sales of premium home theatre speaker systems, partially offset by an increase in sales of Onkyo products. Other CE product sales were$19.0 million as compared to$22.5 million with the decline primarily related to general softness in the accessory market following the prior year rebound in sales experienced after the COVID-19 shut-downs in Fiscal 2021. The Consumer Electronics segment was also impacted by lower purchasing by many big box retailers given high inventory levels. - Biometrics segment net sales in the Fiscal 2023 first quarter were
$0.1 million as compared to$0.2 million in the comparable year-ago period. While segment sales declined, new opportunities emerged this quarter and progress has been made on current projects undergoing testing prior to commercialization.
The gross margin in the Fiscal 2023 first quarter was
- Automotive Electronics segment gross margin of
22.2% as compared to27.0% , a decrease of 480 basis points. The year-over-year decline was primarily related to the higher cost of materials and shipping, as well as increases in tariffs included in the cost of goods sold. Additionally, certain OEM rear-seat entertainment products that began selling during the second half of Fiscal 2022 have generated lower margins than normal due to rising costs, and as negotiations remain underway to revise pricing. - Consumer Electronics segment gross margin of
27.4% as compared to26.6% , an increase of 80 basis points. The primary drivers for the year-over-year increase are higher sales of Onkyo products, as well as the positive impact from price increases that were instituted throughout Fiscal 2022. - Biometrics segment gross margin of
24.3% as compared to19.5% , an increase of 480 basis points. The increase in margin was primarily a result of tooling costs incurred during the three months ended May 31, 2021 that did not repeat in the current year.
Total operating expenses in the Fiscal 2023 first quarter were
- Selling expenses of
$12.3 million increased by$0.8 million , primarily related to higher trade show expenses as the Company attended the Consumer Electronics Show in person in 2022 and the 2021 event was held virtually. - General and administrative expenses of
$19.1 million increased by$0.5 million . The Company incurred higher depreciation and amortization expenses, benefit and insurance expenses, and an increase in fees related to taxes and licensing, partially offset by lower professional fees and salary expenses. - Engineering and technical support expenses of
$8.4 million increased by$2.2 million , primarily due to an increase in engineering labor expenses and research and development expenses related to the Onkyo acquisition, as well as the use of outside labor for certain projects. This increase was partially offset by decreases related to projects in development during the prior year that have been completed, as well as headcount reductions in the Biometrics segment. - Acquisition costs of
$0.1 million declined by$0.5 million . The Company incurred acquisitions costs in both the Fiscal 2023 and Fiscal 2022 first quarter associated with consulting and due diligence fees for the asset purchase agreement signed with Onkyo Home Entertainment Corporation and the joint venture created with Sharp Corporation to complete the transaction.
The Company reported an operating loss in the Fiscal 2023 first quarter of
Total other income/expense, net, in the Fiscal 2023 first quarter was a loss of
Net loss attributable to VOXX International Corporation in the Fiscal 2023 first quarter was
The Company reported an Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") loss in the Fiscal 2023 first quarter of
Seaguard Electronics LLC
On March 3, 2022, the Arbitrator issued a Partial Final Award on Bifurcated Issue in the amount of
During Fiscal 2022, the Company recorded an accrual for the interim arbitration award in the amount of
Balance Sheet Update
As of May 31, 2022, the Company had cash and cash equivalents of
Conference Call Information
The Company will be hosting its conference call and webcast on Tuesday, July 12, 2022 at 10:00 a.m. Eastern.
- To attend the webcast, participants must register online at https://edge.media-server.com/mmc/p/tesjq8k7.
- To access the call by phone, visit https://register.vevent.com/register/BIed2d9f3946264d288e913f1228733bfd and you will be provided with dial-in numbers. Participants are requested to register a day in advance or at a minimum 15 minutes before the start of the call. Those wishing to ask questions following management's remarks should use the dial-in numbers provided.
- A replay of the webcast will be available approximately two hours after the call and archived at the following link in Events and Presentations: https://investors.voxxintl.com/events-and-presentations.
Non-GAAP Measures
EBITDA and Adjusted EBITDA are not financial measures recognized by GAAP. EBITDA represents net (loss) income attributable to VOXX International Corporation, computed in accordance with GAAP, before interest expense and bank charges, taxes, and depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted for stock-based compensation expense, foreign currency losses (gains), acquisition costs, certain non-routine legal and professional fees, and awards. Depreciation, amortization, stock-based compensation, and foreign currency losses (gains) are non-cash items.
We present EBITDA and Adjusted EBITDA in our Form 10-Q because we consider them to be useful and appropriate supplemental measures of our performance. Adjusted EBITDA helps us to evaluate our performance without the effects of certain GAAP calculations that may not have a direct cash impact on our current operating performance. In addition, the exclusion of certain costs or gains relating to certain events allows for a more meaningful comparison of our results from period-to-period. These non-GAAP measures, as we define them, are not necessarily comparable to similarly entitled measures of other companies and may not be an appropriate measure for performance relative to other companies. EBITDA and Adjusted EBITDA should not be assessed in isolation from, are not intended to represent, and should not be considered to be more meaningful measures than, or alternatives to, measures of operating performance as determined in accordance with GAAP.
