VOXX International Corporation Reports its Fiscal 2023 Third Quarter Financial Results
VOXX International Corporation (NASDAQ: VOXX) reported its Fiscal 2023 third quarter results, ending November 30, 2022, with net sales of $143.1 million, down 25.4% from $191.9 million in the year-ago period. The Automotive Electronics segment net sales decreased 21.2% to $48.6 million, while Consumer Electronics saw a 27.5% decline to $94.1 million. However, net income was $7.4 million, a significant improvement compared to a net loss of $28.1 million in the prior year. Operating expenses decreased 20.7% to $34.8 million, reflecting cost-control measures taken amidst ongoing supply chain challenges.
- Net income improved to $7.4 million from a net loss of $28.1 million year-over-year.
- Operating expenses reduced by 20.7% to $34.8 million, indicating effective cost management.
- OEM product sales increased by $0.6 million, signaling growth in that sector.
- Net sales decreased by $48.8 million or 25.4% compared to the prior year.
- Automotive Aftermarket and Premium Audio sales significantly impacted by reduced consumer discretionary spending.
- Gross margin declined to 26.0% from 26.9% year-over-year.
ORLANDO, Fla., Jan. 9, 2023 /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 third quarter ended November 30, 2022.
Commenting on the Company's results and business outlook, Pat Lavelle, President and Chief Executive Officer stated, "As expected, we were profitable in the third quarter, as the steps we have taken to improve gross margins and reduce expenses had a more positive impact on our business. However, sales and profitability were significantly curtailed by the current state of the global economies and ongoing supply chain issues. While reported Holiday sales were up, industry-wide CE sales declined year-over-year as consumer discretionary spending is down, retailers are carrying high inventory positions and in-store retail traffic slowed. This impacted sales of our Automotive Aftermarket and Premium Audio products the most, and we also had to manage through OEM customers shutting production lines due to chip shortages. We expect continued softness in the market and are preparing accordingly."
"Despite some of the near-term headwinds, we remain steadfast in our belief that VOXX is well positioned for growth in the years ahead. Our brands, products, distribution and customer relationships have never been stronger and we have been awarded significant OEM business that runs several years out. We are also increasing production of Onkyo and Pioneer related products to meet the demand from our North America customers and new distributors, while preparing to open up production to serve select global markets. The expected growth from both Automotive OEM and the contributions from Onkyo and Pioneer should help offset market weakness and as economies across the globe stabilize, other areas of our business are poised for growth as well. We are weathering the storm, controlling what we can and ensuring we have the resources and flexibility to drive value."
Fiscal 2023 and Fiscal 2022 Third Quarter Comparisons
Net sales in the Fiscal 2023 third quarter ended November 30, 2022, were
- Automotive Electronics segment net sales in the Fiscal 2023 third quarter were
$48.6 million as compared to$61.6 million in the comparable year-ago period, a decrease of$13.0 million or21.2% . For the same comparable periods, OEM product sales were$19.1 million , up$0.6 million , with the increase driven primarily by higher sales of OEM remote start and security products, as well as OEM safety products. Aftermarket product sales were$29.4 million , a decline of$13.6 million , which was primarily driven by lower sales of aftermarket security products, higher customer inventory on hand, fewer vehicles due to supply chain shortages and a slowing U.S. economy. - Consumer Electronics segment net sales in the Fiscal 2023 third quarter were
$94.1 million as compared to$129.7 million in the comparable year-ago period, a decrease of$35.6 million or27.5% . For the same comparable periods, Premium Audio product sales were$73.5 million , a decline of$31.4 million and other CE product sales were$20.6 million , a decline of$4.2 million . Lower segment sales were primarily attributable to lower domestic sales of premium home theater speakers and wireless speaker products, lower European sales of premium and non-premium speaker products and accessories, and declines in other CE categories due to a slowing of the global economy and other factors. As an offset, the Company experienced an increase in domestic sales of Onkyo and Pioneer related products of$9.4 million . - Biometrics segment net sales in the Fiscal 2023 third quarter were
$0.3 million as compared to$0.4 million in the comparable year-ago period, with the decline primarily related to lower sales of the Company's NIXT product as it was a newer product on the market in the prior fiscal year. The Company anticipates a ramp up in sales moving forward as a result of new projects awarded and a growing pipeline across multiple industry verticals.
On a sequential basis, when compared to the Fiscal 2023 second quarter ended August 31, 2022, Fiscal 2023 third quarter net sales increased
The gross margin in the Fiscal 2023 third quarter was
- Automotive Electronics segment gross margin of
24.6% as compared to23.8% . The year-over-year improvement of 80 basis points was primarily driven by steps taken to mitigate higher supply chain costs, ongoing supply chain constraints and higher tariffs, and the Company began to see a greater positive impact in the Fiscal 2023 third quarter. The improvement was also driven by the positive impact from lower satellite radio product sales, which historically are sold at lower margin, partially offset by lower margins on certain OEM rear-seat entertainment and lower sales of automotive safety products, the latter of which are traditionally are sold at higher margin. - Consumer Electronics segment gross margin of
26.6% as compared to28.3% . The year-over-year decline of 170 basis points was primarily driven by higher supply chain costs and surcharges, lower sales of premium home theater speaker products and, an increase in sales of lower margin products to discount channel customers in Europe. This was partially offset by mitigation steps the Company has taken through pricing adjustments and other sourcing strategies, as well as the positive impact to margins of higher sales of Onkyo and Pioneer products. - Biometrics segment gross margin of
22.7% as compared to32.1% . The year-over-year decline in gross margin was primarily related to the decrease in sales of higher margin NIXT products compared to the prior year, as well as due to certain high volume, low margin discounted sales made that were not present in the prior Fiscal year. While gross margin percentage declined, the dollar impact was minimal based on low sales volumes.
On a sequential basis, when compared to the Fiscal 2023 second quarter ended August 31, 2022, Fiscal 2023 third quarter gross margin improved by 270 basis points.
Total operating expenses in the Fiscal 2023 third quarter were
- Selling expenses of
$11.4 million declined by$2.5 million or17.7% , driven by lower commission expense, salaries and benefits expenses, headcount reductions and both salary and bonus reductions, as well as lower web platform expenses, offset by the higher cost of online platform fees, among other factors. - General and administrative expenses of
$16.2 million declined by$3.8 million or19.1% , driven by lower salary expenses, legal and professional fees, and other cost cutting measures. Additionally, the Company incurred restructuring related expenses of$0.3 million related to the relocation of certain OEM production operations from Florida to Mexico, and which consisted primarily of severance expense and moving costs. Lastly, bad debt expense declined by$0.3 million as a result of greater reserve releases as compared to the prior Fiscal year. - Engineering and technical support expenses of
$7.2 million declined by$2.5 million or26.1% , primarily due to lower research and development expenses related to headcount reductions in the Biometrics segment that took place at the end of Fiscal 2022, and lower development expenses across each of the Company's business segments. Additionally, direct labor expenses declined primarily as a result of salary and benefits, as well as bonus reductions related to cost cutting measures. - Acquisition costs declined by
$0.3 million as the Company incurred acquisitions costs in the Fiscal 2022 third quarter associated with the asset purchase agreement signed with Onkyo Home Entertainment Corporation and the joint venture created with Sharp Corporation to complete the transaction. There were no acquisition costs incurred in the Fiscal 2023 third quarter.