About VOXX International Corporation
VOXX International Corporation (NASDAQ: VOXX) has grown into a leader in Automotive Electronics and Consumer Electronics, with emerging Biometrics technology to capitalize on the increased need for advanced security. Over the past several decades, with a portfolio of approximately 35 trusted brands, VOXX has built market-leading positions in in-vehicle entertainment, automotive security, reception products, a number of premium audio market segments, and more. VOXX is a global company, with an extensive distribution network that includes power retailers, mass merchandisers, 12-volt specialists and many of the world's leading automotive manufacturers. For additional information, please visit our website at www.voxxintl.com.
Safe Harbor Statement
Except for historical information contained herein, statements made in this release constitute forward-looking statements and thus may involve certain risks and uncertainties. All forward-looking statements made in this release are based on currently available information and the Company assumes no responsibility to update any such forward-looking statements. The following factors, among others, may cause actual results to differ materially from the results suggested in the forward-looking statements. The factors include, but are not limited to the: risk factors described in the Company's annual report on Form 10-K for the fiscal year ended February 28, 2022, and other filings made by the Company from time to time with the SEC.
The factors described in such SEC filings include, without limitation: the impact of the COVID-19 outbreak on the Company's results of operations, global supply shortages and logistics costs and delays; cybersecurity risks; risks that may result from changes in the Company's business operations; our ability to keep pace with technological advances; significant competition in the automotive electronics, consumer electronics and biometrics businesses; our relationships with key suppliers and customers; quality and consumer acceptance of newly introduced products; market volatility; non-availability of product; excess inventory; price and product competition; new product introductions; foreign currency fluctuations; and restrictive debt covenants. Many of the foregoing risks and uncertainties are, and will be, exacerbated by the COVID-19 pandemic, the War in the Ukraine and any worsening of the global business and economic environment as a result. The Company assumes no obligation and does not intend to update these forward-looking statements.
Investor Relations Contact:
Glenn Wiener, GW Communications (for VOXX)
Email: gwiener@GWCco.com
Tables to Follow
VOXX International Corporation and Subsidiaries | ||||||||
Consolidated Balance Sheets | ||||||||
(In thousands, except share and per share data) | ||||||||
May 31, | February 28, | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 5,733 | $ | 27,788 | ||||
Accounts receivable, net | 82,645 | 105,625 | ||||||
Inventory | 181,187 | 174,922 | ||||||
Receivables from vendors | 217 | 363 | ||||||
Prepaid expenses and other current assets | 19,602 | 21,340 | ||||||
Income tax receivable | 749 | 734 | ||||||
Total current assets | 290,133 | 330,772 | ||||||
Investment securities | 1,222 | 1,231 | ||||||
Equity investment | 22,010 | 21,348 | ||||||
Property, plant and equipment, net | 49,813 | 49,794 | ||||||
Operating lease, right of use asset | 4,255 | 4,464 | ||||||
Goodwill | 72,507 | 74,320 | ||||||
Intangible assets, net | 97,541 | 101,450 | ||||||
Deferred income tax assets | 39 | 40 | ||||||
Other assets | 3,577 | 3,245 | ||||||
Total assets | $ | 541,097 | $ | 586,664 | ||||
Liabilities, Redeemable Equity, Redeemable Non-Controlling Interest, and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 54,113 | $ | 76,665 | ||||
Accrued expenses and other current liabilities | 46,923 | 54,659 | ||||||
Income taxes payable | 1,545 | 2,714 | ||||||
Accrued sales incentives | 20,427 | 23,755 | ||||||
Interim arbitration award payable | 40,431 | 39,444 | ||||||
Contract liabilities, current | 4,218 | 4,373 | ||||||
Current portion of long-term debt | 500 | 2,406 | ||||||
Total current liabilities | 168,157 | 204,016 | ||||||
Long-term debt, net of debt issuance costs | 14,858 | 9,786 | ||||||
Finance lease liabilities, less current portion | 39 | 78 | ||||||
Operating lease liabilities, less current portion | 3,067 | 3,298 | ||||||
Deferred compensation | 1,222 | 1,231 | ||||||
Contingent consideration, less current portion | 5,001 | 5,750 | ||||||
Deferred income tax liabilities | 4,330 | 5,300 | ||||||
Other tax liabilities | 913 | 1,083 | ||||||