On a sequential basis, when compared to the Fiscal 2023 second quarter ended August 31, 2022, Fiscal 2023 third quarter operating expenses declined by
The Company reported operating income in the Fiscal 2023 third quarter of
Total other income/expense, net, in the Fiscal 2023 third quarter was
Net income attributable to VOXX International Corporation in the Fiscal 2023 third quarter was
The Company reported Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") in the Fiscal 2023 third quarter of
Fiscal 2023 and Fiscal 2022 Nine-Month Comparisons
Net sales in the Fiscal 2023 nine-month period ended November 30, 2022, were
- Automotive Electronics segment net sales in the Fiscal 2023 nine-month period were
$125.4 million as compared to$150.0 million in the comparable year-ago period, a decline of$24.7 million or16.4% . For the same comparable periods, OEM product sales were$51.1 million as compared to$49.9 million , an increase of$1.2 million or2.5% , and aftermarket product sales were$74.3 million as compared to$100.2 million , a decline of$25.9 million or25.8% . - Consumer Electronics segment net sales in the Fiscal 2023 nine-month period were
$271.1 million as compared to$320.8 million in the comparable Fiscal 2022 nine-month period, a decline of$49.7 million or15.5% . For the same comparable periods, Premium Audio product sales were$212.6 million as compared to$252.6 million , a decline of$40.0 million or15.8% , and Other Consumer Electronics product sales were$58.4 million as compared to$68.2 million , a decline of$9.7 million or14.3% . - Biometrics segment net sales for the Fiscal 2023 nine-month period were
$0.7 million as compared to$0.8 million in the comparable Fiscal 2022 nine-month period, a decline of15.1% .
The gross margin in the Fiscal 2023 nine-month period was
- Automotive Electronics segment gross margin was
23.8% as compared to24.7% , down 90 basis points. - Consumer Electronics segment gross margin of
25.5% as compared to27.4% , down 190 basis points. - Biometrics segment gross margins of
31.3% as compared to gross margin of28.4% .
Total operating expenses in the Fiscal 2023 nine-month period were
- Selling expenses of
$35.6 million declined by$1.6 million , or4.3% . - General and administrative expenses of
$54.4 million declined by$2.2 million , or3.8% . - Engineering and technical support expenses of
$23.8 million were essentially flat. - Acquisition costs of
$0.1 million declined by$3.1 million , or95.9% .
The Company reported an operating loss in the Fiscal 2023 nine-month period of
Total other income/expense, net, for the nine-month period ended November 30, 2022, was a loss of
- Interest and bank charges of
$3.1 million increased by$1.3 million . - Equity in income of equity investees of
$5.4 million declined by$1.6 million . - Interim arbitration award of
$3.0 million improved by$36.5 million . - Other, net decreased by
$3.8 million , as the Company had net foreign currency losses of$3.9 million in the Fiscal 2023 nine-month period as compared to net foreign currency losses of$0.3 million in the comparable Fiscal 2022 nine-month period.
Net loss attributable to VOXX International Corporation in the Fiscal 2023 nine-month period was
EBITDA in the Fiscal 2023 nine-month period was a loss 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 November 30, 2022, the Company had cash and cash equivalents of
Conference Call Information
The Company will be hosting its conference call and webcast on Tuesday, January 10, 2023 at 10:00 a.m. ET.
- To attend the webcast: https://edge.media-server.com/mmc/p/tomomefo
- To access by phone: https://register.vevent.com/register/BIed4b330a76244d88aa2641c36e1862b5
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 under "Events and Presentations" in the Investor Relations section of the Company's website at https://investors.voxxintl.com/events-and-presentations
Non-GAAP Measures
EBITDA and Adjusted EBITDA are not financial measures recognized by GAAP. EBITDA represents net income (loss) attributable to VOXX International Corporation and Subsidiaries, 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 (gains) losses, restructuring expenses, acquisition costs, certain non-routine legal and professional fees, and awards. Depreciation, amortization, stock-based compensation, and foreign currency (gains) losses are non-cash items.
We present EBITDA and Adjusted EBITDA in this 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) | ||||||||
November 30, | February 28, | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 8,477 | $ | 27,788 | ||||
Accounts receivable, net | 91,882 | 105,625 | ||||||
Inventory | 192,996 | 174,922 | ||||||
Receivables from vendors | 138 | 363 | ||||||
Prepaid expenses and other current assets | 20,397 | 21,340 | ||||||
Income tax receivable | 7,943 | 734 | ||||||
Total current assets | 321,833 | 330,772 | ||||||
Investment securities | 1,167 | 1,231 | ||||||
Equity investment | 22,444 | 21,348 | ||||||
Property, plant and equipment, net | 47,903 | 49,794 | ||||||
Operating lease, right of use asset | 3,905 | 4,464 | ||||||
Goodwill | 72,375 | 74,320 | ||||||
Intangible assets, net | 92,993 | 101,450 | ||||||
Deferred income tax assets | 38 | 40 | ||||||
Other assets | 3,748 | 3,245 | ||||||
Total assets | $ | 566,406 | $ | 586,664 | ||||
Liabilities, Redeemable Equity, Redeemable Non-Controlling Interest, and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 48,734 | $ | 76,665 | ||||
Accrued expenses and other current liabilities | 44,486 | 54,659 | ||||||
Income taxes payable | 2,080 | 2,714 | ||||||
Accrued sales incentives | 25,466 | 23,755 | ||||||
Interim arbitration award payable | 42,403 | 39,444 | ||||||
Contract liabilities, current | 3,796 | 4,373 | ||||||
Current portion of long-term debt | 500 | 2,406 | ||||||
Total current liabilities | 167,465 | 204,016 | ||||||
Long-term debt, net of debt issuance costs | 45,860 | 9,786 | ||||||
Finance lease liabilities, less current portion | 94 | 78 | ||||||
Operating lease liabilities, less current portion | 2,735 | 3,298 | ||||||
Deferred compensation | 1,167 | 1,231 | ||||||
Contingent consideration, less current portion | 5,209 | 5,750 | ||||||
Deferred income tax liabilities | 5,228 | 5,300 | ||||||
Other tax liabilities | 929 | 1,083 | ||||||
Prepaid ownership interest in EyeLock LLC due to GalvanEyes LLC | 6,068 | 2,451 | ||||||
Other long-term liabilities | 3,144 | 3,508 | ||||||
Total liabilities | 237,899 | 236,501 | ||||||
Commitments and contingencies | ||||||||
Redeemable equity | 3,996 | 3,550 | ||||||
Redeemable non-controlling interest | (932) | 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 and | 246 | 245 | ||||||
Class B Convertible, $.01 par value, 10,000,000 shares authorized, 2,260,954 shares issued and | 22 | 22 | ||||||
Paid-in capital | 296,456 | 300,453 | ||||||
Retained earnings | 117,251 | 126,573 | ||||||
Accumulated other comprehensive loss | (19,851) | (17,503) | ||||||
Less: Treasury stock, at cost, 3,140,179 and 2,862,218 shares of Class A Common Stock at | (27,913) | (25,138) | ||||||
Less: Redeemable equity | (3,996) | (3,550) | ||||||
Total VOXX International Corporation stockholders' equity | 362,215 | 381,102 | ||||||
Non-controlling interest | (36,772) | (35,000) | ||||||
Total stockholders' equity | 325,443 | 346,102 | ||||||
Total liabilities, redeemable equity, redeemable non-controlling interest, and stockholders' equity | $ | 566,406 | $ | 586,664 | ||||
VOXX International Corporation and Subsidiaries | ||||||||||||||||
Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss) | ||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net sales | $ | 143,055 | $ | 191,871 | $ | 397,492 | $ | 472,040 | ||||||||
Cost of sales | 105,918 | 140,167 | 297,859 | 346,455 | ||||||||||||
Gross profit | 37,137 | 51,704 | 99,633 | 125,585 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling | 11,413 | 13,864 | 35,563 | 37,169 | ||||||||||||
General and administrative | 16,223 | 20,049 | 54,435 | 56,609 | ||||||||||||
Engineering and technical support | 7,171 | 9,706 | 23,844 | 23,824 | ||||||||||||