Prepaid ownership interest in EyeLock LLC due to GalvanEyes LLC | 3,692 | 2,451 | ||||||
Other long-term liabilities | 3,279 | 3,508 | ||||||
Total liabilities | 204,558 | 236,501 | ||||||
Commitments and contingencies | ||||||||
Redeemable equity | 3,450 | 3,550 | ||||||
Redeemable non-controlling interest | (227) | 511 | ||||||
Stockholders' equity: | ||||||||
Preferred stock: | ||||||||
No shares issued or outstanding | — | — | ||||||
Common stock: | ||||||||
Class A, $.01 par value, 60,000,000 shares authorized, 24,538,184 and 24,476,847 shares issued | 246 | 245 | ||||||
Class B Convertible, $.01 par value, 10,000,000 shares authorized, 2,260,954 shares issued and | 22 | 22 | ||||||
Paid-in capital | 296,175 | 300,453 | ||||||
Retained earnings | 120,046 | 126,573 | ||||||
Accumulated other comprehensive loss | (18,878) | (17,503) | ||||||
Less: Treasury stock, at cost, 2,862,218 shares of Class A Common Stock at both May 31, 2022 and February 28, 2022 | (25,138) | (25,138) | ||||||
Less: Redeemable equity | (3,450) | (3,550) | ||||||
Total VOXX International Corporation stockholders' equity | 369,023 | 381,102 | ||||||
Non-controlling interest | (35,707) | (35,000) | ||||||
Total stockholders' equity | 333,316 | 346,102 | ||||||
Total liabilities, redeemable equity, redeemable non-controlling interest, and stockholders' equity | $ | 541,097 | $ | 586,664 | ||||
VOXX International Corporation and Subsidiaries | ||||||||
Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income | ||||||||
(In thousands, except share and per share data) | ||||||||
Three months ended | ||||||||
2022 | 2021 | |||||||
Net sales | $ | 128,732 | $ | 137,060 | ||||
Cost of sales | 95,493 | 100,365 | ||||||
Gross profit | 33,239 | 36,695 | ||||||
Operating expenses: | ||||||||
Selling | 12,285 | 11,467 | ||||||
General and administrative | 19,130 | 18,676 | ||||||
Engineering and technical support | 8,389 | 6,232 | ||||||
Acquisition costs | 136 | 676 | ||||||
Total operating expenses | 39,940 | 37,051 | ||||||
Operating loss | (6,701) | (356) | ||||||
Other (expense) income: | ||||||||
Interest and bank charges | (730) | (528) | ||||||
Equity in income of equity investee | 1,588 | 2,723 | ||||||
Interim arbitration award | (986) | — | ||||||
Other, net | (2,110) | 442 | ||||||
Total other (expense) income, net | (2,238) | 2,637 | ||||||
(Loss) income before income taxes | (8,939) | 2,281 | ||||||
Income tax (benefit) expense | (1,092) | 484 | ||||||
Net (loss) income | (7,847) | 1,797 | ||||||
Less: net loss attributable to non-controlling interest | (1,320) | (919) | ||||||
Net (loss) income attributable to VOXX International Corporation | $ | (6,527) | $ | 2,716 | ||||
Other comprehensive (loss) income: | ||||||||
Foreign currency translation adjustments | (1,494) | 372 | ||||||
Derivatives designated for hedging | 87 | 119 | ||||||
Pension plan adjustments | 32 | 1 | ||||||
Other comprehensive (loss) income, net of tax | (1,375) | 492 | ||||||
Comprehensive (loss) income attributable to VOXX International Corporation | $ | (7,902) | $ | 3,208 | ||||
(Loss) income per share - basic: Attributable to VOXX International Corporation | $ | (0.27) | $ | 0.11 | ||||
(Loss) income per share - diluted: Attributable to VOXX International Corporation | $ | (0.27) | $ | 0.11 | ||||
Weighted-average common shares outstanding (basic) | 24,412,462 | 24,266,242 | ||||||
Weighted-average common shares outstanding (diluted) | 24,412,462 | 24,925,974 | ||||||
Reconciliation of GAAP Net Income Attributable to | ||||||||
VOXX International Corporation to EBITDA and Adjusted EBITDA | ||||||||
Three months ended | ||||||||
2022 | 2021 | |||||||
Net (loss) income attributable to VOXX International Corporation | $ | (6,527) | $ | 2,716 | ||||
Adjustments: | ||||||||
Interest expense and bank charges (1) | 527 | 372 | ||||||
Depreciation and amortization (1) | 2,904 | 2,778 | ||||||
Income tax (benefit) expense | (1,092) | 484 | ||||||
EBITDA | (4,188) | 6,350 | ||||||
Stock-based compensation | 126 | 236 | ||||||
Foreign currency losses (gains) (1) | 2,362 | (116) | ||||||
Acquisition costs | 136 | 676 | ||||||
Professional fees related to distribution agreement with GalvanEyes LLC | — | 325 | ||||||
Non-routine legal fees | 508 | 686 | ||||||
Interim arbitration award | 986 | — | ||||||
Adjusted EBITDA | $ | (70) | $ | 8,157 | ||||
(1) | For purposes of calculating Adjusted EBITDA for the Company, interest expense and bank charges, depreciation |
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SOURCE VOXX International Corporation
FAQ
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