Acquisition costs | — | 287 | 136 | 3,279 | ||||||||||||
Total operating expenses | 34,807 | 43,906 | 113,978 | 120,881 | ||||||||||||
Operating income (loss) | 2,330 | 7,798 | (14,345) | 4,704 | ||||||||||||
Other (expense) income: | ||||||||||||||||
Interest and bank charges | (1,460) | (730) | (3,101) | (1,840) | ||||||||||||
Equity in income of equity investee | 2,022 | 2,206 | 5,373 | 6,964 | ||||||||||||
Interim arbitration award | (986) | (39,444) | (2,958) | (39,444) | ||||||||||||
Other, net | 460 | (143) | (3,169) | 675 | ||||||||||||
Total other income (expense), net | 36 | (38,111) | (3,855) | (33,645) | ||||||||||||
Income (loss) before income taxes | 2,366 | (30,313) | (18,200) | (28,941) | ||||||||||||
Income tax benefit | (3,988) | (641) | (5,788) | (374) | ||||||||||||
Net income (loss) | 6,354 | (29,672) | (12,412) | (28,567) | ||||||||||||
Less: net loss attributable to non-controlling interest | (1,067) | (1,551) | (3,090) | (3,473) | ||||||||||||
Net income (loss) attributable to VOXX International Corporation and Subsidiaries | $ | 7,421 | $ | (28,121) | $ | (9,322) | $ | (25,094) | ||||||||
Other comprehensive income (loss): | ||||||||||||||||
Foreign currency translation adjustments | 957 | (1,835) | (2,665) | (2,797) | ||||||||||||
Derivatives designated for hedging | 78 | 184 | 264 | 466 | ||||||||||||
Pension plan adjustments | (19) | 36 | 53 | 59 | ||||||||||||
Other comprehensive income (loss), net of tax | 1,016 | (1,615) | (2,348) | (2,272) | ||||||||||||
Comprehensive income (loss) attributable to VOXX International Corporation and Subsidiaries | $ | 8,437 | $ | (29,736) | $ | (11,670) | $ | (27,366) | ||||||||
Income (loss) per share - basic: Attributable to VOXX International Corporation and Subsidiaries | $ | 0.30 | $ | (1.16) | $ | (0.38) | $ | (1.03) | ||||||||
Income (loss) per share - diluted: Attributable to VOXX International Corporation and Subsidiaries | $ | 0.30 | $ | (1.16) | $ | (0.38) | $ | (1.03) | ||||||||
Weighted-average common shares outstanding (basic) | 24,389,375 | 24,289,909 | 24,408,541 | 24,279,084 | ||||||||||||
Weighted-average common shares outstanding (diluted) | 24,621,359 | 24,289,909 | 24,408,541 | 24,279,084 | ||||||||||||
Reconciliation of GAAP Net Income Attributable to | ||||||||||||||||
VOXX International Corporation to EBITDA and Adjusted EBITDA | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net income (loss) attributable to VOXX International Corporation and Subsidiaries | $ | 7,421 | $ | (28,121) | $ | (9,322) | $ | (25,094) | ||||||||
Adjustments: | ||||||||||||||||
Interest expense and bank charges (1) | 1,263 | 565 | 2,500 | 1,357 | ||||||||||||
Depreciation and amortization (1) | 3,053 | 3,378 | 9,406 | 8,891 | ||||||||||||
Income tax benefit | (3,988) | (641) | (5,788) | (374) | ||||||||||||
EBITDA | 7,749 | (24,819) | (3,204) | (15,220) | ||||||||||||
Stock-based compensation | 145 | 221 | 407 | 694 | ||||||||||||
Foreign currency (gains) losses (1) | (223) | 382 | 3,867 | 268 | ||||||||||||
Restructuring expenses | 303 | — | 532 | — | ||||||||||||
Acquisition costs | — | 287 | 136 | 3,279 | ||||||||||||
Professional fees related to distribution agreement with GalvanEyes LLC | — | — | — | 325 | ||||||||||||
Non-routine legal fees | 28 | 235 | 886 | 1,469 | ||||||||||||
Interim arbitration award | 986 | 39,444 | 2,958 | 39,444 | ||||||||||||
Adjusted EBITDA | $ | 8,988 | $ | 15,750 | $ | 5,582 | $ | 30,259 | ||||||||
(1) | For purposes of calculating Adjusted EBITDA for the Company, interest expense and bank charges, depreciation and amortization, as well as foreign |
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SOURCE VOXX International Corporation
FAQ
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